Embratel Participacoes SC TO-C Information about tender offer

STRICTLY CONFIDENTIAL

Net Serviços de Comunicação S.A.

Valuation Report

May 25, 2012

Exhibit

99.1

IMPORTANT DISCLAIMER: This document is a free translation only. Due to the complexities of language translation, translations are not always precise. The original document was prepared in Portuguese and in case of

any divergence, discrepancy or difference between this version and the Portuguese version, the Portuguese version shall prevail. The Portuguese version is the only valid and complete version and shall prevail for any and

all purposes. The translation was made by persons whose native language is not English, therefore there is no warranty as to the accuracy, reliability or completeness of any information translated and no one should rely on

the accuracy, reliability or completeness of such information. There is no assurance as to the accuracy, reliability or completeness of the translation. Any person reading this translation and relying on it should do so at his or

her own risk.

For additional information, please read carefully the Additional Statements and Information at the end of this Valuation Report on pages 45 through 50.

2

Index

SECTION 1

Executive

Summary

3

SECTION

2

Representations

and

Qualifications

of

the

Appraiser

6

SECTION

3

Market

and

Company

Description

12

SECTION

4

Valuation

of

the

Shares

21

4.A

Historical

Market

Prices

22

4.B

Book

Value

25

4.C

Discounted

Cash

Flow

27

APPENDIX

A

Description

of

the

Valuation

Methodology

38

APPENDIX

B

Glossary

43

APPENDIX

C

Additional

Statements

and

Information

45

Executive Summary

SECTION 1

4

Executive Summary

25.89

12.54

17.43

25.83

28.34

25.89

12.54

15.05

25.93

28.34

Valuation Overview According to each Selected Valuation Methodology

(Share price in R$)

Common Share (NETC3)

Preferred Share (NETC4)

Discounted

Cash

Flow

(1)

Average Share Price

Period between the Material Fact and

publication of the Valuation Report

(2)

Average Share Price

12 months prior to the Material Fact

(3)

Book

Value

(4)

On March 31, 2012

(1)

See page 36 for details on the calculation of the discounted cash flow

(2)

Volume Weighted Average Price (VWAP) in the period between the publication of the Material Fact and the base date of this Valuation Report of May 25, 2012

(3)

Volume Weighted Average Price (VWAP) of the 12 months before the publication of the Material Fact

(4)

See page 26 for details on the calculation of the book value

Notes:

This Valuation Report (this “Valuation Report”) has been prepared by Banco BTG Pactual S.A. (“BTG Pactual”), as requested by Embratel Participações S.A. (“Embrapar”), for

the purpose of evaluating NET Serviços de Comunicação S.A. (“NET” or the “Company”) with respect to and exclusively for (i) the public tender offer through sale of control

(the “Change of Control TO”), under the terms of article 254-A of Law 6,404/76, as amended (the “Brazilian Corporate Law”), of CVM Rule nº 361, dated as of March 5, 2002,

as amended (“CVM Rule 361”), and of item 8.1 of the Rules of the Level II of Governance Standards of the BM&FBOVESPA – Bolsa de Valores, Mercadorias e Futuros 

(the “Level II Standard” and “BM&FBOVESPA”, respectively), and (ii) the public tender offer for the delisting of the Company from the Level II Standard, pursuant to the terms

of item 11.2 of the Level II Standard (the “Level II Delisting TO” and, together with the Change of Control TO, the “Unified Offer”).  The Unified Offer will be made by Embrapar,

Empresa Brasileira de Telecomunicações S.A. – Embratel (“Embratel”) and GB Empreendimentos e Participações S.A. (“GB”), pursuant to the provisions of Law No.

6,385/1976, as amended (“Law No. 6,385/76”), of the Brazilian Corporate Law, the Company’s by-laws, the Level II Standard, and other applicable legislation and rules

established by the CVM, CVM Rule 361, and as published in the Material Fact regarding the Unified Offer by the Company dated March 6, 2012 (the “Material Fact”). For

additional information, please read carefully the Additional Statements and Information at the end of this Valuation Report on pages 45 through 50.

Based on the economic value criteria using the discounted cash flow methodology (in accordance with item XII (c) (1) of Annex III of CVM Rule 361), the price 

range per common and preferred shares issued by NET is shown below:

Valuation Methodologies

BTG Pactual evaluated NET using the following valuation methodologies: (i) average share price weighted by the

volume traded on the BM&FBOVESPA; (ii) book value per share and (iii) discounted cash flow (“DCF”)

Methodology

Description / General Assumptions

Historical Market Prices

1

•

Analysis of the performance of NET’s share prices (NETC3 and NETC4):

During the 12 months prior to the publication of the Material Fact, on March 6, 2012

During the period between the publications of the Material Fact and this Valuation Report, on May 25, 2012

•

Calculation of the Volume Weighted Average Price (VWAP) of the common shares and the preferred shares

Book Value

2

•

Considers

the

accounting

value

of

the

Shareholders’

Equity

of

NET

on

March

31,

2012,

divided

by

the

total

number

of

shares outstanding (excluding treasury shares)

Discounted Cash Flow

3

•

Based on the information available to the general public, the audited financial statements and discussions with the

management of the Company

•

Weighted Average Cost of Capital (“WACC”) estimated by BTG Pactual considering current conditions of 9.71% in

nominal

US$,

reflecting

the

industry

and

the

country

risk

of

the

Company

and

Brazil,

respectively

•

The

enterprise

value

of

NET

(“Enterprise

Value”),

according

to

the

DCF

methodology,

was

calculated

as

the

sum

of

the

following factors:

Present

value

of

free

cash

flows

to

the

firm

("Free

Cash

Flow

to

Firm")

on

March

31,

2012,

projected

in

a

time

horizon

of

ten

years

in

nominal

terms

in

R$,

converted

to

US$

at

the

average

exchange

rate

projected

for

each

year,

discounted at the weighted average cost of capital in nominal US$

Present value of perpetuity

(1)

on March 31, 2012, discounted at the same rate used for the free cash flows during the

period of ten years. A terminal growth rate of 2.20% (nominal US$) was used for the period after the 10 years

projected

•

The Equity Value of NET was calculated by subtracting the net debt, other liabilities and the contingencies from the Enterprise

Value, and adding the tax benefit of the accumulated losses and the use of the goodwill balance as of March 31, 2012

Notes:

(1)

The sum of cash flows generated in all years after the 2012-2021 annual projections

5

Representations and Qualifications of the Appraiser

SECTION 2

7

Representations of the Appraiser

As set forth in CVM Rule 361/2002, BTG Pactual represents that:

1.

As of the date of this Valuation Report, neither BTG Pactual, nor its controlling shareholders, controlled companies or affiliated persons,

holds any securities issued by NET, or any derivatives related to the securities of NET, on its own behalf or under its discretionary

management.

2.

It does not have any interest, directly or indirectly, in the Company or in the Unified Offer, nor is there any other material circumstance that

may represent any conflict of interest or that would impact the required independence to perform its duties.

3.

It does not have any commercial or credit information of any kind whatsoever that may have an impact on this Valuation Report.

4.

The controlling shareholder and the managers of NET did not direct, limit, prohibit or take any actions that have or may have influenced the

access to or the use or the knowledge of the information, assets, documents or methodologies material for the quality of the respective

conclusions;

the

controlling

shareholders

of

NET

and

its

managers

did

not

determine

the

methodologies

used

in

the

preparation

of

the

analysis;

there

is

no

conflict

or

common

interest,

current

or

potential,

between

BTG

Pactual

and

the

controlling

shareholders

of

NET,

the

minority shareholder(s) of the controlling shareholders of NET, NET, the shareholders of NET or the Unified Offer.

5.

In

accordance

with

the

Material

Fact

of

the

Company

dated

April

5,

2012,

it

has

been

hired

by

Embrapar

to

prepare

this

Valuation

Report

of

NET for the Unified Offer.  The total compensation it will receive for rendering the services for the preparation of this Valuation Report is six

hundred

thousand

Reais

(R$600.000,00),

to

be

paid

by

Embrapar.

Embrapar

agreed

to

indemnify

BTG

Pactual,

and

any

individuals

indicated by BTG Pactual, for certain liabilities and expenses that may result as a consequence of this arrangement.

6.

It has not received from NET or Embrapar any compensation for any consulting, appraisal, audit or similar services, in the 12 months

preceding the registration of the Unified Offer.

8

Representations of the Appraiser (Cont.)

As set forth in CVM Rule 361/2002, BTG Pactual represents that:

7.

This Valuation Report contains:

i.

Information about the shares issued by NET, including shareholding information;

ii.

Confirmation that the appraisal criteria is based on the economic value pursuant to the discounted cash flow method;

iii.

The description of the methodologies applied to the valuation based on the market prices and book value of the shares issued by NET (For the purposes of this

Valuation Report, differences between the economic value of the common and preferred shares were not considered); and

iv.

Data used in the calculation of the prices.

8.

In addition to the information required by paragraph 3, article 8, of CVM Rule 361, this Valuation Report provides additional information that

should complement the analysis presented herein and support the conclusion of the value of the shares of NET.

9.

Pursuant to item XIII, letter “c”, of Exhibit III of CVM Rule 361, BTG Pactual understands that the appraisal criteria presented in this

Valuation

Report,

the

discounted

cash

flow

method,

in

accordance

with

item

XII,

letter

“c”,

item

“1”

of

Exhibit

III

of

CVM

Rule

361,

is

the

most

appropriate

to

assess

the

economic

value

range

of

the

shares

issued

by

NET

(for

more

information,

see

Appendix

A

–

Description

of

the Appraisal Methodology).

