(“Telesp”) to render an economic financial valuation (“Valuation”) of Navytree Participações Ltda. (“Navytree”) and other Target-Assets (as defined below), and assuming the conclusion of the Restructuring subject to the terms and conditions established bellow, which will follow the contractual instrument of Navytree acquisition (the “Operation”) to be submitted to Telesp’s General Meeting (the “Meeting”) in compliance with the section 256 and other applicable provisions of Law 6.404/76, as amended (“LSA”).

Telesp informed to ABN AMRO that a corporate restructuring (the “Restructuring”) will be implemented, comprehending the companies Navytree, Lightree Participações Ltda., Lemontree Representação de Assinaturas S.A., Datalistas S.A., Comercial Cabo TV São Paulo Ltda., TVA Sul Paraná S.A. (The “Companies of Restructuring”), by which Navytree will become the owner, directly or by means of the Companies of Restructuring, as the case may be, of (i) 100% of the equity capital of a Multichannel Multipoint Distribution Service (MMDS) and of Cabo e Serviços de Comunicação Multimídia (SCM) services company to supply broadband services inside and outside the State of São Paulo (“MMDS Operation”); (ii) 91.50% of the equity capital of a cable television services company outside the State of São Paulo (“Cabo Sul Operation”); and (iii) 86.65% of the equity capital of a cable television services company at the State of São Paulo (“Cabo SP Operation”). Telesp furnished to ABN AMRO the corporate structure of Navytree resulting from the Restructuring, which forms the table that appears on page 22 of the Valuation hereto.

As the intended Restructuring and for the purposes of the Valuation, Telesp instructed ABN AMRO to proceed to the valuation of the Companies of Restructuring, as well as the MMDS Operation, the Cabo Sul Operation and the Cabo SP Operation, consistent of the assets and liabilities associated to MMDS, cable and broadband, owned by Abril Comunicações S.A., TVA Sistema de Televisão S.A., Comercial Cabo TV São Paulo Ltda., TVA Radioenlaces Ltda. and TVA Sul Paraná Ltda. (“Grupo Abril”), that in connection with the Restructuring must be owned by the Companies of Restructuring (the Companies of Restructuring, together with the MMDS Operation, Cabo Sul Operation and Cabo SP Operation, hereinafter, the “Target-Assets”).

The Target-Assets were evaluated as an independent, stand-alone operation, which means that it does not reflect any merge, incorporation or any other type of combination of the Target-Assets and Telesp operations, and, therefore, the Valuation result doesn’t include benefits or loss of operational, fiscal or of other nature, nor contemplate eventual synergies that could happen from such combination, or expenses associated to it or arisen from it, or that possibly could be generated from its accomplishment. In addition, ABN AMRO, as requested by Telesp, shows, separately, specific operational potential synergies arisen from the Operation, on the perspective of Telesp, and indicated by Telesp to ABN AMRO notoriously relative to the broadband and voice band clients base reliability (“Specific Operational Synergies”).

The Valuation and other integrant parts of this report (“Report”) are intellectual property of ABN AMRO and were prepared by ABN AMRO exclusively and for use and benefit of Telesp’s management and to follow the Operation agreement, which will be submitted to the Meeting. Moreover, the Valuation is a confidential document, for internal use of Telesp’s management and other companies of Grupo Telefonica, for the exclusive purposes of the Operation, in compliance with section 256 and other applicable provisions of LSA, and it can not be disclosed by Telesp to third parties or distributed, copied or used for any other purpose, without ABN AMRO’s prior written consent. The Valuation will be disclosed by Telesp exclusively under the event of meeting legal or regulatory requirements applicable to the Company or to concerned authorities regulation, since that: (i) ABN AMRO be previously communicated about the abovementioned disclosure; and (ii) the Valuation be shown in its entirely for the Operation purposes and exclusively in order to adhere to legal or regulatory requirements, of concerned authorities.

ABN AMRO did not make and does not make any recommendation with respect to the structure of the Operation, the cost, the appreciation of the Specific Operational Synergies, the contractual terms or any other aspects associated to the Operation, nor participated of the negotiation of the Operation or the Restructuring.

