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|As filed with the Securities and Exchange Commission on June 30, 2009
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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2008

Commission file number: 000-51490

CONTAX PARTICIPAÇÕES S.A.

(Exact Name of Registrant as Specified in Its Charter)

|                                                |  |                                                
|----------------------------------------------- |  | -----------------------------------------------
|Contax Holding Company                          |  | The Federative Republic of Brazil              
|(Translation of Registrant's Name into English) |  | (Jurisdiction of Incorporation or Organization)

________________

Rua do Passeio 56, 16o andar (parte) 20021-290 Rio de Janeiro  RJ  Brazil 
(Address of principal executive offices)

Michel Neves Sarkis, Tel: :+55 21 3131-0009, ri@contax.com.br, Rua do Passeio 56, 16o andar 
CEP: 20021-290, Rio de Janeiro  RJ  Brazil

________________

Securities registered or to be registered pursuant to Section 12(b) of the Act: None 
Securities registered or to be registered pursuant to Section 12(g) of the Act:

|                                                         |  |                                          
|-------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                      |  | Name of Each Exchange on Which Registered
|Preferred Shares, without par value ("preferred shares") |  | BM&F Bovespa                             
|Common Shares, without par value ("common shares")       |  | BM&F Bovespa                             

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None 
________________

The number of outstanding shares of each of the Issuer's classes of capital, common or preferred stock, as of the close of the period covered by the annual report was:

10,031,914 preferred shares 5,824,772 common shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes  No

Indicate by
  check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
  reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No

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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check one):

Large accelerated filer 0           Non-accelerated filer 0           Accelerated filer 0

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

International Financial Reporting Standards as 
  issued by the International Accounting
    
  U.S. GAAP 0                       Standards Board 0                       Other 0

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 0 Item 18 0

If this is an annual report, indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act) Yes  No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court. Yes  No

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TABLE OF CONTENTS

|                                                                                      |  |     
|------------------------------------------------------------------------------------- |  | ----
|                                                                                      |  | Page
|                                                                                     
|PRESENTATION OF INFORMATION                                                           |  | 4   
|                                                                                     
|FORWARD-LOOKING INFORMATION                                                           |  | 6   
|                                                                                     
|PART I                                                                                |  | 6   
|Item 1. Identity of Directors, Senior Management and Advisers                         |  | 6   
|Item 2. Offer Statistics and Expected Timetable                                       |  | 6   
|Item 3. Key Information                                                               |  | 6   
|Item 4. Information on the Company                                                    |  | 21  
|Item 4A. Unresolved Staff Comments                                                    |  | 38  
|Item 5. Operating and Financial Review and Prospects                                  |  | 38  
|Item 6. Directors, Senior Management and Employees                                    |  | 47  
|Item 7. Major Shareholders and Related Party Transactions                             |  | 55  
|Item 8. Financial Information                                                         |  | 58  
|Item 9. The Offer and Listing                                                         |  | 61  
|Item 10. Additional Information                                                       |  | 66  
|Item 11. Quantitative and Qualitative Disclosures About Market Risk                   |  | 82  
|Item 12. Description of Securities Other Than Equity Securities                       |  | 82  
|                                                                                     
|PART II                                                                               |  | 82  
|Item 13. Defaults, Dividend Arrearages and Delinquencies                              |  | 82  
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds |  | 82  
|Item 15. Controls and Procedures                                                      |  | 82  
|Item 16A. Audit Committee Financial Expert                                            |  | 83  
|Item 16B. Code of Ethics                                                              |  | 84  
|Item 16C. Principal Accountant Fees and Services                                      |  | 84  
|Item 16D. Exemptions from the Listing Standards for Audit Committees                  |  | 84  
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |  | 84  
|                                                                                     
|PART III                                                                              |  | 85  
|Item 17. Financial Statements                                                         |  | 85  
|Item 18. Financial Statements                                                         |  | 85  
|Item 19. Exhibits                                                                     |  | 86  

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PRESENTATION OF INFORMATION

Contax Participações S.A is a corporation (sociedade por ações) incorporated under Brazilian corporate law. We operate pursuant to our by-laws, other legislation and regulations in
Brazil and, where applicable, local legislation. Our principal executive office is located at Rua do Passeio, 56, 16o andar (parte), 20021-290 Rio de Janeiro, RJ, Brazil, and the telephone number at that office is +55 21 3131-0009.

In this annual report on Form 20-F, except where otherwise specified, the "Company", "we", "us", "our" and "Contax" refer to Contax Participações S.A., its operational subsidiary, TNL Contax S.A. and its
indirect subsidiary, Todo BPO e Soluções em Tecnologia S.A. ("Todo"). References to Contax Holding refer only to Contax Participações S.A., and do not include TNL Contax S.A. References to TNL Contax refer only to TNL
Contax S.A., and do not include Contax Holding. References to the Company's businesses and operations are references to the businesses and operations of its direct and indirect subsidiaries TNL Contax S.A. and Todo BPO e Soluções em
Tecnologia S.A.

Our previous majority shareholder, Telemar Participações S.A., is referred to as Telemar Participações. On April 25, 2008, negotiations relating to the restructuring of the ownership
structure of Telemar Participações were concluded. One of the results was the approval of the partial spin-off of Telemar Participações, with the transfer of its shareholders' equity related to the shares issued by Contax
to a new company created especially for this purpose denominated CTX Participações S.A. ("CTX Participações").

Our two main clients are Telemar Norte Leste S.A., or Tmar, and its subsidiary TNL PCS S.A., or Oi, both of which are indirectly under common control with us and are jointly referred to as "Telemar". Recently, Telemar
adopted the commercial name "Oi" for its fixed line terminals, long-distance services, mobile services, as well as broadband and corporate voice and data service operations. The parent company of Tmar is Tele Norte Leste Participações
S.A., or TNL, which was our majority shareholder before our spin-off to the shareholders of TNL. See "Item 4. Information on the Company  Corporate Reorganization".

References to "U.S. dollars", "U.S.$", "USD$" or "$" are to the lawful currency of the United States and references to "real", "reais" or "R$" are to the lawful currency of Brazil. Any
discrepancies in tables between totals and sums of the amounts listed are due to rounding.

This annual report is presented in reais. On December 31, 2008, the commercial selling rate for reaiswas R$2.3370to U.S.$1.00. However, for the convenience of the reader and given the
dates of the financial statements, some real amounts presented throughout this document have been translated into U.S.$ at the commercial market rate for reaisin effect as of June 9, 2009, which was at R$1.9385 to U.S.$1.00.

References in this annual report to "preferred shares" and "common shares" are to the preferred shares and common shares, respectively, of Contax Holding and collectively referred to as the "shares". References to
"American Depositary Shares" or "ADSs" are to American Depositary Shares, each representing one-twentieth of a preferred share. The ADSs are evidenced by American Depositary Receipts, or ADRs.

References to "Consolidated Financial Statements" are to the consolidated financial statements of Contax as of December 31, 2008 and 2007 and for the two years in the period ended December 31, 2008.

Contax Holding became the parent company of TNL Contax in November 2004. This transaction has been accounted for, at historical cost, as a merger of entities under common control. In order to present the financial
statements in a format that is comparable from year to year and represents the business of Contax Holding and its subsidiary going forward, the financial information of these companies was combined for all periods presented. See "Item 4. Information
on the Company  Corporate Reorganization".

Our consolidated financial statements included in this annual report have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board
("IASB"). These are the Companys first consolidated financial statements prepared in accordance with IFRS. Our
previous Consolidated Financial Statements were prepared in conformity with generally accepted accounting principles in the United States, or U.S. GAAP. As for explanation to the transition from U.S. GAAP to IFRS in respect of the Companys
consolidated financial statements as of December 31, 2007, see note 30.6  to the consolidated financial statements included in item 18. In accordance with the provision of IFRS1 ("First-time Adoption of International Financial Reporting") the
Company presented balance sheets as of December 31, 2008 and 2007, and profit and loss for the years then ended in its first consolidated financial statements prepared in accordance with IFRS.

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On December 28, 2007, the Brazilian government enacted Law No. 11,638/07, which became effective on January 1, 2008, amended the Brazilian Corporation Law and changed certain accounting policies under Brazilian GAAP. In
December 2008, the CVM issued Deliberation 565/08, implementing these changes in accounting policies. In December 2008, the Brazilian government issued Provisional Measure No. 449, which instituted the transitory tax-payer regime (Regime
Tributário de TransiçãoRTT) for the determination of taxable net income of companies subject to the real profit tax regime as a result of the implementation of these changes in accounting policies and the
Brazilian Corporation Law. In May 2009, Provisional Measure No. 449 was codified in Law No. 11,941/09. Brazilian GAAP when applied to us differs in certain terms from IFRS as disclosed in Note 30 to the Companys financial statements as of
December 31, 2008.

We are subject to the informational requirements of the Securities Exchange Act of 1934, or the Exchange Act, as amended, and we file reports and other information with the SEC. However, as a foreign private issuer, we
are exempt from the proxy rules of Section 14 and the short-swing profit rules of Section 16 under the Exchange Act.

Certain terms are defined the first time they are used in this annual report.

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FORWARD-LOOKING INFORMATION

This annual report contains forward-looking statements. We may also make forward-looking statements in press releases, presentations and oral statements. Statements that are not statements of historical fact, including
statements about our management's beliefs and expectations are forward-looking statements. All forward-looking statements involve risks and uncertainties. Many of the forward-looking statements contained in this annual report are identified by the
use of forward-looking words such as "anticipate", "forecast", "believe", "could", "expect", "should", "plan", "estimate", "intend", "predict", "target" and "potential", among others. These statements appear in a number of places in this annual
report and include statements regarding our intent, belief or current expectations with respect to, among other things:

- the growth in the Brazilian outsourcing contact center sector; and
- the performance of the Brazilian economy in general.

Accordingly, our actual results of operations may be different from our current expectations, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as
of the date they are made. Factors that might affect such forward-looking statements include, among other things:

- our future operations performance;
- the demand for our services;
- competitive factors in the sector in which we compete;
- changes in the regulatory framework for our clients in the telecommunications, utilities, services and financial sectors in Brazil;
- changes in labor law and tax requirements;
- economic, business and political conditions in Brazil and in the international markets, including governmental changes and restrictions on the ability to transfer capital across borders; and
- the impact of fluctuations in the price of our shares.

PART I

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

Selected Financial Data

The selected financial data for the years ended December 31, 2008 and 2007 which are presented in the Table I below is derived from our consolidated financial statements prepared in accordance with IFRS and do not
include consolidated financial data in accordance with U.S. GAAP.

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The data presented for December 31, 2008 and the previous year have derived from our audited Consolidated Financial Statements. You should read this information together with such financial statements, including the
notes thereto and "Item 5. Operating and Financial Review and Prospects". Our complete Consolidated Financial Statements as of and for the years ended December 31, 2008 and 2007 are presented in Item 18 of this annual report, together with the audit
report of PricewaterhouseCoopers Auditores Independentes, Rio de Janeiro, Brazil, our independent registered public accounting firm.

|                                                                           |  |                                               |  |            
|-------------------------------------------------------------------------- |  | --------------------------------------------- |  | -----------
|Table I                                                                    |  | Year ended December 31,                      
|                                                                           |  |                                              
|IFRS DATA                                                                  |  | 2008                                          |  | 2007       
|                                                                           |  |                                               |  |            
|                                                                           |  | (in thousands ofreais, except per share data)
|Statement of Operations Data                                               |  |                                               |  |            
|Net operating revenue from services rendered                               |  | 1,774,728                                     |  | 1,365,815  
|Cost of services rendered                                                  |  | (1,507,603)                                   |  | (1,174,106)
|                                                                           |  |                                               |  |            
|Gross profit                                                               |  | 267,125                                       |  | 191,709    
|Operating expenses                                                         |  | (138,448)                                     |  | (105,880)  
|                                                                           |  |                                               |  |            
|Operating income                                                           |  | 128,677                                       |  | 85,829     
|Income from continuing operations                                          |  | 82,826                                        |  | 57,742     
|Loss from discontinued operations                                          |  |                                              |  |           
|                                                                           |  |                                               |  |            
|Net income (loss) and comprehensive income (loss) for the year             |  | 82,826                                        |  | 57,742     
|                                                                           |  |                                               |  |            
|                                                                           |  |                                               |  |            
|Earnings (Loss) per Share (inreais)                                        |  |                                               |  |            
|Income from continuing operations                                          |  |                                               |  |            
|Common shares  Basic (i)(ii)                                              |  | 3.89                                          |  | 3.51       
|                                                                          
|Common shares  Diluted (i)(ii)                                            |  | 3.89                                          |  | 3.36       
|Preferred shares  Basic and Diluted (i)(ii)                               |  | 6.22                                          |  | 3.51       
|Net income (loss)                                                          |  |                                               |  |            
|Common shares  Basic (i)(ii)                                              |  | 3.89                                          |  | 3.51       
|                                                                          
|Common shares  Diluted (i)(ii)                                            |  | 3.89                                          |  | 3.36       
|Preferred shares  Basic and Diluted (i)(ii)                               |  | 6.22                                          |  | 3.51       
|Weighted average common shares outstanding  Basic (i)(iii)                |  | 5,642,517                                     |  | 5,747,315  
|Weighted average common shares outstanding  Diluted (i)(iii)              |  | 5,642,517                                     |  | 6,005,323  
|Weighted average preferred shares outstanding  Basic and Diluted (i)(iii) |  | 9,780,208                                     |  | 10,704,436 
|Balance Sheet Data                                                         |  |                                               |  |            
|Property and equipment, net                                                |  | 307,700                                       |  | 274,559    
|Cash and cash equivalents                                                  |  | 355,928                                       |  | 240,310    
|Total assets                                                               |  | 954,435                                       |  | 737,600    
|                                                                           |  |                                               |  |            
|Current liabilities                                                        |  | 353,713                                       |  | 265,270    
|Long-term liabilities                                                      |  | 279,666                                       |  | 175,325    
|Shareholders' equity                                                       |  | 321,056                                       |  | 297,005    
|Total liabilities and shareholders' equity                                 |  | 954,435                                       |  | 737,600    
|                                                                           |  |                                               |  |            

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|                                                |  |                                               |  |          
|----------------------------------------------- |  | --------------------------------------------- |  | ---------
|Table I                                         |  | Year ended December 31,                      
|                                                |  |                                              
|IFRS DATA                                       |  | 2008                                          |  | 2007     
|                                                |  |                                               |  |          
|                                                |  | (in thousands ofreais, except per share data)
|Cash Flow Data                                  |  |                                               |  |          
|Operating activities (continuing operations)    |  | 254,776                                       |  | 203,176  
|Operating activities (discontinued operations)  |  |                                               |  |          
|Financing activities                            |  | 46,192                                        |  | (51,344) 
|Investing activities (continuing operations)    |  | (183,350)                                     |  | (142,821)
|Investing activities (discontinued  operations) |  |                                               |  |          

|                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|____________________
|(i)                  | Due to numerous expansion plans dating back to the Telemar days, Contax inherited several million "inactive" shareholders. In an effort to reduce unnecessary administrative and operating costs and to provide a low cost form of liquidity for
      these minority shareholders, Contax decided to do a reverse stock split on November 17, 2007. Since ADS are mainly concentrated in the hands of institutional investors in large quantities, the reverse stock split was not needed and therefore was not
    done for the ADSs.
|(ii)                 | Due to the reverse stock split carried out on November 17, 2007, earnings per share are shown based on groups of 20 shares for comparison amongst periods. In this case, the numbers of ADSs was considered grouped, for comparison, even though the
    grouping of ADSs did not occur.                                                                                                                                                                                                                                               
|(iii)                | Due to the reverse stock split carried out on November 17, 2007, the number of shares excluding treasury was divided by 20 for comparison amongst periods. In this case, the numbers of ADRs was considered grouped, for comparison, even though
    the grouping of ADRs did not occur.                                                                                                                                                                                                                                               

Exchange Rates

We will pay any cash dividends or interest on capital and make any other cash distributions with respect to our shares in reais. Accordingly, exchange rate fluctuations will affect the U.S. dollar amounts
received or to be received by the holders of ADSs on conversion by The Bank of New York, as depositary, or the Depositary, of dividends and distributions in reaison the preferred shares represented by the ADSs. Fluctuations in the exchange
rate between the realand the U.S. dollar will also affect the U.S. dollar equivalent of the price of the preferred shares on the Brazilian stock exchanges. Foreign currencies may only be purchased through a Brazilian bank authorized to
operate in these markets.

Until March 4, 2005, there were two legal foreign exchange markets in Brazil, the commercial rate exchange market, or the Commercial Market, and the floating rate exchange market, or the Floating Market. The Commercial
Market was reserved primarily for foreign trade transactions and transactions that generally required prior approval from Brazilian monetary authorities, such as the purchase and sale of registered investments by foreign persons and related
remittances of funds abroad (including the payment of principal of and interest on loans, notes, bonds and other debt instruments denominated in foreign currencies and duly registered with the Brazilian Central Bank (Banco Central do Brasil),
or Central Bank of Brazil, or Central Bank). The Floating Market rate generally applied to specific transactions for which approval by the Brazilian Central Bank was not required. Both the Commercial Market rate and the Floating Market rate were
reported by the Central Bank on a daily basis.

On March 4, 2005, the Brazilian Central Bank issued Resolution no. 3,265, introduced several changes in the Brazilian foreign exchange regulation, including:  (i) the unification of the foreign exchange markets into a
single exchange market; (ii) the easing of several rules for the acquisition of foreign currency by Brazilian residents; and (iii) the extension of the term for converting foreign currency derived from Brazilian exports. On March 8, 2006, the
Brazilian government issued Provisional Measure no. 315, enacted on August 24, 2006 ("PM 315"), which has been approved by the Law no. 11,371, enacted on November 28, 2006. Together with the underlying regulations issued by the National Monetary
Council (Conselho Monetário Nacional "CMN"), this Law no. 11,371 made the
currency exchange rules more flexible, making it possible to maintain export revenues (from merchandise or services) abroad, in the exporter's account or in a Brazilian bank authorized to operate in the exchange market.

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On March 18, 2008, the Central Bank issued Circular No. 3,379, allowing Brazilian exporters of goods and services to maintain the totality of their revenues obtained with exports offshore. Furthermore, the PM 315, now
Law number 11,371/06, permits registration with the Central Bank, in local currency, of the foreign capital invested in legal entities located in Brazil which had not been previously registered and was not eligible for another form of registration
by the Central Bank (so-called "contaminated capital"). This set of recent measures represents a step towards a more flexible Brazilian system. It is expected that the Central Bank will issue further regulations in relation to foreign exchange
transactions, as well as on payments and transfers of Brazilian currency between Brazilian residents and non-residents (such transfers being commonly known as the international transfer of reais), including those made through the so-called
non-resident accounts (also known as CC5 accounts).

The following table sets forth the Commercial Market/Foreign Exchange Market selling rates published by the Central Bank expressed in reaisper U.S. dollar for the periods indicated.

|                        |  |            |  |                     |  |        |  |       
|----------------------- |  | ---------- |  | ------------------- |  | ------ |  | ------
|Period                  |  | Period-end |  | Average for period* |  | High   |  | Low   
|                        |  |            |  |                     |  |        |  |       
|2004                    |  | 2.6544     |  | 2.9259              |  | 3.2051 |  | 2.6544
|2005                    |  | 2.3407     |  | 2.4125              |  | 2.7621 |  | 2.1633
|2006                    |  | 2.1380     |  | 2.1771              |  | 2.3711 |  | 2.0586
|2007                    |  | 1.7713     |  | 1.9483              |  | 2.1556 |  | 1.7325
|2008                    |  | 2.3370     |  | 1.8374              |  | 2.5004 |  | 1.5593
|January 2009            |  | 2.3162     |  | 2.3074              |  | 2.3803 |  | 2.1889
|February 2009           |  | 2.3784     |  | 2.3127              |  | 2.3916 |  | 2.2446
|March 2009              |  | 2.3152     |  | 2.3138              |  | 2.4218 |  | 2.2375
|April 2009              |  | 2.1783     |  | 2.2059              |  | 2.2899 |  | 2.1699
|May 2009                |  | 1.9730     |  | 2.0609              |  | 2.1476 |  | 1.9730
|June 2009 (through 9th) |  | 1.9385     |  | 1.9504              |  | 1.9704 |  | 1.9370

____________ 
* Average of the rates on each day in the period.

Source: Brazilian Central Bank

On December 31, 2008, the commercial selling rate for reaiswas R$2.3370 to U.S.$1.00. On June 9, 2009, the Foreign Exchange Market selling rate was R$1.9385 to U.S.$1.00.

Risk Factors

The following factors should be carefully considered in addition to the other information presented in this annual report.

Risks Relating to Our Business

A large portion of our revenues originates from a limited number of clients, and the loss of one or more of these clients could significantly impact our financial condition.

We strategically focus our marketing efforts on developing long-term relationships with large companies in targeted sectors. As a result, we rely on a limited number of significant clients for a large percentage of our
net revenues. Our contracts with our two largest clients, Telemar and Orbitall Serviços e Processamento de Informações Comerciais Ltda., or Orbitall, accounted for 51.1% and 13.9%, respectively, of our revenues for the year
ended on December 31, 2008. The current terms of our agreements with the Telemar entities (our main client encompassing Tmar and its wholly owned subsidiary Oi, both of which are indirectly under common control with us) are between November 2009 and
November 2010 with an automatic renewal for a further 5 to 6-years period from such end dates. The final term of our agreement with Orbitall, our second largest client, was April 2009. Although we are still
providing services to Orbitall under the terms previously agreed, the renewal of this contract is still under negotiations.

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We have observed in recent years a trend toward corporate consolidation and change of control of companies in our targeted sectors, such as financial services, telecommunications, utilities and internet. Such events may
cause the termination of existing contracts, and the loss of the revenues associated with such contracts.

The loss of any key client or the failure to retain a significant amount of business with our key clients would have a negative impact on our total revenues and our financial condition as a whole.

If the trend toward outsourcing of contact center services were reversed, the growth rate of our business could be reduced.

The outsourced contact center industry has expanded considerably in the past years as a result of an outsourcing trend observed in contact center services. One of the premises upon which the growth of our business and
operations is based is that this outsourcing trend will continue.

However, external factors, such as increases in taxes on revenues that could significantly impact the cost of services rendered by contact center companies, could cause our current and prospective clients to maintain or
return to the use of their in-house functions and thus reduce the trend towards outsourcing of contact center services. As the Brazilian government has historically increased taxes on revenues or on income, we may see ourselves forced into adjusting
our pricing in order to maintain our profit margins, which could unfavorably impact the decision of our clients to retain us.

Additionally, our clients may be subject to restrictions on their ability to outsource contact center services. For example, a lower court ruling has been issued against one of our clients, alleging that under Brazilian
law it was not permitted for this client to outsource certain specific contact center activities that may be protected by Brazilian bank secrecy rules.

Recently, the TST (Brazilian Federal Superior Labor Court) ruled against the ability of CELG (Centrais Elétricas de Goiás), a state eletricity provider, to outsource certain services that were
considered its core business. Although CELG business is different from ours, such decision might have an impact on the way lower courts understand what type of services are considered core services and therefore could not be outsourced under
Brazilian labor laws.

If this and similar rulings continue narrowing the scope of the services we are allowed to render, we could lose a part of our revenues as our current and prospective clients become restricted from outsourcing certain
of their contact center operations.

Moreover, if the government adopts laws that restrict or dictate costly specifications regarding contact center operations and procedures, it could affect current and future clients' decisions to outsource certain
activities, since such laws could unfavorably impact our profit margins and cause us to adjust the pricing of our contracts.

Increases in the use of automated customer services could reduce the demand for our services.

A major part of our services is provided by our contact center attendants. Over time, services provided by live attendants may have to compete against an increase in the use of automated channels which allow customers
of our clients to directly access self-service assistance systems (e.g., internet sites and automated phone services, such as voice recognition and Interactive Voice Response, a device that automates retrieval and processing of information by phone
using touch tone signaling or voice recognition so as to access information residing on a server and reply with a pre-recorded response, such as in "bank-by-phone" transactions), which could mitigate the necessity of personal contact with a contact
center attendant. If automated services were to become more technically viable and thus more widely used, the demand for our services could be reduced.

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Our ability to recruit, motivate and retain qualified management and operators could affect the quality of our services, which could impact our ability to attract new clients and retain existing ones.

Since our business is labor intensive, our ability to attract and retain personnel is key to our continued success. We place significant importance on our ability to recruit, train, and retain qualified personnel. We
employed 74,499 employees as of December 31, 2008. On average, we experienced a monthly turnover of approximately 5.4% of our personnel, requiring us to continuously recruit and train replacement personnel as a result of a changing and expanding
workforce. In addition, demand for qualified technical professionals conversant with certain technologies may exceed supply, as new and additional skills are required to keep pace with evolving technology. In the event that we are unable to recruit,
motivate and retain qualified personnel, the quality of our services could be affected, which could impact our ability to attract new clients and retain existing ones. Additionally, we may experience an increase in personnel costs as a result of:
(i) a decrease in the productivity of our employees resulting from the loss of qualified, experienced personnel, and (ii) an increase in recruiting, training and severance costs related to a higher employee turnover.

Our inability to pass through cost increases could seriously harm our profit margins.

In Brazil, it is common for agreements to be renegotiated annually so that their prices are readjusted to account for inflationary variations in costs. Labor collective bargaining agreements in the contact center
industry are also renegotiated on an annual basis to adjust for inflationary pressures, which results in an increase in our personnel costs. Hence, to protect against increases in costs of, among other things, telecommunications, energy, facilities
lease and especially personnel, most of our contact center services contracts also have annual rate adjustment clauses that provide for price increases in an effort to cover such cost escalations. Nevertheless, we may decide not to exercise the
right to adjust our prices fully in view of competitive conditions or other client relationship issues. In this case, we will not be able to pass through all of our cost increases. In the past, for example, we have had to adjust some of our customer
prices at rates below their respective inflationary adjustment indexes. If any of our costs increase and we are not able to negotiate a commensurate rate adjustment with our clients, our profit margins would be adversely affected.

Our operating results may be harmed if we are unable to maximize our contact center capacity utilization.

Our profitability depends largely on how effectively we utilize our contact center capacity. In order to create the additional capacity necessary to accommodate new or expanded outsourcing contracts, as well as face
significantly higher utilization during peak periods, we must consider opening new facilities or expanding current ones. The opening or expansion of a contact center may result, at least in the short term, in idle capacity. If we lose one or more
significant clients, if the volume of calls from our clients' customers decline or if a significant contract is not implemented in the anticipated time frame, our capacity utilization will be affected.

In addition, our profitability is significantly influenced by our ability to accurately forecast incoming calls. An excess of operators, based on an overestimated forecast, may cause us to lose profitability due to
unused capacity. In contrast, if there are more incoming calls than forecasted, we may not be able to handle the call volume, and we may lose revenues or fail to meet performance requirements under our contracts. For the failure to meet such
requirements, we may be subject to penalties and indemnities under certain clauses of our contracts.

Despite our ongoing efforts to maximize capacity utilization, we are subject to periods of idle capacity. This might occur mainly on the commencement of new operations or the termination of an existing contract.

There can be no assurance that we will be able to achieve or maintain optimal utilization of our contact center capacity.

If our clients are not successful, the amount of business they outsource may be diminished and could result in lower revenues for us.

Our revenues are dependent on the success of our clients. If our clients are not successful, the amount of business they outsource may be reduced. Furthermore, due to the inbound nature of most of our services (e.g.,
customer care), the amount of revenue generated from any particular service contract is dependent upon consumers' interest in, and use of, our clients' products and services.

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If our clients are not successful or their customers reduce their use of our contact center services, our revenues and the expansion of our business would be adversely affected.

General economic and market conditions may adversely affect the Companys financial condition, cash flow and results of operations.

Our results of operations are affected directly by the level of business activity of our clients, which in turn are affected by the level of economic activity in the industries and markets that they serve. The recent
worldwide economic slowdown, may cause reductions in technology and discretionary spending by our clients, which may result in reductions in the growth of new business as well as reductions in existing business. If our clients enter bankruptcy or
liquidate their operations, our revenues could be adversely affected.

The weakening economic conditions throughout the world that caused the decrease in the economic activity of the Brazilian economy from the second half of 2008 onwards, may adversely impact our results of operations,
cash flow and/or financial position, since it could directly cause the slowdown of business from our contracting customers.

The failure to keep our technology up to date may prevent us from remaining competitive.

Our business is dependent on our servers, desktops, telecommunications and network equipment, software applications and IT processes and procedures. The failure to maintain our technology capabilities or to respond
effectively to technology changes could adversely affect our competitiveness. Our continued growth and future profitability depends, among other factors, on the introduction of new services that effectively leverage and respond to technological
developments.

There can be no assurance that (i) our IT and telecommunications systems will be adequate to meet our clients' future needs; (ii) we will be able to incorporate new technology to enhance and develop our existing
services; and (iii) technologies or services developed by our competitors will not render our services uncompetitive or obsolete.

Interruption of our contact center services due to unforeseen events could have a material adverse effect on our financial condition and results of operations.

Our ability to provide our contact center services is dependent upon our ability to protect our facilities and operations against damage that may be caused by fire, natural disasters, power and telecommunications
failures, computer viruses, labor strikes, acts of sabotage or terror and other unforeseen events. We currently have backup systems for our most critical power and data storage and business interruption insurance to offset, in part, certain losses
we may incur if our facilities or operations are adversely affected by events outside our control. Despite the implementation of these systems and contingency plans, as well as network security measures, we may still experience interruption at one
or more of our facilities, and we may be unable to provide the services we are contractually obligated to deliver.

