PHAROL, SGPS, S.A. — Investor Presentation 2019

Jul 16, 2019

Announcement | Lisbon | 16 July 2019

Notice to the Market disclosed by Oi

PHAROL, SGPS S.A. hereby informs on the Notice to the Market disclosed by Oi, S.A., according to the company's announcement attached hereto.

Oi S.A. – In Judicial Reorganization Corporate Taxpayer Registry (CNPJ) 76.535.764/0001-43 Board of Trade (NIRE) No. 33.3.0029520-8 Publicly-Held Company

MATERIAL FACT

Oi S.A. – In Judicial Reorganization ("Oi" or the "Company"), in compliance with Article 157, paragraph 4, of Law No. 6,404/76, pursuant to CVM Instructions Nos. 358/02 and 480/09, and in addition to the Notices to the Market dated December 3, 2018 and January 14, 2019, informs its shareholders and the market in general that it announced its strategic plan on this date, pursuing strategic alternatives for the future, with a focus on the improvement of operational and financial performance with a sustainable business model, for the purpose of maximizing enterprise value, in the context of the judicial reorganization process.

In accordance with the best corporate governance practices, Oi stresses that the aforementioned plan contemplates projections and estimates (guidance) of the following indicators, based on reasonable assumptions, which are subject to various factors, many of which are not nor will be under the control of the Company:

Indicator	2019 - 2024
Net Service Revenues	CAGR¹ > 2%
Indicator	2019
Routine EBITDA (R\$ billion)	Between 4.5 - 5.0
Indicator	2019 - 2021
Routine EBITDA	CAGR¹ 15% - 20%

¹ Compound Annual Growth Rate

The presentation about the approved strategic plan, as well as the assumptions that supported the preparation of such projections and estimates, is available for download on the Company's website (www.oi.com.br/ri) and on the Empresas.NET System of the CVM

(www.cvm.gov.br), as well as the website of B3 S.A. - Brasil, Bolsa, Balcão (www.bmfbovespa.com.br). The Company has also furnished an English translation of the presentation to the U.S. Securities and Exchange Commission under cover of Form 6-K.

The Company will keep its shareholders and the market informed of any development of the subject matter of this Material Fact.

Rio de Janeiro, July 16, 2019.

Oi S.A. – In Judicial Reorganization

Carlos Augusto Machado Pereira de Almeida Brandão Chief Financial Officer and Investor Relations Officer

Special Note Regarding Forward-Looking Statements

This Material Fact contains forward-looking statements. Statements other than historical facts, including statements of the Company's beliefs and expectations, business strategies, future synergies, cost savings, future costs and future liquidity, are forwardlooking statements.. The words "will", "must", "should", "could", "anticipates", "intends", "believes", "estimates", "expects", "predicts", "plans", "targets", "objective", "projects", "forecasts" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. There is no guarantee that the expected events, tendencies or expected results will actually occur. Such statements reflect the current view of the Company's management and are subject to various risks and uncertainties. These statements are based on several assumptions and factors, including general economic and market conditions, industry conditions, corporate approvals, operating factors and other factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. All forward-looking statements attributable to the Company or its affiliates, or people acting on their behalf, are expressly qualified in their entirety by the cautionary notices set forth in this paragraph. No undue reliance should be placed on these statements. Forward-looking statements speak only as of the date on which they were made. Except as otherwise required by federal securities laws of Brazil or of the U.S., or by the rules and regulations of the CVM, the SEC, or applicable regulatory authorities of other countries, the Company and its affiliates do not have any intention or obligation to update or publicly announce the results of any revisions to any of its forward-looking statements to reflect actual results, future events or developments, changes in assumptions or changes in other factors affecting forward-looking statements. However, it is advisable to consult other disclosures made by the Company on matters related to reports and communications filed by the Company within the CVM and the SEC.

Strategic Plan Presentation

Rio de Janeiro, July 2019

IMPORTANT NOTICE

This presentation contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and the applicable Brazilian regulations. Statements that are not historical facts, including statements regarding the beliefs and expectations of Oi – under Judicial Reorganization ("Oi" or "Company"), business strategies, future synergies, cost savings, future costs and future liquidity are forward-looking statements.

The words "will", "may", "should", "could", "anticipates", "intends", "believes", "estimates", "expects", "forecasts", "plans," "aims" and similar expressions, as they relate to the Company or its management, are intended to identify forward-looking statements. There is no guarantee that the expected events, tendencies or expected results will actually occur. Such statements reflect the current views of the Company's management and are subject to a number of risks and uncertainties. These statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, corporate approvals, operational factors and other factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations. All forward-looking statements attributable to the Company or its affiliates, or persons acting on their behalf, are expressly qualified in their entirety by the cautionary statements set forth in this notice. Undue reliance should not be placed on such statements. Forward-looking statements speak only as of the date they are made.

