Subject to the right of a dissenting shareholder to seek redemption upon a decision made at a shareholders' meeting by shareholders representing over 50% of the voting shares, our ordinary and preferred shares are not redeemable:

  · to change the preference of our preferred shares or to create a class of shares having priority or preference over our preferred shares;

· to reduce our mandatory distribution of dividends;

· to change our corporate purposes;

· to transfer all of our Embratel shares to another company in order to make Embratel a wholly-owned subsidiary of that company;

· to approve the acquisition of another company, the price of which exceeds certain limits set forth in the Brazilian Corporate Law; and

· to merge or consolidate with another company, if certain liquidity standards provided in the Brazilian Corporate Law are not met.

The right to redemption lapses 30 days after either:

· publication of the minutes of the relevant shareholders' meeting approving the increase in capital; or

· the publication of the minutes of our preferred shareholders' special meeting, in case the capital increase resolution is dependant upon the approval by a majority vote of our preferred shareholders.

We would be entitled to reconsider any action giving rise to redemption rights within 10 days following the expiration of those rights if the redemption of shares of dissenting shareholders would jeopardize our financial stability.

Unless otherwise later differently provided in our by-laws, our shares are redeemable at their book value, determined on the basis of the last annual balance sheet approved by the shareholders. If the shareholders' meeting giving rise to redemption rights occur more than 60 days after the date of the last annual balance sheet, a shareholder may demand its shares to be valued on the basis of a new balance sheet, which shall be dated no more than 60 days earlier of such shareholders' meeting.