As a result of any such interruption: (i) our revenues could be reduced as a result of reduced activity, as most of our contractual compensation is calculated based on speaking time or number of available workstations;
(ii) we may be required to pay non-compensatory contractual penalties, since we may be unable to meet certain agreed-upon quality targets (service level agreements) as a result of such interruption; (iii) we may be required to pay indemnities to our
clients for lost profits and damages, if we breach or are unable to deliver our services; and (iv) if we continue to fail to meet our obligations, our clients may be entitled to terminate their contracts with us.

Depending on the amount of penalties and indemnifications we may have to pay as a result of the interruption of our services, our financial condition and results of operations could be adversely affected.

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Breaches of our contact center service contracts could expose us to significant monetary penalties.

We are exposed to different types of contractual penalties as a result of material breaches of our contractual service obligations. A fair number of our contracts contain provisions setting penalties for breaches at
  different degrees, determined based on formulas that take into consideration: (i) the nature and extent of the breach, (ii) the amount of revenues raised or due under the relevant contract in a given year, or (iii) the point in time during the life
  of the contract in which the breach occurs. We also have entered into contracts that require us to indemnify our clients for their losses resulting from breach of our obligations under such agreements. As a general matter, we are unable to quantify
  our potential exposure under these provisions, as the penalty amounts are based on future variables relating to the nature of the breach, the amount of revenues actually earned or the amount of time during which the contract has been outstanding.

Our contracts with our two largest clients, Telemar and Orbitall Serviços e Processamento de Informações Comerciais Ltda., or Orbitall, accounted for 51.1% and 13.9%, respectively, of our net
  revenues for the year ended December 31, 2008.

Our exposure for discretionary early termination in connection with our contact center service agreement with Telemar shall be in the amount equivalent to the revenue we obtain in connection with such agreement during
  the three months prior to the date Telemar sends us a notice of termination of the agreement. Our exposure to penalties related to damages caused by the termination of our agreement with Telemar as a result of a contractual breach by us shall be
  limited to 5.0% of our annual revenue in connection with such agreement. Based upon the level of revenue generated in 2008 as a result of such agreement, the early termination penalty would have been in the amount of approximately R$136.0
  million (U.S.$58.2 milion), while our exposure to penalties related to damages for the year could have been up to an amount of approximately R$48.0 million (U.S.$20.5 milion).

Our exposure for discretionary early termination in connection with our contact center service agreement with Orbitall is equivalent to one-sixth of the estimated revenue for the period within the early termination date
  and the final term of the Agreement. The estimated revenue shall be calculated based on the average monthly revenue of the three months prior to the early termination, the minimum amount of such penalty being equivalent to one month's revenue. In
  case of a material breach of the agreement by us, we may be subject to the payment of the amount of the actual damages incurred by Orbitall, up to 30.0% of the amount of the monthly invoice sent to Orbitall in connection with such agreement during
  the month when the breach occurs. Nevertheless, the amount of any such damages would be fact specific and is not determinable at this time. Based upon the level of revenue generated in 2008 as a result of such agreement, if we had breached this
  agreement we would have been subject to penalties in the amount of approximately R$7.8 million (U.S.$3.3 million). The final term of our agreement with Orbitall was April 2009. Although we are still providing services to Orbitall under the
  terms previously agreed, the renewal of this contract is still under negotiations and the terms and conditions mentioned above might be subject to change.

As a result, our exposure for breach under these contracts, though currently indeterminable, may have a significant negative impact on our results.

We may be unable to achieve the same performance levels we have been experiencing with our performance-based compensation contracts.

We derived approximately 28.0% of our net revenues in the fiscal year of 2008 from operations with performance-based compensation, consisting mostly of telemarketing and debt collection services. These services depend
  not only on our success in selling a product, locating a debtor or negotiating a debt settlement, but also on other factors that are beyond our control. For telemarketing activities, for example, our compensation is measured according to the amount
  of our clients' products that we are able to sell in a given period of time or on a sales target which we are required to meet. Consequently, our performance-based compensation for telemarketing can be affected by, among other things, the
  attractiveness of the products and services we will be selling for our clients. In addition, prevailing macroeconomic conditions in Brazil, such as GDP growth, unemployment and availability of disposable income, also affect our performance-based
  compensation more acutely than they affect enterprises that rely solely on fixed-based compensation, since such macroeconomic conditions directly affect consumer spending and default rates. Consequently, there can be no assurance that we will be able to maintain the same level of our past
  performance in the future or that we will not incur losses with our performance-based compensation contracts.

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We may be responsible for labor liabilities which could have an adverse effect on our profitability.

We were involved in 5,287 labor claims as of December 31, 2008. Although the total amount of all labor claims filed against us is approximately R$358,700 thousand (U.S.$153,487 thousand) as of December 31, 2008,
we record provisions for any contingent liabilities in proportion to our historical losses, which, on that date, amounted to approximately R$51,651 thousand (U.S.$22,101 thousand). We also are subject to potential administrative proceedings
brought by the Brazilian Labor Department.

If all of the labor claims filed against us or a greater portion of such claims than we have provisioned for were resolved against us, our profitability would be adversely affected. In addition, although we have
contractual arrangements with both Orbitall and Telemar according to which they shall reimburse us for the costs we may incur in connection with the claims referred above, if those entities fail to comply with such reimbursement arrangements our
margins could be adversely affected. There can be no assurance that additional labor claims and proceedings will not be brought against us in the future, or if they are, that an adverse ruling regarding such claims and proceedings would not have a
negative impact on the cost of services rendered by us, or result in the impositions of penalties or other negative consequences.

Our business is highly competitive and our failure to effectively compete could result in the loss of clients or decreased profitability.

We face significant competition and believe that this competition will intensify. There are numerous providers of our services, including other contact center service companies, niche players, consulting companies and
many small companies that offer low-end services (primarily outbound services). Aside from those competitors, our clients and potential clients may also decide to utilize in-house personnel to perform contact center services they currently
outsource, or maintain their in-house customer service and product support activities. We also face competition from automated customer services, through the use of internet, interactive voice response, voice recognition and other technologies.

Our competitors' services and pricing practices, as well as the timing and circumstances of the entry of additional competitors into our market may harm our business. The trend towards international expansion by foreign
competitors and continuous technology changes may bring new competitors into our market and may increase pricing pressures. Our failure to compete successfully could result in loss of clients and specific service contracts or could result in
decreased profitability.

CTX Participações holds the majority of our voting shares and there may be circumstances in which its interests differ from or conflict with the interests of our other shareholders.

We are controlled by CTX Participações, which spun-off from Telemar Participações in April 2008 and as of May 2009, holds 63.08% of our common shares and 7.45% of our preferred shares. As
controlling shareholder, CTX Participações is entitled to appoint the majority of the members of our board of directors and has the power to, among other things, modify our business plan, determine the date of dividend payments,
approve corporate restructurings and sell our material assets. We cannot assure that our controlling shareholder will not take actions that might differ from or conflict with the interests of our other shareholders.

We may be liable for fraudulent activities or misappropriation of our clients' information by our employees or third parties.

Our contact center business puts us in possession of sensitive client information. Despite our internal controls and our efforts to protect our clients' information, we may be held liable for fraudulent activities by
our employees or by third parties. For example, unauthorized persons may be able to breach our physical or network security systems. Meanwhile, authorized employees may misuse their authorization rights or the information to which they have access.
Our failure to prevent these occurrences could: (i) damage our reputation with our clients
and the market; (ii) allow them to terminate their contracts with us; (iii) expose us to potential liability; and (iv) subject us to the previously discussed contractual penalties and indemnities, all of which may substantially harm our business and
results of operations.

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Risks Relating to Brazil

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazilian political and economic conditions, could adversely impact our business, operations and the
market price of our shares and ADSs.

The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes drastic changes in policy and regulations. The Brazilian government's actions to control inflation and implement
macroeconomic policies have often involved wage and price controls, currency devaluations, capital controls and limits on imports, among other things. Our business, financial condition, results of operations and the market price of our shares and
ADSs may be adversely affected by changes in policies or regulations, or by other factors such as:

- devaluations and other currency fluctuations;
- inflation rates;
- interest rates;
- liquidity of domestic capital and lending markets;
- energy shortages;
- exchange controls and restrictions on remittances abroad (such as those that were briefly imposed in 1989 and early 1990);
- monetary policy;
- tax policy; and
- other political, diplomatic, social and economic developments in or affecting Brazil.

Uncertainty over whether possible changes in policies or rules affecting these or other factors may contribute to economic uncertainties in Brazil and to heightened volatility in the Brazilian securities markets and
securities issued abroad by Brazilian issuers. These uncertainties could adversely affect our activities. Historically, members of the executive and legislative branches of the Brazilian government, as well as other related persons, have been
investigated on the grounds of alleged illicit or unethical behavior. It is not possible to predict the outcome of such investigations and whether the outcome will adversely affect the Brazilian economy. As a consequence of their impact on the
Brazilian economy, these uncertainties and allegations of unethical or illegal conduct may have a material adverse effect on us and may also adversely affect the trading price of our common shares.

Inflation and certain government measures to curb inflation may have adverse effects on the Brazilian economy, the Brazilian securities market, our business and operations and the market price of the shares.

Brazil has historically experienced extremely high rates of inflation. Inflation and some of the Brazilian government's measures taken in an attempt to curb inflation have had significant negative effects on the
Brazilian economy. While inflation has been kept largely under control since the introduction of the realin 1994, inflationary pressures persist. Actions taken in an effort to curb inflation, coupled with speculation about possible future
governmental actions, have contributed to economic uncertainty in Brazil and heightened volatility in the Brazilian securities market. According to the Índice Geral de Preços Mercado, or IGP-M, a general price inflation index
published by Fundação Getúlio Vargas, or FGV, the Brazilian general price inflation rates were 3.8%, 7.7% and
9.8% in 2006, 2007 and 2008, respectively. According to the Índice Geral de Preços - Disponibilidade Interna, or IGP-DI, another general price inflation index published by FGV, the Brazilian general price inflation rates were
3.8%, 7.9% and 9.1% in 2006, 2007 and 2008, respectively. According to the Índice Nacional de Preços ao Consumidor Ampliado, or IPCA, published by the Instituto Brasileiro de Geografia e Estatística, or
IBGE, the Brazilian consumer price inflation rates were 3.1%, 4.5% and 5.9% in 2006, 2007 and 2008, respectively. In the first quarter of 2009, inflation measured by the IGP-M, IGP-DI and IPCA, was approximately -0.92%, -0.96% and 1.23%,
respectively, or -3.68%, -3.84% and 4.92% on an annualized basis, respectively.

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The Long Term Interest rate  TJLP (Taxa de Juros de Longo Prazo) is the interest rate used in the BNDES loan agreement, and has been stable at a yearly rate of 6.25% since July of 2007.

Brazil may experience high levels of inflation in the future. Inflationary pressures may lead to further government intervention in the economy, including the introduction of government policies that could adversely
affect the economy overall and our business in particular.

Changes in Brazilian labor law may negatively affect us.

Brazilian companies are subject not only to the Federal Constitution and ordinary legislation concerning labor relations (mainly the Consolidação das Leis do Trabalho, or CLT), but also to
collective bargaining agreements between employers' associations and employee unions or between individual employers and employee unions, in addition to administrative orders, technical notes and instructions issued by the Brazilian Labor
Department. In addition, the tendency of Brazilian labor laws and regulators to protect employees from dismissal has created barriers to the loosening of labor standards. Furthermore, due to the volume of cases and insufficient personnel, the labor
courts are typically slow in deciding the labor claims and disputes that are submitted to them for resolution.

The Brazilian Labor Department continuously issues and revises current labor regulations regarding specific practices in different business sectors. In April 2007, the Brazilian Labor Department published a technical
note setting forth new guidelines concerning labor practices and regulations regarding contact center activities. These rules include, among other things, employees' directives regarding work environment, working hours and breaks, ergonomic
equipment design standards and guidance on labor related diseases (Exhibit II to Regulation no. 17 (Anexo II da Norma Regulamentadora no 17)), approved by Rule no. 9, issued by the Brazilian Labor Department as of March 30, 2007
(Portaria no 09). Labor inspectors have been paying greater attention to these factors and, as a result, have been requiring strict compliance by companies with workplace health and safety rules. Enforcement of these new regulations may
lead to increased costs, which we may not be able to pass through to our clients or, in some cases, administrative fines, which would adversely affect our financial condition.

In addition, the Brazilian Legislative Branch has undertaken several bills concerning the reduction of working hours and breaks of the telemarketing operators.

Changes in the Brazilian telemarketing regulatory framework may directly affect us.

On July 31st, 2008, the Brazilian Federal Government enacted Decree no. 6,523/2008 (Decreto no 6.523/2008), which became effective on December 1st, 2008 and imposes upon services providers regulated by Federal Agencies (i.e. telephone,
electric energy, cable television, credit card, and airline companies) obligations regarding the "Call Centers Law" (Lei dos Call Centers), which mandates that the Customer Assistance Service (SAC - Serviço de Atendimento ao
Consumidor) of such services providers shall comply with a higher level of service standards. See item 4: Industry Overview  Regulatory Developments regarding the Telemarketing Services.These laws are applied to a large variety of
our clients that have sought services complying with such new rules. While this set of rules may increase Contaxs products demand, it will also increase operational costs. Aditionally, such law provides for substantial non-compliance penalties
(ranging from R$200 thousand to R$3,000 thousand per event), that might be assessed upon our clients. Although we are bound only to the SLA contained in our service agreements, our clients might try to transfer any cost with such penalties
to us. See item 4: Industry Overview  Regulatory Developments regarding the Telemarketing Services.

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Regulatory proposals, such as the creation of a "do not call list", could restrict our contact center services.

A series of bills have been presented to the House of Representative and the Senate and to local legislative branches of certain states and municipalities proposing to regulate several aspects of the outbound
telemarketing services we provide, such as: (i) the days and hours in which outbound calls are allowed; and (ii) the creation of a national "do not call list." If these bills are passed, our ability to make outbound calls may be significantly
restricted, which would adversely impact our current revenue and growth opportunities. "See Item 4: Industry Overview  Regulatory Developments regarding the Telemarketing Services".

So far, the only law enacted in such regard is São Paulo State Law no. 13,226 (Lei Estadual no. 13.226/2008), which created the so-called Register for Telemarketing Phone Calls Blocking (Cadastro para o
Bloqueio do Recebimento de Ligações de Telemarketing). Under this law, telemarketing companies are prevented from contacting costumers in the State of São Paulo that were previously registered in a specific public database.
This law restricts our ability to make outbound calls in São Paulo, which adversely impacts our current revenue and growth opportunities.

Exchange rate instability may adversely affect our financial condition.

The Brazilian currency has been devalued frequently over the past four decades. Throughout this period, the Brazilian government has implemented various economic plans and used various exchange rate policies, including
sudden devaluations, periodic mini-devaluations (such as daily adjustments), exchange controls, dual exchange rate markets and a floating exchange rate system. From time to time, there have been significant fluctuations in the exchange rate between
the Brazilian currency and the U.S. dollar and other currencies. Based on the real/U.S. dollar exchange rate, the real appreciated against the U.S. dollar by 9.5% and 20.7% in 2006 and 2007, while in 2008 the exchange rate depreciated
by 24.2% . In the first quarter of 2009, in comparison to the end of 2008, the real appreciated against the U.S. dollar by 0.9% based on the real/U.S. dollar commercial exchange rate of RS$2.307 to U.S.$ 1.00, as of the close
of business on March 30, 2009. Devaluation of the realrelative to the U.S. dollar could create additional inflationary pressures in Brazil by generally increasing the price of imported products and requiring recessionary government policies
including tighter monetary policy. On the other hand, appreciation of the realagainst the U.S. dollar may lead to a deterioration of the country's current account and the balance of payments, as well as to a dampening of export-driven
growth. Devaluations also reduce the U.S. dollar value of distributions and dividends on the ADSs and the U.S. dollar equivalent of the market price of our shares and, as a result, the ADSs.

We may be unable to convertreaisinto U.S. dollars to make dividend distributions to our ADS holders.

In the past, Brazil's economy has experienced balance of payment deficits and shortages in foreign exchange reserves, and the government has responded by restricting the ability of persons or entities, Brazilian or
foreign, to convert reaisinto any foreign currency. The government may institute a restrictive exchange control policy in the future. Any restrictive exchange control policy could prevent or restrict our access to U.S. dollars to meet our
dividend payment obligations.

Economic and market conditions in other emerging market countries may adversely affect the Brazilian economy and, therefore, the market value of our common shares, preferred shares and ADSs and our ability to access the capital markets.

The market for securities issued by Brazilian companies is influenced by economic and market conditions in Brazil, and, to varying degrees, market conditions in other Latin American and emerging market economies.
Although economic conditions are different in each country, the reaction of investors to developments in one emerging market country may cause the capital markets in other countries to fluctuate. Developments or conditions in other emerging market
countries have at times significantly affected the availability of credit in the Brazilian economy and resulted in considerable outflows of funds and declines in the amount of foreign currency invested in Brazil, as well as limited access to
international capital markets, which may adversely affect our ability to borrow funds at an acceptable interest rate or to raise equity capital when and if there should be a need for us to do so. Such developments have included the devaluation of
the Mexican peso in December 1994, the Asian economic crisis of 1997, the Russian currency crisis of 1998 and the 2001 economic and political crisis in Argentina. The continuing
political crisis in Venezuela and the socialist-oriented government of Bolivia may also influence investors' perceptions of risk in Latin America. The volatility in market prices for Brazilian securities has varied from time to time as a result of
such crises.

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Risks Relating to the ADSs and the Preferred Shares

You may not be able to sell the ADSs or preferred shares at the price or time you desire because an active or liquid market for the ADSs or the preferred shares will not likely develop.

There has not been a public market for either our ADSs or our preferred shares. We have obtained approval for the listing of our preferred shares on the BM&F Bovespa or "Bovespa" (the stock exchange of the State of
São Paulo, Brazil, the main Brazilian stock exchange), but we do not intend to list the ADSs in any organized market or stock exchange. As a result, active trading in the ADSs will not likely develop. Similarly, active trading in the
preferred shares in the United States will not likely develop. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors.

We can terminate the Deposit Agreement without the consent of holders of ADSs.

We can cause the Depositary to terminate the Deposit Agreement at any time by giving the ADS holders at least 30 days prior notice. After termination, the Depositarys only responsibility will be (i) to deliver
deposited securities to ADS holders who surrender their ADSs, and (ii) to hold or sell distributions received on deposited securities. As soon as practicable after the expiration of one year from the termination date, the Depositary will sell the
deposited securities which remain and hold the net proceeds of such sales, without liability for interest, in trust for the ADS holders who have not yet surrendered their ADSs. After making those sales, the Depositary shall have no obligations
except to account for such proceeds and other cash. The Depositary will not be required to invest such proceeds or pay interest on them.

The relative volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell the preferred shares underlying the ADSs at the price and time you desire.

Investing in securities that trade in emerging markets, such as Brazil, often involves greater risk than investing in securities of issuers in the United States, and such investments are generally considered to be more
speculative in nature. The Brazilian securities market is substantially smaller, less liquid and more concentrated than major securities markets in the United States. As a result, the price for the preferred shares may be subject to substantial
volatility, and it may be difficult to find a buyer or a seller at certain times. Accordingly, although you are entitled to withdraw the preferred shares underlying the ADSs from the Depositary at any time, your ability to sell the preferred shares
underlying the ADSs at a price and time of your choosing may be substantially limited. There is also significantly greater concentration in the Brazilian securities market than in the United States. As of December 31, 2008, the aggregate market
capitalization of the 10 largest companies listed on the Bovespa was approximately U.S.$308.3 billion, representing almost 52.4% of the aggregate market capitalization of that market. The top 10 stocks in terms of trading volume accounted for
approximately 46.1%, 45.8% and 53.1% of all shares traded on the Bovespa in 2006, 2007 and 2008, respectively.

Holders of preferred shares and ADSs have limited voting rights.

Of our two classes of capital shares outstanding, only our common shares have full voting rights. Except in certain limited circumstances, our preferred shares will be entitled to full voting rights only in the event
that we fail to pay the minimum dividends for a period of three consecutive years. As a result of these limited voting rights and the fact that CTX Participações holds 63.08% of our common shares, holders of our preferred shares and,
therefore, of our ADSs, generally will not be able to influence any corporate decision requiring a shareholder vote, including the declaration of dividends.

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Holders of ADSs are not entitled to attend shareholders' meetings and may only vote through the Depositary.

Under Brazilian law, only shareholders registered as such in our corporate books may attend shareholders' meetings. All preferred shares underlying the ADSs are registered in the name of the Depositary. A holder of
ADSs, accordingly, is not entitled to attend shareholders' meetings. A holder of ADSs is entitled to instruct the Depositary as to how to vote the preferred shares represented by ADSs, in accordance with procedures provided for in the Deposit
Agreement, but a holder of ADSs will not be able to vote the underlying preferred shares directly at a shareholders' meeting or to appoint a proxy to do so.

Holders of ADSs may have fewer and less well-defined shareholders' rights than shareholders of U.S. public companies.

Our corporate affairs are governed by our by-laws and Brazilian corporate law, which may differ from the legal principles that would apply if we were incorporated in a jurisdiction in the United States. Under Brazilian
corporate law, the holders of our preferred shares and our ADSs may have fewer and less well-defined rights to protect their interests relative to actions taken by our Board of Directors or the holders of our common shares than under the laws of
other jurisdictions outside Brazil.

When compared to Delaware corporation law, Brazilian corporate law and practice have less detailed and well-established rules, and judicial precedents relating to protections afforded to non-controlling security holders
and the review of management decisions involving duty of care and duty of loyalty standards in the context of corporate restructurings, transactions with related parties, and sale-of-business transactions. In addition, shareholders in Brazilian
companies must hold at least 5.0% of the outstanding share capital of a corporation in order to have standing to bring a shareholder derivative suit, and shareholders in Brazilian companies ordinarily do not have standing to bring class action
suits.

Although Brazilian law imposes restrictions on insider trading and price manipulation, the Brazilian securities markets may not be as highly regulated and supervised as the U.S. securities markets or markets in other
jurisdictions. In addition, rules and policies against self-dealing and regarding the preservation of shareholder interests may be less well-defined and enforced in Brazil than in the United States, potentially causing disadvantages to holders of
the preferred shares and/or ADSs. Corporate disclosures may be less complete or informative than what may be expected of a U.S. public company.

Holders of ADSs or preferred shares may not receive any dividends.

According to Brazilian corporate law and our by-laws, we must pay dividends to our shareholders totaling at least 25.0% of our annual net income, as determined and adjusted under Brazilian GAAP, except that we may use
current net income (as per Brazilian corporate law): (i) to offset accumulated losses; (ii) to constitute a reserve for unrealized profits; (iii) to constitute a reserve for contingencies (if such contingencies are not already provisioned for); and
(iv) to constitute a legal reserve (up to 5.0% of current net income, limited to 20.0% of the share capital).

In extreme circumstances, we may not pay dividends to our shareholders in a particular fiscal year if, at a shareholders' meeting, our Board of Directors advises our shareholders that such distributions would not be
advisable in view of our financial condition.

Exchange controls and restrictions on remittances abroad may adversely affect holders of ADSs.

Brazilian law provides that whenever there is a significant imbalance in Brazil's balance of payments or a significant possibility that such imbalance will exist, the Brazilian government may impose temporary
restrictions on the remittance to foreign investors of the proceeds of their investment in Brazil (as it did for approximately six months in 1989 and early 1990) and on the conversion of Brazilian currency into foreign currencies. These restrictions
could hinder or prevent the Brazilian custodianof our shares underlying the ADSs or holderswho have exchanged the ADSs for our underlying shares fromconverting dividends, distributions or the proceeds from any sale of such
shares into U.S. dollars and remitting such U.S. dollars abroad. In such an event, the Brazilian custodian
for our shares will hold the reais that it cannot convert for the account of holders of the ADSs who have not been paid. Neither the custodian nor the Depositary will be required to invest the reais or be liable for any interest.

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Dividends received by United States individuals will not be "qualified dividend income" eligible for a 15.0% tax rate.

For United States federal income tax purposes, U.S. shareholders within the meaning of section 7701(a)(30) of the U.S. Internal Revenue Code of 1986 generally will recognize, to the extent of our current and accumulated
earnings and profits, ordinary income on the receipt of cash dividends on shares. Unless the class of shares with respect to which distributions are made is readily tradable on an established securities market in the United States, any dividend
income will not be treated as "qualified dividend income" eligible for a 15.0% tax rate in the case of U.S. shareholders who are individuals. We do not intend to list the ADSs on an established securities market in the United States. As a result,
any dividends received by United States individuals will not be "qualified dividend income" eligible for a 15.0% tax rate.

If you surrender your ADSs and withdraw preferred shares, you risk losing the ability to remit foreign currency abroad and certain Brazilian tax advantages.

As an ADS holder, you will benefit from the electronic certificate of foreign capital registration to be obtained by the Custodian for our preferred shares underlying the ADSs in Brazil, which permits the Custodian to
convert dividends and other distributions with respect to the preferred shares into foreign currency and remit the proceeds abroad. If you surrender your ADSs and withdraw preferred shares, you will be entitled to continue to rely on the Custodian's
electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to such preferred shares, you will not be able to remit foreign currency
abroad unless you obtain your own electronic certificate of foreign capital registration or you qualify under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell shares on Brazilian stock exchanges without
obtaining separate electronic certificates of foreign capital registration. If you do not qualify under the foreign investment regulations you will generally be subject to less favorable tax treatment of dividends and distributions on, and the
proceeds from any sale of, such preferred shares.

If you attempt to obtain your own electronic certificate of foreign capital registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or
distributions relating to our shares or the return of your capital in a timely manner. The Depositary's electronic certificate of foreign capital registration may also be adversely affected by future regulatory changes.

Changes in Brazilian tax laws may have an adverse impact on the taxes applicable to the disposition of the ADSs or preferred shares.

According to Law no. 10,833, enacted on December 29, 2003, the disposition or sale of assets located in Brazil by a non-resident to either a Brazilian resident or non-resident is subject to taxation in Brazil,
regardless of the domicile of the purchaser or whether the disposition occurs outside Brazil. If the disposition or sale of assets located in Brazil is interpreted to include a disposition or sale of our ADSs, this provision could result in the
imposition of income tax on the gains from such a sale or disposition of our ADSs by a non-resident of Brazil to another non-resident of Brazil. However, considering the general and unclear scope of Law no. 10,833 and the absence of jurisprudence in
respect thereof, we are unable to predict whether an interpretation applying such tax laws to dispositions of the ADSs solely between non-residents could ultimately prevail in Brazilian courts.

Holders of ADSs may be unable to exercise preemptive rights with respect to our shares.

Under Brazilian law, if we issue new shares for cash as part of a capital increase, we generally must grant our shareholders the right to purchase a sufficient number of shares to maintain their existing ownership
percentage. Rights to purchase shares in these circumstances are known as preemptive rights. We may not be able to offer our preferred shares to U.S. holders of ADSs pursuant to preemptive rights granted to holders of our shares in connection with
any future issuance of our preferred shares unless a registration statement under the Securities Act of 1933, or the Securities Act, is effective with respect to such preferred shares and preemptive rights, or an
exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement relating to preemptive rights with respect to our preferred shares, and we cannot assure you that we will file any
such registration statement. If such a registration statement is not filed and an exemption from registration does not exist, The Bank of New York, as depositary, will attempt to sell the preemptive rights, and you will be entitled to receive the
proceeds of such sale. However, these preemptive rights will expire if the Depositary does not sell them, and U.S. holders of ADSs will not realize any value from the granting of such preemptive rights.

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Holders of ADSs may face difficulties in serving process on or enforcing judgments against us and other persons.

Contax Holding and TNL Contax are corporations organized under the laws of Brazil, and all the members of our Board of Directors and all of our Executive Officers and our independent public accountants reside or are
based in Brazil. All of our assets and those of these other persons are located in Brazil. As a result, it may not be possible for you to effect service of process upon us or these other persons within the United States or other jurisdictions
outside Brazil or to enforce against us or these other persons judgments obtained in the United States or other jurisdictions outside Brazil. Because judgments of U.S. courts for civil liabilities based upon the U.S. federal securities laws may only
be enforced in Brazil if certain conditions are met, you may face greater difficulties in protecting your interests in the case of actions by us or our Board of Directors or Executive Officers than would shareholders of a U.S. company. Although,
subject to certain conditions, investors generally would be permitted to bring an original action in Brazilian courts under the U.S. federal securities laws, pursuing such an action in a Brazilian court could prove difficult given the relative
inexperience of such courts in these matters.

Item 4. Information on the Company

History and Organizational Structure

Contax Participações S.A. was incorporated in Brazil on July 31, 2000 as a corporation, or sociedade por ações, under the name Caroaci Participações S.A. Its primary
functions were those of a typical holding company. Contax Holding's registered address is: Rua do Passeio 48 a 56 (parte), 20021-290, Rio de Janeiro, RJ, Brazil. Its telephone number is +55 21 3131-0009.

Contax Holding is the sole parent company of TNL Contax S.A., a corporation incorporated in Brazil on April 3, 2000 as a sociedade por ações under the name Contax S.A. TNL Contax is the only
significant subsidiary of Contax Holding and is an operational entity that conducts contact center service activities.