10.

BTG Pactual’s internal procedure for approving the Valuation Report comprises the following steps:

i.

Discussion

about

methodologies

and

assumptions

to

be

used

in

the

valuation,

involving

the

investment

banking

team

responsible

for

the

preparation

of

the

Valuation Report;

ii.

Preparation

and

review

of

the

Valuation

Report

by

the

investment

banking

team;

iii.

Review of the Valuation Report by the internal legal and compliance departments, and review by an external law firm;

iv.

After the preparation and review of the Valuation Report by the internal teams; the document is submitted for approval by an internal committee composed of

investment

banking

Partners

and

Directors,

including

the

ones

in

charge

of

the

sub-area

of

Mergers

and

Acquisitions.

In

this

committee,

the

main

assumptions

and

methodologies

used

in

the

Valuation

Report

are

discussed

and

explained;

and

v.

Finally, after conclusion of the previous steps, applicable requirements requested by the internal committee, if any, are discussed and implemented in order to

obtain final approval.

9

Qualifications of the Appraiser

As required by CVM Rule 361, BTG Pactual presents below its recent experience in transactions in the telecom

sector and in mergers and acquisitions involving the appraisal of public and private companies

Note:

(1)

The term “advisor" includes the following services: transaction structuring, assistance in gathering information, economic and financial evaluation and/or 

assistance in the process of negotiations between the transaction parties

BTG Pactual’s experience in transactions in the telecom sector

Oi

(2011):

Advisor

(1)

to

Tele

Norte

Leste

Participações

S.A.

in

the

corporate

restructuring of Oi S.A.

TIM

(2011):

Advisor

to

TIM

Participações

S.A.

in

the

acquisition

of

AES

Atimus

Oi

(2010/11):

Advisor

to

Grupo

Oi

and

its

controlling

shareholders

in

the

alliance with Portugal Telecom

Contax

(2011):

Advisor

to

Contax

in

the

acquisition

of

Dedic

Oi

(2008):

Advisor

to

the

controlling

shareholders

of

Oi

in

the

voluntary

offer

for the preferred shares held by the minority shareholders

TVA

(2006):

Advisor

to

TVA

in

its

sale

to

Telefonica

Telemar

(2006):

Advisor

to

Telemar

in

the

corporate

restructuring

proposal

BTG Pactual’s experience in selected merger and acquisitions transactions

Public Companies:

MPX

(2012):

Financial

advisor

to

MPX

in

its

strategic

partnership

with

E.ON

BR

Malls

(2011):

Advisor

to

BR

Malls

in

the

aquisition

of

100%

of

Shopping

Jardim Sul

Ternium

(2011):

Financial

advisor

to

Ternium

and

Confab

with

respect

to

the

entry in the controlling group of Usiminas

TAM

(2010):

Advisor

to

TAM

in

the

merger

with

LAN

Cosan

(2010):

Advisor

to

Cosan

in

the

creation

of

a

joint

venture

with

Shell

Petrobras

(2010):

Advisor

to

Petrobras

in

the

integration

of

its

petrochemical

assets with Braskem

Perdigão (2009):

Advisor to Perdigão in the merger with Sadia

Private Companies:

CIBE

(2012):

Advisor

to

CIBE

in

the

creation

of

a

joint

venture

in

the

toll

road

concession sector with the Italian group Atlantia

Eurofarma

(2012):

Advisor

to

Eurofarma

in

the

creation

of

Supera

RX,

a

joint

venture with Merck

Schincariol

(2011):

Advisor

to

the

controlling

shareholders

of

Grupo

Schincariol in the sale to Kirin

Wtorre

(2011):

Sale

of

WTorre

Properties

to

BR

Properties

Estre

Ambiental

(2011):

Advisor

to

Estre

Ambiental

in

the

acquisition

of

Cavo Serviços e Saneamento

Teuto

(2010):

Advisor

to

Teuto

in

the

sale

of

a

stake

to

Pfizer

10

Qualifications of the Appraiser (Cont.)

Professionals responsible for preparing this Valuation Report

•

Marco Gonçalves is the partner in charge of Mergers and Acquisitions in the investment banking department of BTG Pactual in Brazil

•

Marco Gonçalves has more than 15 years of experience in investment banking, with operations focused exclusively on M&A. Before working at BTG Pactual, Marco

worked

at

Credit

Suisse,

ABN

AMRO,

Deutsche

Bank

and

BNP

Paribas

in

São

Paulo

and

New

York

•

His experience includes advisory to TIM Telecom in the acquisition of AES Atimus, advisory to Tele Norte Leste in the restructuring of the Grupo Oi, advisory to Oi in the

alliance with Portugal Telecom,  the purchase of control of Brazil Telecom, the purchase of control of Tele Norte Celular, the voluntary TOs and tag along TOs of Brasil

Telecom Participações and Brasil Telecom and of Tele Norte Celular and Amazonia Celular, the acquisition of Tele Norte Celular Participações, the sale of Telecom

Italia's stake in Solpart Participações and the privatization and the sale of CTE Enitel Telecom

•

Graduated with a degree in Mechanical Engineering from Universidade Federal de Santa Catarina, with a specialization in Finance from NYU

Marco Gonçalves

Mergers and Acquisitions, Investment Banking

•

Associate

partner

of

BTG

Pactual

and

senior

member

of

the

Mergers

and

Acquisitions

division

of

the

investment

banking

department

in

Brazil

•

Bruno has 12 years of experience in investment banking, having previously worked in the following investment banks: Credit Suisse, Citigroup Global Markets (Salomon

Smith Barney) and BNP Paribas

•

During

his

career,

Bruno

has

worked

on

more

than

40

M&A

and

debt

and

equity

capital

markets

transactions

in

several

industries

(e.g.

telecom,

IT,

commodities,

consumer goods) and geographies (e.g. Brazil, Latin America ex-Brazil and Europe)

•

His experience in the telecom industry includes the acquisition of AES Atimus by TIM, advisor to Comitê Organizador Rio 2016 in the National Sponsorships Tier 1 of the

telecom

category,

advisor

to

Tele

Norte

Leste

Participações

in

the

corporate

restructuring

of

Grupo

Oi,

alliance

between

Oi

and

Portugal

Telecom,

purchase

of

control

of

Brasil Telecom by Grupo Oi, the purchase of the control of Tele Norte Celular, the voluntary TOs and tag along TOs of Brasil Telecom Participações and Brasil Telecom

and of Tele Norte Celular and Amazonia Celular and the acquisition of Tele Norte Celular Participações

•

Bruno graduated with a degree in Economics from Universidade de São Paulo (FEA-USP)

Bruno Amaral

Mergers and Acquisitions, Investment Banking

11

Qualifications of the Appraiser (Cont.)

•

Analyst if the investment banking department at BTG Pactual in Brazil

•

Before joining BTG Pactual, Fernando worked as controller at Velcan Energy, a company operating in the renewable energy generation sector

•

Fernando has more than 3 years of experience in investment banking and has worked on several equity offerings, such as Gerdau, IMC, Tecnisa, Direcional, Lopes, Even and JBS. He also

has experience in the debt offering and mergers and acquisitions, particularly in the real estate and consumer goods sectors, such as the operations involving Schincariol, Grupo Catuaí,

JCPM, Femepe and Rodoviário Schio

•

Fernando graduated with a degree in Production Engineering from Escola Politécnica da Universidade de São Paulo, with a second degree in Industrial Engineering from École Nationale

des Ponts et Chaussées in Paris

Fernando Kalil

Mergers and Acquisitions, Investment Banking

•

Analyst in the investment banking department at BTG Pactual in Brazil

•

Fernando was involved in several equity and debt offerings and mergers and acquisitions transactions, such as Unicasa’s share issuance and the acquisition of control of Crivo by

TransUnion

•

Fernando is majoring in Business Administration from Universidade de São Paulo (FEA-USP)

Fernando Cerri

Mergers and Acquisitions, Investment Banking

•

Director in the Mergers and Acquisitions division of the investment banking department at BTG Pactual

•

Before joining BTG Pactual, Daniel worked in the investment banking areas of Credit Suisse and N.M. Rothschild in Brazil, in addition to the consulting firm Bain & Company

•

Daniel has 8 years of experience in investment banking and has worked on several M&A, ECM and DCM transactions in several sectors

•

His

experience

in

the

telecom

sector

includes

the

advisory

to

Tele

Norte

Leste

in

the

restructuring

of

the

group

Oi,

advisory

to

Oi

in

the

alliance

with

Portugal

Telecom

and

in

the

acquisition

of

Brasil

Telecom,

the

advisory

to

Contax

in

the

acquisition

of

Dedic,

the

advisory

to

Oi

in

the

voluntary

TOs

and

tag

along

TOs

of

Brasil

Telecom,

in

the

voluntary

TOs

and

tag

along

TOs

of

Amazônia Celular, in the proposal for the corporate restructuring of Telemar and advisory to Telefónica in the acquisition of Telefónica Data

•

Daniel is graduated in Production Engineering from Escola Politécnica da Universidade de São Paulo

Daniel Anger

Mergers and Acquisitions, Investment Banking

Professionals responsible for preparing this Valuation Report

Market and Company Description

SECTION 3

13

Brazilian Telecom Market

Industry History and Evolution of the Major Services

Source: Teleco (www.teleco.com.br), Anatel (www.anatel.gov.br) and Pyramid (www.pyr.com).