This Report does not constitute a fairness opinion or a recommendation, expressly or implicit, in respect of the suitability and opportunity, or in respect of the strategic decision of putting into effect the Operation or its commercial aspects, which are exclusive competency of Telesp’s management and its stockholders. This Report does not constitute any recommendation to Telesp’s stockholders as what they should vote in relation to the Operation.

The use of the values determined in the Valuation or other integrant parts of this Report for any other valuation relating to the Target-Assets for any other purposes is Telesp’s sole and exclusive responsibility.

ABN AMRO does not make, nor will make, expressly or implicitly, any statement or warranty in relation to the Supplied Information by Telesp, as defined below, including studies, projections or previsions of Target- Assets, or assumptions and estimates in which these projections and previsions were based, used for the preparation of the Valuation, the exhibition of the Specific Operational Synergies or any other integrant part of this Report, neither assume any responsibility or duty to indemnify regarding the accuracy, veracity, integrity, consistency, sufficiency and precision of the Supplied Information, which are under sole and exclusive Telesp’s responsibility.

For the purposes of the Valuation, the Target-Assets were evaluated by discounted cash flow methodology. The horizon of projection comprised the period from September 2006 to December 2016, in accordance to the business plans prepared and supplied by Telesp for the Target-Assets (“Business Plans”). Telesp informed not having altered its view concerning the future performance of Target-Assets since the preparation of the Business Plans until the closing date of this Report

The Valuation took into consideration the total value of the net debt existent on September 30th (“Net Debt”) on the Companies of Restructuring, as presented by Grupo Abril to Telesp and presented to ABN AMRO. To determinate the stockholder capital value (“Equity Value”) of Navytree, the Net Debt was discounted from the total economic financial value of the Target-Assets raised according to item 12 above (“Enterprise Value”)

For the purposes of determining the Net Debt, Grupo Abril considered (i) any credit settled by good and services supplier, with interests incidence and charge of other financial burdens, or any parceled buying or other similar adjustment regarding to goods or services (except commercial accounts arising from goods or services generally acquired or took on account and payable in the normal course of business); (ii) short, medium and long term outstanding debts, including bank loans, overdrafts and any debentures, bonds or bills, including all due and unpaid interests; (iii) amounts raised under any other transaction that might have commercial effect of a loan or money raising and (iv) any financial leasing operation, discounted the cash value. For the purposes of determining the Net Debt, “cash” means the total value of: (a) bank account available in cash balance; and (b) financial applications in instruments with liquidity on short term, considering such value as free of any charges and totally free of any warranty

ABN AMRO evaluation work, arising from its expertise and experience, used as basis, among other things, the following information or documents made available by Telesp to ABN AMRO until August 6th, 2007 (in concert, the “Supplied Information”):

In preparing the Valuation, ABN AMRO reviewed other studies and financial and market analysis and took into consideration other aspects it deemed to be necessary, including the judgment of the economic, monetary, and market conditions

ABN AMRO presumes and relies on the accuracy, veracity, integrity, consistency, sufficiency and precision of all Supplied Information, in writing or discussed with Telesp’s representatives who were referred by Telesp (“Designated Representatives”), as well as any other publicly available information, and does not assume any responsibility by the accuracy, veracity, integrity, consistency, sufficiency and precision of the Supplied Information, nor regarding the form in which they were elaborated. ABN AMRO assumes that all the Supplied Information to ABN AMRO or in any way supplied by Telesp or discussed by the Designated Representatives with ABN AMRO are complete, correct and sufficient for the purpose of the Valuation, and that all the financial projections provided to ABN AMRO, or at any way , available or discussed with ABN AMRO were prepared on a reasonable way and reflect the best estimates and valuations at the time they were available, and, since its delivery until the present moment, there was no material change in business, in financial situation, on assets, liabilities, on business perspectives, business transactions or in the numbers of shares of the Companies of Restructuring, except as contemplated in the restructured proposal presented by Telesp and discussed with the Designated Representatives, as well as any significant event that could alter the Supplied Information, or made them incorrect or imprecise in any material aspects or that could cause a material effect in the Valuation or in any integrant part of the Report. ABN AMRO assumed the implementation of the Restructuring on the terms and conditions provided by Telesp, and does not assume any responsibility due to implementation or results, once implemented