On December 29, 2004, the shareholders of TNL approved a proposal from its Board of Directors to spin off Contax Holding to TNL's shareholders for two primary reasons: (i) to realize the full value of the Company as a
separate entity and (ii) to allow the management of TNL to focus on its telecommunications operations. The spin-off was consummated in August 2005 with the delivery of our shares to the shareholders of TNL.

On October 2008, the Company invested in its new subsidiary Todo. The launch of operations in the Business Process Outsourcing (BPO) segment through a new subsidiary is aimed at expanding our service portfolio and
entering new markets, without losing focus on our main business, the contact center (voice process outsourcing) industry operated through TNL Contax S.A.

TNL Contax owns 80.0% of the voting and total capital of the newly created company, with the remaining shares of Todos capital held indirectly by executive officers of Todo. Shareholders agreement and other
documents were signed between the parties regulating matters such as a non-compete agreement between Todo and TNL Contax and restrictions on the remaining shareholders regarding the sale of shares. Todo is managed independently from TNL Contax, with
different executive directors and with its headquarter located in São Paulo. Todo did not have any significant activities during 2008, and began operations only in April 2009.

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Share Buyback:

During 2006 and 2007, the Company implemented three different buyback programs, which resulted in the repurchase of 719.0 thousand common shares and 2,705.0 thousand preferred shares. Of these totals, 544.0 thousand
common shares and all of the 2,705.0 thousand preferred shares were cancelled, with the remaining 175.0 thousand common shares held in treasury without reducing the Company's capital stock.

In September 2008, the Company approved a fourth buyback program of approximately R$40 million. By the end of September, we had completed implementing the program and repurchased 52,337 common and 861,664 preferred
shares. All of these shares were canceled in January 2009, resulting in the Company's stock capital of 14,942,685 shares, comprised of 5,772,435 common and 9,170,250 preferred.

Altogether, the Company invested R$201 million in all of its buyback programs, of which R$41 million were invested in 2006, R$120 million in 2007 and R$40 million in 2008.

Stock Option Plan:

At the General Shareholders Meeting held on April 16, 2007, our Stock Option Plan was approved. The purpose of plan, established pursuant to article 168, paragraph 3, of Law no. 6,404/76, is to attract executives
to the Company, as well as to retain and ensure a closer alignment between the interests of the management of the Company and the interests of the shareholders, sharing the risks of the capital market. Pursuant to the approval of the Stock Option
Plan, on October 18, 2007, nine thousand common shares were sold to the Company's officers. On December 31, 2008, there were still 166.0 thousand common shares held in treasury.

Reverse Stock Split:

On October 17, 2007, our shareholders approved the Reverse Stock Split of all shares representing the Company's capital stock at the ratio of twenty (20) shares for one (1) share of same type. The plan was approved due
to the several million "inactive" shareholders that the Company had dating back to the Telemar days. With the spinoff, we inherited several million "inactive" shareholders and in an effort to reduce unnecessary administrative and operating costs and
to provide a low cost form of liquidity for these small shareholders, Contax decided to do a reverse stock split. Since ADS are mainly concentrated in the hands of institutional investors in large quantities, no Reverse Stock Split took place in
relation to the ADSs, so that currently the ratio is 20 ADSs for one (1) preferred share.

Since November 19, 2007, the shares representing the Company's capital stock have been traded in the new ratio of 20:1.

After we approved the Reverse Stock Split, our shareholders were given one (1) month to either acquire new stock in order to hold at least one share according to the new ratio or to sell their shares free of transaction
costs. After the stipulated term, there were still shareholders left with fractions of shares. On August 13, 2008, the share fractions were grouped and auctioned, with the proceeds made available to their former holders.

Telemar Participações S.A. restructuring process concluded on April 2008

On April 25, 2008, negotiations relating to the restructuring of the ownership structure of Telemar Participações (Contax's previous controlling shareholder) were concluded. This restructuring included the
replacement of certain shareholders in order to expand the financing and investment capacity of Telemar Participações and its subsidiaries. See Item 5: Recent Developments.

The restructuring included the followings phases: (i) an increase in the capital of Telemar Participações; (ii) the repurchase by Telemar Participações of outstanding shares; (iii) the
purchase and sale of shares among Telemar Participações' shareholders; and (iv) the restructuring of Fiago Participações S.A. (one of Telemar Participações' shareholders).

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On the same date, an Extraordinary Shareholders' Meeting of Telemar Participações unanimously approved the partial spin-off of Telemar Participações, with the transfer of that portion of its
shareholders' equity related to the shares issued by Contax held by Telemar Participações to a new company created especially for this purpose called CTX Participações.

The partial spin-off is one of the phases of the restructuring and was necessary in order to separate Telemar Participações' interests into two different companies that will operate in the contact center
and telecommunications industries, respectively.

Its important to notice that even though Telemar Participações and CTX Participações still have shareholders in common, they are two different investment groups with different types of
business administration profiles, and therefore, with their controlling companies being independently managed. As the controlling shareholder, CTX Participações S.A. is fully responsible for the strategic guidelines of Contax
Participações and its subsidiaries.

The charts below show the capital structure before and after the restructuring of the controlling group:

Before the reestructuring:



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After the reestructuring:




Overview

The Company has experienced overall growth of its businesses since its inception. Based on information provided by Call Center Inf and available in the most recent financial statements published by Brazilian contact
center companies, in 2009 the Company maintained its position as the largest contact center service provider in Brazil based on 2008s results. We specialize in the design, implementation, and operation of complex contact centers, in order to
help our clients improve their customer relationships and maximize the value they provide to their customers. Our clients include many of Brazil's largest companies in the telecommunications, financial services, utilities and Internet sectors.

TNL Contax began operations at the end of 2000 in response to opportunities in the Brazilian contact center outsourcing market. TNL Contax initially provided outsourced services previously rendered by Telemar in order
to reduce costs and increase the quality of Telemar's in-house activities. In addition, TNL Contax provided integrated services with Telemar to their large corporate customers.

During 2008 we increased our client base in comparison to the previous year, from 50 clients on December 31, 2007 to 58 on December 31, 2008. Our business strategy is focused on developing long-term relationships with
large companies in targeted sectors. We offer a variety of channels of communications to interact with customers, including voice, Internet, e-mail, mail and fax services. As of December 31, 2008, we had 74,499 employees (61,397 in 2007) and
operated 32,153 workstations (28,043 in 2007) distributed throughout 25 contact centers (22 in 2007) in Brazil.

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Our services are designed to enhance the quality of customer interaction at all stages of the customer lifecycle, from identifying and acquiring new customers through providing information and customer services,
rendering technical support, customer retention and debt collection.

Industry Overview

The scope of customer interaction by contact centers generally has expanded from single purpose (generally, basic support or marketing) to integrated service offerings (combining services such as customer care,
telemarketing, technical support, customer retention and debt collection) through various communication channels. As a consequence, the outsourced contact center sector has evolved from primarily single-facility, low technology environments to
large, full-service organizations with multi-channel, large-volume contact centers that use sophisticated technology platforms to support such activities.

Companies traditionally relied on in-house personnel and infrastructure to perform sales, direct marketing and customer care. However, driven by increasing competition and higher customer sophistication, companies began
to outsource their contact center activities in order to focus on their core businesses and to reduce costs. Because such activities face significant fluctuations in demand, many companies have found that it is not cost-effective to maintain excess
capacity, particularly during peak traffic periods. Moreover, many companies have recognized that they were not appropriately equipped to conduct contact center activities and could not keep pace with the rapid changes in technology.

Outsourced contact center providers are able to render services at lower overall costs as a result of their ability to amortize fixed costs over a large number of customers, resulting in economies of scale in operations
and technology. For example, by turning to an outsourcer, a company can obtain access to sophisticated technology platforms, such as call management software, interactive voice response systems, predictive dialers (devices used to automate the
method of making outbound calls and direct them to an operator when a live person answers, thereby screening out answering machines, busy signals or other operator intercepts) and automatic call distributors, without the cash outlay or maintenance
costs that would be required to implement these features in-house. Because of their expertise and experience, outsourced contact center providers are also able to achieve higher quality and productivity, allowing their clients to focus on their core
businesses while retaining and enhancing customer relationships.

Today, companies face the challenge of delivering consistent levels of customer service, regardless of the channel of communications utilized or their customers' locations. This trend has been fueled by the continued
growth in Internet and e-mail use, and the increasingly remote nature of customer interactions. Moreover, companies are increasingly focused on better, differentiated customer services and on increasing the value of their customer relationships
through the cross-selling of additional products or services. By working in partnership with an outsourcer, a company can focus on its strategy for acquisition, retention and growth of its customer base without being overburdened with the
complexities of day-to-day contact center operations.

Contact center activities are becoming central to the way companies choose to enhance customer loyalty and retention. According to IDC (a market intelligence and consulting company specializing in the IT and
telecommunication industries), the outsourced contact center market worldwide had gross revenues of approximately U.S.$74.7 billion in 2008, with the Brazilian market contributing with an estimated R$6.9 billion (U.S.$3.0 billion). The
IDC estimates that five key sectors constitute approximately 90% of this market: telecommunications, technology/consumer, financial services, health care and transportation/leisure. The two biggest companies in the Brazilian contact center market
(Contax and Atento) together had gross revenues of approximately R$2,873 million (U.S.$1,625 million) in 2007 and R$3,653 million (U.S.$1,989 million) in 2008.

> Factors that influence companies worldwide to outsource their contact center needs include the following:

- Increasing importance for companies to retain and enhance customer relationships;
- Increasing need for companies to focus on core competencies rather than non-revenue producing activities;

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- Rapid changes in technology requiring personnel with specialized technical expertise and continued investment in new contact center equipment and services;
- Increasing need to integrate and manage complex systems incorporating a variety of hardware and software systems spanning a number of technology generations; and
- Extensive and ongoing training requirements.

Brazilian contact center outsourcers have enjoyed significant growth over the past several years. Several factors contributed to this growth:

- Increase in telephony penetration.Prior to Brazil's privatization of state-owned telecommunications companies in 1998, telephony penetration in Brazil was very low, limiting the use of contact centers as an effective way to deliver
    customer service on a broad basis. Today, a larger portion of the Brazilian population can access customer services in general through different communication channels, including both mobile and fixed-line terminals. According to the Brazilian
    telecommunications regulatory agency (Agência Nacional de Telecomunicações), or Anatel, total wireline and wireless penetration grew from 42.8 million in 1999 to 191.9 million in December 2008.
- Expansion of contact center-intensive service sectors due to economic stabilization and privatization.In the mid-1990s, Brazil implemented successful economic reforms which created a stable macro-economic environment, spurring
    the growth of financial services and, consequently, the consumer base of these companies. Brazil concurrently privatized large state-owned service providers in the telecommunications, electric, water and gas sectors, which brought about large
    investments and a rapid growth in customers.
- Pressure to reduce costs. Pricing pressures from competition and shareholder demands for higher returns have forced Brazilian companies to streamline personnel, through restructuring and outsourcing, and make other cost reductions,
    including reducing face-to-face customer services.

There are still a number of companies in Brazil that maintain contact center operations in-house. We believe that such companies still elect to keep such activities in-house because of a lack of confidence in the
quality of outsourced services, even though in-house contact centers may be more expensive to maintain. A key factor for the success of any contact center outsourcer is the ability to provide high quality service at a cost lower than in-house
operations.

According to the most recent data provided by IDC, the total number of outsourced workstations in Brazil grew from 101,124 workstations in 2006, to roughly 127,670 in 2007 and by preliminary results, 145,826 in 2008,
which represents growth of approximately 26.3% in 2007 and 14.2% in 2008. It is our belief that this increase in outsourced contact center workstations is an indication of substantial growth opportunities for outsourcers of contact center services
in the next few years.

In our quest for improving the services we provide to our customers, we launched, on November 12, 2007, a project to voluntarily join the Seal of Ethics of PROBARE - Brazilian Program for Self-Regulation of Client
Relations Market. PROBARE is an initiative of three entities active in the client, consumers and companies relations market in Brazil:  Brazilian Association of Direct Marketing (ABEMD - Associação Brasileira de Marketing
Direto), Brazilian Association of Client Relations (ABRAREC - Associação Brasileira das Relações Empresa Cliente) and Brazilian Association of TeleServices (ABT - Associação Brasileira de
Telesserviços). These entities identified the need for definition of standards of self-regulation in the client, consumers and companies relations sector, in order to improve services provided to consumers and customers contractors.

In order to achieve this prestigious emblem of excellence in service, our Company underwent a rigorous auditing program according to which it had to meet strict requirements. Our Antártica (São Paulo) and
Comércio (Salvador) sites have been officially certified and we are working to fulfill the same requirements in other operational sites.

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Regulatory Developments regarding the Telemarketing Services

On July 31st, 2008, the Brazilian Federal Government enacted Decree No. 6,523/2008 (Decreto no 6.523/2008), which became effective on December 1st, 2008 and is imposed upon services providers regulated by
Federal agencies (i.e. telephone, electric energy, cable television, credit card, and airline companies). The new set of rules, which is also referred to as the Call Centers Law (Lei dos Call Centers), mandates that the Customer
Assistance Service (SAC - Serviço de Atendimento ao Consumidor) of such services providers shall comply with the following: (i) all telephone calls must be free of charges and may not result in any financial burden to consumers; (ii)
consumers must have the option in the first menu  and in all subsequent menus  to contact directly an operator; (iii) telephone calls will not be finalized until the request is completed; (iv) access to an operator shall not be
conditioned to providing any consumers data; (v) consumers must have access to an operator within a time limit ranging from forty five (45) seconds to ninety (90) seconds, depending on the business of the service provider, as mandated by
Ordinance No. 2,014/2008 from the Ministry of Justice (Portaria no 2.014/2008); (vi) misdirected telephone calls must be reassigned to the proper operator within sixty (60) seconds; (vii) unless authorized by consumers, no marketing nor
merchandise may be broadcasted; (viii) all claims, requests, demands and complains must receive a protocol number to permit the consumers to track their information; and (ix) all telephone calls must be recorded and kept in file for a period of
ninety (90) days and must be provided to consumer upon request within ten (10) days, pursuant Ordinance No. 49/2009 of the Secretariat of Economic Law of the Ministry of Justice (Portaria no 49/2009).

A series of bills have been presented to the House of Representative and the Senate and to local legislative branches of certain states and municipalities proposing to regulate several aspects of the outbound
telemarketing services we provide, such as: (i) the days and hours in which outbound calls are allowed; and (ii) the creation of a national "do not call list." Following several discussions and public hearings, the Commission of Science, Technology,
Innovation, Communication and Information Technology of the Brazilian Senate (Comissão de Ciência, Tecnologia, Inovação, Comunicação e Informática) approved an amendment to Bill No. 243/04,
which sets forth the creation of the "do not call list", limiting the outbound telemarketing services to the hours between 9:00 am to 9:00 pm on business days and between 10:00 am to 4:00 pm on Saturdays, as well as prohibiting outbound
telemarketing services on Sundays and holidays. Such amendment to Bill No. 243/04  which transit along with Bills Nos. 123/2007 and 252/2008 of similar content  still needs to be approved by the majority of the members of the House of
Representative and Senate. The proposal is currently being discussed by the Commission for Constitution, Justice and Citizenship (Comissão de Constituição, Justiça e Cidadania), which is expected to issue a
conclusive decision and submit the bill to the Plenary of the Senate and to the President of Brazil for final examination and approval. If approved, such amended bill will enter into effect after a grace period of one year. Additionally, in 2008
other three Bills of Law were presented to House of Representatives, namely Bills Nos. 3,996/2008, 4,414/2008 and 4,517/2008 that also proposes the creation of a do not call list with minor differences among them.

In 2008 the State of São Paulo enacted a new law - State Law No. 13,226 of October 7, 2008 (Lei Estadual No. 13.226/2008) - which created the so-called Register for Telemarketing Phone Calls Blocking
(Cadastro para o Bloqueio do Recebimento de Ligações de Telemarketing). Under this law, telemarketing companies are prevented from contacting costumers in the State of São Paulo that were previously registered in the
public database. This law restricts our ability to make outbound calls in São Paulo, which adversely impacts our current revenue and growth opportunities.

Our Strategy

Contaxs business model is built on the expertise acquired through highly complex operations and high volume of transactions, allowing the Company to render services on a consultative approach to the needs of each customer.

The capacity to adapt the needs of each customer and offer products that solve problems is the operational model of Contax, deeming essential the pro-active, ongoing and close contact with its end customers to be vital for the success of the
business. The Company aims to insert itself as an essential link in the delivery pipeline of its contracting customers, and become an important lever for adding value. The more it participates in and understands its customers business, the
more Contax can enhance the quality of the services it offers.

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Our business strategy is called: WE MAKE CUSTOMERS FOR LIFE. Besides being a basic instrument to win new customers, this business model helps the Company to establish lasting relations with its customers by delivering constant and
sustainable results. This confidence generates an ideal environment for the introduction of new services for existing contracts. In 2008, the growth in operations of existing customers accounted for 78% of the growth of net revenues. This
significant figure reiterates the efficiency of the business model and the credibility won by the Company in its eight years of existence.

In 2005, we defined a business strategy named Leadership in Execution that established two basic pillars for the Company. The first is the improvement and differentiation of its four main products: Customer Care, Telemarketing,
Retention and Debt Collection. The other pillar strives for excellence in the support areas and the operational model.

An important step was taken in the end of 2008 in the diversification of the products offered by the Company. Through the creation of a new subsidiary, we stepped beyond contact center core products and diversified into
business processing outsourcing of technological services. The experienced acquired in-house by the IT department in providing contact center solutions was incorporated into a new business to target in-house contact centers. It was decided that the
best way to address the offering of services in IT solutions would be to create a new company, so that this new niche could be properly addressed and target by the corporation. This way, the launch of Todo is not just the outsourced IT department
that belonged to TNL Contax, but its a new specialized administrative structure that will improve the services offered to TNL Contax, but also, in the near future, branch out and develop new IT solutions for other customers as well.

With this in mind, our approach to refining our principal product offerings focused on:

Customer care:We feel that one of the reasons many clients are resistant to outsourcing their customer service function is fear of lowering quality and thus jeopardizing the relationships they have with their
customers. Being able to assure quality and personalized service in keeping with our clients' expectations will permit us to win more clients. We expect that by enhancing the customer service model currently in use in the market, implementing
actions that make each contact more profitable, raising quality in a consistent way and increasing contact efficiency, we will be able to deliver the high standards expected by the market.

Debt collection:We see potential for development in the debt collection market. Each industry segment and each client has different requests concerning the way a collection should be processed. We believe the
successful model used with some of our clients can be successfully implemented in other operations, depending on the needs of other clients. Through developing pilot tests to try new methods of debt collection, integrating management information
systems with customers' needs, providing debt collection operators with proper training, as well as implementing customized forms of variable earnings, we believe that we will be able to continue to grow our customer base.

Telemarketing:The quality of our services in telemarketing has been improving each year. The model we developed with our oldest client, Telemar, has brought positive results for both of us. We believe that by
customizing this model to specific clients' needs, we believe that we will be able to fulfill our other clients' requirements.

Retention: The customers retention services seeks both to persuade the end consumer not to cancel a service and to observe consumer behavior, adopting preventive measures to avoid cancellation requests, mapping
and developing new retention offers.

The development of our support areas and operational model included the following principal elements:

Human resources:  We believe our employees are the key to our success. We focus on attracting and retaining new employees, monitoring their performance and using diverse training methods to meet each client's
needs. By developing a structured career plan and providing various performance initiatives, we are able to achieve employee excellence and instill Contax values in our workforce.

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Operational model:  By providing our clients with services during the entire customer lifecycle and developing a successful value proposal in Contax's main product classes, we believe we can continue to enhance
our operational model.

IT systems:We believe that infrastructure and technology are important elements in providing superior services and attracting new clients. We seek to sustain a competitive advantage and to distinguish our
services by maintaining advanced IT systems and by retaining strong partnerships with leading technology providers. With this objective, Todo was created to become a supplier of technological services designed according to the specific needs of
contact centers. Todos first customer, when it begun its operations in April 2009, was Contax which outsourced its entire IT area to Todo.

Commercial model:We have recently added specialized members to our sales force and created a product management marketing function in order to expand our range of clients and services. We are developing new
product offerings that focus on specific segments of our clients' businesses and are continually identifying clients that are not currently "key accounts" to whom we seek to provide a broader range of call center services.

Since 2006, within the "WE MAKE CUSTOMERS FOR LIFE" business strategy, the Company has created Operations Offices, which specialize in customer care, debt collection and telemarketing, as well as creating a Department
of Products, which implements a set of product offers in our main product lines.

Competition

The outsourced contact center sector in Brazil is competitive and fragmented. Our top five largest competitors are listed below. We also compete with a variety of companies, including niche providers, consulting
companies, IT providers, and numerous small companies that offer low value-added services (primarily outbound telemarketing services). In addition, we compete with in-house contact centers, which continue to represent the largest segment of contact
center activities. In addition, some of our outbound services also compete with other forms of direct marketing, such as mail and e-mail messages, and with traditional media, such as television and radio.

We believe offshore outsourcing, where the contact center provider is not located in the same country as its customers, is neither a threat nor a significant opportunity for us at this time. Because Brazil is a low-cost
country and the national language is Portuguese, it is unlikely that contact center service providers in other countries, usually referred to as "offshore" facilities, could provide Portuguese-speaking customer service at a lower cost than providers
in Brazil. Although Brazil has competitive labor costs when compared to those of other countries and a large qualified workforce, we do not believe that significant opportunities exist to provide services for other countries at this time. We monitor
these opportunities on a regular basis.

We also face competition from automated customer services, through the use of Internet, Interactive Voice Response, voice recognition and other technologies. We provide automated customer services as a part of our
contact services and continue to develop our technology in this area. However, an increase in the use of automated services could prevent us from effectively passing through our costs to our clients, and may also shorten the speaking time of our
calls.

As a result of intense competition, contact center services are frequently subject to pricing pressures. Competition for contracts for many of our services takes the form of competitive bidding on proposals, which take
into account quality, technical and cost factors.

Since 2005 we have been the leading contact center service provider in terms of revenues (based on information in the most recent financial statements published by Brazilian contact center companies). Our major
competitors in Brazil are:

- Atento.  Atento is a part of the Spanish group Telefonica, which in Brazil controls a large fixed-line operator (Telesp), an Internet provider (Terra) and, together with Portugal Telecom, Brazil's leading mobile operator (Vivo).
    Atento has operated in the Brazilian market since 1999. After acquiring several companies
in the sector, they became one of the largest contact center services providers in Brazil. Two of Atento's major clients are Telefonica and Unibanco.

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- Tivit. Controlled by the Votorantim Group (one of the largest private economic conglomerates in Brazil). Following the acquisitions of Softway and Telefutura in 2007, Tivit has become one of the five largest contact center providers in Brazil. Two of Tivit's major clients are Santander and Telefonica.
- Dedic.Dedic is controlled by Portugal Telecom, which controls, jointly with Telefonica, Brazil's largest mobile operator Vivo. Dedic renders services, directly or indirectly, primarily to Portugal Telecom's subsidiaries in Brazil.
      Two of Dedic ́s major clients are Vivo and Itaú Bank.
- CSU. Controlled by Gstaad Investment Holding Company and River Charles, CSU was created in 1992 and is a conglomerate comprised of four units: (i) CSU CardSystem, which is, currently, the largest Brazilian independent automated
      billing processing Company; (ii) CSU TeleSystem; (iii) CSU Credit&Risk and (iv) CSU MarketSystem. CSU is present in São Paulo, Rio de Janeiro, Pernambuco and Paraná and two of its major clients are Globo Cabo (NET) and Banco do
      Brasil.
- Teleperformance. Teleperformance is a French company that operates in approximately 45 countries. In
      2004, Teleperformance increased its Brazilian operations by merging with Companhia Brasileira de Contact Center, after which Teleperformance became one of the largest contact center service providers in Brazil. Two of Teleperformance's major clients
      are UOL (one of the largest Brazilian Internet providers) and Sky/Direct (a Pay-TV provider).

Our Business

We offer a variety of integrated customer-interactive products and services covering all stages of the customer lifecycle through multiple communications channels. Each of our main service offerings (customer care,
telemarketing, technical support, retention, and debt collection, as described below) showcases our ability to add value to our clients' Customer Relationship Management (CRM) strategies, while anticipating their needs. We believe we operate in a
flexible environment that can accommodate dynamic shifts in volume, workload and staffing requirements. We seek to build upon and strengthen our end-customer relationships on behalf of our clients. Our operators are thoroughly trained in the
applicable products and services they are supporting and, as a result, they can act as a seamless extension of our clients' efforts to acquire and service their end-customers.

Our business approach is geared toward creating unique products and services that are developed jointly with our clients, leveraging our experience and best practices for each new client we serve. Building on these
tailored products and services, we have developed particular strengths (e.g., customer retention, debt collection) that we can leverage by servicing other clients across diverse sectors.

The main services rendered by us are the following:

- Customer Care.  Our customer care solutions focus on the assurance of the excellence of customer care operations and on understanding the reasons why customers contact the Company, which are followed by specific recommendations for
      improving customer care service. Contax also develops cross-selling and up-selling strategies associated with customer service efforts and identifies opportunities for automation. Our customer service solutions are segmented into interactive voice
      response (IVR), personal services (B2C and B2B), technical support, field support and back-office.
- Telemarketing. This service is focused on providing efficient solutions for attracting new clients (whether through active, receptive or blended approaches) and improving returns from the existing portfolio, always focusing on the
      specific characteristics of each client and its target market. The main pillars for achieving and exceeding these targets are (i) efficient contact, through dialers and enhancement of contact lists, and (ii) the quality of the salespeople, achieved
      through recruiting focused on the appropriate profile of potential employees, regular training and motivation.

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  Technical Support.  We provide comprehensive technical product support for our clients' customers. For example, we handle troubleshooting calls of consumer products, respond to software and hardware problems, provide support for ISPs'
dial-up and broadband customers, and manage corporate IT help desks. For such services, we employ qualified personnel with specialized technical training in dedicated teams.

  Retention.  We provide our clients with customer retention services, whether by persuading their end-customers not to cancel a service or by observing customer behavior and taking preventive measures to avoid cancellation requests. We
collaborate with our clients by mapping final customers' opinions, in order to ensure the adoption of adequate strategies for reversing intentions to cancel services.

  Debt Collection. We design debt collection strategies together with our clients to maximize results, while emphasizing customer retention. We participate from the early stages of developing our clients' collection strategy to the
actual execution of the strategy, using database filters (systems that prioritize contacts and determine the type of service each customer will receive), predictive dialers and other automatic contact tools, such as voice mail and text messages
typically sent to wireless handheld devices, in order to maximize the likelihood of customer contact and behavior models that enable us to categorize customers' risk and identify the most efficient techniques of interacting with customers. In order
to enhance our performance, we launch pilot programs to test the statistical efficiency of specific tools and strategies.

The percentages of revenues, derived from each of the services listed above, were as follows:

|                  |  |                         |  |        |  |       
|----------------- |  | ----------------------- |  | ------ |  | ------
|                  |  | Year ended December 31,
|                  |  |                        
|Services          |  | 2008                    |  | 2007   |  | 2006  
|                  |  |                         |  |        |  |       
|Customer Care     |  | 54.0%                   |  | 53.0%  |  | 54.0% 
|Telemarketing     |  | 15.7%                   |  | 13.7%  |  | 12.3% 
|Technical Support |  | 1.9%                    |  | 2.5%   |  | 2.3%  
|Retention         |  | 5.0%                    |  | 5.0%   |  | 3.9%  
|Debt Collection   |  | 15.0%                   |  | 17.1%  |  | 15.3% 
|Other             |  | 8.4%                    |  | 8.7%   |  | 12.3% 
|                  |  |                         |  |        |  |       
|Total             |  | 100.0%                  |  | 100.0% |  | 100.0%
|                  |  |                         |  |        |  |       
|                  |  |                         |  |        |  |       

We also offer other services such as dispatch, back-office support, and surveys, among others. Furthermore, we continuously work with our clients to develop new products.

With the objective of exploring new business opportunities and developing new products, we initiated Todos operation, which will act as a provider of technology services, with an initial focus on the contact
center segment. Through Todo, the Company intends to supplement its present range of services and take advantage of its expertise and market relationship in order to operate in the broader universe of Business Process Outsourcing (BPO).

Todo was created from Contaxs own IT area, which we believe will facilitate its emergence as a significant player in this market segment. Over time Todo intends to expand its operations mainly to offer services to
companies that have their own contact centers, providing technological solutions for this market, which shows a growing demand for specialist service providers.

On a monthly basis, we handle approximately 175 million customer contacts over the telephone at our 25 contact center sites. Our technology infrastructure provides for the effective distribution of calls to one or more
of our sites.

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Markets and Clients

We provide contact center services primarily across the following sectors:

  Telecommunications.  We provide a full range of contact center services to Telemar, our largest client. Telemar's operations include fixed line terminals, long-distance services, mobile services, as well as broadband and corporate voice and data services. In addition to traditional customer care services, we deliver extensive client retention and debt
collection services for Telemar's retail and corporate customers. Due to our strong relationship with Telemar and because other telecom groups control their own contact center companies, we have not actively pursued other opportunities in this
sector.