Notes:

(1)

Percentage of individuals in Brazil who are users

(2)

Not including access by 3G modem

(3)

Access installed that is available to users, including public use terminals (“TUP”)

Pay-TV Market Growth

(number of points of access per service, in millions)

CAGR ‘09-’11: 30.6%

(1)

Cable TV

accounts

for 41.8%

Fixed Line Market Growth

(number of points of access per service, in millions)

(1)

(3)

CAGR ‘08-’11: 1.4%

Growth Trend

(number of points of access per service, in millions)

CAGR ‘08-’11: 22.0%

CAGR

‘07-’11

25%

20%

2%

19%

Brazilian Market Development

Pre-Privatization

(until 1998)

Post-Privatization

(1998-2003)

Competition

Increase

(2003-2008)

Current Scenario

(2008-today)

•

State monopoly and low volumes of investment

•

Poor quality services and the very beginning of the Internet

•

Several players, with focus on the availability and quality of the services

•

Beginning of broadband and launch of the GSM technology

•

Consolidation of the sector and maturation of the fixed line market

•

Beginning of the convergence of services and launch of 3G technology

•

Industry with high competition and convergence of players

•

Cable TV and broadband as the main growth drivers

Broadband Market Growth

(2)

(number of points of access per service, in millions)

(1)

Cable TV

accounts

for 28.5%

CAGR ‘08-’11: 18.1%

With the maturation of the fixed line market, the cable TV and broadband segments now represent important growth

drivers for the Brazilian telecom sector

4.32

4.98

5.52

5.72

2.78

4.48

6.99

7.74

12.74

13.68

3.9%

5.0%

6.5%

7.0%

2009

2010

2011

1Q2012

Cable TV

DTH

MMDS

TVA (UHF)

7.47

9.77

Density

Brazilian Telecom Market

Pay TV Market

Source: Anatel (http://www.anatel.gov.br/Portal/exibirPortalPaginaEspecial.do?acao=&codItemCanal=1475&codigoVisao=5&nomeVisao=Informações Técnicas&nomeCanal=TV por

Assinatura&nomeItemCanal=Consolidação de Serviços de TV por Assinatura) and (http://www.anatel.gov.br/Portal/exibirPortalRedireciona.do?codigoDocumento=279096).

DTH

Segment’s

Growth

versus

Cable

Segment

(2006

–

2011)

(in thousands of bases connected and in % per year)

DTH

Segment’s

Growth

versus

Cable

Segment

(1Q10

–

1Q12)

(in thousands of bases connected and % per quarter)

Competition between the Cable and DTH segments

2,842

3,228

3,811

4,314

4,980

5,518

1,479

1,762

2,092

2,780

4,476

6,985

13.2%

13.6%

18.1%

13.2%

15.4%

10.8%

2.9%

19.1%

18.7%

32.9%

61.0%

56.1%

2006

2007

2008

2009

2010

2011

Cable

DTH

Cable Growth

DTH Growth

4,463

4,592

4,807

4,980

5,102

5,213

5,360

5,518

5,715

3,085

3,495

3,939

4,476

5,023

5,619

6,270

6,985

7,739

3.4%

2.9%

4.7%

3.6%

2.4%

2.2%

2.8%

2.9%

3.6%

11.0%

13.3%

12.7%

13.6%

12.2%

11.9%

11.6%

11.4%

10.8%

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

Cable

DTH

Cable Growth

DTH Growth

14

15

DTH

versus

Cable

Net

Adds

(2006

–

2011)

(1)

(in thousands of bases connected and in % per year)

DTH

versus

Cable

Net

Adds

(1Q10

–

1Q12)

(1)

(in thousands of bases connected and in % per quarter)

Source: Anatel (http://www.anatel.gov.br/Portal/exibirPortalPaginaEspecial.do?acao=&codItemCanal=1475&codigoVisao=5&nomeVisao=Informações Técnicas&nomeCanal=TV por

Assinatura&nomeItemCanal=Consolidação de Serviços de TV por Assinatura) and (http://www.anatel.gov.br/Portal/exibirPortalRedireciona.do?codigoDocumento=279096).

Brazilian Telecom Market

Pay TV Market

331

386

583

503

666

538

41

283

330

688

1,696

2,509

45%

50%

60%

44%

29%

18%

6%

37%

34%

60%

74%

84%

2006

2007

2008

2009

2010

2011

Cable

DTH

% Cable

% DTH

149

129

215

173

121

111

148

158

197

306

409

444

537

548

596

650

715

754

33.4%

25.4%

33.2%

24.9%

18.7%

16.1%

18.9%

18.5%

21.1%

68.5%

80.8%

68.6%

77.3%

84.3%

86.5%

83.3%

83.6%

81.0%

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

Cable

DTH

% Cable

% DTH

Competition between the Cable and DTH segments

Note: (1) The Net Adds charts do not sum 100% in some years and/or quarters due to the possibility of negative net adds for other technologies (mainly MMDS).

16

Source: Anatel (http://www.anatel.gov.br/Portal/documentos/278359.pdf?numeroPublicacao=278359&pub=principal) and

(http://www.anatel.gov.br/Portal/documentos/278356.pdf?numeroPublicacao=278356&pub=original).

Subscriber

Base

by

Operator

(1Q09

–

4Q11)

Market

Share

per

Operator

(1Q09

–

4Q11)

Net

Adds

per

Operator

(2Q09

–

4Q11)

Share

of

Net

Adds

per

Operator

(2Q09

–

4Q11)

Brazilian Telecom Market

Pay TV Market

NET

SKY

Embratel

Others

1Q09

2Q09

132.9

24.8

74.4

15.0

3Q09

161.7

58.7

72.2

3.9

4Q09

36.1

60.2

97.2

181.6

1Q10

150.4

70.6

163.9

60.9

2Q10

107.0

139.8

211.3

49.1

3Q10

182.8

151.4

237.6

75.7

4Q10

152.4

221.2

236.7

84.9

1Q11

120.4

305.6

245.6

(21.8)

2Q11

107.0

314.9

214.1

53.2

3Q11

136.7

281.5

374.7

(12.4)

4Q11

148.1

342.5

314.9

49.9

NET

SKY

Embratel

Others

1Q09

2Q09

53.8%

10.1%

30.1%

6.1%

3Q09

54.5%

19.8%

24.3%

1.3%

4Q09

9.6%

16.0%

25.9%

48.4%

1Q10

33.7%

15.8%

36.7%

13.7%

2Q10

21.1%

27.6%

41.7%

9.7%

3Q10

28.2%

23.4%

36.7%

11.7%

4Q10

21.9%

31.8%

34.0%

12.2%

1Q11

18.5%

47.0%

37.8%

(3.4%)

2Q11

15.5%

45.7%

31.1%

7.7%

3Q11

17.5%

36.1%

48.0%

(1.6%)

4Q11

17.3%

40.0%

36.8%

5.8%

NET

SKY

Embratel

Others

1Q09

50.3%

27.8%

0.6%

21.3%

2Q09

50.4%

27.2%

1.6%

20.8%

3Q09

50.6%

26.9%

2.6%

20.0%

4Q09

48.5%

26.3%

3.8%

21.4%

1Q10

47.7%

25.8%

5.6%

21.0%

2Q10

46.1%

25.9%

7.8%

20.3%

3Q10

44.8%

25.7%

9.8%

19.7%

4Q10

43.2%

26.1%

11.6%

19.1%

1Q11

41.6%

27.4%

13.2%

17.7%

2Q11

40.0%

28.6%

14.3%

17.1%

3Q11

38.5%

29.1%

16.5%

15.9%

4Q11

37.1%

29.8%

17.9%

15.2%

NET

SKY

Embratel

Others

1Q09

3,295

1,825

37

1,398

2Q09

3,427

1,850

111

1,413

3Q09

3,589

1,909

183

1,417

4Q09

3,625

1,969

281

1,599

1Q10

3,776

2,040

444

1,660

2Q10

3,883

2,180

656

1,709

3Q10

4,065

2,331

893

1,784

4Q10

4,218

2,552

1,130

1,869

1Q11

4,338

2,858

1,376

1,847

2Q11

4,445

3,173

1,590

1,901

3Q11

4,582

3,454

1,964

1,888

4Q11

4,730

3,797

2,279

1,938

Competition between the Cable and DTH segments

17

37.1%

25.4%

8.7%

Cable TV

Broadband

Fixed Line

Net Serviços de Comunicação S.A.

Overview

NET is an important company in the Brazilian telecommunications sector, operating in the segments of broadband,

cable TV and fixed line, with more than 5.5 million subscribers

Relevant Company Events

Company Overview

•

NET is the largest multi-service cable company in Latin America, present in

approximately 100 cities in Brazil

•

The

Company

provides

cable

TV

services

(programming

packages

and

pay-per-

view), broadband Internet and voice through a single cable

•

It

has

an

over

58,000-kilometer-long

network

of

coaxial

cables

(1)

,

with

capacity

to

reach more than 13 million households, out of which approximately 5.5 million

are subscribers

•

Based on data as of 2011, NET has approximately:

–

4.7 million pay-TV subscribers

–

4.3 million broadband internet subscribers

–

3.8 million fixed line subscribers

Geographic Footprint and Market Share

(Market share in Brazil, in number of points of access)

Client Base Growth

(in millions of points of access)

Cable TV

Broadband

Fixed Line

CAGR:

13.2%

CAGR:

21.6%

CAGR:

22.6%

States with coverage by NET

Market Share (2011)

3.7

4.2

4.7

2009

2010

2011

2.9

3.5

4.3

2009

2010

2011

2.6

3.2

3.8

2009

2010

2011

Source: Company (Formulário de Referência 2012, Management Information and IR website (http://www.mzweb.com.br/net2008/web/arquivos/Apresenta%E7ao_Call_4Q10_port_Final.pdf))

and Teleco (www.teleco.com.br).