ABN AMRO did not assume any responsibility of conducting (i) any appraisal of the assets and liabilities, accounted or not (contingent or not), of the Target-Assets; (ii) any revision or audit of the financial statements and the documents that based the Net Debt; (iii) any technical audit of the operations of the Target -Assets; (iv) any valuation of the solvency or the fair value of the Target-Assets, according to any state or federal legislation related to bankruptcy, solvency or similar issues; (v) any physical inspection of the properties, installations or assets of the Target -Assets

ABN AMRO adopts the assumption that all the financial projections provided by Telesp or discussed by ABN AMRO with the Designated Representatives were prepared on a reasonable way and reflect the best estimates and valuations at the time they were available and the best judgment of Telesp’s management as the expected future financial performance. ABN AMRO does not assume any responsibility related to the Restructuring’s results, included, but not limited to, in case of the contents and/or the results of the Supplied Information, including the Net Debt of the Companies of Restructuring, after the Restructuring, diverges from the Supplied Information

Estimates and projections presented in the Valuation are intrinsically subject to uncertainties and various events or factors that are beyond the control of Telesp, the Target-Assets and ABN AMRO, especially those whose occurrence depends upon future or uncertain events. Therefore, ABN AMRO does not assume any responsibility or indemnity obligation if the future results differ from the referred estimates and projections, and does not make any declaration or warranty with respect to such estimates and projections

The preparation of economic/financial valuations is a complex process that involves subjective judgment and is not susceptible to a partial analysis or brief description. ABN AMRO did not attribute specific importance to certain factors considered in the Valuation, but, on the contrary, undertook a qualitative analysis of the importance and relevance of all factors considered herein. As such, the Valuation must be analyzed as a whole, and the analysis of selected parts, summaries or specific aspects of the Valuation without knowledge and analysis of the Valuation in its entirety could result in an incomplete or incorrect understanding of the analysis undertaken by ABN AMRO and of the conclusions contained in the Valuation

Other valuations of companies and sectors prepared by ABN AMRO could treat market assumptions in a different way than was framed in this Valuation; the research departments and other departments of ABN

AMRO and its affiliated companies may use in their analyses, reports and publications, estimates, projections and different methodologies than those used in this Valuation, as well as such analyses, reports and publications may contain different conclusions from those set out in this Valuation

The description of the Specific Operational Synergies and the determination of its present value were carried out, as requested by Telesp, with basis on internal studies from Telesp’s management, which were available by Telesp to ABN AMRO. ABN AMRO conducted discussions sole and exclusively with the Designated Representatives with respect to the studies and analysis of the Specific Operational Synergies, and was informed that such studies and analysis reflect the best estimates and evaluations of Telesp’s management on this date, which are under sole Telesp’s responsibility. ABN AMRO does not assume any responsibility by the accuracy, veracity, integrity, consistency, sufficiency and precision of all information and projections that were provided or at any way available in order to present the Specific Operational Synergies. Estimates and projections related to the Specific Operational Synergies that were provided to ABN AMRO, or with ABN

ABN AMRO has provided, directly or through its affiliated companies, certain financial and investment banking services to Telesp and its controlling, controlled and affiliate companies, for which it received remuneration, continues to provide these services and could, at any time, provide them again. ABN AMRO, directly or through its affiliated companies, is or could become a creditor of Telesp and its controlling, controlled and affiliate companies in certain financial operations

In the normal course of its activities, ABN AMRO could, directly or through its affiliated companies, trade in securities of Telesp and its controlling, controlled and affiliate companies, on its own behalf or on behalf of its clients and, consequently, could , at any time, retain buying or selling positions with respect to such securities

However, ABN AMRO declares not having any conflict of interest that could diminish the autonomy necessary got the performance of its functions with respect to the preparation of the Valuation

ABN AMRO will be paid by Telesp for the services related to the preparation of the Valuation, irrespectively of the conclusion of the Operation. Telesp has agreed to indemnify ABN AMRO for certain obligations and liabilities that may arise from the performance of the services that resulted in the present Report

Date:

By:

/s/ Daniel de Andrade Gomes

Name:

Daniel de Andrade Gomes

Title:

Investor Relations Director