  Financial Services.New financial products and service offerings have expanded our opportunities in this sector. We provide a broad range of services to the credit card, retail bank and insurance segments, as well as to consumer
credit companies. This sector continues to grow in importance for us since many financial institutions have in-house operations that fit into our strategy of focusing on clients with high volume and highly complex services.

  Utilities.There are several large companies in Brazil in the power, water and sewage, and gas distribution segments. Currently, we provide services to a few power distribution companies in the Southeast and Northeast regions of Brazil. We intend to continue to expand our activities in this sector and our success could be enhanced if there is further privatization in the water and sewage segment.

  Internet.  We have developed specific end-to-end services for Internet service providers, or ISPs, by servicing iG, Brazil's largest ISP, and, more recently, Telemar's new ISP subsidiary. We are particularly interested in providing
customer acquisition, retention and technical support services to the growing number of broadband Internet access providers.

Other key sectors include pay TV, travel and transportation, among other service providers. We conduct all of our business in Brazil and all of it in Portuguese.

The percentages of revenues, with respect to each sector listed above, were as follows:

|                   |  |                         |  |        |  |       
|------------------ |  | ----------------------- |  | ------ |  | ------
|                   |  | Year ended December 31,
|                   |  |                        
|Sector             |  | 2008                    |  | 2007   |  | 2006  
|                   |  |                         |  |        |  |       
|Telecommunications |  | 51.2%                   |  | 50.8%  |  | 57.6% 
|Financial Services |  | 33.7%                   |  | 33.5%  |  | 31.5% 
|Utilities          |  | 1.5%                    |  | 2.0%   |  | 1.9%  
|Internet           |  | 0.2%                    |  | 1.3%   |  | 1.2%  
|Other              |  | 13.4%                   |  | 12.4%  |  | 7.9%  
|                   |  |                         |  |        |  |       
|Total              |  | 100.0%                  |  | 100.0% |  | 100.0%
|                   |  |                         |  |        |  |       
|                   |  |                         |  |        |  |       

Client Contracts

Most of our relevant contact center services agreements range from one to six year terms and allow clients to terminate services after an initial lock-in period, which varies from 6 to 60 months. Most of these contracts
establish penalties calculated as a percentage of the estimated value due for the remaining term of the agreement. We have historically established long-term relationships with our clients based on the continuous renewal of our contracts and
expansion of the services we provide.

Pricing models have evolved over the last few years. In the past, most of our contracts were based on capacity rental, where the client defined the number of workstations to be employed for a fixed price. Most of our
inbound service contracts are now billed based on speaking time, where the client pays for each minute of conversation of our operators with customers. Other services are mostly priced on a pay-for-performance basis, where we either receive a
combination of a fixed-rate fee plus a success fee or payments that are wholly
performance-based. Typically, performance-based compensation is used in debt collection and telemarketing services.

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Our services can be rendered on a fully-outsourced or partially-outsourced basis. Partially-outsourced services may include providing our contact center infrastructure when clients desire to use their own employees or
providing our human resources when clients have already invested in their own facilities.

Nearly all of our contracts include Service Level Agreements (SLAs) that define performance requirements and minimum quality thresholds. Service Level Agreements are agreements between service providers and their
customers that define, among other things, the services provided, the metrics associated with these services, acceptable and unacceptable service levels (e.g., speed of answer goals), liabilities on the part of the service provider and the customer
in the case of non-performance, and actions to be taken in specific performance. The most common Service Level Agreement provision on inbound services is related to the time a customer should wait to be serviced. This is typically measured as the
minimum percentage of phone calls that should be answered in a maximum time frame (e.g., an "80/20" Service Level Agreement provision requires that at least 80.0% of the calls will be answered in no longer than 20 seconds). With the increased
complexity of outsourced services, more Service Level Agreement provisions are required by clients, such as service interruption, adherence to defined scripts, and even operator turnover. If we do not meet a Service Level Agreement provision, we may
be liable for penalties or a price reduction of our services.

Our clients are entitled to receive penalties and indemnifications from us when they face operational problems or damages resulting from an act of imprudence, negligence, gross negligence or willful misconduct by us in
connection with the delivery of our services. These penalties, and consequently the respective amounts due thereunder, vary depending on the type and level of each failure. Hence, we cannot quantify an amount for these penalties in advance, since it
is only possible to determine the nature and extent of those failures when a specific event occurs. Regarding our indemnification obligations, we have other contracts pursuant to which we may be required to pay the total amount of the damages
incurred by a client, as calculated by the client, an arbitrator or a judge in a legal proceeding. As a result, we are unable to estimate the amount of these indemnifications, since such amount would be directly related to the nature and extent of
the damages incurred by our clients and caused by us, our directors, officers, employees or subcontractors. Our exposure in any of these circumstances could be significant.

Our main clients are Telemar and Orbitall. For the years of 2008 and 2007, the contract with Telemar represented 51.1% and 50.7% of our total revenues, respectively. The revenue derived from Orbitall's operation
represented 13.9% of our total revenues for 2008 and 15.0% of our total revenues for 2007.

Result Variance and Seasonality

We experience variations in our results of operations primarily due to the timing of our clients' Customer Relationship Management initiatives, such as customer acquisition and sales campaigns. For example, we
experience higher activity in December, which is typically a month of higher volume of promotional activities and sales for our clients, while the beginning quarter of the year tends to be slower in volume of business due to it being a period of
holidays and less working days.

Our periodic results may also be impacted by the start of significant operations under a new contract or the termination of an existing one. The start of a contract may adversely affect our results, since we incur
start-up costs that are recovered throughout the course of the contract, such as hiring and training personnel and IT implementation. The termination of our existing contracts may also adversely impact our results, as we would incur increases in
costs relating to the severance of our employees and the reallocation of our assets, as well as suffer lower utilization rates of our facilities.

Another relevant factor that may impact our results is the practice of annual rate adjustments, usually related to past inflation. This practice is very common in Brazil and some of our contracts allow for rate
adjustments on an annual basis while some of our costs (e.g., telecommunications, leased facilities) have periodic rate adjustments according to past inflation. If any significant client contract has its rate adjusted, our monthly results may be
positively impacted in relation to the previous month. We are currently in negotiations with the labor union
and any increase in our employees' wages or benefits that may result from the conclusion of these negotiations may have an impact on our business until the contractual rate adjustments with our clients become effective. Our annual labor union
negotiation typically results in compensation increases, which could take the form of a percentage salary increase and/or one-time payment. In the event of the latter, our cash flow in a given period would be more acutely affected.

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Human Resource Management

We believe human resources are the key to the success of our business. In December 31, 2008, our headcount totaled 74,499 employees. Accordingly, we continuously refine our approach to hiring, training and managing
qualified personnel at all levels of our organization, which we believe to be one of our core strengths. We offer classroom, online and on-the-job training programs for our employees, ranging from training regarding information about our clients and
the products and services they offer to techniques of telephone-based sales and customer service. Once hired, each new operator receives on-site training, the duration of which depends upon the complexity of the services to be provided.

In order to guarantee productivity and quality of our employee's performance, we have developed specific training programs related to customer care, telemarketing and debt collection techniques. For activities with
performance-based compensation services, we have specific training programs to guarantee constant results.

We also focus on employee retention. This effort is important since initial training, particularly for inexperienced and young recruits, is costly and time consuming. Moreover, better-qualified and more experienced
operators generally achieve higher productivity levels and greater revenue per workstation.

We have an aggressive internal employee promotion program. Our systems and tools allow us to track each operator's performance using predefined indicators, such as punctuality, absence and productivity. These systems
allow us to reward our best employees, and provide specific training for underachievers, resulting in greater productivity and reducing total human resources costs. We have variable compensation programs for activities that are linked to the
achievement of performance-based goals.

Facilities

Our principal executive office, known as Passeio, is located in Rio de Janeiro, Brazil. This facility currently serves as the headquarters for senior management and the financial, information technology, human resources
and administrative departments. Passeio also houses contact center operations, with 2,443 workstations, and it is currently our largest facility with 24,044 square meters. In December 31, 2008, the Company had in operation a total of 25 contact
centers in seven different states.

We believe our existing facilities are adequate to meet current requirements and to accommodate minor expansions. Instead of maintaining extra capacity for future demands, we have opted for a strategy of high capacity
utilization. In order to meet aggressive implementation requirements of new clients, we have developed a group of suppliers with standardized products and services, capable of quickly responding to our need for additional workstations or facility
expansion. Furthermore, in locations such as São Paulo and Rio de Janeiro, where there is a higher likelihood of future growth from client demand, we seek to lease premises that allow for significant expansion, if necessary.

We seek new locations where there are favorable workforce demographics, ample telecommunication and electricity services and easy access to transportation for employees. We also perform a cost-benefit analysis of every
potential location in light of rental costs, setup/retrofit costs, local tax incentives, safety features, and the cost of future expansion. This has led us to achieve competitive advantages in connection with the location of our facilities: (a) our
operations are geographically spread, covering a substantial part of the main economic areas of Brazil; and (b) we have important operations in places like the Northeast of Brazil which allow us to render services at lower general costs, mainly as a
result of local tax incentives and high performance of our personnel at lower labor costs.

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The following table sets forth additional information concerning our facilities at December 31, 2008:

|                         |  |       |  |                 |  |             |  |            |  |               
|------------------------ |  | ----- |  | --------------- |  | ----------- |  | ---------- |  | --------------
|Sites                    |  | State |  | # Work Stations |  | # Employees |  | Sq. Meters |  | Expiration    
|                         |  |       |  |                
|Passeio1                 |  | RJ    |  | 2,443           |  | 6,369       |  | 24,044     |  | Nov. 10, 2010 
|Makenzie                 |  | RJ    |  | 2,497           |  | 4,524       |  | 10,077     |  | Dec. 30, 2009 
|Mauá                     |  | RJ    |  | 1,851           |  | 4,877       |  | 9,702      |  | Feb. 28, 2013 
|Niterói                  |  | RJ    |  | 1,753           |  | 4,980       |  | 13,624     |  | Dec. 30, 2009 
|Riachuelo                |  | RJ    |  | Support Area    |  | 1,264       |  | 2,335      |  | Jan. 14, 2013 
|São Cristóvão2           |  | RJ    |  | 492             |  | 13          |  | 5,600      |  | Not Applicable
|Alameda Santos           |  | SP    |  | Support Area    |  | 175         |  | 1,110      |  | Mar. 25, 2012 
|Alegria                  |  | SP    |  | 607             |  | 2,077       |  | 19,000     |  | Nov. 20, 2017 
|Antártica                |  | SP    |  | 2,926           |  | 5,660       |  | 21,621     |  | June 13, 2009 
|Augusta                  |  | SP    |  | Support Area    |  | 67          |  | 3,497      |  | May 31, 2011  
|Inhaúma3                 |  | SP    |  | 651             |  | 5           |  | 3,350      |  | June 30, 2011 
|Lapa                     |  | SP    |  | 1,670           |  | 4,616       |  | 17,375     |  | Aug. 1, 2011  
|Oliveira Coutinho4       |  | SP    |  | 718             |  | 8           |  | 3,419      |  | Sept. 30, 2013
|Paulista/ Conj. Nacional |  | SP    |  | 2,690           |  | 5,373       |  | 14,711     |  | Dec. 31, 2011 
|Rubens Meireles          |  | SP    |  | Support Area    |  | 203         |  | 2,752      |  | July 2, 2011  
|Contorno                 |  | MG    |  | 2,368           |  | 6,044       |  | 7,290      |  | July 30, 2010 
|Nova Lima                |  | MG    |  | 624             |  | 1,297       |  | 370        |  | Oct. 31, 2011 
|Prado                    |  | MG    |  | 1,656           |  | 4,330       |  | 11,998     |  | Dec. 31, 2014 
|C. da Pólvora            |  | BA    |  | 1,575           |  | 4,033       |  | 7,757      |  | Dec. 30, 2009 
|Comércio                 |  | BA    |  | 1,566           |  | 3,760       |  | 11,000     |  | April 1, 2009 
|Fortaleza                |  | CE    |  | 3,137           |  | 7,460       |  | 15,246     |  | Dec. 30, 2009 
|Aurora                   |  | PE    |  | 515             |  | 1,141       |  | 8,584      |  | Oct. 10, 2012 
|Conquista                |  | PE    |  | 780             |  | 2,074       |  | 9,256      |  | Jun. 24, 2011 
|Príncipe                 |  | PE    |  | 1,022           |  | 2,116       |  | 3,805      |  | Dec. 30, 2009 
|Porto Alegre             |  | RS    |  | 612             |  | 2,033       |  | 1,769      |  | Undefined Term
|                         |  |       |  |                 |  |            
|Total                    |  |       |  | 32,153          |  | 74,499      |  | 229,292    |  |               

____________

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | Includes both contact center operations and our headquarters.                                                                                                                                                                                                                                                                                                                                                                           
|2 | We acquired this real property on December 20, 2007. We own the title deed, but it has not yet been registered at the Notary Public. The price of the building and land acquired by Contax on December 2007 was R$3,459 thousand. This site was
launched to house operations for financial clients, where we manage the technological park and infrastructure of the clients ́contact center, while the client is in charge of personnel.
|3 | This site was also launched to house operations for a financial institution, where we manage the technological park and infrastructure of the client's contact center, while the client is in charge of personnel.                                                                                                                                                                                                                      
|4 | Since March 3, 2007, we have been rendering our services to a financial institution from this site, on which such financial institution is the lessor and is in charge of personnel in this site.                                                                                                                                                                                                                                       

Information Technology

Our growth and business success, among other factors, depends on highly effective technology and therefore, during 2008, Contaxs new Technologies Department, improved its competencies and models in order to
oversee the usage of new technology in the Company, especially focusing on:

  Research of new technologies and benchmarks to allow permanent business growth;

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  Identification of promising partners or technologies adhering to our strategy; and

  Evaluation of infrastructure alternative solutions and products, in order to reduce operational costs and enhance business effectiveness.

Significant investments in telecommunications and IT infrastructure have continuously been made with the purpose of meeting our and our clients' requirements. We believe that its vital that we continue to invest in the
development of new and innovative systems on a timely basis in order to maintain our competitiveness.

We use industry-standard software and hardware from IBM, Lenovo, Microsoft, Oracle and Cisco, EMC, Avaya, Nortel, SAP, Novell, Genesys, Dell, Altitude, Intervoice, Nice, CA, Symantec and others for operations and
administrative functions, in addition to our own internally developed software and applications. For the purposes of interacting with our clients' databases, we have implemented highly customized services. In some services, we also utilize systems
and software developed by our clients.

We have developed the internal capability to design software services applicable to our business requirements. Our in-house software development team is comprised of approximately forty systems programmers and analysts.
We have successfully developed in-house systems that have resulted in a competitive advantage by allowing us to tailor our services as well as control and reduce our operational costs, particularly those related to employee productivity. See "
Our Strategy."

We utilize sophisticated technology for our business, from our telephony platforms (Avaya and Nortel) to our workstations, computer equipment (Dell, IBM, Lenovo and others) and professional recorders, as well as
productivity tools, such as predictive dialers, Interactive Voice Response Units, automated call distributors and workforce management software. Our customer service professionals have the tools to initiate and efficiently handle millions of service
interactions on a daily basis. Our telephony infrastructure, partnered with Telemar's as well as other carriers' data and telephony networks, provide several options when routing voice and data contacts throughout our different sites. These
platforms support such features as voice over IP, or VoIP, best services routing, skills-based routing and schedule adherence.

During 2008 we have reviewed our major current IT procedures based on ITIL methodology, in order to optimize such processes and enhance value.

During the most recent fiscal year some new technologies were implemented:

  Exclusive new VoIP platform  In 2008, Contax began using data network for voice communication by implementing a new platform based in VoIP in order to increase scale in Data Center construction, in addition to consolidating data and
voice elements, bringing more functionalities to our business.

  High Speed Networking Creation  Contax has its own service and data networks which provides voice routing, communication between systems, video conference and other services, providing a new business model that supports those
applications that demand intensive bandwidth capacity.

  "Server Virtualization"  Contax invested in modern server machines called "virtual servers" which are able to host several systems that were previously run in different exclusive dedicated servers. This technology alow us to reduce
space and energy consumption.

   Information Security  The Company chose Symantec as the provider of antivirus and antispam solutions, in an outsourcing designed to guarantee security to Contax and its customers. Symantec was chosen as the outsourced company after it
was recommended by specialized consulting companies.

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Capital Expenditures

The following table sets forth our capital expenditures for the periods indicated below:

|                                  |  |                         |  |         |  |        
|--------------------------------- |  | ----------------------- |  | ------- |  | -------
|                                  |  | Year ended December 31,
|                                  |  |                        
|                                  |  | 2008                    |  | 2007    |  | 2006   
|                                  |  |                         |  |         |  |        
|                                  |  | (in thousands ofreais) 
|Telecommunications and IT systems |  | 110,540                 |  | 76,665  |  | 64,035 
|Leasehold improvements            |  | 31,328                  |  | 33,287  |  | 36,549 
|Furniture and fixtures            |  | 16,537                  |  | 12,249  |  | 5,510  
|Other                             |  | 9,525                   |  | 11,217  |  | 2,764  
|                                  |  |                         |  |         |  |        
|Total capital expenditures        |  | 167,930                 |  | 133,418 |  | 108,858
|                                  |  |                         |  |         |  |        
|                                  |  |                         |  |         |  |        

Our capital expenditure is primarily linked to our rate of growth, with a small portion (approximately 20.0%) being applied towards general upgrades and quality improvements of our existing systems.

Sales and Marketing

Our commercial efforts are focused on the largest Brazilian economic conglomerates, which we believe have the potential need for a significant number of outsourced services. As a result of this strategy, we channel
virtually all of our sales efforts through our direct corporate sales force, consisting of six key account managers, led by six commercial managers and supported by a team of thirty people who are responsible for supporting the key account managers
in designing commercial proposals.

According to our "Leadership in Execution" strategy, in 2005, we structured the Products Solutions Development team in order to enable us to deliver customized products to our clients. Based on our understanding of our
customers' needs and specific requirements, this team generates customized solutions using in-house knowledge and experience. Furthermore, this division is responsible for managing the entire service delivery process, interfacing with various other
areas of Contax.

Moreover, we also organize sales, products and marketing teams with two main guidelines: (1) structuring and developing Contax's service offerings, focused on three lines of services: Customer Service, Sales and Debt
Collection; and (2) assisting our operational divisions in implementing best practices.

In 2006, we adopted a strategy known as "WE MAKE CUSTOMERS FOR LIFE", which illustrates our commitment to, and alignment with, our clients' long-term satisfaction. This new vision stimulates us to organize and present
ourselves as a strategic partner, focused on the final customer of our clients, thus creating an interdependent relationship with our direct clients. We intend to be a relationship company rather than a simple service company.

Insurance

Our assets and liabilities of material value and high risk are currently covered by insurance policies maintained by Contax Holding and TNL Contax, which guarantee coverage for material damage and loss of revenue
arising from such damage. While Contax Holdings insurance policy is valid until January, 2010, TNL Contaxs own insurance policies are valid until May 2010 and are contracted in the amounts listed below, which it believes will be adequate
for the nature and risks of its activities and sufficient to ensure the protection of its net worth and operational continuity. All policies are renewable upon expiration.

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Our insurance policies comprise the following coverage, measured by the risks and nature of our assets:

|                                  |  |                        |  |                       
|--------------------------------- |  | ---------------------- |  | ----------------------
|Coverage Type                     |  | Amount Covered in 2009 |  | Amount Covered in 2008
|                                  |  |                        |  |                       
|Property damage                   |  | R$81,427 thousand      |  | R$61,400 thousand     
|Business interruption             |  | R$43,283 thousand      |  | R$42,654 thousand     
|General liability                 |  | R$10,000 thousand      |  | R$10,000 thousand     
|Directors and Officers' liability |  | U.S.$100,000 thousand  |  | U.S.$100,000 thousand 

Intellectual Property

On December 30, 2008, Tele Norte Leste Participações S.A. transferred to us at no cost eighteen (18) trademark applications/registrations containing the word "Contax" filed before the Brazilian Patent and
Trademark Office (Instituto Nacional de Propriedade Industrial). The record of this assignment and the respective publication by the Brazilian PTO are still pending. The portfolio includes twelve (12) trademark registrations and six (6)
pending applications.

On November 18, 2008, Todo filed two (2) trademark applications with the Brazilian PTO. On March 20, 2009, Todo filed eight (8) trademark applications, which has not yet been published for the knowledge of third
parties. All Todo's applications are pending and no oppositions have been filed against them.

There are currently seven domain names registered with the "Contax" name at the Center of Information and Coordination of Dot BR- NIC.BR (Núcleo de Informação e Coordenação do
Ponto BR - NIC.br), the Brazilian institution responsible for registering domain names. There are four domains registered under the name of Contax Holding (Contax Participações S.A.), among them (www.contax-net.com.br and
www.contaxt.com.br), one (www.contax.com.br) registered under the name of TNL Contax, and two (www.contax.net.br and www.contaxt.net.br) registered under the name of TNL. The domain names registered by TNL will be assigned to us at no cost, upon
authorization of NIC.BR.

There is currently one domain name registered in name of Todo, namely, www.todobpo.com.br, at the Center of Information and Coordination of Dot BR - NIC.BR (Núcleo de Informação e
Coordenação do Ponto BR - NIC.br), the Brazilian institution responsible for registering domain names.

Item 4A. Unresolved Staff Comments

Not applicable.

Item 5. Operating and Financial Review and Prospects

The following discussion and analysis of our results of operations, financial condition and liquidity should be read in conjunction with our financial statements and the related notes included elsewhere in this annual
report.

Executive Overview

We provide contact center services, such as customer care, telemarketing, technical support, customer retention and debt collection. Continuing a leadership plan initiated in 2005, our net revenues of R$ 1,774,728
thousand in 2008 makes us the largest contact center provider of Brazil in terms of revenues and represented an increase of 29.9% as compared to 2007, based on information provided by IDC and available in the most recent financial statements
published by Brazilian contact center companies.

Our services vary based on the nature of the contact interaction (i.e., whether the contact is inbound or outbound), and are generally rendered from our 32,153 workstations (in 2008) through various communication
channels, such as by telephone, web, mail, e-mail and fax. Our revenues are calculated based on a number of indicators, including the number of workstations, speaking time and performance targets, which vary in accordance with the type of service
and contractual arrangements we have with our clients.

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Our results are significantly impacted by the following factors, among others:

  the acquisition or loss of a major client;

  fluctuations in demand for our services;

  our ability to pass through to our clients increases in costs;

  our ability to efficiently manage our workforce productivity; and

  success or failure with respect to our performance-based services.

Acquisition or Loss of a Major Client

The acquisition or loss of a major client may have a significant effect on our results. Beginning operations under a new contract may adversely impact our results, since we have start-up costs that are recovered
throughout the course of the contract, such as hiring and training personnel and IT implementation. The termination of our existing contracts may also adversely affect our results, as we would incur costs to terminate employees and reallocate
assets, as well as suffer lower utilization rates of our facilities.

Fluctuations in Demand for Our Services

The increase and decrease of services required by our major clients has a significant impact on our results, particularly as such fluctuations affect capacity utilization rates. The growth of our clients' customer bases
can increase the overall need for contact center services, such as customer service, telemarketing, collection and retention. If our clients' customer base erode or other events occur, such as increased automated customer service, a decrease in call
volume and/or speaking time and, consequently, a decrease in our revenues could result.

Our Ability to Pass Through to Our Clients Increases in Total Costs

Our ability to obtain rate adjustments to compensate for increased costs is a significant factor in our results. Our business is very labor intensive and personnel costs are among the key factors impacting our costs.
These costs include wages, costs of employee benefits and payroll taxes. For 2008, personnel costs accounted for 74.5% of our total costs, while the remaining 25.5% represented costs associated with third-party services, depreciation and our
facilities.

Our annual collective labor negotiations involve the discussion of compensation and benefits. To protect against cost increases related to telecommunications, energy and our leased facilities as well as the impact of
inflation, most of our contracts have annual rate adjustment clauses that allow for price increases to cover any such cost escalation. We may decide not to exercise the right to adjust prices fully in view of competitive conditions and/or other
client relationship issues.

Our Ability to Efficiently Manage Our Workforce Productivity

Our profitability depends largely on the productivity of our workforce. Workforce productivity involves both traffic planning, which consists of designing facilities and resources to meet user requirements, and
corresponding workforce management.

Inbound services based on speaking time represented approximately 30.0% of our net revenues in 2008. Efficient traffic planning is key to the profitability of our services, by bringing the number of operators as close
as possible to the levels required to deal with incoming call volume. An excess number of operators, based on an overestimated forecast, may cause us to lose profitability due to idle capacity. In contrast, if there are more incoming calls than
originally forecasted, we may not have enough operators to deal with the additional call volume and we may be subject to Service Level Agreements' penalties.

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Workforce management involves team scheduling that requires the use of sophisticated planning tools to determine the number of employees scheduled at each shift for each type of service, according to our forecast of
call volume and speaking time per call, as well as complying with all labor regulations related to our services. We employ advanced planning and control software packages and have developed several systems that contribute to increased employee
productivity. These systems include proprietary software that links payroll to employee login time and a company-wide intranet that measures individual and team performance indicators. A significant deviation in these performance indicators could
have a material impact on our results.

Success or Failure with Respect to Our Performance-Based Services

Approximately 31.0% of our net revenues in 2008 were derived from operations with performance-based revenues, which involve telemarketing and debt collection services. Performance targets include successful sales and
collection percentages on bad debt, among other performance indicators. For example, if we are able to collect more money in a given month, our revenue for such debt collection services rendered can be significantly higher and thus more profitable.
Our success or failure on such performance-based services can significantly impact our results in any given period.

Key Events in 2008

Volume of Operations:

During the past fiscal year, we experienced an expansion in our volume of operations. In addition to contracts with new clients, our growth resulted from the expansion of services provided to our existing clients
(especially in the telecom and financial sector). This growth in new services required an increase of 14.7% in workstations, from 28,043 workstations in December 2007 to 32,153 workstations in December 2008. Our headcount also increased 21.3%, from
61,397 employees in December 2007 to 74,499 employees in December 2008.

The increase in size and also the ability to readjust contracts with clients to reflect cost increase translated into a net revenue increase of 29.9%, so that in 2008 net revenue came to a total of R$1,774.7 million
as compared to R$1,365.8 million in 2007 (an increase of R$408.9 million).

In 2008, Contax's growth resulted mainly from the increase of revenues derived from our existing clients, which represented 77.5% of the total net revenue increase. From the product point of view, customer care
continued to account for the biggest portion of net revenue, representing 54.0% of the total. Telemarketing and debt collection accounted for 15.7% and 15.0%, respectively.

Share Buyback Program:

On September 2008, the Company approved a fourth buyback program of approximately R$40 million. By the end of the month, the program was completed and 52,337 common and 861,664 preferred shares were repurchased. All
of these shares were canceled in January 2009, resulting in a Company's stock capital of 14,942,685 shares, comprised of 5,772,435 common and 9,170,250 preferred.

Altogether, the Company invested R$201 million in all of its buyback programs, of which R$41 million was invested in 2006, R$120 million in 2007 and R$40 million in 2008.

BNDES Loan Agreement:

In 2007, we entered into a loan agreement with BNDES for the total amount of approximately R$216.7 million with the purpose of financing the expansion of our installed capacity, upgrading current facilities,
training programs, improving service quality and productivity and investments in marketing activities, within the PROSOFT- Corporate (Software Industry and Correlated Services Development Program). In October 2007, the first tranche of the BNDES
loan was provided in the amount of R$100 million.

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In 2008, four additional tranches were received on January 28, January 30, June 12 and November 18, in the amounts of R$40 million, R$10 million, R$61.8 million and R$4.9 million, respectively. The
Company has already received from BNDES the total amount of R$216.7 million.

Repayment will occur within a six-year settlement term, including a two year grace period, with an annual cost of TJLP (the Brazilian long-term interest rate) plus 2.0% .

Telemar Participações S.A. restructuring process concluded on April 2008

On April 25, 2008, negotiations relating to the restructuring of the ownership structure of Telemar Participações were concluded. One of the results was the approval of the partial spin-off of Telemar
Participações, with the transfer of its shareholders' equity related to the shares issued by Contax to a new company created especially for this purpose denominated CTX Participações S.A. See "Item 4. Information on the
Company".

Creation of a new subsidiary  Todo

On October 2008, the Company invested in its new subsidiary Todo. The launch of operations in the Business Process Outsourcing (BPO) segment through a new subsidiary is aimed at expanding our service portfolio and
entering new markets, without losing focus on our main business, the contact center (voice process outsourcing) industry operated through TNL Contax S.A.

TNL Contax owns 80.0% of the voting and total capital of Todo, with the remaining shares held indirectly by executive officers of Todo. Shareholders agreement and other documents were signed between the parties
regulating matters such as a non-compete agreement between Todo and TNL Contax and restrictions on the remaining shareholders regarding the sale of shares. Todo is managed independently from TNL Contax, with different executive directors and with
headquarters located in São Paulo. Todo did not have any significant activities during 2008, and began operations in April 2009.

Critical Accounting Policies and Estimates

In preparing our financial statements, we have relied on estimates and assumptions derived from historical experience and various other factors that we deemed reasonable and relevant.  "Critical accounting policies" are
those that are important to the portrayal of our financial condition and results and require management's most difficult, subjective or complex judgments, estimates and assumptions.