•

Anatel’s approval for the acquisition of Vivax by NET, permitting the offer of all NET

services in the cities provided by Vivax

•

Acquisition of BIGTV (Sociedades BIGTV) by NET

•

Acquisition of ESC 90 Telecomunicações Ltda by NET

•

Embratel’s voluntary TO, resulting in the acquisition of 143,853,436 preferred shares

of NET

•

End of the period to exercise the right to sell by the holders of the remaining

outstanding preferred shares of NET resulting from the tender offer ended 07-Oct-

2010. During this period, Embratel acquired 49,847,863 additional preferred shares

•

Acquisition of the direct and indirect control of NET by Embrapar and its controlling

company Embratel, through the purchase of common shares issued by GB

Empreendimentos

e

Participações

S.A.

(“GB”),

the

Company's

direct

parent

16-may-2007

21-dec-2007

30-jun-2009

07-oct-2010

13-jan-2011

05-mar-2012

Notes:

(1) In addition to the network of coaxial cables, which generally is the network that effectively reaches the households, NET’s hybrid network infrastructure also includes approximately 17,000

kilometers of optical fiber cables (mainly used for connecting central stations to intermediary network hubs). The sum of the extension of NET’s coaxial network and optical fiber network totals

approximately 75,000 km. The expansion of the network of coaxial cables represents the main investment needed to expand the base of households reached by the Company.

18

Board of Directors

Oscar Von Hauske Solis

Chairman of the Board of Directors

Rossana Fontenele Berto

Member of the Board

Carlos Henrique Moreira

Member of the Board

Issac Berensztejn

Member of the Board

Mauro Szwarcwald

Member of the Board

Fernando Carlos Ceylão Filho

Member of the Board

Jorge Luiz de Barros Nóbrega

Member of the Board

Antonio Oscar de Carvalho Petersen Filho

Member of the Board

Carlos Hernán Zenteno de los Santos

Member of the Board

Antonio João Filho

Member of the Board

José Antônio Guaraldi Félix

Member of the Board

José Formoso Martinez

Member of the Board

Audit Committee

Martin Roberto Glogowsky

Chairman of the Audit Committee

João Adamo Júnior

Member

Eraldo Soares Peçanha

Member

Management

José Antônio Guaraldi Félix

Chief Executive Officer and Investor Relations Officer

Roberto Catalão

Chief Financial Officer

Rodrigo Marques de Oliveira

Officer

Daniel Feldmann Barros

Director of Operations

Shareholder

Common

%

Preferred

%

Total

%

GB Empreendimentos

e Participações S.A.

58,374,440

51.0%

-

-

58,374,440

17.0%

Globo Comunicações e

Participações S.A.

11,855,947

10.4%

1,000

0.0%

11,856,947

3.5%

Embratel

Participações S.A.

40,928,401

35.8%

12,242,351

5.4%

53,170,752

15.5%

Empresa

Brasileira de

Telecomunicações S.A.

2,580,655

2.3%

210,838,097

92.3%

213,418,752

62.2%

Free Float

720,242

0.6%

5,422,468

2.4%

6,142,710

1.8%

Total shares

114,459,685

100.0%

228,503,916

100.0%

342,963,601

100.0%

Net Serviços de Comunicação S.A.

Shareholders’

Composition and Management

Shareholders’

Composition

(as of March 31, 2012)

Company’s Management

Source: Company

Note:

(1)

Embratel Participações  S.A. and Empresa Brasileira de Telecomunicações S.A. hold 54.5% of the voting interests and 100% of the non-voting interests of GB

Empreendimentos e Participações S.A.

(1)

19

Net Serviços de Comunicação S.A.

Consolidated Financial Statements

Source: Net Serviços de Comunicação S.A. Audited Annual Financial Statements and Limited Review 1Q2012 Financial  Statements

Balance Sheet

(in R$ millions)

ASSETS

2009

2010

2011

1Q 2012

Total Assets

8,333.8

8,356.2

8,894.9

8,849.8

Current

1,587.5

1,498.8

1,621.5

1,384.4

Cash and Cash Equivalents

1,015.6

821.6

721.2

483.5

Trade Accounts Receivable

288.8

350.9

507.7

554.7

Inventories

58.8

82.1

53.1

46.9

Recoverable Taxes

3.6

28.4

115.7

71.4

Prepaid Expenses

33.2

27.4

29.7

35.8

Prepaid Rights for Use

175.1

172.5

169.8

169.1

Other Current Assets

12.5

16.0

24.2

23.0

Non-Current

6,746.3

6,857.3

7,273.4

7,465.3

Judicial Deposits

74.6

83.7

97.3

109.5

Deferred Income Taxes and Social Contribution

643.9

377.4

271.0

227.0

Recoverable Taxes

71.1

94.5

5.6

5.6

Prepaid Rights for Use

659.8

487.3

317.5

275.4

Other Non-Current Assets

6.6

6.1

9.3

7.6

Property, Plant and Equipment

2,767.0

3,322.4

4,122.8

4,403.2

Intangible Assets

2,523.2

2,485.9

2,450.0

2,437.1

Liabilities and Shareholders' Equity

2009

2010

2011

1Q 2012

Total Liabilities and Shareholders' Equity

8,333.8

8,356.2

8,894.9

8,849.8

Current

1,111.9

1,288.3

1,857.0

1,794.0

Trade Accounts Payable

327.7

349.5

586.5

576.6

Accounts Payable - Programming Suppliers

124.6

134.8

172.3

182.2

Taxes Payable

72.9

65.6

94.4

82.5

Payroll and Related Charges

181.7

180.7

237.2

155.8

Debt

85.5

104.9

295.0

308.9

Related Parties

-

78.2

84.5

86.6

Copyright Payable - ECAD

77.8

99.4

145.5

153.3

Deferred Revenue

208.2

208.9

207.3

206.5

Unrealized Losses on Derivatives

19.6

50.9

12.5

16.1

Other Current Liabilities

14.0

15.5

21.8

25.3

Non-Current

3,714.3

3,253.2

2,850.1

2,753.4

Debt

2,113.3

2,073.4

1,874.4

1,823.5

Deferred Revenue

782.3

612.2

404.6

352.4

Deferred Taxes

183.8

-

-

-

Provisions

605.4

554.8

551.3

566.2

Other Non-Current Liabilities

29.6

12.9

19.8

11.3

Shareholders' Equity

3,507.5

3,814.7

4,187.8

4,302.4

Share Capital

5,599.3

5,599.3

5,599.3

5,599.3

Capital Reserves

153.2

153.2

153.2

153.2

Accumulated Deficit

(2,245.0)

(1,937.8)

(1,564.6)

(1,450.1)

20

Net Serviços de Comunicação S.A.

Consolidated Financial Statements (Cont.)

Income Statement

(in R$ millions)

Source: Net Serviços de Comunicação S.A. Audited Annual Financial Statements and Limited Review 1Q2012 Financial  Statements

2009

2010

2011

1Q 2012

Net Revenues

4,613.4

5,405.7

6,695.9

1,838.5

(-) Cost of Services Rendered

(2,789.8)

(3,346.8)

(4,147.0)

(1,169.3)

(=) Gross Profit

1,823.6

2,058.9

2,548.9

669.2

(-) Operational Expenses

(1,200.1)

(1,400.8)

(1,669.0)

(461.7)

Selling Expenses

(505.1)

(594.5)

(720.0)

(199.0)

General and Administrative Expenses

(634.7)

(792.6)

(920.2)

(234.5)

Other

(60.4)

(13.7)

(28.8)

(28.2)

(=) Operating Profit

623.5

658.1

879.9

207.4

(+/-) Finance Results

65.4

(190.1)

(300.5)

(32.9)

Finance Expenses

(27.3)

(359.4)

(475.9)

(72.2)

Finance Income

92.8

169.4

175.4

39.4

(=) Profit Before Income Taxes and Social Contribution

688.9

468.0

579.4

174.6

(-) Income Taxes and Social Contribution

47.0

(160.8)

(206.3)

(60.0)

(=) Net Income

735.9

307.2

373.2

114.6

Valuation of the Shares

SECTION 4

Valuation of the Shares

SECTION 4.A

Historical Market Prices

23

Historical Market Prices

Common Shares –

NETC3

Share

Price

(1)

and

Volume

Evolution

Volume

Price

Period: 9-mar-11 to 25-may-12

6-mar-12

Material Fact about the

Unified Offer

Period

Initial date

Final date

VWAP

Average daily

(R$/share)

volume

(R$ thousand)

Between the Material Fact and this Appraisal Report

06-Mar-12

25-May-12

25.93

0

30 trading days before the Material Fact

19-Jan-12

05-Mar-12

20.22

0

60 trading days before the Material Fact

07-Dec-11

05-Mar-12

20.22

0

90 trading days before the Material Fact

24-Oct-11

05-Mar-12

15.83

0

180 trading days before the Material Fact

15-Jun-11

05-Mar-12

15.80

0

12 months before the publication of the Material Fact

09-Mar-11

05-Mar-12

15.05

1

Source: Economatica (www.economatica.com)

Note:

(1)

Corresponds to the closing share price. Values adjusted for dividends

24

Historical Market Prices

Preferred Shares –

NETC4

Share Price

(1)

and Volume Evolution

Source: Economatica (www.economatica.com)

Note:

Period

Initial date

Final date

VWAP

Average daily

(R$/share)

volume

(R$ thousand)

Between the Material Fact and this Appraisal Report

06-Mar-12

25-May-12

25.83

530

30 trading days before the Material Fact

19-Jan-12

05-Mar-12

21.61

542

60 trading days before the Material Fact

07-Dec-11

05-Mar-12

20.09

562

90 trading days before the Material Fact

24-Oct-11

05-Mar-12

19.82

415

180 trading days before the Material Fact

15-Jun-11

05-Mar-12

18.09

314

12 months before the publication of the Material Fact

09-Mar-11

05-Mar-12

17.43

276

(1)

Corresponds to the closing share price. Values adjusted for dividends

Volume

Price

Período: 9-mar-11 to 25-may-12

6-mar-12

Material Fact about the

Unified Offer

Valuation of the Shares

SECTION 4.B

Book Value

26

(in R$ millions, except otherwise mentioned)

Total assets

8,849.8

(-) Total Liabilities

(4,547.3)

(-) Minorities

0.0

Shareholders' Equity

4,302.4

Number of outstanding shares (millions)

(1)

343.0

Book value per share (R$/share)

12.54

Book Value

Net Serviços de Comunicação S.A.’s value is R$12.54 per share, based on the book value criteria

Book Value –

Net Serviços de Comunicação S.A.

