I)

Commitments The Company has several contracts for rental of street lighting posts, underground ducts and offices renewed automatically each year for varying terms. The contracts may be terminated at the request of either party, subject to notice periods ranging from one to two months and rescission penalties. These expenses amounted to R$102,262 in 2009 (R$74,527 in 2008). There are also commitments, through April 15, 2010, with several suppliers for the purchase of materials and equipment used for subscriber installation in the amount of R$28,478.

II)

Provisions The Company and its subsidiaries are involved in legal and administrative processes before several courts and governmental agencies arising during the normal course of operations, involving tax, labor, civil and other legal matters. These cases involve tax demands, compensation claims, requirements for contract review and other actions for which the amounts claimed do not reflect the final expected settlement value. Management, based on information received from its legal advisors, pending legal processes and prior experience has recorded a provision for an amount that is believed to be sufficient to cover probable losses for the ongoing lawsuits as shown below:

	Labor	Civil	Tax	Social Security	Total
Balances at January 1st, 2008	41,143	30,443	595,134	6,279	672,999
Additions	24,814	12,829	51,337	-	88,980
Currency adjustments	720	260	29,941	1,183	32,104
Payments and reversals	(19,973)	(8,563)	(69,139)	(473)	(98,148)
Balances at December 31, 2008	46,704	34,969	607,273	6,989	695,935
Additions	18,721	23,858	65,466	-	108,045
Additions related to business combination	290	25	17,721	-	18,036
Currency adjustments	1,018	373	16,370	276	18,037
Payments and reversals	(13,157)	(13,190)	(202,025)	(6,318)	(234,690)
Balances at December 31, 2009	53,576	46,035	504,805	947	605,363

a)	Labor provisions Labor claims involving the Company and its subsidiaries comprise 1,407 lawsuits, mostly arising from employees and third party complaints. The main claims are for subsidiary liability and dangerous work pay. The Company made judicial deposits in the amount of R$9,409 on December 31, 2009 (R$9,156 on December 31, 2008 and R$10,965 on January 1st, 2008) in relation to labor cases.
b)	Civil provisions Civil claims relate mainly to service contract terminations, contract reviews, improper collection and negative credit reports, advertising disputes, channel availability, occupational accidents (own employees or outsourcers), accidents involving third parties other than staff or service providers and actions objecting to certain items in the standard contract adopted by operators, in particular in relation to the increase in monthly fees in April 1999. The plea in the civil proceedings mainly relate to indemnifications for moral and material damages sought by subscribers, except for actions relating to lighting post rentals, in which the Company is requesting to change the monthly rent amounts. For these cases, the Company has recorded provisions of R$40,430 (R$28,389 on December 31, 2008 and R$24,397 on January 1st, 2008).
c)	Tax and social security provisions Tax charges and contributions calculated and collected by the Company and its subsidiaries, and their income statements, tax and company records, are subject to examination by tax authorities for varying periods under applicable legislation. The following are the main tax and social security contingencies:
	a.	Value-added tax (ICMS – Imposto sobre Circulação de Mercadorias e Prestação de Serviços) Vivax and ESC 90 are objecting to the ICMS tax rate levied on access provider revenue and also on other revenues for which it has recorded a provision of R$112,443 on December 31, 2009 (R$86,438 on December 31, 2008 and R$63,093 on January 1st, 2008). The states in which the subsidiaries operate adhere to the ICMS No. 57/99 agreement, except for the State of Rio Grande do Sul, which taxes services at the rate of 12%. The Company’s subsidiaries based in Rio Grande do Sul are making judicial deposits and provisioning all amounts in excess of the 7.5% rate effective in 2000 and the 10% rate effective in 2001, and taking legal action against the rate of taxation of its services in this State.
	b.	IOF (Financial operations tax) The Company and its subsidiaries have centralized cash management and cash transfers made under a current intercompany account. Based on the opinion of its external legal counsel, management understands that such transfers are not subject to Financial Operations Tax (IOF) charges. However, in view of certain adverse court decisions as to the applicability of this law, management has recorded estimated liabilities of R$60,718 at December 31, 2009 (R$45,018 at December 31, 2008 and R$56,867 at January 1st, 2008).
	c.	Withholding tax (IRRF) on foreign currency bonds The Senior Notes and Floating Rate Notes (Notes) are not subject to Withholding Tax (IRRF) and Tax on Financial Operations (IOF), as long as the average term is not less than 96 months. As result of the fact that some noteholders exercised their rights in advance, the Company established a provision of R$143,281 (R$140,621 in 2008 and R$132,534 on January 1st, 2008) related to these taxes).
	d.	PIS (Programa de Integração Social) and Cofins (Contribuição para o Financiamento da Seguridade Social) – Social contribution taxes On September 30, 2009, the Company and its legal counsel assessed the progress of legal cases related to the increase in the calculation base for the PIS and the Cofins on income as provided in paragraph 1st of Article 3 of Law No. 9,718/98 and revoked by Law No. 11,941/09 on May 27, 2009. Based on the results of this assessment, revocation of the legal provision which created the increased calculation base and the existence of favorable case law related to this matter, the Company reversed its provision of R$124,269. The adjustment was recorded as a reduction in financial expenses.
III)	Contingent liabilities not provisioned In addition to the items mentioned above, there are other open cases which legal advisors assess as possible but not probable losses and so no provisions were recorded. The main cases in which risk of loss is rated as “possible” are summarized below:
	a.	Disallowed expenses and non-proven expenses Net São Paulo and Net Rio received demands from the tax authorities in the amount of R$88,660 on December 31, 2009 (R$82,605 on December 31, 2008 and R$63,734 on January 1st, 2008) for not having submitted documents supporting their registered expenses within the period determined by the tax inspectors).
	b.	Omission of revenues and discrepancy between amounts declared and booked In November 2008, the Federal Revenue of Brazil issued a tax demand against the Net Brasília subsidiary in the amount of R$19,092 (R$17,104 on December 31, 2008). The Federal Revenue’s main allegations relate to omission of revenues and discrepancies between amounts declared and recorded in the Company’s accounting records for certain months from 2004 through 2007. The Company’s defense is mainly based on the legality of the accounting procedures and legitimacy of exclusions from the calculation of taxable income.
IV)	Other Information Charge for extra outlet On April 22, 2009, Anatel passed Resolution No. 528, which prevents cable subscription TV operators from charging clients for more than one outlet per residence. The resolution only mentions that certain items such as installation, internal network, converter and signal decoder and other equipment repairs could be charged for by these operators. The Federal Court in Brasília had extended an injunction based on a case decided by ABTA (the Brazilian Pay Tv Association) in 2008, allowing the Company to charge for the additional connections. However, in 2009, the Federal Court in Brasília revoked the ABTA injunction related to additional connections. Nevertheless, management does not expect any substantial impact on Company operations, since the current sales model for the extra outlet is covered by the charge for the rental of the equipment and the installation fee as provided for in the resolution.