The application of these critical accounting policies often requires judgments made by management regarding the effects of matters that are inherently uncertain. Our estimates, including but not limited to the
provisions for accounts receivable and contingent liabilities, may differ from the actual value of such assets or liabilities. The following is a discussion of our critical accounting policies, including some of the variables, assumptions and
sensitivities underlying the estimates relating to:

- revenue recognition;
- depreciation of property and equipment;
- payroll and related accruals;
- contingencies; and
- deferred and recoverable income tax and social contribution.

Revenue Recognition

We recognize revenues on an accrual basis at the time services are rendered, except with respect to some of our performance-based services, which we recognize upon their measurement and acceptance by our client. Most

service contract revenues are calculated based on indicators such as quantity of workstations, speaking time and on performance targets. Revenues are calculated based on information available in our IT systems that relate to the volume of data
services rendered to each client. Revenues related to our performance-based services are calculated based on data available in our and our clients' IT systems. In addition, we usually allocate operation managers to review, reconcile and discuss such
indicators with clients. Some revenue adjustments are recorded after discussions with such clients.

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Depreciation of Property and Equipment

We depreciate property and equipment using the straight-line method at rates we judge compatible with the useful lives of the underlying assets. In 2007, the useful lives of IT equipment and Furniture and fixtures were
reviewed due to the reduction of the estimated economic useful life of assets acquired before December 31, 2006. The evaluation and determination of the new economic useful life of these assets was performed in accordance with the rules of A.B.N.T
 Brazilian Association of Technical Rules. Given the complex nature of our telecommunications and IT systems, the estimates of useful lives require considerable judgment and are inherently uncertain, due to rapidly changing technology and
practices in our business sector, which could cause early obsolescence of such systems.

Payroll and Related Accruals

Payroll and related accruals are the most significant costs of our operations, and are calculated and recorded on an accrual basis by our payroll system. Payroll and related accruals include wages and salaries, paid
vacation, Christmas bonus (décimo terceiro salárioor thirteenth salary), social security charges, executive profit sharing plan and employees' payroll tax withholdings, most of which are defined by Brazilian labor law.

For paid vacation provision, each employee is entitled to a 30-day calendar paid annual vacation, corresponding to 133.3% of a monthly salary. We record a monthly provision for paid vacations, until such benefit is paid
(when employees effectively take their vacations). For the thirteenth salary payment provision, we record a monthly provision equal to 1/12 of each employee's monthly salary until such benefit is paid. Fringe benefits, such as paid transportation
and meal vouchers, are recognized as expenses on a monthly basis when provided to employees.

Management's executive profit sharing plan is performance-based on the achievement of several financial and quality targets of the Company as well as individual employees' targets, determined on an annual basis. This
provision is recorded on a monthly basis and is recalculated at year-end based on our best estimate of targets attained, as set in the annual budget process, but the actual total amount is only final after being reviewed and approved by our Board of
Directors.

Contingencies

The preparation of our financial statements requires us to make estimates and assumptions regarding contingencies that affect our overall financial condition or relate to the changes in the real value of assets and
liabilities at the date of the financial statements and accounting revenues and expenses during the reported period. Such contingencies include those related to the legal proceedings discussed in Note 22 to our Consolidated Financial Statements.

Under IFRS, provisions for contingencies are recognized for the amounts of probable losses based on management's opinion of the outstanding contingent matters. We continuously evaluate the provisions for contingencies
based on changes in relevant facts, circumstances and events, such as judicial decisions, that may impact our estimates, which in turn could have a material impact on our results of operations and shareholders' equity. While management believes that
the current provisions for contingencies are adequate, there can be no assurance that these factors will not change in the future.

Labor Claims. Labor claim provisions in the total amount of R$51,651 thousand (U.S.$22,101 thousand), as of December 31, 2008, relate mainly to salary equalization claims (R$22,300 thousand
(U.S.$9,542 thousand)),
unpaid overtime salary (R$6,100 thousand (U.S.$2,610 thousand)), and the remaining (R$23,424 thousand (U.S.$10,023 thousand)) to various other factors (e.g., accidents and benefits, among others).

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Tax Claims.Our total provisions for tax contingencies amount to R$11,927 thousand (U.S.$5,104 thousand) and relate mainly to social security taxes (R$5,804 thousand (U.S.$2,484 thousand)), as of
December 31, 2008 owed to the National Institute of Social Security (Instituto Nacional de Seguridade Social -INSS). Other provisions regarding tax claims are related to the mandatory contribution (R$1,934 thousand (U.S.$828
thousand)), as of December 31, 2008 to the Rio de Janeiro and São Paulo Municipalities regarding services tax, or ISS, and another provision of R$4,189 thousand (U.S.$1,792 thousand) for PIS/COFINS.

We do not believe that the proceedings recorded as probable losses, if decided in a manner that is adverse to us, will have a material adverse effect on our financial condition. It is possible, however, that future
results of operations could be materially affected by changes in our assumption, and the effectiveness of our strategies with respect to legal proceedings.

Deferred and Recoverable Income Tax and Social Contribution

We record deferred tax credits arising from temporary differences and tax loss carryforwards. These projections include several assumptions related to the performance of the Company, exchange rates, service volumes, tax
rates and other factors that could differ from current estimates.

There is no time limit for the use of tax loss carryforwards according to current Brazilian tax regulations. However, accumulated tax losses may offset no more than 30.0% of the taxable profit in any year.

Results of Operations

Results of Operations for the Year ended December 31, 2008 compared with the Year ended December 31, 2007

|                     |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|-------------------- |  | ----------------------- |  | ------------------------- |  | ------------------------------------ |  | -------------------------------------------------------------------- |  | ----- |  | -----
|                     |  | Year ended December 31, |  | Period over period change |  | Period over period percentage change |  | Results as a percentage of net sales for the year ended December 31,
|                     |  |                         |  |                           |  |                                      |  |                                                                     
|                     |  | 2008                    |  | 2007                      |  | Favorable (unfavorable)              |  | Favorable (unfavorable)                                              |  | 2008  |  | 2007 
|                     |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|                     |  |                         |  |                           |  |                                      |  | (in thousands of reais)                                              |  |       |  |      
|Net operating        |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|revenues of services |  | 1,774,728               |  | 1,365,815                 |  | 408,913                              |  | 30%                                                                  |  | 100%  |  | 100% 
|rendered             |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|Cost of services     |  | (1,507,603)             |  | (1,174,106)               |  | (333,497)                            |  | 28%                                                                  |  | (85)% |  | (87)%
|                     |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|rendered             |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|Gross profit         |  | 267,125                 |  | 191,709                   |  | 75,416                               |  | 39%                                                                  |  | 15%   |  | 13%  
|Finance Income       |  | 32,547                  |  | 16,647                    |  | 15,900                               |  | 96%                                                                  |  | 2%    |  | 1%   
|Selling, general and |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|administrative       |  | (119,772)               |  | (86,755)                  |  | (33,017)                             |  | 38%                                                                  |  | (7)%  |  | (6)% 
|expenses             |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|Finance costs        |  | (32,597)                |  | (20,193)                  |  | (12,404)                             |  | 61%                                                                  |  | (2)%  |  | (1)% 
|Other operating      |  | (18,626)                |  | (15,579)                  |  | (3,047)                              |  | 20%                                                                  |  | (1)%  |  | (1)% 
|                     |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|expenses, net        |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|Profit before tax    |  | 128,677                 |  | 85,829                    |  | 42,848                               |  | 50%                                                                  |  | 7%    |  | 5%   
|Income tax and       |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|social contribution  |  | (45,848)                |  | (28,087)                  |  | (17,761)                             |  | 63%                                                                  |  | (3)%  |  | (2)% 
|benefit              |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      
|                    
|Minority interest    |  | 3                       |  | -                         |  | 3                                    |  | -                                                                    |  | 0%    |  | 0%   
|                     |  |                         |  |                           |  |                                      |  |                                                                      |  |       |  |      

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|           |  |                         |  |                           |  |                                      |  |                                                                      |  |      |  |     
|---------- |  | ----------------------- |  | ------------------------- |  | ------------------------------------ |  | -------------------------------------------------------------------- |  | ---- |  | ----
|           |  | Year ended December 31, |  | Period over period change |  | Period over period percentage change |  | Results as a percentage of net sales for the year ended December 31,
|           |  |                         |  |                           |  |                                      |  |                                                                     
|           |  | 2008                    |  | 2007                      |  | Favorable (unfavorable)              |  | Favorable (unfavorable)                                              |  | 2008 |  | 2007
|           |  |                         |  |                           |  |                                      |  |                                                                      |  |      |  |     
|           |  |                         |  |                           |  |                                      |  | (in thousands of reais)                                              |  |      |  |     
|          
|Net income |  | 82,826                  |  | 57,742                    |  | 25,084                               |  | 43%                                                                  |  | 5%   |  | 3%  
|           |  |                         |  |                           |  |                                      |  |                                                                      |  |      |  |     
|           |  |                         |  |                           |  |                                      |  |                                                                      |  |      |  |     

Net Operating Revenues of Services Rendered

For the year ended December 31, 2008, net revenue increased by R$408,913 thousand compared to 2007, representing an increase of 29.9%, from R$1,365,815 thousand in 2007 to R$1,774,728 thousand in 2008. This
growth was achieved through: (i) the expansion of the volume of operations with our existing clients, especially in the telephony and financial sector; (ii) the adjustment of fees in connection with existing contracts to reflect increase in costs of
services rendered and (iii) new businesses in several segments, including retail, financial and services. Our ability to add-on new business to our clients' portfolios shows strong alignment with our customer relationship strategy and the perception
of the quality of our services by the client.

From the product point of view, customer care continued to account for the biggest portion of net revenue, representing 54.0% of the total. Telemarketing and debt collection accounted for 15.7% and 15.0%, respectively,
which we believe have a greater growth potential. Retention and other services accounted for 5.0% and 8.4%, respectively, while technical support represented 1.9% of the net revenue.

In 2008, Contax recorded strong growth in all of its products, with 32.4% increase in Customer Care, 48.9% in Telemarketing, 29.9% in Retention and 14.0% in Debt Collection. The performance of the Customer Care product
was mainly a result of an increase in client operations in the telecom, financial and Pay-TV industries. In this service, the decree that regulates Customer Care has been in effect since December 1, 2008, contributing to increasing client demand.
The growth in Telemarketing/Retention operations basically reflects the increase in active Telemarketing operations designed to attract new clients. The growth of the Debt Collection segment mainly came about through the expansion of collection
portfolios in the telecom and financial industries, which boosted the volume even though there was a decline in overall defaults.

Cost of Services Rendered

Total cost of services increased by R$333,497 thousand in 2008, representing an increase of 28.4% from R$1,174,106 thousand in 2007 to R$1,507,603 thousand in 2008. Of the total costs of services rendered in
2008, 73.6% are related to personnel expenses (73.5% in 2007), mainly with payroll, charges, benefits and training, among others. The remaining 26.4% (26.5% in 2007) are expenditures in connection with third-party services, maintenance of equipment,
rental of properties and data circuits, expenditures related to facilities, general expenses and depreciation. The cost variation in 2008, when compared to 2007, occurred mainly due to the growth of services rendered upon demand by our customers,
significantly impacted the costs, which in turn increased our revenues, since approximately 90.0% of the costs are variable and so directly related to the growth of business volume.

Personnel expenses have been affected by an increase of 21.3% in headcount (from 61,397 employees in December 2007 to 74,499 employees in December 2008), and were also affected by the R$30,100 thousand for the
collective bargaining agreement and adjustments to the food and health benefit agreements.

Costs related with third-party services increased 31.2%, reflecting mainly the increase in costs from infrastructure and IT equipment maintenance caused by the expansion of the Companys operations. It is worth
noting that in 2008 Contax expanded the number of more sophisticated workstations, which require more complex technological solutions and higher maintenance costs. The main expense items were: (i) R$22.3 million in services related to the
maintenance of IT equipment (hardware and software); and (ii) R$24.5 million in infrastructure and facilities-related services (electricity, security, cleaning, telecom and building maintenance). Rental and insurance
costs increased 47.3%, mainly in connection with the leasing of new sites and contractual adjustments, plus the rental of third-party infrastructure to meet client demand while the increase in own operations had not been concluded.

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In 2008, depreciation increased by R$11,672 thousand, or 12.5%, chiefly due to the increase in acquisitions during the same period whose impact on depreciation was further increased by the adoption of new
depreciation criteria in 2007,which led the monthly depreciation rates in the areas of information technology equipment and furniture and fixtures to be reviewed due to the reduction of the economic useful life estimate of assets. The
evaluation and determination studies of the new economic useful life of these assets were prepared in accordance with the rules of A.B.N.T. - the Brazilian Association of Technical Rules - by a specialized consultant qualified for this activity,
whose report was issued on May 7, 2007.

Finance Income

Finance Income of R$32,547 thousand in 2008 grew by 95.5% as compared to 2007, corresponding to a R$15,900 thousand increase. The income return on Companys investments increased in R$14,664 thousand due to higher average funds
available mainly deriving from receipts of tranches related to BNDES financing between October 2007 and November 2008, in the amount of R$216,730 thousand, added to higher yield on financial investments.

Selling, General and Administrative Expenses

Selling, general and administrative expenses of R$119,772 thousand in 2008 grew by 38.1% as compared to 2007, corresponding to a R$33,017 thousand increase, essentially due to two important factors: (i) a
R$13.1 million increase in personnel expenses, related to the expansion of the Companys management team; and (ii) a R$8.0 million increase in third-party service expenses mainly related to specialized consulting expenses, as well as, a
R$9.6 million increase in expenses related to marketing, sponsorship and donation.

Finance Costs

In 2008, finance cost was R$32,597 thousand, as compared to R$20,193 thousand in 2007. The R$12,404 thousand increase was due to the increased expenses with Interest on Loans (R$16,520 thousand in 2008
versus R$2,249 thousand in 2007), stemming from the increase in the BNDES debt balance.

Other Net Operating Expenses

Other net operating expenses increased by R$3,047 thousand, from R$15,579 thousand in 2007 to R$18,626 thousand in 2008. The increase was due primarily to an increase of labor lawsuits that in turn caused
the Company to raise its provisions for contigencies in R$3,131 thousand.

Income Tax and Social Contribution Benefit

In 2008, the Income and Social Contribution taxes (at a rate of 34.0%) were in line with the amounts determined by prevailing laws, resulting in a total amount of R$45,848 thousand being paid. When compared to last
year's payment of R$28,087 thousand, the growth occurred mainly due to the increase of taxable income.

Net Income

In 2008, Contax recorded Net Income of R$82,826 thousand, up R$25,084 thousand or 43.4% over 2007. This result is mainly explained by the operating margin gain caused by the events mentioned above, partially
offset by the effect of Income and Social Contribution taxes, reflecting a higher taxable income base.

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Liquidity and Capital Resources

Cash and cash equivalents as of the end of 2008 and 2007 were equal to R$355,928 thousand and R$240,310 thousand, respectively. Following is a summary of the principal changes in cash flows during the past two
years.

Net cash flows from operating activities increased R$51,600 thousand, representing an increase of 25.4%, from R$203,176 thousand in 2007 to R$254,776 thousand in 2008. This increase can be chiefly explained
by: (i) the increase of net income for the year of R$25,087 thousand, as compared to 2007; (ii) a R$15,328 thousand increase in other liabilities (mainly explained by a R$16,850 thousand of proceeds resulted from the auctioning of
grouped shares from the Reverse Stock Split, which have not been paid to the former holders of fractions. See "Item 18. Financial Statements"); and (iii) a R$17,433 thousand increase in depreciation. These effects were partially offset by a
R$8,639 thousand growth in deferred income and social contribution tax assets.

Net cash flows used in investing activities increased R$42,529 thousand, representing a 29.8% increase, from R$142,821 thousand in 2007 to R$185,350 thousand in 2008. This growth relates to business
expansion of our operations during the year, which caused organic growth in property and equipment expenditure. The increase in capital expenditure for property and equipment is positively correlated with the growth of our business.

Net cash flows from financing activities increased R$97,536 thousand, from R$(51,344) thousand in 2007 to R$46,192 thousand in 2008. This is mainly explained by the following factors: (i) the increase in the
proceeds received from the debt with BNDES in the amount of R$16,671 thousand; and (ii) the decrease of R$80,382 thousand reflecting lower amounts of share buybacks.

As long as the Company continues to present a natural growth of business and results, we believe that our current cash and cash equivalents, and cash flows from operations will be adequate to meet anticipated working
capital needs, continued expansion objectives and anticipated levels of capital expenditures for the foreseeable future. At the same time, the Company continues to seek attractive sources of financing to support future growth opportunities.

Management believes that the resources available to the Company are sufficient for its present requirements and will be sufficient to meet its anticipated requirements for capital expenditures and other cash
requirements for the 2009 fiscal year.

Contractual Obligations at December 31, 2008

|                              |  |                        |  |                        |  |           |  |           |  |          
|----------------------------- |  | ---------------------- |  | ---------------------- |  | --------- |  | --------- |  | ---------
|                              |  | Payments due by period
|                              |  |                       
|                              |  |                        |  | Less than              |  |           |  |           |  | More than
|Contractual obligations       |  | Total                  |  | 1 year                 |  | 1-3 years |  | 3-5 years |  | 5 years  
|                              |  |                        |  |                        |  |           |  |           |  |          
|                              |  |                        |  | (in thousands ofreais) |  |          
|Capital (finance) lease       |  | 25,970                 |  | 16,086                 |  | 9,884     |  | -         |  | -        
|Operating lease (facilities)* |  | 161,228                |  | 51,998                 |  | 74,721    |  | 31,177    |  | 3,331    
|Financings (BNDES)**          |  | 216,730                |  | 13,546                 |  | 162,546   |  | 40,638    |  | -        
|                              |  |                        |  |                        |  |           |  |           |  |          
|Total                         |  | 403,927                |  | 81,630                 |  | 247,151   |  | 71,815    |  | 3,331    

* Most of our facilities' lease agreements can be terminated before their expiration, with one to six months' prior notice, subject to a penalty equivalent to three times the monthly rent. 
** Includes estimated interest payments.

At December 31, 2008, we had not incurred any additional contractual obligations.

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Recent Developments

Acquisition by Telemar of Brasil Telecom

On April 25, 2008, Telemar, our major client, entered into a Share Purchase Agreement with the controlling shareholders of Brasil Telecom S.A., or BrT, for the acquisition of 81,092,986 common shares of Brasil Telecom Participações S.A., or BrT Part, representing 60.5% of its voting capital stock and 22.3% of its total share capital, including 247,317,180 common shares and 120,911,021 preferred shares of BrT held by BrT Part, representing 99.1% of the outstanding voting capital stock and 65.6% of the total share capital of BrT. The total purchase price was R$5.9 billion, adjusted by the variation of the interbank rate and any dividends declared up to the closing date.

The acquisition of BrT by Telemar was approved by ANATEL through Act no 860, dated February 18, 2009, and published in the Official Register on February, 27, 2009. On May 22, 2009, Telemar submitted to CVM an application for registration of a Public Tender Offer for the acquisition of shares with voting rights belonging to minority shareholders in order to insure them a minimum price per share of 80.0% of what was paid per share belonging to the controlling block. The Public Tender Offer will be held on June 23, 2009 at Bovespa.

On December 10, 2008, CADE approved an Agreement for Operation Reversibility Preservation (APRO)which is a preliminary commitment by Telemar and BrT with CADE which states that the acquisition could be reversed in case the regulatory agency understands that the acquisition could negatively affect the competition in the Brazilian telecommunications market. The terms and the details of the acquisition are still being reviewed by CADE.

Item 6. Directors, Senior Management and Employees

We are managed by a Board of Directors (Conselho de Administração) and a Board of Executive Officers (Diretoria). According to our by-laws, members of the Board of Directors are appointed by our shareholders, which in turn, nominate the Executive Officers.

Board of Directors

The Board of Directors is currently composed of twelve regular members and twelve alternates, each serving a three-year term. The Board of Directors holds regular meetings once every three months, with special meetings called upon by any member of the Board of Directors anytime.

In regard to the appointment of Directors, Brazilian corporate law and the CVM regulations provide the following:

(i) holders of preferred shares representing at least 10.0% of the total capital stock of a company may appoint one member to the Board of Directors and its respective alternate;

(ii) holders of common shares representing at least 15.0% of the total common shares with voting rights may appoint one member to the Board of Directors and its respective alternate; and

(iii) if items (i) and (ii) above do not occur, holders of common shares and holders of preferred shares representing together more than 10.0% of the total capital of a company may jointly appoint one member to the Board of Directors and its respective alternate.

Those rights may only be exercised by shareholders that prove their continuous share ownership during the last three months prior to our shareholders' meeting.

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Brazilian corporate law determines that shareholders holding more than 5.0% of common shares are entitled to exercise cumulative voting rights (voto múltiplo) so as to increase their chances of electing at
least one member to the Board of Directors. Under the cumulative voting process, each voting share is entitled to a number of votes equal to the number of Board seats being filled at the relevant shareholders' meeting, such votes which can be cast
for one or more candidates. As a result of cumulative voting, controlling shareholders may be prevented from controlling all seats of the Board, while minority shareholders may be allowed to appoint at least one member of that body. Common shares
participating in the cumulative voting process will not be counted for the purposes of appointing Board members in the circumstances described in (ii) and (iii) of the preceding paragraph.

None of our Directors have service contracts with Contax Holding or with TNL Contax providing for benefits upon termination of their employment.

The members of the Company's Board of Directors were appointed for a three-year term beginning at our Annual Shareholders' Meeting held on April 7, 2009 until our Annual Shareholders' Meeting in 2012.

The following are the current members of our Board of Directors and their respective positions:

|Name                            | Position
|------------------------------- | --------
|Fernando Antonio Pimentel Melo  | Chairman
|Pedro Jereissati                | Director
|Carlos Jereissati               | Director
|Cristina Anne Betts             | Director
|Lúcio Otávio Ferreira           | Director
|Flavio Eduardo Sznajder         | Director
|Rafael Andrade da Cunha Pereira | Director
|Antonio Adriano Silva           | Director
|Newton Carneiro da Cunha        | Director
|Sérgio Francisco da Silva       | Director
|Renato Sobral Pires Chaves      | Director
|Manuel Jeremias Leites Caldas   | Director

The following are brief biographies of the members of our Board of Directors:

Fernando Antonio Pimentel Melo.  Born on August 29, 1953, Mr. Melo holds a Law degree from Universidade Federal de Pernambuco. He was elected a member of CTX Participações S.A. on April 25,
2008 and has been the CEO of Fundação Atlântico de Seguridade Social since March, 2005. He was also an officer of Fundação Telebrás de Seguridade Social  SISTEL from 1991 to 2000 and CEO from 2000 to
2004. He was also CEO of ABRAPP from 2001 to 2007.

Pedro Jereissati.  Born on May 24, 1978, Mr. Pedro Jereissati obtained a degree in Business Administration from Fundação Armando Álvares Penteado - FAAP in 2000, and a MBA from Kellogg
School of Management of the Northwestern University, in Chicago, US, in 2005. Mr. Jereissati joined the Jereissati group in 1995, at the group's operational area at Empresa de Shopping Centers S.A. He served as the New Business Director of
Jereissati Participações S.A. from April 2001 until June 2006, and as Chief Financial Officer of Iguatemi Empresa de Shopping Centers S.A. until April 2008. He has been a member of the Board of Directors of Iguatemi Empresa de Shopping
Centers S.A. since January 2007 and Jereissati Participações S.A. since April 2008. Mr. Jereissati has served as an executive officer of LF Tel S.A. and La Fonte Telecom since May 2006. He is also the chief executive officer and
investor relations officer of Telemar Participações S.A., and a member of the Board of Directors of Telemar Participações S.A. and Tele Norte Leste Participações S.A.

Carlos Jereissati.  Born on September 4, 1971, Mr. Carlos Jereissati obtained a degree in Business Administration from Fundação Getúlio Vargas -FGV  SP in 1994, and took a number
of specialization courses abroad, including: Management for Success (University of Michigan Business School, 2002), Spring Convention
(International Council of Shopping Centers, 1998, 1999, 2002, 2003, 2004, 2005 and 2006) and Real State Finance & Investment (Euromoney Training, 1998). Since 1996, he has been a member of the executive board of Iguatemi Empresa de Shopping
Centers  IESC, of which he is the current chairman. He was President and Vice President of the Brazilian Association of Shopping Malls (ABRASCE - Associação Brasileira de Shopping Centers S.A.) from 2002 to 2004 and from
2005 to 2006, and is currently a member of this entity's Advisory Board. He was a member of the CDES (Conselho de Desenvolvimento Econômico e Social) and is a member of the Brazilian Association of Volunteers (IBRAVO - Associação Brasil Voluntário) since 1995 and a member of ICSC - International Council of Shopping Centers, since 1994. In 2007, he was elected as a Young Global Leader by the World Economic Forum.

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Cristina Anne Betts. Born on October 20, 1969, Ms. Betts holds a degree in Business Administration from Fundação Getúlio Vargas  FGV (1991), with MBA from INSEAD, France. She has
been the Vice President of Finance at Iguatemi Empresa de Shopping Centers S.A since April 2008. Previously, she worked at PriceWaterhouse (1992  1995), Banco Credit Suisse First Boston Garantia (1995  1999), Bain & Company (1999
 2004) and Tam Linhas Aéreas S.A., where she held the position of Chief Strategic Planning and Controllership Officer, as well as being in charge of the Investor Relations area (2004 to 2008).

Lúcio Otávio Ferreira. Born on August 26, 1967, Mr. Ferreira holds a degree in Business Administration from FUMEC  MG, in addition to an Executive MBA in Finance from IBMEC-MG, obtained
in 1994. Mr. Ferreira has been the Chief Financial Officer of the Andrade Gutierrez group holding company since 2005, and since September 2006, he has also been the Chief Investor Relations Officer of Andrade Gutierrez Participações
S.A. He is a member of the Board of Directors of Madeira Energia S.A.  MESA since 2007, was elected as a Director of Luxemburgo Administração e Participações S.A. in February 2008, was elected as a Director of
Andrade Gutierrez Concessões S.A. in April 2008, and elected as a alternate to the Board of Directors of Tele Norte Leste Participações S.A. Since 2008, he is a certified Investment Manager by CVM. He was Project Finance and
Project Structuring Manager of Andrade Gutierrez Concessões from 1997 to 2001 and Financial Manager of such company until 2005.. He was the Financial Manager of the SINDI group -Kit Eletro from 1994 to 1996, and of the Belgo Mineira group
from 1991 to 1994. Also, he worked at Caixa Econômica Federal as a clerk from 1989 to 1991 and, at Banco Nacional, as Financial Transaction Desk Manager from 1986 to 1989.

Flavio Eduardo Sznajder.  Born on March 15, 1971, Mr. Sznajder holds a Masters degree in Administration Sciences (MSc.) from Coppead-UFRJ and a degree in Engineering from PUC-RJ. He is a partner at Bogari
Capital. He was also a Director of Andrade Gutierrez Telecomunicações from 2001 to 2007, a member of the Finance Committee of Telemar Participações from 2003 to 2007, a member of the Board of Directors of TG Agro alcohol
plant in 2006 and 2007, a member of the Investment Committee of Fundo AG-Angra Infra-Estructure in 2006 and 2007, a member of the Board of Directors of Pegasus Telecom S.A. in 2001 and 2002, and a senior associate with Booz-Allen & Hamilton's
telecommunications group from 1997 to 1999 and in 2001. He also worked at Gradus Management Consultancy as a senior associate and at Banco BBM as a trainee.

Rafael Andrade da Cunha Pereira. Born on May 17, 1975, Mr. Pereira obtained a degree in Mechanical Engineering from Universidade Estadual de Minas Gerais / PUC - MG in 1997, and an MBA-Full Time from Esade
Business School in 2005. Mr. Pereira has been working for the Andrade Gutierrez group since 2001, in the Heavy Construction and Concession areas, where he held the positions of Trainee Engineer, Civil Work Engineer, Commercial and Project
Development Manager, and currently a member of its executive committee. He is also an alternate member of the board of directors of the Andrade Gutierrez group holding company since January 2008. He is also managing partner of Lagamar
Empreendimentos Ltda., a company engaged in planning, implementing and running hotels and real estate developments.

Antonio Adriano Silva.Born on March 2, 1944, Mr. Silva holds a degree in business administration and is the Chief of Staff for the Vice President of Brazil since 2002. Previously, he worked at Coteminas
 Cia. de Tecidos Norte de Minas from 1979 to 2002, at Asa Criação de Publicidade from 1976 to 1979 and at Associação Comercial de Minas from 1973 to 1976. He was also Technical Advisor to Brazilian Senator
José Alencar for 4 years (1989/2002) and has been a member of the Board of Directors of CEMIG  Companhia Energética de Minas Gerais since 1999.

Newton Carneiro da Cunha.Born on July 7, 1955, Mr. Cunha obtained a degree in Financing from the Universidade Estácio de Sá, a post graduate degree in Corporate Finance from the same school
and a MBA from the
Estudos Aplicados à Previdência  IDEAS / COPPE / UFRJ. He also holds a master degree in Pension Plans Management  from Alcalá University, Spain. He is an executive officer from Fundação Petrobrás de
Seguridade Social  PETROS, since 2007, having served as Secretary General of PETROS between 2003 and 2007. Mr. Cunha is also the CFO of Estacionamento Cinelândia and Director of TermoBahia S.A.