(Consolidated Financial Statements as of March 31, 2012)

Source: Net Serviços de Comunicação S.A. Limited Review Financial Statements

Note:

(1)

On March 31, 2012. Not considering treasury shares. Considers common and preferred shares

Valuation of the Shares

SECTION 4.C

Discounted Cash Flow

28

Discounted Cash Flow

General Considerations

Unlevered cash flow method

-

Projection of the unlevered cash flows

-

The cash flows are discounted at the weighted average cost of capital of the Company (WACC) for the calculation of the present value

Projections in nominal R$

The unlevered cash flow is converted annually to US$ to be discounted

Base date: March 31, 2012; cash flows are discounted to the present value as of March 31, 2012

Forecast period: 2012 to 2021

Assumes that the cash flows are generated along the year (“mid-year convention”)

Cash flow discounted in nominal US$

BTG Pactual evaluated NET through the discounted free cash flow to firm (“FCFF”) methodology

Discounted Cash Flow

Currency

Information Source

Valuation Methodology

BTG

Pactual used, as basis for the evaluation, public sources of market

information and long term financial and operational projections provided by or

discussed with the management teams of NET, in nominal R$.

29

Discounted Cash Flow

Main Assumptions

BTG

Pactual

used,

as

the

basis

for

the

valuation,

public

sources

of

market

information

and

long

term

financial

and

operational projections provided by or discussed with the management of the Company.

Notes:

(1)

Number of households reached by the total network

(2)

Percentage of disconnections for the base of households connected. Calculated as the number of disconnected households divided by the number of households connected at the

beginning of the period

(3)

Average Revenue per User

(4)

The costs included here were projected not including depreciation and amortization

(5)

Estimated based on the free cash flow projection for the last period and increased by the expected growth, using the Constant Growth Model or Gordon’s Model equation as shown in

Appendix A. Description of the Valuation Methodology

(6)

Long-horizon

expected

equity

risk

premium

(historical)

(Source:

2012

Ibbotson

Report

–

corporate.morningstar.com)

Base of

Households

Connected

Based on projections of new installations (gross adds) and disconnections per period

–

New

installations

based

on

the

Company’s

expansion

plan

for

the

increase

of

the

length

of

lines

(cabling)

and

HPs

(1)

–

Disconnections

estimated

based

on

the

average

churn

rate

(2)

of

2010

and

2011,

applied

to

the

initial

base

of

households

connected

Net Revenues

Net

Revenues

estimated

based

on

the

average

number

of

connected

households

in

the

period

and

the

average

ARPU

(3)

per

household

during

the period, net of taxes and cancellations for each period

–

Average ARPU per period substantially stable in the early years of the projection due to the high competition in the industry, and

increasing from 2016 onwards as a result of replacement of technologies and changes in service mix

Operating Costs

and Expenses

(4)

Operating Costs and Expenses estimated as a function of the average base of households connected per period, assuming the maintenance of

inflation

on

the

metrics

of

costs

and

expenses

per

new

customer,

per

client

connected

and

per

HP

Capital

Expenditures

CAPEX based on the estimated amount needed to offset the depreciation of assets and meet the need for operating infrastructure improvement

for

each

year,

based

on

the

geographical

expansion

plan

aimed

at

increasing

the

Company's

penetration

in

class

A,

B

and

C

households

in

Brazil, mainly influenced by the new regulations of ANATEL

Working Capital

Based

on

the

maintenance

of

the

average

historical

ratios

of

the

working

capital

accounts

in

relation

to

Net

Revenues,

Costs

and

Expenses

Discount Rate

Discount rate calculated based on: (i) unlevered beta of comparable companies, (ii) target capital structure, (iii) country risk, and (iv) market risk

premium

(6)

Terminal Value

Gordon’s

perpetuity

growth

model

(5)

in

2021

Assumes growth rate of 2.2% in nominal US$ in the perpetuity

Depreciation and

Amortization

Calculated based on the depreciation schedule of fixed assets and the assumptions of new investments

Considers the amortization of goodwill of R$ 1.3 billion, according to the information from the Company’s  financial records

Income Tax and

Social Contribution

Considers a marginal income tax rate of 34%

Assumes full use of the accumulated losses base of R$ 2.8 billion for IR and R$ 3.6 billion for CSLL throughout the projection

30

Macroeconomic Assumptions

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

Inflation

IGP-M

5.48%

5.00%

4.88%

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

IPC-A

5.17%

5.60%

5.11%

5.00%

4.90%

4.90%

4.90%

4.90%

4.90%

4.90%

US Inflation (US-CPI)

2.30%

2.20%

2.20%

2.20%

2.20%

2.20%

2.20%

2.20%

2.20%

2.20%

Interest Rate (SELIC)

End of Period

8.00%

9.50%

9.50%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

Average

8.72%

8.75%

9.50%

9.25%

9.00%

9.00%

9.00%

9.00%

9.00%

9.00%

Exchange Rate (R$/US$)

End of Period

1.95

1.98

2.04

2.09

2.15

2.20

2.26

2.32

2.38

2.45

Average

1.92

1.97

2.01

2.06

2.12

2.18

2.23

2.29

2.35

2.42

Discounted Cash Flow

Macroeconomic Assumptions

Source: Brazilian Central Bank’s Relatório Focus and Statistics Series (www.bcb.gov.br), Economist Intelligence Unit (www.eiu.com) and BTG Pactual estimates (www.btgpactual.com)

31

Discounted Cash Flow

Operational Projections Summary

Number of Households Connected (End of Period)

(in thousands of households)

CAGR 2012E-2021E: 11.1%

Average

ARPU

per

Household

(1)

(in R$ / month)

CAGR 2012E-2021E: 1.9%

103.99

109.10

109.92

109.40

109.10

108.95

111.39

113.92

117.86

121.95

126.19

130.58

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

4,737

5,492

6,787

8,379

10,227

12,070

13,110

14,017

14,901

15,770

16,615

17,444

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

Note:

(1) Average Revenue per User, net of taxes and cancellations. The projected growth in average ARPU per household of 1.9% over the forecast period represents a negative rate in real terms (considering the projected inflation), which is explained by

a

combination of factors, according to discussions with the Company’s management including: (i) for the existing packages, the cap of annual adjustments is the inflation for the period, but NET may choose to adjust the price at lower-than-inflation

rate levels in order to maintain market share in an environment with fierce competition; (ii) existing clients may migrate to packages with nominal prices equal or lower than the current ones; and (iii) during Company’s expansion period (particularly

between 2012 and 2015), the Company is likely to capture new customers with cheaper packages than the current ones, which decreases the Company’s average ARPU as a whole.

32

Discounted Cash Flow

Operational Projections Summary (Cont.)

Note:

Gross Adds

(1)

(in thousands of households)

CAGR 2012E-2021E: 5.3%

Churn Rate

(2)

(%)

15.4%

15.8%

15.6%

15.6%

15.6%

15.6%

15.6%

15.6%

15.6%

15.6%

15.6%

15.6%

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

1,309

1,501

2,152

2,650

3,154

3,438

2,922

2,951

3,069

3,192

3,304

3,419

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

Note:

(1) The number of gross adds undergoes a relevant reduction between 2015 and 2016 because at this point NET is supposed to achieve its network coverage target (as detailed on page 33). From 2016 onwards, the growth of NET’s customer base 

occurs

in

the

coverage

area

already

served

by

the

NET,

which

explains

the

slowdown

in

gross

adds

and

also

explains

the

reduction

in

the

Company’s

capex

requirements

(as

detailed

on

page

35).

(2) Percentage of disconnections for the base of households connected. Calculated as the number of disconnected households divided by the number of households

connected in the beginning of the period

33

Discounted Cash Flow

Operational Projections Summary (Cont.)

Number

of

Homes

Passed

(1)

and

Coverage

(2)

(in thousands of households and %)

CAGR 2012E-2021E: 7.1%

Total

Coaxial

Cable

Network

Extension

(3)

(in thousand km)

CAGR 2012E-2021E: 6.3%

52

58

64

79

94

108

110

111

112

112

111

111

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

11,762

13,424

15,925

19,825

23,425

27,025

27,325

27,725

28,125

28,525

28,925

29,425

28.1%

31.8%

37.1%

45.6%

53.0%

60.3%

60.0%

60.0%

60.0%

59.9%

59.9%

60.0%

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

Notes:

(3)

In

addition

to

the

network

of

coaxial

cables,

which

generally

is

the

network

that

effectively

reaches

the

households,

NET’s

hybrid

network

infrastructure

also

includes

approximately

17,000

kilometers of optical fiber cables (mainly used for connecting central stations to intermediary network hubs). The sum of the extension of NET’s coaxial network and optical fiber network totals

approximately

75,000

km.