Except as required under the Brazilian and U.S. federal securities laws and the rules and regulations of the CVM, the SEC or other regulatory authorities in other applicable jurisdictions, the Company and its affiliates do not have any intention or obligation to update, revise or disclose any changes to any of the forward-looking statements herein in order to reflect current or future events or their developments, changes in assumptions or changes in other factors affecting the forward-looking statements herein. You are advised, however, to consult any further disclosures the Company makes on related subjects in reports and communications that the Company files with the CVM and the SEC.

OI: TRANSFORMATION OF THE COMPANY - LEADERSHIP IN FIBER AND INFRASTRUCTURE, SHAREHOLDER VALUE CREATION BY PURSUING STRATEGIC OPTIONS

Fiber: undisputable leader in fiber and infrastructure

• Leveraging non-replicable network to become the FTTH¹ national leader and 5G enabler in the country
• 4.6m homes expected to be passed by YE2019; 16m expected by YE2021; ~30m potential homes with attractive return
• 30% expected to be CAGR 2019-24, offsetting revenue decline in copper by YE2021
• Accelerating wholesale operations almost doubling expected revenues by YE2024 to achieve market leadership

Mobile: optimize and capture all pockets of value to maximize strategic optionality

• Leveraging network capacity to grow expect full year growth in mobile revenues² in 2019
• Exploring all strategic options to maximize shareholder value

Material incremental cost reductions: R\$ 1bn+ net annual cost reductions³

• To be achieved by YE 2021, above and beyond existing cost reduction efforts
• Sustainable cost reduction opportunities identified
• Expected EBITDA growth from 2019-2021
• Signs of revenue stabilization since Feb/2019 and expected >2% revenue CAGR 2019-24

Divestment of non-core assets and cash inflows: Potential impact of R\$ 12.5-14.5bn⁴

• Non-core assets: R\$ 6.5-7.5bn
• PIS/Cofins: R\$ 2.1-3.1bn R\$ 2.1bn already under a favorable decision

OI REVISITED ITS BUSINESS STRATEGY AND POSITIONING IN ORDER TO MAXIMIZE SHAREHOLDER and ENTERPRISE VALUE

All business segments individually assessed and portfolio logic considered, including divestments

Focus on competitive advantages

Effective capital allocation

Financial discipline to fund the plan

The Board has worked closely with Management and independent advisors¹

Heavy involvement and collaboration

Regular meetings to redesign strategy

Strong alignment to optimize execution

STRATEGIC FOCUS: LEADERSHIP IN FIBER AND INFRASTRUCTURE, LEVERAGING NON-REPLICABLE AND LARGEST HIGH-CAPACITY NETWORK

Leading starting point and superior capacity to provide fiber and enable 5G countrywide

BROADBAND: STRENGTHENING COMPETITIVE ADVANTAGE IN FIBER THROUGH ACCELERATION OF FTTH DEPLOYMENT

Opportunity to deploy FTTH using the reuse approach - faster and cheaper - with evaluation of partnership models to accelerate fiber

Potential additional HPs:

Accelerated deployment expected to enable 4.6m homes passed by YE 2019 and 16m homes passed by YE 2021 – ~66% higher than initially announced

Deployment strategy expected to be developed in three tiers, depending on regional competitive context

• Direct competition through investments
• Partnerships to accelerate deployment
• Enablement of smaller cities with transport infrastructure and additional services

Oi plans to deploy ~15m homes passed between 2019-2021

FTTH HAS VERY ATTRACTIVE POTENTIAL RETURNS (IRR>40%¹ ) AND IS EXPECTED TO BE A KEY DRIVER OF FUTURE EBITDA AND CASH FLOW

FTTH business case breakdown based on achieved data – unitary economics for a new customer

1. Pre-tax calculations. IRR post-tax > 30% 2. Percentage of potential new clients – refers to the adoption rate of the service (homes connected/homes passed)

2. Considers only direct potential costs – does not include taxes or other indirect costs, ie. SG&A 4. Includes IPTV and Oi Play bundles. No price increase assumed in IRR calculations

Source: Oi internal data

Broadband

^5. NPS = Net Promoter Score

OUTSTANDING COMMERCIAL RESULTS IN ALL 10 CITIES LAUNCHED IN 2018—FASTER TAKE-UP THAN EXPECTED, LOWER CHURN RATE AND SUPERIOR QUALITY

Revenues stabilized due to the strong growth of FTTH in the 10 cities analyzed …

Broadband revenues (10 cities)

… driven by strong take-up rates, lower churn and superior quality

KPIs from 10 cities launched in 2018

Broadband

1. Excludes Petropolis (10 months of average HP aging) and Montes Claros (2 months) from the group of 10 cities analyzed. Business case assumes run-rate of 25% after 3 years Source: Oi internal data; Netflix ISP Ranking

Wholesale: National provider of transport network and enabler of 5G infrastructure in Brazil, accelerating wholesale operations

2018 market size estimated at ~R\$ 9bn with a CAGR of 12% driven by last mile demand

Oi plans to expand opportunities to exploit full potential of unregulated fiber market, leveraging a non-replicable infrastructure…