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Sergio Francisco da Silva.Born on January 3, 1962, Mr. Silva holds a degree in Psychology from Universidade Paulista  São Paulo, and post-graduate degrees in Project (2004) and Planning,
Budgeting and Public Management (2005), both from Fundação Getúlio Vargas. At present, Mr. Silva takes a Finance MBA course at IBMEC. He holds the position of Director of Administration and Information Technology of
Fundação dos Economiários Federais since August 2007. Previously, he was Executive Director of APCEF/SP from 1992 to 1994, a member of Caixa Econômica Federal (CEF) Labor Relations Committee from 1996 to 1997, a member of
the National Executive Board of CEF's Employees from 1996 to 1998, a member of the São Paulo State Health Board from 1998 to 1999, Health Secretary for the Bank Workers Union of São Paulo, Osasco and Region from 1997 to 2000, a member
of the Board of Directors of "SÃO PAULO CONFIA" from 2000 to 2002, Finance Secretary for the Bank Workers Union of São Paulo, Osasco and Region from 2000 to 2002, a member of the Boards of Directors of Fiago Participações
S.A. and Telenorte Celular Participações, and Director of Benefits and Administration with Fundação dos Economiários Federais from 2003 to 2007. Was a member of the Audit Committee of Brasil Telecom
Participações S.A. in 2008 and 2009.

Renato Sobral Pires Chaves.Born on September 7, 1965, Mr. Chaves obtained a degree in accounting from Universidade Santa Úrsula, with a Master Degree in Accounting from the Universidade Federal do
Rio de Janeiro (UFRJ), and post-graduate degrees in Finance/Capital Markets from the Pontifícia Universidade Católica (PUC-RJ) and Accounting from Fundação Getúlio Vargas (RJ). He works at Banco do Brasil since
April 1984, having worked at Banco do Brasils Administração de Ativos - Distribuidora de Títulos e Valores Mobiliários S.A. - BB DTVM e BB-Banco de Investimento S.A. He has also worked at Caixa de Previdência
dos Funcionários do Banco do Brasil -PREVI, from February 2003 until May of 2008, as Diretor of Investments. He is also member of the Board of Directors of ALOG Data Centers do Brasil S.A. since September, 2007.

Manuel Jeremias Leite Caldas. Born on January 8, 1956, Mr. Caldas obtained a degree in Electrical Engineering from Instituto Militar de Engenharia - IME in 1980, holding a Master degree and a Doctorate in
Economics from Fundação Getúlio Vargas - FGV. He is a Financial Consultant to Alto Capital Gestora de Recursos since 2007. From 1996 to 2006, worked at Banco PEBB S.A. as the Technical Department Manager and Chief Economist. Mr.
Caldas also served as Research Officer to Banco Gulfinvest S.A. in 1995, Economic Department Manager of Banco Nacional S.A. between 1991 and 1994. He was also a Senior Financial Analysis of Banco Bozanno Simonsen S.A. in 1990 and worked at Light
SESA as Engineer between 1981 and 1990.

Executive Officers

Our by-laws provide that the Board of Executive Officers shall consist of one President (CEO), one Chief Financial Officer (CFO), and up to three other officers. The Executive Officers are to be elected by the Board of
Directors for a term of three years and may be removed from office at any time. The current Executive Officers were last appointed at our Board of Directors Meetings held on May 5, 2009, and will serve until the first Board of Directors Meeting
following the Annual Shareholders Meeting of 2012.

The following are the Executive Officers and their respective positions:

|Name                              | Position                                                
|--------------------------------- | --------------------------------------------------------
|Francis James Leahy Meaney        | President (CEO)                                         
|Michel Neves Sarkis               | Chief Financial Officer (CFO)/Investor Relations Officer
|José Luiz Cardoso Albano          | Officer                                                 
|Rosangela Maria de Oliveira Lutti | Officer                                                 

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Francis James Leahy Meaney. Mr. Meaney, born on November 4, 1964, is our founder and has been our CEO since our inception in 2000. He is active in various contact center industry organizations, including
ABT (Brazilian Association of Telemarketing Companies) of which he is a Vice-President. Previously, he was a Vice President at Global Crossing Latin America in Miami from 1999 to 2000, General Manager for Conectel, the leading paging company in Brazil,
from 1997 to 1999 and management consultant for various consumer products companies in Latin America between 1990 and 1997. He began his career at Credit Suisse First Boston in New York, where he worked from 1986 to 1988. He holds a B.A. in
Economics from the University of Notre Dame and an MBA from Harvard Business School. He also completed the Advanced Management Program at INSEAD.

Michel Neves Sarkis. Mr. Sarkis, born on February 28, 1969, has acted as our CFO since April 2001 and was designated Investor Relations Officer in December 2004 of our Company. Prior to joining us, he
worked for five years as an auditor of PricewaterhouseCoopers from June 1990 to August 1995. He also acted as Divisional Controller of Pepsi in Minas Gerais and Rio de Janeiro for more than two years, from August 1995 to November 1997, where he was
responsible for the financial department. In November 1997, he was appointed General Manager of the Rio de Janeiro Division of Conectel Paging Company. In 1999, he went to Prosegur Brazil as General Manager of the Bahia and Espírito Santo
Division. He holds a B.A. in Management from UFES  Universidade Federal do Espírito Santo and an Accounting degree from Faculdade Costa Braga  São Paulo and an MBA from Pontifícia Universidade Católica 
São Paulo.

José Luiz Cardoso Albano. Mr. Albano, born on January 6, 1962, has acted as our Executive Officer since May 2002. Prior to becoming our Operating Officer, he acted as General Manager of Telemar in
Rio Grande do Norte. Prior to that, he was responsible for the management of Telemar contact center in Fortaleza, which centralized its operations in seven states of the northeast region of Brazil. Previously, he worked as a contact center manager
for TIM / Maxitel, a mobile telephony carrier in Belo Horizonte (from 1999 to 2000). He acted as an Operational Manager of Minas Gerais and Brasília branch offices of Quatro A, a contact center company (from 1996 to 1999). Also, he worked at
Cimentos Mauá (from 1987 to 1994). He holds a B.A. in Management from Faculdade Cândido Mendes and a B.A. in Marketing from Universidade Federal de Minas Gerais and in Human Resources from FGV Minas Gerais. He also holds a BA in
Business Administration from Fundação Dom Cabral (2005).

Rosangela Maria de Oliveira Lutti. Ms. Lutti, born on March 1, 1954, was appointed as our Executive Officer on July 27, 2006. Ms. Lutti has worked at Contax as Human Resources Officer since October 2005.
Previously, she worked four years at Bunge Fertilizantes as Human Resources Officer, between March 2001 and March 2005, and at Camargo Correa S.A. holding as Organizational Development Officer from August 2000 to March 2001. She also worked at
Olivetti do Brasil from September 1978 to October 1997, and at Pirelli Cabos S.A. as Human Resources Officer from July 1998 to August 2000. She has a degree in Social Service from Faculdade Paulista de Serviço Social and a post degree in
Human Resources from FGV.

Fiscal Council

According to Brazilian corporate law, the Fiscal Council (conselho fiscal) of a company does not need to operate on a permanent basis. As a general rule, it shall only be installed, and its members elected, if so
required by shareholders representing 10.0% of our common or 5.0% of our preferred shares outstanding. However, CVM Rule 324/00 establishes that in case of publicly held companies with capital stock above R$150 million (which is our case) the
audit council shall be installed if required by shareholders representing at least 2.0% of common shares or 1.0% of preferred shares.

In such occasion, it shall consist of three to five effective members and respective alternates, elected at a shareholders' meeting for a term ending on the Annual Shareholders Meeting following their election.  At our
Annual Shareholders Meeting held on April 7, 2009, our controlling shareholders required the installation of our Fiscal Council and five members and respective alternates were elected to compose this body.

The Fiscal Council operates in accordance with the relevant provisions set forth under Brazilian corporate law and in the Company's by-laws. Under such provisions, the Fiscal Council is a corporate body, independent
from the Company's Board of Directors and Board of Executive Officers and from its independent registered public accounting firm.  The Fiscal Council's primary responsibility under Brazilian law is to monitor management's activities, review the
financial statements, and report its findings to the shareholders.

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Brazilian corporate law further establishes that the Fiscal Council may not contain members that are: (i) on the Board of Directors, (ii) on the Board of Executive Officers, (iii) employed by us or a controlled Company,
and (iv) spouses or relatives of our management, up to and including the third degree of relationship. Under Brazilian corporate law, holders of preferred shares have the right to elect separately one member of the Fiscal Council. Also, under the
Brazilian corporate law, minority groups of shareholders that hold at least 10.0% of the voting shares also have the right to elect separately one member of the Fiscal Council.

Despite some apparent similarities to the U.S. audit committee as provided for under the Sarbanes-Oxley Act, a Fiscal Council established under Brazilian corporate law has not typically been considered equivalent or
comparable to a U.S. audit committee formed according to the provisions of the Sarbanes-Oxley Act and the New York Stock Exchange, or NYSE, listing standards. The listing standards of the São Paulo Stock Exchange, where our shares are listed,
do not require that companies listed with it form or maintain a permanent Fiscal Council or a comparable U.S. audit committee-type body. As a result, our Fiscal Council will not be upgraded to discharge the same responsibilities of a U.S. audit
committee formed according to the provisions of the Sarbanes-Oxley Act and the NYSE listing standards.

The following table indicates the persons elected to our Fiscal Council at our Annual Shareholders Meeting held on April 7, 2009 and, which shall serve as members of that body until the Annual Shareholders Meeting of
2010.

|Name                             | Position      
|-------------------------------- | --------------
|Sidnei Nunes                     | Chairman      
|Eder Carvalho Magalhães          | Regular Member
|Sérgio Mamede Rosa do Nascimento | Regular Member
|Aloisio Kok                      | Regular Member
|Marcio Luciano Mancini           | Regular Member

Sidnei Nunes.Born on September 28, 1959, Mr. Nunes has an MBA from the Universidade de São Paulo and is also a graduate in Management and Accounting from Faculdade de Administração
Paulo Eiró. He serves as a Director of Iguatemi Empresa de Shopping Centers S.A., La Fonte Telecom, LFTEL S.A. and Grande Moinho Cearense S.A. and as an Executive Officer of Jereissati Participações S.A., La Fonte Telecom S.A.
and LF TEL S.A. since 1995. Mr. Nunes served as CFO of Iguatemi Empresa de Shopping Centers S.A. from 1995 to 2008 and member of the Fiscal Council of Telemar subsidiaries in Ceará and Sergipe between 2000 and 2001.

Eder Carvalho Magalhães.Born on July 1, 1968, Mr. Magalhães holds a MBA from IBMEC  Instituto Brasileiro de Mercado de Capitais and is a gradute in Accounting from Instituto Cultural
Newton Paiva Ferreira. He is the controller at Grupo Andrade Gutierrez since 1995. Since 2002, Mr. Magalhães is also the executive officer in charge of real estate at Grupo Andrade Gutierrez. He has also served as Controller at Fiat
Finanças Brasil Ltda. from 1993 to 1995 and worked at Pricewaterhouse from 1987 to 1992.

Sergio Mamede Rosa do Nascimento.Born on April 29, 1954, Mr. Nascimento holds an MBA from IBMEC  Instituto Brasileiro de Mercado de Capitais and is a graduate in physics from Universidade de Franca
and post graduate in Economics Engineering from UDF  Associação de Ensino Unificado do Distrito Federal. He also served as a member of our Board from April 2006 until April 2009. Mr. Nascimento served as CFO at Companhia de
Seguros Aliança do Brasil from 1999 to 2003 and worked at Banco do Brasil in several different capacities, such as Technical Consultant to the CEO and Chief of Socio-economic Reserach Department. Also served as Board member appointed by Banco
do Brasil at the Superior Council of its Pension Fund.

Aloisio Kok. Born on December 24, 1948, Mr. Kok obtained a degree in Economics from Universidade de São Paulo - USP, and took a number of courses in Brazil and abroad, including Risk Management for
Banking Programme from Institut Européen d'Administration des Affaires - INSEAD in 1997.  He was Chief Financial Officer of Banco de Boston S.A. and Banco Bandeirantes S.A. and Vice-President of ABN Amro Bank S.A. Mr. Kok is a member of the
Board of Directors of Cia. de Ferro Ligas da Bahia - Ferbasa since 2008.

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Marcio Luciano Mancini. Mr. Mancini, born on March 27, 1973, is a certified analyst and fund manager by CVM and was invited to the Fiscal Council of our Company in 2006. He holds a bachelor's degree in
business from EAESP/FGV (June/1997). He is also a member of the Fiscal Councils of Duratex, Eletropaulo, Copel, Sanepar and Dixie-Toga. Mr. Mancini was a member of the Fiscal Councils of Unipar, Renner Participações S.A., Lojas Renner
S.A., Comgás, Fosfértil  Fertilizantes Fosfatados S.A., Lojas Americanas S.A., ACESITA S.A., AES Tiête S.A. and AES Sul Distribuidora Gaúcha de Energia. He worked at Hedging-Griffo Asset Management as a buy-side
analyst from February 1997 to April 2002, covering the utilities' industry, and at BMS PARTNERS Serviços Financeiros as a junior financial analyst of investment projects.

Compensation of Directors, Executive Officers and Fiscal Council Members

For the year ended December 31, 2008, the aggregate amount of compensation, including cash and benefits in kind, paid by Contax to all of its Directors, Executive Officers and Fiscal Council members was approximately
R$6,245 thousand. Contax is not required under Brazilian law to disclose, and has not otherwise disclosed, the compensation of its Directors, Officers or Fiscal Council members on an individual basis.

Share Ownership

The members of Contax Participações S.A. Board of Directors and Fiscal Council together own less than 0.21% of its common shares or total capital stock. On April 16, 2007, the General Shareholders' Meeting
approved the Stock Option Plan, pursuant to article 168, paragraph 3, of Law no. 6,404/76. Our Executive Officers are limited to purchasing up to 5.0% of the Company's total capital stock.

As of June 2009, our Board of Directors and Executive Officers where shareholders with the following percentage:

|Name                            | Position | Common Shares | Preferred Shares
|------------------------------- | -------- | ------------- | ----------------
|Qty.                            | Total %  | Qty.          | Total %         
|Fernando Antonio Pimentel Melo  | Chairman | *             | *               
|Pedro Jereissati                | Director | *             | *               
|Carlos Jereissati               | Director | *             | *               
|Cristina Anne Betts             | Director | *             | *               
|Lúcio Otávio Ferreira           | Director | *             | *               
|Flavio Eduardo Sznajder         | Director | *             | *               
|Rafael Andrade da Cunha Pereira | Director | *             | *               
|Antonio Adriano Silva           | Director | *             | *               
|Newton Carneiro da Cunha        | Director | *             | *               
|Sérgio Francisco da Silva       | Director | *             | *               
|Renato Sobral Pires Chaves      | Director | *             | *               
|Manuel Jeremias Leites Caldas   | Director | *             | *               
|Total                           |          | *             | *               

* less than 1% of the class of shares.

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|Name                       | Position                                                                  | Common Shares | Preferred Shares
|-------------------------- | ------------------------------------------------------------------------- | ------------- | ----------------
|Qty.                       | Total %                                                                  
|Francis James Leahy Meaney | Chief Executive Officer (CEO)                                             | *             | *               
|Michel Neves Sarkis        | Chief Financial Officer (CFO)/ 
    
    Investor Relations Officer (IRO) | * 
    *      | *
    *         
|Jose Luiz Cardoso Albano   | Officer                                                                   | *             | *               
|Total                      |                                                                           | *             | *               

* less than 1% of the class of shares.

Employees

On December 31, 2008, we had a total of 74,499 employees and 257 trainees distributed among the following locations:

|                  |  |           |  |         
|----------------- |  | --------- |  | --------
|City/State        |  | Employees |  | Trainees
|                  |  |           |  |         
|Rio de Janeiro/RJ |  | 16,967    |  | 80      
|Niterói/RJ        |  | 4,966     |  | 14      
|São Paulo/SP      |  | 18,375    |  | 66      
|Salvador/BA       |  | 7,761     |  | 32      
|Recife/PE         |  | 5,315     |  | 16      
|Fortaleza/CE      |  | 7,447     |  | 13      
|Belo Horizonte/MG |  | 11,641    |  | 30      
|Porto Alegre/RS   |  | 2,027     |  | 6       
|Total             |  | 74,499    |  | 257     
|                  |  |           |  |         
|                  |  |           |  |         

The employees are distributed between our administrative (6%) and operational (94%) areas.

Approximately 28.7% of our employees are members of the telecommunications company workers and switchboard operators unions. These unions represent the employees' professional category and are affiliated with the
Interstate Federation of Telecommunications Workers (Federação Interestadual dos Trabalhadores em Telecomunicações Fittel) or National Federation of Telecommunications (Federação
Nacional de Telecomunicações Fenatel). The base date for the collective labor bargaining agreement for the category is May, at which time salary adjustments are negotiated. The conditions of the collective labor bargaining
agreement are negotiated annually and in a centralized manner with Fittel and the unions of the states where we have operations. These negotiations are carried out between union representatives and a team of experienced negotiators from TNL Contax.

We maintain a courteous and professional relationship with the union representatives and invite them to visit our sites on a regular basis to show the labor condition improvements that we continue to make for our
employees.

Employee Benefits

We provide the following benefits to our employees: (i) medical plan; (ii) dental plan; (iii) life insurance; (iv) food program for employees who work six hours per day; (v) meal program for employees who work eight
hours per day; (vi) transportation; (vii) discount plan with certain pharmacies; (viii) funeral expenses plan; and (ix) daycare assistance. Officers, managers and coordinators are also entitled to mobile telephones with monthly credits varying from
R$60 to R$120.

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Career and Salary Plan

Ou remuneration structure was last updated in the second half of 2006, in order to remain competitive in the market and maintain our Career and Salary Plan in line with our goals , taking into consideration our
employees satisfaction, as well as, rewarding individual performance. There has not been any major changes since then, but its important to note that it was also designed to provide additional opportunity for our employees, establishing the
guidelines for promotions.

Employees assigned to some of our operations, such as telemarketing, retention, debt collection units and Orbitall operations are eligible for variable remuneration, linked to the achievement of individual as well as
collective goals.

All employees are eligible for our profit sharing plan which is linked both our performance and to individual goals set annually.

Outsourcing

We also engage service companies to provide services related to our secondary activities, such as janitorial services, security, office assistants and helpdesk. At December 31, 2008, we used the services of
approximately 2,144 outsourced workers.

Workplace Health and Safety

As required by law, we maintain two workplace health and safety programs: the occupational health program (Programa de Controle Médico de Saúde Ocupacional), or PCMSO, and the workplace risk
prevention program (Programa de Prevenção de Riscos Ambientais), or PPRA. In addition, we maintain a safety-at-work program, called Internal Commission for the Prevention of Accidents (Comissão Interna de
Prevenção de Acidentes), or CIPA. We also carry out ergonomic and noise level studies and have a workplace exercise program to help prevent work-related injuries.

Item 7. Major Shareholders and Related Party Transactions

Major Shareholders

We have two classes of share capital outstanding, common shares and preferred shares. Only the common shares have full voting rights. The preferred shares have limited voting rights in connection with certain matters.
See "Item 10. Additional Information - Memorandum and Articles of Association - Voting Rights".

The following table sets forth the information concerning the ownership of our common shares by CTX Participações and by other shareholders holding five percent or more of our common shares, as of May,
2009. Except for the shareholders listed below, we are not aware of any other shareholder owning more than five percent of common shares. None of the major shareholders listed below have any different or special voting rights attached to their
shares.

|                       |  |              |  |              
|---------------------- |  | ------------ |  | -------------
|                       |  | Number of    |  | Percentage of
|                       |  | common       |  | outstanding  
|Shareholders           |  | shares owned |  | common shares
|                       |  |              |  |              
|CTX Participações S.A. |  | 3,641,220    |  | 63.08%       
|Fator                  |  | 501,715      |  | 8.69%        
|Eton Park              |  | 328,572      |  | 5.69%        
|                       |  |              |  |              
|Total                  |  | 4,471,507    |  | 77.46%       
|                       |  |              |  |              
|                       |  |              |  |              

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The following table sets forth, as of February, 2009, information concerning the ownership of the common voting shares of CTX Participações.

|                                        |  |               |  |              
|--------------------------------------- |  | ------------- |  | -------------
|                                        |  | Number of     |  | Percentage of
|                                        |  | common        |  | outstanding  
|CTX Participações shareholder           |  | shares owned  |  | common shares
|                                        |  |               |  |              
|BNDES Participações S.A.  BNDESPAR     |  | 859,225,280   |  | 27.8%        
|LF TEL S.A.                             |  | 705,461,180   |  | 22.8%        
|FIAGO Participações S.A.                |  | 683,147,324   |  | 22.1%        
|AG Telecom Participações S.A.           |  | 352,730,590   |  | 11.4%        
|Luxemburgo Participações S.A.           |  | 352,730,590   |  | 11.4%        
|Fundação Atlântico de Seguridade Social |  | 137,316,044   |  | 4.4%         
|                                        |  |               |  |              
|Total                                   |  | 3,090,611,008 |  | 100.0%       
|                                        |  |               |  |              
|                                        |  |               |  |              

CTX Participações' Shareholders' Agreements

Certain CTX Participações' shareholders are parties to two shareholders' agreements with respect to their interests in CTX Participações S.A. AG Telecom Participações S.A.,
Luxemburgo Participações S.A. (current denomination of Andrade Gutierrez Investimentos em Telecomunicações S.A.), L.F. Tel S.A., BNDES Participações S.A., Fiago Participações S.A. and
Fundação Atlântico de Seguridade Social are parties to a Shareholders' agreement, dated April 25, 2008, which governs: (1) special procedures and quorum requirements for the approval of certain corporate resolutions by the
management; (2) rules for the election of the members of the board of directors, fiscal council and executive officers; (3) rules in regard to voting rights during the general shareholders' meetings of CTX Participações; (4) conditions
which would constitute a lien on the shares or subscription rights; (5) requirements in regard to the exercise of the right of first refusal and the preemptive rights of the shareholders in the case of a disposal and subscription of shares of CTX
Participações; (6) tag along rights in which the direct or indirect transfer of control of CTX Participações can only be effected; and (7) appraisal rights in the case of a disposal of shares of CTX
Participações in the event of a transfer of control of the shareholder.

Pursuant to the first Shareholders' agreement, CTX Participações' controlling shareholders have also agreed to exercise their voting rights in the shareholders' meetings of CTX Participações
in order to: (1) maintain their investment in Contax Participações S.A.; and (2) have CTX Participações properly manage Contax Participações S.A. and its subsidiaries and assure decisions and actions by the
companies' management are taken in the companies' best interests and according to market conditions. Under the first Shareholders' agreement, CTX Participações' shareholders must meet prior to any general shareholders' or board of
directors' meeting of CTX Participações or any of their affiliates, to vote on the matters to be subsequently submitted at those meetings (the "Prior Meetings"). Each controlling shareholder is entitled to one vote at the Prior Meeting
and all the decisions taken in this meeting bind all the controlling shareholders' votes in the general shareholders' meetings, including votes of shareholders who have not participated in the Prior Meeting. The controlling shareholders are also
bound to assure that directors appointed by them vote at meetings of the board of directors in accordance with decisions taken in the Prior Meetings and that such decisions are implemented. Except as otherwise provided in the shareholders'
agreements, resolutions at the Prior Meetings are passed by the vote of holders of a simple majority of shares. However, certain matters, such as matters relating to related party transactions, approval of the name for the position of chief
executive officer of Contax Participações require the approval of 66.7% of the shares affected by such Shareholders' agreement; changes in preferences and capital increase require the approval of 70.0% of the shares affected by such
Shareholders' agreement; and changes in the corporate purpose and any decision resulting in the change of control of CTX Participações requires the approval of 84.0% of the shares affected by such Shareholders' agreement.

AG Telecom Participações S.A., Luxemburgo Participações S.A. (current denomination of Andrade Gutierrez Investimentos em Telecomunicações S.A.), L.F. Tel S.A. and
Fundação Atlântico de Seguridade Social (CTX Participações' controlling shareholders) are parties to a second Shareholders' agreement, also dated April 25, 2008. This second instrument outlines (1) rules in regard
to voting rights during the general shareholders' meetings of CTX Participações; (2) holding of Prior Meetings; and (3) transfer of CTX Participações' shares owned by its controlling shareholders.

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Holders of ADSs

In the United States, the preferred shares trade in the form of American Depositary Shares, ADSs, each represented by 20 ADRs of the same type, issued by The Bank of New York, as depositary, pursuant to a Deposit
Agreement among us, the Depositary and the registered holders and beneficial owners of ADSs from time to time. Our ADSs are not listed on any stock exchange in the United States.

Due to numerous expansion plans dating back to the Telemar days, Contax inherited several million "inactive" shareholders. In an effort to reduce unnecessary administrative and operating costs and to provide a low cost
form of liquidity for these minority shareholders, Contax announced a reverse stock split on October 17, 2007. On November 19, 2007 all the shares started being traded exclusively in groups of twenty. Since ADR holders are mainly concentrated in the
hands of institutional investors in large quantities, the reverse stock split was not needed and the Reverse Stock Split did not affect the ADSs, which are not being traded in groups of twenty.

Related Party Transactions

Set forth below is a description of the related party transactions that are material to us. Related party transactions refer to any loans receivable, accounts receivable from services rendered and any other debts with
our shareholders, subsidiaries, unconsolidated affiliates or shareholders. For further information about transactions with related parties see Note 17 to our Consolidated and Combined Financial Statements as well as to our interim consolidated
financial statements.

Telemar/Contax Contracts

We are a party to two main related party agreements with the Telemar entities (our main client encompassing Tmar and its wholly owned subsidiary Oi, both of which are indirectly under common control with us): (i) an
agreement related to contact center services provided by us to Telemar, on a fully outsourced basis, and (ii) an agreement related to telecommunications services provided by Telemar to us. Such agreements were executed on November 30, 2004 and duly
approved at Tmar's Extraordinary Shareholders' Meeting on December 17, 2004.

Prior to such contracts, we performed all contact center activities for Telemar, under various contracts, both on a fully outsourced as well as on a partially outsourced basis. Such partial outsourcing services were
usually performed in facilities and with equipment owned by Telemar. Telemar was also responsible for all facilities costs such as general maintenance and electricity.

The total amount of our operating revenues derived from Telemar was R$966.6 million in 2008 and R$744.2 million in 2007, representing respectively, 51.1% and 50.7% of our total revenues in those years. Our
relationship with Telemar is currently represented by several distinct and independent services, such as customer services for Telemar's fixed line business, outbound telemarketing to attract additional mobile customers, customer support for prepaid
and postpaid mobile users, technical support for broadband subscribers, and debt collection services.

Telemar, in turn, is our main telecommunications services provider (fixed-switched telecommunication service, mobile services, long distance/toll-free, data, and other services) and, most importantly, provides such
services, directly or through us, to some of our clients, at their option. The total amount paid to Telemar and its subsidiaries for these services was equal to R$26,584 thousand in 2008, R$24,706 thousand in 2007 and R$20,087 thousand
in 2006, or 1.8%, 2.1% and 1.9% of the total costs of our services rendered and operational expenses in 2008, 2007 and 2006, respectively. While Telemar currently provides most of our telecommunications services, if it were to become unable or
unwilling to provide these services, we believe that we would be able to obtain such services from another provider with a minimum of disruption to our business.

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Todo/Contax Contracts

Todo was created as a supplier of technological solutions designed specifically for contact center operations, having as its first customer TNL Contax, which practically outsourced its entire IT department to Todo.
Through Todo, Contax intends to supplement its present range of services and take advantage of its expertise and market relationship in order to operate in the broader universe of Business Process Outsourcing (BPO).

BNDES/Contax Contracts

In 2007, we entered into a loan agreement with BNDES for the total amount of approximately R$216.7 million with the purpose of financing the expansion of our installed capacity, upgrading current facilities,
training programs, improving service quality and productivity and investments in marketing activities, within the PROSOFT- Corporate (Software Industry and Correlated Services Development Program).

In October 2007, the first tranche of the BNDES loan was provided in the amount of R$100 million, followed by additional tranches on January 28, January 30, June 12 and November 18, 2008, in the amounts of
R$40.0 million, R$10.0 million, R$61.8 million and R$4.9 million respectively, totaling R$216.7 million.

Facilities Lease Agreements

Some of our facilities are located on real estate that is leased from related parties. Most of these related party lease agreements are with Telemar. Lease expense for all related party lease agreements totaled
R$7,218 thousand and R$6,219 thousand in 2008 and 2007, respectively. During the first period under the full outsourcing contract entered into in 2005 with Telemar, Contax occupied Telemar's real estate in order to fulfill its contract, and
given that Contax, at its expense, had to pursue several infrastructure investments in the real properties, Contax was contractually exempted from the corresponding lease payments. In 2006, the exemption expired and Contax started to pay to Telemar
the monthly leases of the occupied real estate.

Transactions with our Board of Directors or Executive Officers

None of the members of our Board of Directors or Executive Officers, or any close member of their respective families, has or has had any direct interest in any transaction effected with us which is or was unusual in
its nature or conditions, or significant to our business.

As of December 31, 2008, no outstanding loans or guarantees thereof have been made to the members of the Boards of Directors or Executive Officers or the Fiscal Council, or any close member of their respective families.

Item 8. Financial Information

Consolidated Statements and Other Financial Information

See "Item 18. Financial Statements".