The

expansion

of

the

network

of

coaxial

cables

represents

the

main

investment

needed

to

expand

the

base

of

households

reached

by

the

Company.

Notes:

(1) Number of households reached by the total network

(2) Network coverage over the total number of households. Calculated as the total number of homes passed divided by the total number of urban class A, B and C households (Company’s target market). The target of approximately 60%

coverage of urban households of income classes A, B and C in the cities (markets) where the Company operates or plans to operate is the Company’s management’s  estimate of the level at which point additional investments to expand

coverage become riskier from a perspective of expected returns. Therefore, NET’s management does not intend to invest in the expansion of the network once this goal is achieved.

34

Discounted Cash Flow

Financial Projections Summary

Net Revenues

(in R$ millions)

CAGR 2012E-2021E: 14.2%

EBITDA and EBITDA Margin

(1)

(in R$ millions and %)

CAGR 2012E-2021E: 13.3%

5,406

6,696

8,098

9,955

12,180

14,575

16,829

18,543

20,451

22,442

24,520

26,685

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

1,559

1,942

2,399

2,748

3,340

3,977

4,944

5,364

5,876

6,375

6,884

7,385

28.8%

29.0%

29.6%

27.6%

27.4%

27.3%

29.4%

28.9%

28.7%

28.4%

28.1%

27.7%

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

Note:

(1) The Company’s EBITDA margin is expected to decrease between 2012 and 2013 given the rapid expansion of its coverage area, as shown on page 33. NET will need to expand its divisions responsible for prospecting new customers and

support (such as field service, call center, etc). Additionally, NET expects to need constantly updated programming in order to capture new customers, resulting in additional and increasing costs. These additional costs are only partially offset by

the dilution of other fixed costs. The combination of these effects with a decreasing ARPU over the same period (as shown on page 31) results in the expected decrease of the EBITDA margin.

35

Discounted Cash Flow

Financial Projections Summary (Cont.)

Net Income and Net Margin

(in R$ millions and %)

CAGR 2012E-2021E: 12.1%

CAPEX

and

CAPEX

as

%

of

Net

Revenues

(1)

(in R$ millions and %)

CAGR 2012E-2021E: 7.0%

Note:

(1) The increase in Capex as a percentage of Net Revenues projected for the years 2012 to 2015 is explained by the Company’s coverage expansion plan, aiming to accelerate the capture of new customers, as detailed on page 33.

307

373

793

715

746

845

1,345

1,449

1,634

1,823

2,024

2,215

5.7%

5.6%

9.8%

7.2%

6.1%

5.8%

8.0%

7.8%

8.0%

8.1%

8.3%

8.3%

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

1,250

1,660

2,245

3,506

4,025

4,417

3,206

3,203

3,415

3,633

3,856

4,121

23.1%

24.8%

27.7%

35.2%

33.1%

30.3%

19.1%

17.3%

16.7%

16.2%

15.7%

15.4%

2010A

2011A

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

36

Discounted Cash Flow

Valuation

Notes:

(1)

Corresponds to the non-cash amount considered in costs due to the anticipated acquisition of capacity

(2)

Considers the cash flow for the months from April to December 2012 (75% of the total cash flow projected for this year)

(3)

Considers the mid-year convention of the cash flows for  all the years

(4)

Considers WACC of 9.71% in nominal US$

(5)

Exchange rate as of March 31, 2012 (Source: Brazilian Central Bank)

(6)

As of March 31, 2012

(7)

Provision for contingencies including taxes payable, less judicial deposits as of March 31, 2012

(8)

Considers use of tax losses up to 30% of the tax base for each period, discounted at the same cost of capital (WACC). Initial tax base of R$ 2.8 billion for income tax (IR) and R$ 3.6 billion for Social Contribution (CSLL)

(9)

Total number of outstanding common and preferred shares (excluding treasury shares as of March 31, 2012). For the purposes of this Valuation Report, differences between the economic value of the common and

preferred shares were not considered

Price Range per Share

(Price per share in R$)

R$ 27.12

R$ 28.34

R$ 25.89

-4.5%

+4.5%

Price range  of the valuation by DCF

Free Cash Flow to Firm (FCFF)

unit

2012E

2013E

2014E

2015E

2016E

2017E

2018E

2019E

2020E

2021E

Perpetuity

EBITDA

R$ mn

2,399

2,748

3,340

3,977

4,944

5,364

5,876

6,375

6,884

7,385

7,385

(-) Depreciation & Amortization

R$ mn

(1,042)

(1,381)

(1,724)

(2,019)

(2,153)

(2,473)

(2,815)

(3,178)

(3,563)

(3,975)

(3,975)

(=) EBIT

R$ mn

1,357

1,366

1,616

1,959

2,791

2,891

3,061

3,196

3,321

3,410

3,410

(-) Taxes over EBIT

R$ mn

(461)

(465)

(549)

(666)

(949)

(983)

(1,041)

(1,087)

(1,129)

(1,159)

(1,159)

(+) Depreciation & Amortization

R$ mn

1,042

1,381

1,724

2,019

2,153

2,473

2,815

3,178

3,563

3,975

3,975

(+) Other non-cash items

(1)

R$ mn

79

168

166

-

-

-

-

-

-

-

-

(=) NOPLAT

R$ mn

2,016

2,451

2,956

3,311

3,995

4,381

4,835

5,288

5,755

6,225

6,225

(-) CAPEX

R$ mn

(2,245)

(3,506)

(4,025)

(4,417)

(3,206)

(3,203)

(3,415)

(3,633)

(3,856)

(4,121)

(3,975)

(+/-) Changes in Working Capital

R$ mn

(237)

(130)

(115)

(27)

(39)

79

69

79

87

98

-

(=) Free Cash Flow to Firm (FCFF)

R$ mn

(349)

(1,185)

(1,184)

(1,133)

751

1,258

1,489

1,733

1,985

2,202

2,250

(=)

Free

Cash

Flow

to

Firm

(FCFF)

(2)

US$ mn

(182)

(603)

(589)

(549)

354

578

667

756

844

912

932

Present Value of FCFF

(3,4)

US$ mn

(176)

(537)

(478)

(406)

239

355

374

386

393

387

Terminal Value Calculation

Cash Flow for Perpetuity

US$ mn

932

Growth (nominal terms)

%

2.2%

Present Value of Perpetuity

US$ mn

5,383

Firm Value, Equity Value and Price per Share

Present Value of FCFF

US$ mn

537

(+) Terminal Value

US$ mn

5,383

(=) Firm Value

US$ mn

5,919

(x)

Exchange

rate

(5)

R$/US$

1.82

(=) Firm Value

R$ mn

10,786

(-) Net Debt 1Q2012

(6)

R$ mn

(1,649)

(-) Net Contingencies 1Q2012

(7)

R$ mn

(457)

(+)

Present

Value

of

the

Tax

Benefit

from

Tax

Losses

(8)

R$ mn

620

(=) Equity Value

R$ mn

9,299

(/) Total Number of Shares

(9)

mn

343

(=) Price per Share

R$/share

27.12

37

(in R$ millions)

Provisions

566.2

(-) Escrow Deposits

(109.5)

(=) Net Contingencies

456.8

(in R$ millions)

Gross Debt

(1)

2,132.4

Short-term Gross Debt

308.9

Long-term Gross Debt

1,823.5

(-) Cash and Cash Equivalents

(483.5)

(=) Net Debt

1,648.9

Discounted Cash Flow

Rationale of the Calculation of Net Debt and Net Contingencies

Net Debt

(Consolidated Financial Statements as of March 31, 2012)

Net Contingencies

(Consolidated Financial Statements as of March 31, 2012)

Source: Net Serviços de Comunicação S.A. Limited Review Financial Statements

Note:

(1)

Includes loans, financing and debentures

Description of the Valuation Methodology

APPENDIX A

39

Structure of the Discounted Cash Flow Model

Free Cash Flow to Firm (FCFF) method preparation

EBITDA

(+/-)

changes in

working capital

(-)

CAPEX

(-)

taxes

Perpetuity of the

Unlevered Cash

Flow

(-) Net Debt

(-) Net Contingencies

(+) Present Value of the Tax Benefit from Tax Losses

(-)

cost of goods sold

(-)

selling expenses

(-)

other expenses

Present Value

of the Terminal

Value

Present Value

of the

Unlevered Cash

Flow

Firm Value

Equity Value

WACC

Unlevered Cash

Flow

EBITDA

Operating

Costs and

Expenses

Net Revenues

Deductions

Gross

Revenues

Operational assumptions

40

WACC Calculation

Cost of

Equity

(K

e

)

Cost of

Debt

(K

d

)

Market Risk

Premium (R

m

)

(2)

Relevered Beta

(4)

Capital

Structure

(6)

Equity = 75.0%

Debt = 25.0%

Country Risk

Premium

(CRP)

(3)

Risk-free

Rate

(R

f

)

(1)

Cost of Debt

(nominal

R$)

(5)

K

d

=

Kd

*

(1-

Marginal

Tax)

K

e

= R

f

+ (ß

* R

m

) + CRP

WACC

=

D

/

(D

+

E)

*

K

d

+

E

/

(D

+

E)

*

K

e

3.06%

6.62%

2.45%

0.882

11.35%

Marginal Tax

34.0%

4.78%

WACC

(nominal US$)

9.71%

Cost of Equity (K

e

)

(nominal US$)

Cost of Debt (K

d

)

(nominal US$)

11.44%

WACC

was

calculated

by

combining

the

cost

of

equity

(K

e

)

and

the

cost

of

debt

(K

d

)

estimated

for

the

Company,

considering

a

target

capital

structure

(6)

Notes:

(1)

Based on the average price of the last 1,080 trading days of the U.S. 10 Year Treasury Note (Source: Bloomberg as of May 25, 2012 – www.bloomberg.com) 

(2)

Long-horizon expected equity risk premium (historical) (Source:  2012 Ibbotson Report – corporate.morningstar.com) 

(3)

Based on the EMBI+ Brazil average of the same period utilized to calculate the Risk-free Rate, as per note (1) above (Source: IPEA Data as of May 25, 2012 –

www.ipeadata.gov.br) 

(4)

Based on the average of the betas of comparable companies, unlevered by each company’s capital structure and levered by NET’s capital structure. The following

companies were included in the calculation of the beta coefficient: Oi S.A., Telefonica Brasil, TIM Participações, Comcast Corporation, Direct TV, Dish Network

Corporation and America Movil (Source: Bloomberg as of May 25, 2012 – www.bloomberg.com). Additional details on page 41. 