… expected to almost double wholesale revenues by 2024, focusing growth on nonregulated revenues

Strategy expected to preserve and emphasize Oi's leadership role in infrastructure in Brazil

1. Examples: Openreach 49%; Telstra Wholesale: 59%; Telxius: 47%; Globenet: 80% Source: Ovum; Anatel; Oi internal data; Oi estimates

B2B: AGGRESSIVE GROWTH IN ICT SERVICES — ACCELERATING POSITIONING AS A SOLUTIONS INTEGRATOR, leveraging the CAPILLARITY AND robustness of our FIBER network

New positioning—Oi Solutions Comprehensive portfolio of ICT solutions

• Integrator and provider of telecom and ICT¹ solutions
• Strategy beyond services or products, seeking to bring complete solution to the customer
• Value added to the client through an advisory and customized positioning

ICT revenue is expected to be the main driver of segment growth, offsetting total revenues decline from 2021 onwards

1. ICT = Information and communication technology Source: Oi internal data 8

B2B

Mobile: Maximize value capture, leveraging existing capacity, competitive product portfolio and refarming of 1.8 Ghz spectrum to 4G and 4.5G

Oi expects to capitalize on postpaid, leverage infrastructure in preparation for 5G and explore all strategic options to maximize shareholder value

Mobile

Operational Operational simplification: Oi plans to engage the organization to simplify simplification the operating model with focus on efficiency and DIGITAL transformation to enable Structural cost reduction

Deep structural cost take-out and digital programs in five main workstreams …

Sales & Mktg	• Portfolio simplification • Customer journey simplification • Sales channel footprint review
Organizational Processes	• Process re-design and digitalization (simplification and automation) • Structure review based on process re-design • Optimization across companies of the group
IT	• Simplification of IT and systems architecture • Service portfolio review • Project portfolio review
Procurement	• Rigorous demand management • Supplier rationalization and specifications

Network

• Value-based rollout • Energy efficiency

… to reach peers' OPEX/Revenues average and reduce Oi's recurrent cost base by R\$ 1bn+

R\$ 1bn+ net cost reduction²

on annual base cost, over and above existing efforts, expected to be implemented by YE 2021

1. Peers average in the period of 2018; 2. Net of costs to achieve Source: Companies financials, Oi internal data 10

Oi is FULLY focused on improving Operational and FINANCIAL performance, INCREASING REVENUES AND EBITDA WITH A SUSTAINABLE BUSINESS MODEL

Initial signs of sequential monthly revenue stabilization since February 2019 - expected revenues CAGR >2% until 2024

Total monthly revenue, R\$bn (not to scale)

Business transformation, investments and operational simplification driving expected EBITDA growth to 15-20% CAGR until YE 2021

Improving EBITDA expected to be driven by fiber investments, mobile strategy, wholesale growth and cost reduction

Room for further improvement through structural transformation

Significant increase from 4.5-5.0 expected in 2019, where there is EBITDA pressure due to:

• Increasing commercial efforts due to strong traction seen in fiber and mobile
• FX headwinds (Real depreciation) on foreign currency costs
• Downward trends in copper revenues (to be offset by fiber by 2021)

Oi is committed to improving financial performance and delivering sustainable results

1. Excluding any impact from possible regulatory regime changes Source: Oi internal data

To fund the strategy, Oi plans to divest non-core assets and release cash through non-operational actions, with potential impact of R\$ 12.5–14.5bn

Divestment of non-core assets with potential cash-in of ~ R\$ 6.5-7.5bn

Asset	Estimated timing	Estimated value
Towers	4Q 2019
Data Center	1H 2020	R\$ 6.5–R\$ 7.5bn
Unitel + Arbitration	4Q 2019
Real Estate1	1Q 2021	70-80% of Oi's Market Cap (@July/19)
Other Non Strategic	4Q 2020

Capital increase and PIS/COFINS credits amount to ~ R\$ 6-7bn

IN SUMMARY: OI PLANS TO BECOME THE LEADER IN FIBER AND INFRASTRUCTURE—POTENTIAL TO INCREASE MULTIPLE THROUGH FIBER-CENTRIC MODEL AND VALUE FROM STRATEGIC OPTIONS

Potential to increase multiple through adoption of a fiber-centric model … … and to unlock and capture significant

value from strategic options

Sustainable business model, focused on core competitive advantages

1. Mobile and Copper; 2. Considers market cap R\$ 9.4 bn, net debt R\$ 10.1 bn and EBITDA 2018 R\$ 5.8 bn 3. Traditional telcos: avg. of Vivo, TIM Brasil, America Móvil, Verizon, Deutsche Telekom, AT&T, T Mobile, Telstra, Vodafone; 4. Fixed Infrastructure telcos: Uniti, Zayo, Chorus, GTT, Cogent, CETIN (PrivateCo, considering post-separation FY 2015 numbers) Source: Oi Internal data; Oi estimates 13