Legal Proceedings

General

We are party to a number of legal actions arising from our regular course of business. Although the amount of the global liability that could arise with respect to these actions cannot be accurately predicted, in our
opinion, such actions, if decided adversely to us, would not, individually or in the aggregate, have a material adverse effect on our financial condition and results of operations. We are subject to contingencies with respect to tax, labor and other claims.

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The composition of our contingency provisions is as follows:

|       |  |                        |  |       
|------ |  | ---------------------- |  | ------
|       |  | At December 31,       
|       |  |                       
|       |  | 2008                   |  | 2007  
|       |  |                        |  |       
|       |  | (in thousands ofreais)
|Nature |  |                        |  |       
|Labor  |  | 51,651*                |  | 38,955
|Tax    |  | 11,927                 |  | 7,776 
|Civil  |  | 573                    |  | 129   
|       |  |                        |  |       
|Total  |  | 64,151                 |  | 46,860
|       |  |                        |  |       

* Pursuant to the service agreement executed by Telemar and TNL Contax, it was defined that labor claims arising from the transfer of labor agreements from Telemar to the Company shall be incumbent upon Telemar, which amount has been recorded as
"Receivable Credits". The amount of labor claims under Telemar's responsibility as of December 31, 2008, was R$13,781 thousand, with the other R$37,870 thousand being labor claims filed against TNL Contax by employees and former employees.

Labor

Judicial

As a part of our ongoing operations, we have been the defendant in a number of lawsuits brought by our employees, labor unions and the Labor Public Prosecution Office (Ministério Público do
Trabalho). We have established what we believe to be an adequate reserve to cover these claims.

As at December 31, 2008, we were involved in approximately 5,287 employment-related legal proceedings, as opposed to 4,024 in 2007. The total estimated amount involved in these proceedings is R$358,700 thousand
(U.S.$153,487 thousand), as compared to R$260,715 thousand (U.S.$111,560 thousand) in 2007. We record provisions for any contingent liabilities in proportion to our historical losses, which, on that date, amounted to approximately
R$51,651 thousand (U.S.$22,101 thousand), as compared to R$38,954 thousand (U.S.$16,668 thousand) in 2007:

|                |  |                       
|--------------- |  | ----------------------
|                |  | As of December 31,    
|                |  |                       
|                |  | 2008                  
|                |  |                       
|                |  | (in thousands ofreais)
|Types of risk*  |  |                       
|Probable        |  | 51,651                
|Possible/Remote |  | 307,049               
|                |  |                       
|Total           |  | 358,700               

____________ 
* The types of risk have been determined by our management, based on the opinion of external legal counsel and existing legal precedents.

Most of these proceedings relate to claims for:  (i) overtime; (ii) salary equalization; (iii) continuity of service; and (iv) damages, pain and suffering. The increase in the number of labor law suits, from 4,024 in 2007 to 5,287 in 2008 is
directly related to the significant increase in the number of employees since 2004.

There was a lawsuit filed by the São Paulo State Labor Prosecution Office in 2005 against contact center service providers, including TNL Contax, and their clients, principally financial institutions, alleging
that such clients are not allowed to outsource their contact center services, since this is allegedly an activity strictly related to those clients' core business. This lawsuit, still not finally decided, argues that activities directly related to
the core business of a company cannot be outsourced. There is some jurisprudence consolidated by the Superior Labor Court a few years ago regarding this matter. However, due to the fact that this jurisprudence is not uncontroversial, the
market cannot ascertain with confidence what are the activities that are (or not) directly related to a company's core business and which cannot, therefore, be outsourced.

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Administrative Proceedings

As at December 31, 2008, approximately 57 notices of alleged violations of labor laws were pending against us. The amounts involved in such notices of infraction depend on the type of violation, the number of employees
involved, and whether the alleged violation is a first time offense. Until December 31, 2008, in order to file administrative appeals, we performed administrative deposits, as required by law, in the approximate amount of R$23,400 thousand
(U.S.$10,013 thousand), in connection with fines regarding five administrative proceedings; and R$41,400 thousand (U.S.$17,715 thousand), concerning 16 other administrative proceedings that we lost at the lower administrative level.

We have disputed all these notices of infraction before the administrative authority and are awaiting a final decision in these administrative proceedings. Nevertheless, if such decisions are not favorable to us in
administrative courts, we are allowed and intend to seek the judicial courts in order to request not only annulment of any and all debts assigned to us by the administrative courts, but also reimbursement for administrative appeals filed on the
contingency of payment.

Since we classify the risk of loss of these notices of infractions as being "possible", we have not included them, nor the amounts deposited in connection with fines, as part of our contingent liability.

The alleged labor violations relate mainly to the following infractions: (i) failure to present documents to the labor inspectors; (ii) failure to grant holidays; (iii) noncompliance with workplace health and safety
rules; (iv) failure to grant intraday and weekly rest breaks; (v) late payment of the wages (after the fifth business day of the month); (vi) failure to pay the FGTS on the remuneration failure to pay administrative fines; (vii) payment in cash of
the transport-tickets; and (viii) noncompliance with the determined quota for hiring juvenile interns (menores aprendizes).

Under Brazilian law, if a company has more than 100 employees, two to five percent of its employees must be rehabilitated social security beneficiaries or qualified persons with disabilities. Because of our inability to
meet this quota, in September 2002 we entered into a Conduct Adjustment Term (Termo de Ajuste de Conduta), or the Commitment, with the Attorney General for Labor, under which we were granted a period of three years to meet the hiring
quota. However, even though we implemented a program aimed at hiring rehabilitated social security beneficiaries and persons with disabilities, the positions available could not be filled. Pursuant to the terms of the Commitment, therefore, we have
been sending reports every six months to the Office of the Attorney General for Labor and the Regional Labor Office to show that positions have been made available to meet the quota.

Tax

We are party to sixteen (16) tax judicial claims (being defendants in seven (7) of these claims) mainly related to social security taxes owed to the National Institute of Social Security (Instituto Nacional de
Seguridade Social - INSS), to the mandatory contribution, services tax (ISS) and PIS/COFINS. See also "Item 5 - Critical Accounting Policies And Estimates - Contingencies - Tax Claims".

Civil

We are subject to seventy (70) civil lawsuits. There are only eight (8) lawsuits in an amount greater than R$50,000, four (4) of which, derived from accidents suffered by employees at work or diseases alleged to be
derived from work.

The two highest claims filed against us are for R$233.0 thousand (U.S.$99.7 thousand) and R$165.0 thousand (U.S.$70.6 thousand), respectively. These claims relate to two different lawsuits brought by
former employees. In the first lawsuit, the plaintiff claims health impairment as a result of having contracted a labor-related disease allegedly while working for us. The plaintiff charges us with omission in fulfilling certain precautions

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related to the workplace safety rules. The second lawsuit is brought by a former employee seeking indemnification for health-related damages as a result of having contracted a labor-related disease allegedly while working for us. This second
plaintiff claims that, apart from working for us, he/she also pursued artistic activities, which allegedly could not be continued in light of the disease. The likelihood of an unfavorable outcome to us in both lawsuits is estimated as
possible by our external legal counsels. Nevertheless, the courts before which both lawsuit were filed declined jurisdiction over the cases and reassigned them to the Labor Courts because of the nature of the disputed matters.

Additionally to the aforementioned civil lawsuits, TNL Contax has been fined by the Empresa Brasileira de Correios e Telégrafos, a postal services company, for breach of its contractual obligations. The fines
total an amount equivalent to R$2,645 thousand (U.S.$1,132 thousand) for alleged violation of confidenciality over telephone messages; failure to transfer reserved telephone lines (0800); and failure to recover 100% of the telephone calls.

Despite what is believed to be the strong legal grounds to challenge the fairness of such fines, TNL Contax has recorded provisions in an amount of R$441.6 thousand (U.S.$188.9 thousand).

Policy on Dividend Distribution

The preferred shares are entitled under our by-laws to receive, to the extent of available distributable profits and reserves, a non-cumulative preferred dividend in an amount equal to the greater of (i) six percent per
year on the amount resulting from the division of the subscribed capital by the total amount of our shares, and (ii) three percent of the equity value of the share, or the Preferred Dividend. To the extent there are additional distributable profits,
we are also required to distribute to all shareholders an amount equal to at least 25.0% of the adjusted net income, or the General Dividend, determined in accordance with Brazilian corporate law. Our obligation to pay General Dividends to holders
of preferred shares will be met inasmuch as a Preferred Dividend is paid. Payment of General Dividends may be limited to the net realized income for the year, provided that the difference is recorded as unrealized reserve. Net income recorded in
unrealized income reserve, when realized and as long as not offset by losses for subsequent years, should be added to the first dividend declared after realization. We may also make additional distributions to the extent of available distributable
profits and reserves. All of the aforementioned distributions may be made as dividends or as tax-deductible interest on capital. See "Item 10. Additional Information  Memorandum and Articles of Association  Allocation of Net Income and
Distribution of Dividends".

Significant Changes

See "Item 5. Operating and Financial Review and Prospects".

Item 9. The Offer and Listing

Information Regarding the Price History of the Stock to Be Offered or Listed

The principal trading market for the preferred shares is the Bovespa. As of December 31, 2008, we had approximately 83 thousand shareholders.

The preferred shares commenced trading separately on the Bovespa on August 2005. The following table sets forth the reported high and low closing sale prices for preferred shares on the Bovespa for the periods
indicated, adjusted for dividends and interest on capital.

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|                       |  |                             |  |      
|---------------------- |  | --------------------------- |  | -----
|                       |  | reaisper Preferred Shares *
|                       |  |                            
|                       |  | High                        |  | Low  
|                       |  |                             |  |      
|2005                   |  | 58.00                       |  | 24.20
|2006                   |  | 65.80                       |  | 32.00
|2007                   |  |                             |  |      
|1stQuarter             |  | 41.60                       |  | 35.00
|2ndQuarter             |  | 48.40                       |  | 37.80
|3rd Quarter            |  | 55.73                       |  | 47.80
|4th Quarter            |  | 54.80                       |  | 48.45
|2008                   |  |                             |  |      
|1stQuarter             |  | 51.66                       |  | 43.37
|2ndQuarter             |  | 51.00                       |  | 35.00
|3rd Quarter            |  | 46.90                       |  | 37.50
|4th Quarter            |  | 41.99                       |  | 21.50
|2009                   |  |                             |  |      
|January                |  | 45.52                       |  | 35.00
|February               |  | 45.39                       |  | 39.00
|March                  |  | 46.97                       |  | 40.15
|April                  |  | 48.49                       |  | 40.07
|May                    |  | 54.61                       |  | 45.00
|                      
|June (through 9, 2009) |  | 57.16                       |  | 51.00

_______________
* Prices per share after the Reverse Stock Split.

Source:Bloomberg

In the United States, the preferred shares trade in the form of ADSs, each representing one-twentieth of a preferred share, issued by the Depositary pursuant to a Depositary Agreement among the Company, the Depositary
and the registered holders and beneficial owners from time to time of ADSs. As of June 1, 2009, there were 32,128 thousand ADSs outstanding. The following table sets forth the reported high and low closing sales prices for ADSs for the period
indicated.

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|                       |  |                      |  |     
|---------------------- |  | -------------------- |  | ----
|                       |  | U.S. dollars per ADS
|                       |  |                     
|                       |  | High                 |  | Low 
|                       |  |                      |  |     
|2005                   |  | 1.30                 |  | 0.40
|2006                   |  | 1.65                 |  | 0.66
|2007                   |  |                      |  |     
|1stQuarter             |  | 0.94                 |  | 0.81
|2ndQuarter             |  | 1.19                 |  | 0.83
|3rd Quarter            |  | 1.41                 |  | 1.05
|4th Quarter            |  | 1.50                 |  | 1.20
|2008                   |  |                      |  |     
|1stQuarter             |  | 1.37                 |  | 1.02
|2ndQuarter             |  | 1.52                 |  | 0.99
|3rd Quarter            |  | 1.39                 |  | 0.90
|4th Quarter            |  | 0.92                 |  | 0.41
|2009                   |  |                      |  |     
|January                |  | 0.93                 |  | 0.73
|February               |  | 0.96                 |  | 0.79
|March                  |  | 0.96                 |  | 0.78
|April                  |  | 1.02                 |  | 0.82
|May                    |  | 1.24                 |  | 0.91
|June (through 9, 2009) |  | 1.40                 |  | 1.20

Source:The Bank of New York ADR Inform

Trading on the Brazilian Stock Exchanges

BM&F Bovespa is the only Brazilian stock exchange on which private equity and private debt may be traded.

BM&F Bovespa trading sessions are from 10:00 a.m. to 5:00 p.m., São Paulo time. During daylight saving time in the United States, the sessions are held from 9:00 a.m. to 4:00 p.m., São Paulo time
(closing call is from 4:55 p.m. to 5:00 p.m.). Equity trading is executed fully electronically through an order-driven trading system called Megabolsa. Additionally, the home broker system through the Internet has been established allowing
retail investors to transmit orders directly to the BM&F Bovespa. BM&F Bovespa also permits trading from 5:45 p.m. to 7:00 p.m. on an online system connected to Megabolsa and Internet brokers called the After Market. The After Market
session is restricted to certain stocks that were traded through the electronic system. Trading on the After Market is subject to regulatory limits on price volatility and on the volume of shares transacted through Internet brokers. CVM has
discretionary authority to suspend trading in shares of a particular issuer under specific circumstances. Securities listed on the BM&F Bovespa may also be traded off the exchange under specific circumstances, but such trading is very limited.

Settlement of transactions is effected three business days after the trade date, without adjustment for inflation. Delivery of and payment for shares are made through the facilities of separate clearinghouses for each
exchange, which maintain accounts for the member brokerage firms. The seller is ordinarily required to deliver the shares to the exchange on the second business day following the trade date. The clearing house for BM&F Bovespa is Companhia
Brasileira de Liquidação e Custódia (CBLC), which is owned, among others, by BM&F Bovespa.

In order to better control volatility, BM&F Bovespa has adopted a circuit breaker mechanism pursuant
  to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the index of the stock exchange falls 10% or 15%, respectively, compared to the previous days closing index. If the market falls more than 15% compared
  to the previous day no more pauses are taken. The circuit breaker is not allowed to be started during the last 30 minutes of the trading session.

The Brazilian stock exchange, Bovespa, is significantly less liquid than the NYSE or other major exchanges around the world. As of December 2008, the aggregate market capitalization of the 392 companies listed on the
Bovespa was equivalent to R$1.4 trillion (U.S.$599.1 billion) and the 10 largest companies listed on that
exchange represented approximately 52.4% of the total market capitalization of all listed companies. In contrast, as of December 2008, the aggregate market capitalization of the 3,507 companies listed on the NYSE was U.S.$14.3 trillion and the
10 largest companies listed on the NYSE represented approximately 15.0% of the total market capitalization of all listed companies.

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The Brazilian equity market is relatively small and illiquid compared to major world markets. Although any of the outstanding shares of a listed company may trade on the Bovespa, in most cases fewer than half of the
listed shares are actually available for trading by the public, the remainder being held by small groups of controlling shareholders, by government entities or by one principal shareholder. For this reason, data showing the total market
capitalization of Brazilian stock exchanges tend to overstate the liquidity of the Brazilian equity market.

The average daily trading volume of Bovespa for December 2008 was approximately 26.4 billion, which corresponds in terms of value to R$3.8 billion (U.S.$1.6 billion). The monthly average of these figures in 2008
was 18.5 billion and R$7.3 billion (U.S.$3.1 billion), respectively.

Trading on Brazilian stock exchanges by nonresidents of Brazil is subject to certain limitations under Brazilian foreign investment legislation. See "Item 10. Additional Information-Exchange Controls and Other
Limitations Affecting Security Holders".

Regulation of the Brazilian Securities Market

The Brazilian securities markets are regulated by the CVM, which has authority over the stock exchanges and the securities markets generally, and by the Brazilian Central Bank, which has, among other powers, licensing
authority over brokerage firms and regulates foreign investment and foreign exchange transactions. The Brazilian securities markets are governed by (i) Law no. 6,385, as amended and supplemented, which is the principal law governing the Brazilian
securities markets; (ii) the Brazilian corporate law (Law No. 6,404/76), as amended and supplemented; and (iii) the regulations issued by the CVM, the CMN, and the Brazilian Central Bank (collectively, the Securities Laws).

Under Brazilian corporate law, a company is either public, a companhia aberta, such as Contax, or private, a companhia fechada. All public companies are registered with the CVM and are subject to
reporting requirements. A company registered with CVM may have its securities traded either on the Bovespa or in the Brazilian over-the-counter market. Shares of companies listed on the Bovespa may not simultaneously trade on the Brazilian
over-the-counter market. The shares of a public company may also be traded privately, subject to certain limitations. To be listed on the Bovespa, a company must apply for registration with the CVM and the Bovespa. Once the Bovespa has admitted a
company to listing and the CVM has accepted its registration as a public company, its securities may be traded on the Bovespa.

The trading of securities on the Bovespa may be suspended at the request of a company in anticipation of the announcement of a material event. Trading may also be suspended at the initiative of the Bovespa or the CVM,
based on or due to a belief that, among other reasons, a company has provided inadequate information regarding a material event or has provided inadequate responses to inquiries by the CVM or the Bovespa.

The trading of shares is prohibited under certain circumstances as follows: (i) trading by the company of its own shares except for cancellation or maintenance in treasury for further disposal, according to Rule 10/80,
issued by the Brazilian Securities Exchange Commission; (ii) trading by the company's controlling shareholders, Officers, Directors or members of any technical or advisory body established pursuant to its by-laws; (iii) trading by persons who, as a
result of their position, title or relationship with the company, have knowledge of the impending disclosure of a material event; and (iv) trading by the persons listed under item (iii) above during the 15-day period before the disclosure of the
company's quarterly and annual financial statements.

The Brazilian securities markets are principally governed by the Securities Laws, as well as by regulations issued by the CVM and the CMN. These laws and regulations, among others, provide for disclosure requirements,
restrictions on insider trading and price manipulation, and protection of minority shareholders. However, the
Brazilian securities markets are not as highly regulated and supervised as the United States securities markets or markets in certain other jurisdictions.

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Recent changes to Brazilian corporate laws and regulations increased the rights of minority shareholders, including holders of preferred shares, by granting them restricted voting rights. The amended Brazilian corporate
law also granted more regulatory power to the CVM. On December 28, 2007, Law No. 11,638 was enacted, implementing changes in the accounting standards adopted by the Brazilian corporate law with respect to the preparation and reporting by Brazilian
companies of financial statements in accordance with Brazilian GAAP.

With respect to forthcoming developments, it is important to point out that CVM has released two public hearing notices, as follows: (i) no. 07/08, as of December 26th, 2009, which contains a draft of a new CVM
instruction that is expected not only to revoke CVM instruction 202 (which currently regulates the registration of issuers in the Brazilian regulated markets), but also to improve the requirements regarding the information provided as a condition to
obtain registrations with the CVM. A relevant issue presented by the Draft is the transparency level of information regarding the officers remuneration. The CVM is demanding that the information of the officers' remuneration shall be given on
an individual form (by each officer) instead of by the administrative body and also intends to display the variable remuneration, with the remunerations exhibition by the stock and bond option plans; and (ii) no. 01/09, as of March 26th, 2009,
with the intention to amend CVM instruction 400 (which currently regulates public offers for the distribution of securities in primary and secondary markets) in connection with the most likely adjustments to be introduced as a result of the
abovementioned public hearing no. 07/08. The public hearings are still being conducted by CVM and no binding regulation has yet been issued in connection thereto.

Disclosure Requirements

Through its Instruction no. 358, CVM revised and consolidated the requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of
information in the trading and acquisition of securities issued by publicly held companies.

> Such requirements include provisions that:

- establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by the controlling shareholders, resolutions of the general shareholders' meeting of shareholders and of management of
      the company, or any other facts related to the company's business (whether occurring within the company or otherwise somehow related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade such
      securities or to exercise any of such securities' underlying rights;
- specify examples of facts that are considered to be material, which include, among others, the execution of shareholders' agreements providing for the transfer of control, the entry or withdrawal of shareholders that maintain any managing,
      financial, technological or administrative function with or contribution to the company, and any corporate restructuring undertaken among related companies;
- require the Officer of Investor Relations, to publish and inform CVM and also the stock exchange and entities of the organized over-the-counter market where the securities issued by the company are traded, as the case may be, any material
      events occurred or related to their business;
- require the controlling shareholders, directors, members of the administrative council, of the Fiscal Council and of any technical and consultative bodies, according to the by-laws, to report any material event they are aware of to the
      Officer of Investor Relations, who will provide for its disclosure. In the event those people referred above have personal knowledge about material events and verify omission by the Officer of Investor Relations towards investors in the fulfilling
      of his communication and disclosing duties, they will only be exempt from responsibility if they communicate the material events to CVM immediately;
- require simultaneous disclosure of material facts to all markets in which the corporation's securities are admitted for trading;

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- require the acquirer of a controlling stake in a corporation to publish material facts, including its intentions to promote, or not, within a year, the cancellation of the registration of publicly-held companies;
- establish rules regarding disclosure requirements in the acquisition and disposal of a material stockholding stake; and
- forbid the use of insider information.

Item 10. Additional Information

Memorandum and Articles of Association

In addition to the description in this Item 10, you should also review the copy of our by-laws incorporated by reference as an exhibit to this annual report. Under Brazilian corporate law, no memorandum or articles of
association are required. Our only constitutive documents are the by-laws and the minutes of the General Shareholders' Meeting that provided for our incorporation.

Organization

We are a listed Company duly registered with the CVM under no. 01910-0 and our by-laws are filed under no. 33.3.0027541 -0 with the Board of Trade (Junta Comercial) of the State of Rio de Janeiro.
According to Article 3 of our by-laws, our business purpose is to participate, directly or indirectly, in other companies as partner, shareholder or quotaholder, in Brazil or abroad. We have no present intention of listing our shares on any
organized market or stock exchange in the United States.

Except as described in this section, our by-laws do not contain provisions addressing the duties, authority, or liabilities of Directors and senior management, which are instead established by Brazilian corporate law.

Qualification of Directors

Brazilian corporate law provides that only shareholders of a company may be appointed to its Board of Directors. There is no minimum share ownership or residency requirement for qualification as a Director. If a
Director is a non-Brazilian resident, he or she must appoint an attorney-in-fact to receive service of process.

According to Brazilian corporate law, persons disqualified by special law, or sentenced for a bankruptcy offense, fraud, bribery or corruption, misappropriation of public funds or embezzlement, crimes against the
national economy or decency or public property, or to any criminal sanction which precludes, even temporarily, access to public office are disqualified for election to an administrative office in the corporation. A person who has been declared by
the CVM to be incapacitated is also ineligible to an administrative office in a publicly held corporation.

The officers shall have unblemished reputations and are ineligible, except if a waiver is granted by the general meeting, in the following cases: (i) holding of a position in a competing company, specially in management
board or advisory or finance committees; and (ii) conflicting interests with the company.

Allocation of Net Income and Distribution of Dividends

Our by-laws require the Board of Directors to recommend, at each annual shareholders' meeting, the allocation of net income from the preceding fiscal year as follows:

- 5.0% to a legal reserve, not to exceed 20.0% of the paid-in capital of Contax;
- at least 25.0% of adjusted net income against payment of dividends. As required by Brazilian corporate law, such amount will be increased if required to satisfy payment of dividends of preferred shares; and

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- respecting the entry in the reserve for profits to be realized, the remaining net income should be allocated in the reserve for expansion for working capital purposes. The total amount registered in the reserve for expansion together with
    the amount enrolled in profit reserves is limited to the total amount recorded as paid-in capital.

Whenever we accumulate or reserve profits, the Board of Directors can authorize the allocation of interim dividends, as provided under Brazilian corporate law. In general, we have to pay dividends first to holders of
preferred shares and then, to holders of common shares. The remaining balance will be distributed equally among all of the shares of our capital stock. Dividends not claimed within three years of the date on which they were made available for
distribution will revert to us. See "Item 8. Financial Information  Policy on Dividend Distribution".

In lieu of the payment of dividends as stated above, we may elect to make payments to shareholders characterized as interest on our capital. See " Taxation  Brazilian Tax Considerations  Distribution
of Interest on Capital".

Shareholders' Meetings

The annual shareholders' meetings are held once a year, generally during the first four months following the end of the fiscal year. Extraordinary meetings can be called at any time.

Our shareholders have the power to decide any matters related to our corporate purpose and to pass any resolutions they deem necessary for our protection and development through a shareholders' vote at a shareholders'
meeting.

We convene the shareholders' meetings by publishing a notice in the national edition of Valor Econômico, a Brazilian newspaper, and also in the Official Gazette of the State of Rio de Janeiro
(Diário Oficial do Estado do Rio de Janeiro). The notice must be published no fewer than three times, the first of which must be at least 15 calendar days prior to the scheduled meeting date.

The notice must always contain the meeting's place, date, time and agenda and, in case of a proposed amendment to the by-laws, an indication of the subject matter affected by such proposal.

The Board of Directors, or, in some specific situations set forth in Brazilian corporate law, the shareholders or the Fiscal Council, if in operation, has the power to call shareholders' meetings. A shareholder may be
represented at a shareholders' meeting by its attorney-in-fact so long as that attorney-in-fact was appointed within one year of such meeting. The attorney-in-fact must be another shareholder, a member of our management, a lawyer, or a financial
institution. The power of attorney granted to the attorney-in-fact must comply with certain formalities set forth by Brazilian law.

In order to be legally convened after a first call, a shareholders' meeting must obtain a quorum representing at least one-quarter of the issued and outstanding voting capital. If this quorum is not met, a shareholders'
meeting can be held with any quorum after a second call has been published. However, if the purpose of a shareholders' meeting is to amend our by-laws, shareholders representing at least two-thirds of the issued and outstanding voting capital must
be present. If this quorum is not met, the Board of Directors may call a second meeting with notice given at least eight calendar days prior to the scheduled meeting, in accordance with the rules of publication described above. No minimum quorum
requirements apply to a second meeting, except that certain voting requirements may still apply as described below.

Voting Rights

Each common share entitles its holder to one vote at our shareholders' meetings. Except as otherwise provided by law, resolutions of a shareholders' meeting are passed by the vote of holders of our common shares.
Abstentions are not taken into account.

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Holders of preferred shares may acquire full voting rights if we fail to pay dividends for three consecutive years. They will continue to have voting rights until dividends are duly paid.

Pursuant to Brazilian corporate law, the approval of the following matters requires: (i) a separate vote of shareholders representing the majority of each class of the outstanding, adversely affected preferred shares;
and (ii) a vote of shareholders representing the majority of the issued and outstanding common shares:

- the creation of preferred shares or the increase of an existing class of shares without preserving their proportion with other classes of shares, except as already authorized by our by-laws;
- a change of a preference, privilege or redemption or amortization provision of any class of preferred shares; and
- the creation of a new class of preferred shares that has a preference, privilege or redemption or amortization provision which is superior to those of existing preferred shares.

Preferred shareholders do not have a vote on any other matter in addition to the ones previously mentioned, except that they can elect one member and respective alternate to sit on our Fiscal Council, if in operation,
and, if they come to hold more than 10.0% of our capital stock, they can elect one member and respective alternate to sit on our Board of Directors. See "Item 6. Directors, Senior Management and Employees".

Notwithstanding the actions described above, the approval of a majority of the holders of the issued and outstanding common shares is required to approve the following matters:

- a reduction of the mandatory dividend set forth in our by-laws;
- the approval of a merger, spin-off or consolidation;
- our participation in a group of companies, or grupo de sociedades, the management of which is coordinated through contractual relationships and equity ownership, as defined under Brazilian corporate law;
- a change in our business purpose;
- the creation of founders' shares (partes beneficiárias);
- the cessation of our liquidation process; and
- approval of our dissolution.

Pursuant to Brazilian corporate law, holders of common shares, voting at a shareholders' meeting, have the exclusive power to:

- amend the by-laws, including changing the rights of holders of common shares;
- elect or dismiss members of the Board of Directors or Fiscal Council, if in operation;
- review the yearly accounts prepared by management and accept or reject management's financial statements, and decide on the allocation of: (i) net profits for payment of the mandatory dividend, and (ii) funds to the various reserve accounts;
- authorize the issuance of debentures and founders' shares (partes beneficiárias), except that the Board of Directors is empowered to approve the issuance of simple debentures that are not convertible into shares and have
    no real guarantee;

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- suspend the rights of shareholders who have not fulfilled their obligations as imposed by law or by the by-laws;
- accept or reject the valuation of assets contributed by a shareholder in consideration for issuance of capital stock;
- pass resolutions authorizing: (i) the reorganization of our legal form; (ii) our merger, spin-off, dissolution or liquidation; and (iii) the election or dismissal of liquidators and the inspection of their accounts; and
- authorize our management to file for bankruptcy or request concordata (a reorganization process similar to Chapter 11 proceedings under U.S. bankruptcy law).

Related Party Transactions

According to Brazilian corporate law, a shareholder may not vote on resolutions to approve the following matters: (i) an evaluation report of property transferred by such shareholder as capital contribution to a
company; (ii) the accounts of such shareholder while serving as an officer of a company; or (iii) any other resolution that may benefit such shareholder personally or in which such shareholder and the company may have a conflicting interest.
Resolutions passed with a vote of a conflicted shareholder may be voided and such shareholder held liable for damages and required to disgorge any benefits incurred.