(5)    NET’s estimated marginal cost of debt, corresponding to CDI + spread of 2.50%. Cost estimate based on the issuance of long-term debt by the Company, using

NTN-B 24 as a reference for the cost of sovereign debt, and adding a Company's corporate risk spread of 125-150 basis points.

(6)

Estimated capital structure sustainable in the long term. The capital structure considered has a higher debt component when compared to the Company’s current

structure (Equity: 84.7% / Debt: 15.3%, calculated based on the price per share as of May 25, 2012 and Balance Sheet 1Q12), but was not considered inconsistent

with current management’s practice since it is expected that this level can be reached without the risk of compromising the Company's current rating. 

41

Comparable Companies for the Relevered Beta Calculation

Company

D / E (1)

Tax Rate

Leverage Factor

Average Beta(2)

Unlevered Beta

Oi S.A.

117.6%

34.0%

177.6%

0.935

0.526

Telefonica Brasil

6.1%

34.0%

104.0%

0.533

0.512

TIM Participações

8.1%

34.0%

105.4%

0.659

0.625

Comcast Corp. Cl A

65.5%

40.0%

139.3%

1.049

0.753

DIRECTV

41.8%

40.0%

125.1%

0.952

0.761

DISH Network Corp. Cl A

37.9%

40.0%

122.8%

1.357

1.105

America Movil S.A.B. de C.V.

25.6%

30.0%

117.9%

0.915

0.776

Average - Unlevered Beta

0.723

Capital Structure

Equity / (Equity + Debt)

75.0%

Debt / (Equity + Debt)

25.0%

Debt / Equity

33.3%

Releverage Factor

1.22

Relevered Beta Calculation

Average - Unlevered Beta

0.723

(x) Leverage Factor

1.22

Relevered Beta

0.882

Relevered Beta Calculation

Notes:

(1)

Source: Company’s Financial Statements and FactSet (www.factset.com).

(2)

Bloomberg, as of May 25, 2012 (www.bloomberg.com). Calculated based on the average beta for the last 2 years for each of the companies

42

Constant Growth Model or Gordon’s Model

Constant Growth Model or Gordon’s Model was used for the calculation of the perpetuity

Perpetuity =

FCF(n) x (1+g)

WACC -

g

FCF(n):

Free cash flow projected for the last year

“g”:

Constant growth rate of the cash flows of the period post-projected

WACC:

Average cost of capital, weighted by the target capital structure

Glossary

APPENDIX B

44

Glossary

Terms and definitions used in this Valuation Report

ARPU:

average

revenue

per

user.

Beta:

index that measures the non-diversifiable risk of a stock. It is an index that measures the relationship between the return of

the stock and the market return. Thus, the risk premium will always be multiplied by this coefficient, requiring a higher premium for

the

higher

risk

variation

of

the

stock

in

relation

to

the

market

portfolio.

Capex:

capital expenditures.

CAGR:

compound

annual

growth

rate.

CAPM:

capital asset pricing model.

Churn:

Percentage of disconnections for the base of households connected. Calculated as the number of disconnected households

divided by the number of households connected in the beginning of the period.

DTH:

direct

to

home.

Corresponds

to

Television

and

Audio

Sign

Transmission

Service

via

Satellite

with

Subscription

EBIT:

earnings

before

interest

and

taxes.

EBITDA:

earnings before interest, taxes, depreciation and amortization.

FCFF:

free cash flow to firm.

HP:

homes passed. Corresponds to the number of households reached by the total network.

NOPLAT:

net operating profit less adjusted taxes

VWAP:

volume weighted average price.

WACC:

weighted average cost of capital.

Additional Statements and Information

APPENDIX C

46

Additional Statements and Information

This Valuation Report has been prepared by BTG Pactual, as requested by Embrapar, for the purpose of evaluating NET with respect to and exclusively for (i) the Change of Control TO,

under the terms of article 254-A of the Brazilian Corporate Law, of CVM Rule 361 and of item 8.1 of the Level II Standard of the BM&FBOVESPA; and (ii) the Level II Delisting TO, which

together with the Change of Control TO-are referred to herein as the “Unified Offer”.  The Unified Offer will be made by Embrapar, Embratel and GB, pursuant to the provisions of Law No.

6,385/76, of the Brazilian Corporate Law, the Company by-laws, the Level II Standard, and other applicable legislation and rules established by the CVM, CVM Rule 361, and as published

in the Material Fact regarding the Unified Offer by the Company dated March 6, 2012.

BTG Pactual emphasizes that its services did not include any advice whatsoever, including legal or accounting, and that it has not provided any legal, regulatory or tax services with respect

to this Valuation Report or the Unified Offer, and consequently the preparation of this Valuation Report does not include any opinion related to such services. 

The content of this Valuation Report is not, and shall not be, considered as a promise or guarantee with respect to the past or future, does not represent a recommendation to any member

of the management or stockholder of the Company or Embrapar, or of any of their controlled, controlling or affiliated companies, on how to vote or proceed with respect to any matter

related to the Unified Offer, does not represent any recommendation concerning the price of the Unified Offer, nor shall it be used to justify the voting right of any person regarding any

matter, and shall not be used for any purpose other than the strict context of the Unified Offer, without the previous and written authorization of BTG Pactual.

For the analysis and conclusions included in this Valuation Report, the following procedures, among others, were carried out: (i) the review of the Company’s audited financial statements

for the fiscal years ended December 31, 2009, 2010 and 2011 and unaudited financial statements with limited review by the Company's independent auditors for the three-month period

ended March 31, 2012; (ii) the review of consolidated earnings results reports (press releases) disclosed by the Company for the fiscal years ended December 31, 2009, 2010 and 2011

and the three-month period ended March 31, 2012; (iii) the review of and discussion with the Company’s management concerning financial, operational and management forecasts and

estimates provided by the Company for future years (“Projections”); (iv) the review, alongside the Company’s management, of the Company’s business and prospects; and (v) the analysis

of other public and non-public information, such as financial studies, analyses, Projections, research and financial, economic and market factors considered relevant and from trusted

sources (collectively the “Information”).  Unless expressly noted otherwise, as indicated in notes or specific references, all the Information included, considered, used or presented in this

Valuation Report are those presented by the Company to BTG Pactual or discussed between them.

47

Additional Statements and Information

(Cont.)

BTG Pactual assumes that the Projections reflect the best estimates currently available with respect to the future performance of the Company. This Valuation Report does not account for financial

or operational gains or losses that may occur after the conclusion of the Unified Offer.

BTG Pactual (i) assumed that the operational and financial forecasts and the Projections related to demand and market growth provided to BTG Pactual by the management of the Company were

reasonably

prepared

based

on

foundations

that

reflect

the

best

currently

available

estimates

and

the

Company’s

management’s

best

judgment

with

respect

to

the

future

financial

performance

of

the Company and demand and market growth; and (ii) understands that, since the delivery of the Information and through the date of this Valuation Report, the Company and its management are

not aware of any information that may materially affect the business, financial condition, assets, liabilities, business prospects, commercial transactions or the number of shares issued by the

Company,

nor

are

aware

of

any

other

significant

facts

that

could

alter

the

Company’s

future

performance,

the

Information

(or

make

it

incorrect

or

inaccurate

in

any

material

respects),

or

that

could

cause a material effect on this Valuation Report.

Also

in

preparing

this

Valuation

Report,

BTG

Pactual

has

assumed

and

relied

upon

the

accuracy,

content,

veracity,

completeness,

sufficiency

and

integrity

of

all

such

Information

provided,

obtained

or

discussed

with

the

Company

or

from

other

public

and

non

public

information,

in

all

material

respects.

BTG

Pactual

has

not

been

requested

to

carry

out,

and

has

not

carried

out,

(i)

any

independent

verification

of

any

Information

or

any

documentation

on

which

the

Information

is

based

that

was

publicly

available

or

that

has

been

provided

by

the

Company,

its

representatives

or

any

third parties for the preparation of this Valuation Report, and accordingly does not assume any responsibility for such Information, (ii) any technical audit of the Company’s operations, nor any

accounting, financial, legal, tax or any other audit of the Company or any third parties, (iii) an independent verification or valuation of any assets or liabilities (including any non-registered

contingency, obligation or financing, property or other assets) of the Company; (iv) an evaluation of the Company’s solvency, in accordance with any bankruptcy, insolvency or similar legislation; or

(v) any physical inspection of the properties, facilities or assets of the Company.

BTG Pactual expresses no opinion or representation, explicit or implicit, nor any guarantee as to the reliability of the presentation of the Information mentioned, nor assumes any responsibility for

the accuracy, content, veracity, completeness, sufficiency or integrity of all data and the Information on which this Valuation Report was based (including financial and operational forecasts

provided by the management of the Company or assumptions and estimates on which such forecasts were based).  BTG Pactual emphasizes that any mistakes, changes or modifications to such

information could significantly affect the analysis and conclusions of BTG Pactual.

48

Additional Statements and Information (Cont.)

This Valuation Report has been prepared in accordance with the terms of the Brazilian Corporate Law, the Level II Standard and CVM Rule 361, but is not intended to be the sole basis for the

evaluation of the Company and, therefore, this Valuation Report does not comprise all the necessary information needed for such purpose, and, consequently, does not represent nor constitute a

proposal, solicitation, suggestion or recommendation by BTG Pactual for the approval or not of the Unified Offer.  The decision with respect to the approval or not of the Unified Offer is entirely the

responsibility of the shareholders of the Company.

The sums of the individual amounts presented in this Valuation Report may differ from the sums actually presented due to rounding.  Our work considered the relevance of each item, and therefore

assets, liabilities, rights and obligations of secondary importance were not the subject of detailed analysis.

This Valuation Report was prepared for exclusive use within the context of the Unified Offer, in accordance with the terms of the Brazilian Corporate Law and CVM Rule 361, and fulfills their

requirements

and

provisions,

and

should

not

be

used

for

any

other

purpose,

including,

but

not

limited

to,

for

the

purposes

of

articles

8th,

caput,

45,

227,

§2°,

228,

§2°,

229,

§5°,

252,

§1°

and

264

of

the

Brazilian Corporate Law and of CVM Rule No. 319, dated as of December 3, 1999, as amended.  Furthermore, this Valuation Report is not and should not be used as (i) an opinion as to the

adequacy (fairness opinion) of the Unified Offer; (ii) a recommendation regarding any aspects of the Unified Offer; (iii) a valuation report issued for any purposes other than those provided for in CVM

Rule 361 and, if the Unified Offer is registered with the U.S. Securities and Exchange Commission (“SEC”) or disclosed in the United States of America in accordance with the rules and

regulations

of

the

SEC,

for

those

provided

for

in

the

applicable

laws

and

regulations

of

the

United

States

of

America;

or

(iv)

an

opinion

on

the

adequacy

or

a

determination

of

a

fair

price

for

the

Unified

Offer.

This

Valuation

Report

has

not

been

compiled

or

created

for

the

purposes

of

complying

with

any

legal

provision

in

Brazil

or

abroad,

except

for

those

applicable

to

the

Unified

Offer.

This Valuation Report has been produced pursuant to the market, economic and other conditions available at the time of its preparation, and the conclusions presented are subject to variations due

to several factors over which BTG Pactual exerts no control.  This Valuation Report also applied the discounted cash flow methodology, in which were used parameters and financial variables

disclosed by the Brazilian Central Bank that may substantially differ from actual future economic conditions.  Furthermore, the discounted cash flow methodology does not anticipate changes in the

internal

and

external

environment

in

which

the

Company

operates,

except

for

those

expressly

set

out

in

this

Valuation

Report.

Thus,

considering

that

the

analysis

and

the

amounts

are

based

on

forecasts of future results informed by the management of the Company, they do not necessarily indicate the future financial results by the Company, which may be more or less favorable, in whole

or in part, than those used in the analysis.  Moreover, considering that such analyses are intrinsically subject to uncertainties and based on a variety of events and factors that are out of the control of

the Company and of BTG Pactual, BTG Pactual shall not be responsible in any manner should the future results of the Company differ from those presented in this Valuation Report.  The future

results of the Company may also be affected by market and economic conditions.

49

Additional Statements and Information (Cont.)

This Valuation Report is the result of a complex financial analysis and involved subjective judgments and several definitions regarding the most appropriate analysis methods, as well as the

applicability of such methods to specific circumstances. In order to reach the conclusion presented herein, special importance was not attributed to certain factors here considered, but, rather, a

qualitative reasoning was carried out, regarding the factors and analysis applied to the specific circumstances of the Company. The final conclusion reached results from all the analysis that was

performed, considered as a whole, and not based on, or related to, the analysis factors considered on an isolated basis. The estimates comprised in this Valuation Report and the evaluation

resulting from any specific analysis are not necessarily indicative of the real amounts or results or future values, which may be significantly more or less favorable in relation to those suggested by

this analysis. We do not express any opinion about the values at which the shares related to the Unified Offer could trade in the capital markets at any time.

Analysis reports of companies and segments that were prepared by other companies, even by the companies themselves, may treat analysis factors in a different way compared to the approach

of this evaluation, and, consequently, may present results significantly different.

This Valuation Report seeks to indicate only the value range for the shares issued by the Company under the Unified Offer during the base dates used for each methodology, pursuant to the

terms of CVM Rule 361, and does not evaluate any other aspect or implication of the Unified Offer.  This Valuation Report does not concern the merits of the Unified Offer compared to other

commercial strategies that may be available to the Company or its shareholders, nor does it concern the eventual commercial decision to consummate the Unified Offer.  The Company’s

shareholders should seek the opinion of their respective financial advisors for such purpose. The results presented herein refer specifically to the Unified Offer and are not applicable to any other

matter or transaction, present or future, related to the Company, to the economic group of which it is a part or the segments in which they operate.

This Valuation Report includes assumptions and estimates about the future (“Assumptions and Estimates”), which may be identified by expressions such as “anticipates”, “intends”, “plans”,

“seeks”, “believes”, “estimates”, “expects” and similar references to future periods, and by the inclusion of forecasts.  Assumptions and Estimates are based on the current expectations

considering the industry of the Company, its financial condition, the economy and other future variables. Because they are related to the future, Assumptions and Estimates are subject to

uncertainties, risks and contingencies that are difficult to predict. The current results of the Company may differ materially from those contemplated by the Assumptions and Estimates. Past

results are not indicative of future performance, therefore it is not possible to adopt any of the Assumptions and Estimates as historical fact or assurance of future performance. Important

variables that may cause notable distinctions to the Assumptions and Estimates include regional, national or global conditions regarding the economy, business, competition, the market, and

regulation, including, among others, competition within the telecommunications industry, regulatory or environmental risks, risk of liability from former owners of the Company’s real estate

properties, operational risks including industrial accidents and disasters, managing foreign transactions, technological changes and capacity to acquire or renew permits and approvals.

50

Additional Statements and Information (Cont.)

Banco BTG Pactual S.A.

This Valuation Report is based on the Information that was made available up to the date hereof, and the views expressed herein are subject to change based upon a number of factors, including

market, economic and other conditions, as well as the business and prospects of the Company. BTG Pactual undertook and adopted as a premise that governmental and regulatory licenses and

approvals as well as any waivers, amendments and renegotiations of contracts required for the Unified Offer were or will be obtained, as well as that all the authorizations and approvals

necessary for the consummation of the transaction proposed in this Valuation Report will be obtained, and that no changes or relevant limitations, restrictions or conditions will be necessary to

obtain the said authorizations and approvals.

The information herein regarding the accounting and financial position of the Company, as well as about the market, are those that were available as of May 25, 2012, considered as the base date

of this Valuation Report. Any change in these positions may affect the results of this Valuation Report.  BTG Pactual does not undertake any obligation to review, amend or update this Valuation

Report,

in

whole

or

in

part,

after

the

date

hereof,

or

to

advise

of

any

third

party

facts

or

matters

of

which

BTG

Pactual

may

become

aware

that

would

impact

the

content

of

this

Valuation

Report

after the date hereof, subject to the terms of item II of paragraph 9, of article 8th of CVM Rule 361.

Embrapar agreed to reimburse BTG Pactual for any expenses incurred and to indemnify BTG Pactual, and any individuals indicated by BTG Pactual, for certain liabilities and expenses that may

result as a consequence of this arrangement. BTG Pactual shall receive a payment for the preparation of this Valuation Report, regardless of the conclusion of the Unified Offer or of the

conclusions herein contained. The amount to be paid to BTG Pactual for the preparation of this Valuation Report is described in Item “Representations and Qualifications of the Appraiser”, located

on page 7 of this Valuation Report, and will be paid by Embrapar.

This Valuation Report is the intellectual property of BTG Pactual and cannot be circulated, reproduced, published or in any other way used, nor can it be filed, included in or referred to, in whole or

in

part,

in

any

document

without

the

prior

consent

of

BTG

Pactual,

provided,

however,

that

its

use

shall

be

permitted

within

the

strict

conditions

of

CVM

Rule

361,

the

Brazilian

Corporate

Law

and,

if

the

Unified

Offer

is

registered

with

the

SEC

or

disclosed

in

the

United

States

of

America

in

accordance

with

the

rules

of

the

SEC

and

the

applicable

laws

and

regulations

of

the

United

States

of

America.  If required to be disclosed by applicable law, these materials may only be disclosed if reproduced in full, and any description of or reference to BTG Pactual must be in a form reasonably

acceptable to BTG Pactual.

Fernando Cerri

Daniel Anger

Bruno Amaral

Marco Gonçalves

Fernando Kalil

[by: /s/ Marco Gonçalves]

[by: /s/ Bruno Amaral]

[by: /s/ Daniel Anger]

[by: /s/ Fernando Kalil]

[by: /s/ Fernando Cerri]