Brazilian corporate law also provides that a Director or Officer shall not take part in any (i) corporate transaction in which they have an interest that conflicts with those of the company, or (ii) decision made by
other Directors or Officers regarding such conflicting transaction. The conflicted Director or Officer shall disclose their impediment to the other Directors or Officers and request that the nature and extent of their interests be recorded in the
minutes of the meeting of the Board of Directors or of the Board of Executive Officers. In addition, a Director or Officer may only execute contracts with a company under reasonable and fair terms in line with prevailing market standards or in
accordance with the same guidelines that the company would observe when executing contracts with unrelated third parties. Any business executed by such Director or Officer and the company in disagreement with these rules may be voided and the
Director or Officer required to return to the company any benefits incurred.

Appraisal Rights

Brazilian corporate law provides that under certain circumstances a shareholder has the right to require that its equity interests in a company be redeemed for payment. Such payment shall not be lower than the company's
pro-rata net worth (as per its most recently approved balance sheet) unless an independent valuation were to determine a lower economic value for the company's equity value.

Appraisal rights may be exercised:

> (i) by the dissenting or nonvoting holders of the adversely affected class of shares (including any holder of preferred shares of an adversely affected class) in the event that the holders of a majority of all outstanding common shares authorize:

- the creation of preferred shares or an increase of an existing class of shares without preserving their proportion with other classes of shares, except as already authorized in our by-laws;
- a change in the preferences, privileges, or redemption or amortization provisions of any class of preferred shares; or
- the creation of a new class of preferred shares that has a preference, privilege, or redemption or amortization provision that is superior to those of existing preferred shares.

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> (ii) by all dissenting or nonvoting shareholders, in the event that the holders of a majority of all outstanding common shares authorize:

- a reduction of the mandatory dividend set forth in our by-laws;
- the approval of our consolidation or merger into another company;
- our participation in a grupo de sociedades;
- a change in our business purpose;
- our spin-off, if such spin-off implies (a) a change in our business purpose (except if the spun-off assets revert to a company whose main purpose is the same as ours), (b) a reduction of the mandatory dividend set forth in our by-laws, or
      (c) our participation in a grupo de sociedades; or
- the acquisition of control of another company at a price which exceeds certain limits set forth in Brazilian corporate law.

Notwithstanding the above, in the event that we are consolidated or merged with another company, become part of a grupo de sociedades, or acquire the control of another company for a price in excess of certain
limits imposed by Brazilian corporate law, holders of any type or class of shares that are marketable and dispersed in the market will not have appraisal rights. Shares are considered marketable when that type or class of shares is part of a general
stock exchange index, as defined by the CVM, in Brazil or abroad. Shares are considered dispersed in the market when the controlling shareholder, the parent company or other companies under its control hold less than half the total amount of that
share type or class.

Dissenting or nonvoting shareholders are also entitled to appraisal rights in the event that the entity resulting from a merger or spin-off does not have its shares listed in an exchange or traded in the secondary
market within 120 days from the shareholders' meeting that approved the relevant merger or spin-off.

Dissenting or nonvoting shareholders are only entitled to appraisal rights when they are shareholders of record at the time of the first notice calling for a shareholders' meeting to vote on this matter is published or
at the time when a material fact (fato relevante) was announced, whichever occurs earlier.

Appraisal rights lapse 30 days after publication of the minutes of the shareholders' meeting that gave rise to such appraisal rights, except when the resolution is approved pending confirmation by the holders of
preferred shares (such confirmation to be given at special meeting to be held within one year). In this event, such 30-day period for dissenting shareholders begins at the date of publication of the minutes of the shareholders' meeting. Within 10
days after expiration of the exercise period of appraisal rights, we are entitled to reconsider any resolution or decision that gave rise to such appraisal rights, in the event that the reimbursement of shares held by dissenting shareholders is
deemed to have a negative impact on our financial stability.

In any one of the situations explained above, shares would be redeemable at their net book value, based on the most recent balance sheet approved by shareholders. The reimbursement amount can only be lower than the net
book value amount if it is based on the economic value of the enterprise, as determined by an appraisal process in accordance with Brazilian corporate law. If the shareholders' meeting that gave rise to such appraisal rights is held more than 60
days after the date of the most recently approved balance sheet, shareholders may require that the reimbursement value of their shares be calculated based on a new balance sheet dated up to 60 days prior to that shareholders' meeting.

Liquidation Procedures

In the event of our liquidation, the holders of preferred shares would be entitled to priority in relation to holders of common shares in the reimbursement of capital, with no premium. The reimbursement amount to which
they would be entitled is based on the portion of the capital stock represented by the preferred shares, as adjusted from time to time to reflect any capital increases or reductions. First, after all our creditors have been paid, the residual
assets, if any, would be applied towards the amount of capital represented by preferred shares to its respective holders. Once holders of preferred shares have been fully reimbursed, the holders of the common shares will be reimbursed, to the extent
of remaining assets, if any, on the portion of the capital stock represented by common shares. All our shareholders will participate equally and ratably in any remaining residual assets.

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Form and Transfer of Securities

Our shares are maintained in book-entry form with a transfer agent, Banco do Brasil S.A., or the Registrar, that serves as the registrar for those of our shares that will be freely traded on the Bovespa. To make a
transfer of shares, the Registrar makes an entry in the register by debiting the share account of the transferor and crediting the share account of the transferee.

Transfers of shares by a foreign investor are made in the same way and executed by the investor's local Custodian on the investor's behalf.

The Bovespa and clearing systems, such as member brokerage firms and banks, control Brazil's clearing house for equity of Brazilian listed companies, CBLC. Shareholders may choose, at their discretion, to hold their
shares through CBLC. Shares are added to the CBLC system through Brazilian institutions that have clearing accounts with the CBLC. Our shareholder registry indicates which shares are kept at the CBLC system.

Transfer of Control

The sale of a controlling block of shares of a publicly held Company, such as Contax, can only be effected if the acquirer undertakes to make a public offering to purchase the remaining common shares at a price equal to
at least 80.0% of the amount paid for each voting share in such controlling block. Such public offering must comply with the rules issued by the CVM. In addition, the acquirer may grant the option to the minority shareholders to keep their shares
upon receipt of a premium equal to the difference between the market value of the shares and the amount paid for the shares comprising the controlling block.

The concept of sale of control is defined by Brazilian corporate law and regulations as the direct or indirect: (i) transfer of (A) shares included in the controlling block or subject to a shareholders' agreement, or
(B) securities convertible into voting shares; or (ii) assignment of shares and other securities subscription rights, or rights attached to securities convertible into shares, that may result in the disposal of control of a company.

Amendments

Our by-laws were amended on December 17, 2008 to reflect the cancellation of 52,337 common shares and 861,664 preferred shares held in treasury, without reduction of our capital stock (166,018 common shares still being
held in treasury), as approved at our Extraordinary Shareholders' Meeting held on such date. In consequence, the caption of article 5 of our by-laws will now have the following wording: "Article 5  The Company's Capital Stock comprises
R$223,873,116.10 (two hundred and twenty three million, eight hundred and seventy three thousand, one hundred and sixteen reais and ten centavos), divided into 14,942,685 shares, of which 5,772,435 are common and 9,170,250 are preferred shares,
all registered book-entry shares with no par value".

Article 13 of our by-laws was last amended after our Extraordinary Shareholders' Meeting held on June 17, 2008 to increase the maximum number of members of the Company's Board of Directors, from 11 to 13 members.

Disclosure of Shareholder Ownership

Brazilian regulations establish that the controlling shareholders, directly or indirectly, and those shareholders who elected the members of the Board of Directors or Fiscal Council, if in operation, as well as any
other person or group of persons acting together or representing the same interest and who directly or indirectly hold 5.0% or more of any type or class of shares in a publicly held company, disclose their respective shareholdings to the company. In the event that an acquisition results in a change of control of a company or of its administrative structure, as well as when the acquisition results in the obligation to tender a public offer, the acquirer of the control of such
company shall publish a press release regarding the shareholdings, as required by Brazilian regulations. The officer of investor relations is responsible for transmitting the information to the CVM and the stock exchanges. Every 5.0% increment or
disposal in shareholding must be similarly disclosed. See "Item 9. The Offer and Listing-Disclosure Requirements".

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Material Contracts

We are a party to a material contract with Telemar related to contact center services rendered by us to both Tmar and Oi, which was executed on November 30, 2004 and duly approved at Tmar's Extraordinary Shareholders'
Meeting on December 17, 2004.

The total amount of our net operating revenues derived from Telemar was R$906.6 million in 2008 and R$692.1 million in 2007, representing 51.1% and 50.7%, respectively, of our total revenues in those years. Our
relationship with Telemar is currently comprised of several distinct and independent services, such as customer services for Telemar fixed line business, outbound telemarketing to attract additional mobile customers, customer service for prepaid and
postpaid mobile users, technical support for broadband subscribers, and debt collection services.

On April 1, 2004, Orbitall, one of Brazil's main credit card processing companies, executed an agreement with us, or the Orbitall Agreement, according to which we agreed to provide contact center services to the
customers of Orbitall's clients, such as Citibank, Credicard, Itaucard, Banespa, Sodexo, VR Vales and Medial Saúde. So far, the Orbitall Agreement has accounted for a significant portion of our revenues (second only to the Telemar service
agreement) and we expect it to be one of our main service agreements in the foreseeable future. The final term of our agreement with Orbitall was April 2009. Although we are still providing services to Orbitall under the terms previously agreed, the
renewal of this contract is still under negotiations.

See the reference to such material contracts as well as to their amendments in "Item 19. Exhibits".

BNDES Loan Agreement

On June 20, 2007, the Company's Board of Directors approved the loan agreement of approximately R$216.7 million from BNDES (the Brazilian Development Bank) to the subsidiary TNL Contax S.A., as approved by the
Executive Board of BNDES on May 22, 2007. Repayment will occur within a six-year settlement term, including a two year grace period, with an annual cost of TJLP (the Brazilian long-term interest rate) plus 2.0% .

The funds are for increasing installed capacity, upgrading current facilities, training programs, improving service quality and productivity and investments in marketing activities, within the PROSOFT- Corporate
(Software Industry and Correlated Services Development Program).

In October 2007, the first tranche of the BNDES loan was provided in the amount of R$100 million, followed by additional tranches on the January 28, January 30, June 12 and November 18, 2008, in the amounts of
R$40 million, R$10 million, R$61.8 million and R$4.9 million, respectively, totaling R$216.7 million.

Exchange Controls and Other Limitations Affecting Shareholders

There are no restrictions on ownership of our capital stock by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of preferred shares into
foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation and foreign exchange regulations, which generally requires, among other things, that the relevant investments be registered
with the Brazilian Central Bank. Such restrictions on the remittance of foreign capital abroad could hinder or prevent the acting as custodian for the Depositary of the preferred shares underlying the ADSs, or holders who have exchanged ADSs for
preferred shares from converting dividends, distributions or the proceeds from any sale of such preferred shares into U.S. dollars, as the case may be, and remitting such U.S. dollars abroad. Holders of ADSs could be adversely affected by delays in, or refusal to grant any, required government approval for conversions of Brazilian currency payments and remittances abroad of amounts owed to holders of ADSs. See "Item 3. Key Information-Risk Factors-Risks
Relating to the ADSs and the Preferred Shares".

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Foreign investors may register their investments under Law no. 4,131 or Resolution no. 2,689 of the CMN. Registration under Law no. 4,131 or under Resolution no. 2,689 generally enables foreign investors to convert into
foreign currency dividends, other distributions and sales proceeds received in connection with registered investments and to remit such amounts abroad. Resolution no. 2,689 affords favorable tax treatment to foreign investors who are not resident in
a tax haven jurisdiction, which is defined under Brazilian tax laws as a country that does not impose taxes or where the maximum income tax rate is lower than 20.0% or that restricts the disclosure of shareholder composition or ownership of
investments ("Tax Haven").

All investments made by a foreign investor under Resolution no. 2,689 will be subject to an electronic registration with the Brazilian Central Bank.

Under Resolution no. 2,689, foreign investors may invest in almost all financial assets and engage in almost all transactions available to local investors in the Brazilian financial and capital markets, provided that
certain requirements are fulfilled. In accordance with Resolution no. 2,689, the definition of foreign investor includes individuals, legal entities, mutual funds and other collective investment entities, domiciled or headquartered abroad.

Resolution no. 2,689 prohibits the offshore transfer or assignment of title to Brazilian securities, except in the cases of (i) corporate reorganization effected abroad by a foreign investor, or (ii) inheritance.

Pursuant to Resolution no. 2,689, foreign investors must:

- appoint at least one representative in Brazil with powers to take action relating to the foreign investment;
- complete the appropriate foreign investor registration forms;
- obtain registration as a foreign investor with the CVM; and
- register their foreign investment with the Brazilian Central Bank.

Securities and other financial assets held by the foreign investor pursuant to Resolution no. 2,689 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Brazilian
Central Bank or CVM or in registry, clearing and custody systems authorized by the Brazilian Central Bank or CVM. In addition, the trading of securities is restricted to transactions carried out in exchanges or in organized over-the-counter markets
recognized by the CVM.

Resolution no. 1,927 of the CMN provides for the issuance of depositary receipts in foreign markets in respect of shares of Brazilian issuers.

Under the mechanics of an ADS program, the custodian for the Depositary holds those shares that correspond to the ADSs issued abroad so that such shares are blocked from trading on the Bovespa. The Depositary will keep
a record of the ADS holders and record the transfers of ADSs made by such ADS holders. Distributions made by us will be paid to the custodian, who will remit such distribution outside Brazil to the Depositary, so that it can in turn distribute these
proceeds to the ADS holders of record.

To allow that dividends paid in reais be legally converted into U.S. dollars and remitted outside Brazil to holders of ADSs, the Brazilian Central Bank has issued an electronic certificate of foreign capital
registration in the name of the Depositary, which is kept by the custodian on the Depositary's behalf. Pursuant to the electronic certificate of foreign capital registration, the custodian is allowed to convert, into foreign currency, dividends and
other distributions denominated in reais with respect to the preferred shares represented by ADSs and remit the proceeds of such distributions outside Brazil to the Depositary, so that it can in turn forward such proceeds to the ADS holders
of record.

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In the event that a holder of ADSs exchanges such ADSs for preferred shares, the holder will be entitled to continue to rely on the Depositary's electronic certificate of foreign capital registration for five business
days after the exchange, after which the holder must seek to obtain its own electronic certificate of foreign capital registration with the Brazilian Central Bank. Thereafter, unless the preferred shares are held by a duly registered investor
pursuant to Resolution no. 2,689 or unless a holder of preferred shares applies for and obtains a new certificate of registration, such holder may not be able to convert into foreign currency and remit outside Brazil the proceeds from the
disposition of, or distributions with respect to, the preferred shares. Also, if not registered under Resolution no. 2,689, such holder will be subject to less favorable Brazilian tax treatment than a holder of ADSs. In addition, if the foreign
investor resides in a Tax Haven, the investor will also be subject to less favorable tax treatment. See "Item 3. Key Information. Risk factors  Risks relating to the ADSs and preferred shares  If you surrender your ADSs and withdraw
preferred shares, you risk losing the ability to remit foreign currency abroad and certain Brazilian tax advantages" and " Material tax considerations-Material Brazilian tax considerations".

Under current Brazilian legislation, the federal government may impose temporary restrictions on remittances of foreign capital abroad in the event of a serious imbalance or an anticipated serious imbalance of Brazil's
balance of payments. For approximately six months in 1989 and early 1990, the Brazilian government froze all dividend and capital repatriations held by the Brazilian Central Bank that were owed to foreign equity investors, in order to preserve
Brazil's foreign currency reserves. These amounts were subsequently released in accordance with federal government directives. There can be no assurance that the Brazilian government will not impose similar restrictions on foreign repatriations in
the future. See "Item 3. Key Information. Risk factors  Risks relating to Brazil".

Registered Capital

Investments in preferred shares by (i) a holder not deemed to be domiciled in Brazil for Brazilian tax purposes, (ii) a non-Brazilian holder, who is registered with the CVM under Resolution no. 2,689, or (iii) the
Depositary, are eligible for registration with the Brazilian Central Bank. Such registration (the amount so registered being referred to as Registered Capital) allows the remittance outside Brazil of foreign currency, converted at the commercial
market rate, acquired with the proceeds of distributions on and amounts realized through dispositions of such preferred shares. The Registered Capital per preferred shares purchased in the form of an ADS, or purchased in Brazil and deposited with
the Depositary in exchange for an ADS, will be equal to its purchase price (stated in U.S. dollars). The Registered Capital per preferred shares withdrawn upon cancellation of an ADS will be the U.S. dollar equivalent of (i) the average price of a
preferred shares on the Bovespa on the day of withdrawal; or (ii) if no preferred shares were traded on that day, the average price on the Bovespa during the 15 trading sessions immediately preceding such withdrawal. The U.S. dollar equivalent will
be determined on the basis of the average commercial market rates quoted by the Brazilian Central Bank on such date or dates.

A non-Brazilian holder of preferred shares may experience delays in effecting Brazilian Central Bank registration, which may consequently delay remittances of currencies abroad. Such a delay may adversely affect the
amount in U.S. dollars received by the non-Brazilian holder.

Taxation

The following summary contains a description of the principal Brazilian and U.S. federal income tax consequences of the acquisition, ownership and disposition of shares or ADSs. Such summary does not, however, purport
to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase shares or ADSs. The summary is based upon the tax laws of Brazil and the United States and regulations under these tax laws as currently
in effect, which are subject to change. Although there is at present no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. No assurance can be
given, however, as to whether or when a treaty will enter into force or how it will affect the U.S. holders of shares or ADSs. Prospective holders of preferred shares or ADSs should consult their own tax advisors as to the tax consequences of the
acquisition, ownership and disposition of shares or ADSs in their particular circumstances.

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Brazilian Tax Considerations

The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of shares or ADSs by a non-Brazilian holder. The following is a general discussion only, and
therefore does not specifically address all of the Brazilian tax considerations applicable to any particular NonResident Holder. It is based upon the tax laws of Brazil as in effect on the date of this filing, which are subject to change, possibly
with retroactive effect, and to differing interpretations, which may result in different tax consequences from those described below.

The tax consequences described below do not take into account the effects of any tax treaties or reciprocity of tax treatment entered into by Brazil and other countries. Please note that Brazil has not entered into any
tax treaty with the United States. Also, the discussion does not address any tax consequences under the tax laws of any state or municipality of Brazil either. Each prospective investor is urged to consult its own tax advisor about the Brazilian tax
consequences of an investment in our shares or the ADSs.

Taxation of Dividends

Dividends paid by us in cash or in kind from profits of periods beginning on or after January 1, 1996 (i) to the Depositary in respect of shares underlying ADSs or (ii) to a non-Brazilian holder in respect of shares,
will generally not be subject to Brazilian withholding tax. Dividends paid from profits generated before January 1, 1996 may be subject to Brazilian withholding tax at varying rates, according to the tax legislation applicable to each corresponding
year.

Distribution of Interest on Capital

Brazilian corporations may make payments to shareholders characterized as interest on capital of the Company as an alternative form of making dividend distributions. The rate of interest may not be higher than the
Brazilian long-term interest rate, or TJLP, as determined by the Central Bank from time to time. The total amount distributed as interest on capital may not exceed the greater of (i) 50.0% of net income (after social contribution on profits and
before the provision for corporate income tax and the amounts attributable to shareholders as shareholders' interest on equity) for the year in respect of which the payment or credit is made or (ii) 50.0% of retained earnings for the year prior to
the year in respect of which the payment or credit is made. Payments of interest on capital are decided by the shareholders on the basis of recommendations of a Company's Board of Directors.

Distribution of interest on capital paid to Brazilian and non-Brazilian holders of shares, including payments to the Depositary in respect of shares underlying ADSs, are deductible by us for Brazilian corporate income
tax purposes. Such payments are subject to Brazilian withholding tax at the rate of 15.0%, except for payments to persons who are exempt from tax in Brazil, which payments are free of Brazilian tax, and except for payments to persons situated in Tax
Havens (that is, a country or location that does not impose income tax or where the income tax rate is lower than 20.0% or where the local legislation imposes restrictions on disclosing the shareholding composition or the ownership of the
investment), which payments are subject to tax at a 25.0% rate.

No assurance can be given that our Board of Directors will not recommend that future distributions of profits will be made by means of interest on capital instead of by means of dividends.

Amounts paid as interest on capital (net of applicable withholding tax) may be treated as payments in respect of the dividends we are obligated to distribute to our shareholders in accordance with our by-laws and
Brazilian corporate law. Distributions of interest on capital in respect of the shares, including distributions to the Depositary in respect of shares underlying ADSs, may be converted into U.S. dollars and remitted outside of Brazil, subject to
applicable exchange controls.

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Taxation of Gains Outside Brazil

According to Law No. 10,833 of December 29, 2003, capital gains realized on the disposition of assets located in Brazil by a Non-Brazilian Holder, whether to another non-Brazilian resident or to Brazilian residents, are
subject to taxation in Brazil. In this sense, if the shares are disposed of by a Non-Brazilian Holder, as they are defined as assets located in Brazil, such holder will be subject to income tax on the gains assessed, following the rules described
below, whether the disposition is conducted in Brazil or abroad and with a Brazilian resident or not.

Regarding ADSs, although the matter is not free from doubt, the gains realized by a Non-Brazilian Holder on the disposition of ADSs to another Non-Brazilian Holder would not be taxed in Brazil, based on the theory that
ADSs do not constitute assets located in Brazil for purposes of Law No. 10,833/03. However, we cannot assure you that Brazilian courts would adopt this theory. Thus, the gain on a disposition of ADSs by a Non-Brazilian Holder to a resident in Brazil
(or possibly even to a Non-Brazilian Holder) may be subject to income tax in Brazil in the event that courts determine that ADSs would constitute assets located in Brazil.

The Brazilian tax authorities have issued a normative instruction confirming that, pursuant to Law no. 10,833, these tax authorities intend to assess income tax on capital gains earned by non-Brazilian residents who
earn a capital gain in the disposition of assets located in Brazil, regardless of whether the Buyer is a Brazilian resident or not. Holders of ADSs outside Brazil may have grounds to assert that Brazilian Law no. 10,833 does not apply to sales or
other dispositions of ADSs, as ADSs are not assets located in Brazil. However, except in the situations described below in the section Taxation of Gains in Brazil, the sale or other disposition of shares abroad would be subject to the provisions of
Brazilian Law no. 10,833. Considering the general and unclear scope of such provisions and the lack of a final judicial court ruling in respect thereof, we are unable to predict whether such understanding will ultimately prevail in of Brazil.

Any capital gains arising from sales or other dispositions outside Brazil would be subject to Brazilian income tax at the rate of 15.0% or, if the investor is located in a Tax Haven, 25.0% . Brazilian Law no. 10,833
requires the purchaser of our shares outside Brazil or its attorney-in-fact in Brazil to withhold the income tax. A disposition of shares can only occur abroad if an investor decides to cancel its investment in ADSs and register the underlying
shares as a direct foreign investment under Law no. 4,131.

Taxation of Gains in Brazil

The deposit of shares in exchange for ADSs may be subject to Brazilian tax on capital gains at the rate of 15.0%, or 25.0% in the case of Tax-Haven residents, if the acquisition cost of the shares is lower than (a) the
average price per share on a Brazilian stock exchange on which the greatest number of such shares were sold on the day of deposit; or (b) if no shares were sold on that day, the average price on the Brazilian stock exchange on which the greatest
number of shares were sold in the 15 trading sessions immediately preceding such deposit. In such case, the difference between the acquisition cost and the average price of the shares calculated as above will be considered to be a capital gain
subject to taxation. Such taxation is not applicable in case of Non-Resident Holders registered under Resolution no. 2,689 (other than Tax-Haven residents), which are currently not subject to income tax in such a transaction.

The withdrawal of ADSs in exchange for shares is not subject to Brazilian tax. Any exercise of preemptive rights relating to the ADSs will not be subject to Brazilian taxation. Any gain on the sale or assignment of
preemptive rights relating to shares by the depositary on behalf of holders of ADSs will be subject to Brazilian income taxation according to the same rules applicable to the sale or disposition of shares.

Under Brazilian law, the tax consequences of an investment in Brazil will depend on the type of the investment and the domicile of the investor. Generally, a Non-Brazilian Holder may invest in Brazil in accordance with
CMN Resolution no. 2,689 (a "2689 Investment") or with Law no. 4,131 (a "4131 Investment"). In order for a Brazilian investment by a Non-Brazilian Holder to qualify as a 2689 Investment, the Non-Brazilian Holder must appoint a Brazilian custodian
for its investment, register its investment with the Central Bank, and satisfy certain other requirements. An investment in shares by a Non-Brazilian Holder that is registered with the Central Bank but that is not a 2689 Investment may be classified
as a 4131 Investment.

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Gain realized by a Non-Brazilian Holder on the disposition of shares held as a 2,689 Investment on the Bovespa (which includes the transactions carried out on the organized over-the-counter market) is not subject to
Brazilian income tax, unless the Non-Brazilian Holder is organized under the laws or a resident of a Tax Haven, in which case such gain is subject to income tax at a rate of 15.0% . Gain realized by a Non-Brazilian Holder on the disposition of
shares held as a 2689 Investment that is not carried out on the Bovespa is subject to Brazilian income tax at a rate of 15.0% .

In all cases other than a 2689 Investment (including a 4131 Investment), gain realized by a Non-Brazilian Holder on the disposition of shares to a Brazilian resident, whether or not carried out on the Bovespa, is
subject to Brazilian income tax at the rate of 15.0%, except for dispositions that are not carried out on the Bovespa by a Non-Brazilian Holder organized under the laws or a resident of a Tax Haven, which are subject to tax at a rate of 25.0% .

In addition, a withholding tax of 0.005% will also be assessed on the sales price or other disposition value of shares sold or disposed of in transactions carried out on a Brazilian stock exchange, except in the case of
a 2689 Investment by a Non-Brazilian Holder who is not organized under the laws or a resident of a Tax Haven. Such tax must be withheld by one of the following entities: (i) the agent receiving the sale or disposition order from the client; (ii) the
stock exchange responsible for registering the transactions; or (iii) the entity responsible for the settlement and payment of the transactions. This 0.005% withholding income tax is not levied in day trade transactions.

The current preferential treatment for non-Brazilian holders of ADSs and non-Brazilian holders of shares under Resolution no. 2,689 may not continue in the future.

In the case of a redemption of shares or a capital reduction by a Brazilian corporation, with subsequent withdraw of the ADSs, the positive difference between the amount received by the non-resident and the acquisition
cost of the shares redeemed is treated as capital gain derived from the sale or exchange of shares not carried out on a Brazilian stock exchange market and is therefore subject to income tax at the rate of 15.0%, or 25.0%, as the case may be.

Any exercise of preemptive rights relating to our shares will not be subject to Brazilian taxation. Gains on the sale or assignment of preemptive rights relating to our shares by the Depositary may be subject to
Brazilian taxation, according to the same rules applicable to the sale or disposition of shares. Tax authorities may attempt to tax such gains even when the sale or assignment of such rights takes place outside Brazil, based on the provisions of Law
no. 10,833, as described above.

As a Non-Resident holder of ADSs, you may cancel your ADSs and exchange them for shares and no income tax may be levied on such exchange, as long as the appropriate rules are complied with in connection with the
registration of the investment with the Central Bank.

Tax on Foreign Exchange and Financial Transactions

Foreign Exchange Transactions. Brazilian law imposes a Tax on Foreign Exchange Transactions, or "IOF/Exchange Tax," on the conversion of reais into foreign currency and on the conversion of foreign currency into
reais. As from January, 2008, IOF/Exchange Tax rate applicable to almost all foreign currency exchange transactions was increased from zero to 0.38%, although the zero percent rate still applies in some cases, such as: (i) inflow and outflow related
to transactions carried out on the Brazilian stock exchange by 2,689 Holders; and; (ii) payment of dividends and interest on shareholders equity related to the investment mentioned under item (i) above.

Notwithstanding these rates in force as of the date hereof, the Minister of Finance is legally entitled to increase the rate of the IOF/Exchange to a maximum of 25% of the amount of the currency exchange transaction,
but only on a prospective basis.

Tax on Transactions Involving Bonds and Securities.Brazilian law imposes a Tax on Transactions involving Bonds and Securities, or "IOF/Bonds Tax," due on transactions involving bonds and securities, including
those carried out on a Brazilian stock exchange. The rate of IOF/Bonds Tax applicable to transactions involving common or preferred shares and common and preferred ADSs (if applicable) is currently zero, although the Minister of Finance is permitted to increase such rate at any time up to 1.5% of the amount of the taxed transaction per each day of the
investors holding period, but only to the extent there is a gain realized on the transaction and only on a prospective basis.

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Other Brazilian Taxes

There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of shares or ADSs by a non-Brazilian holder except for gift and inheritance taxes levied by some states
in Brazil on gifts made or inheritances bestowed by individuals or entities not resident or domiciled in Brazil or in the relevant state to individuals or entities that are resident or domiciled within such state in Brazil. There are no Brazilian
stamp, issue, registration, or similar taxes or duties payable by holders of shares or ADSs.

As a general rule, until December 31, 2007, transactions carried out in Brazil that resulted in the transfer of funds from an account maintained with a Brazilian financial institution were subject to the Temporary
Contribution on Financial Transactions (CPMF Tax), at the rate of 0.38% . However, as of January 1, 2008, the CPMF Tax is no longer in force, and should not be levied on any debit to bank accounts carried after that date.

Material United States Federal Income Tax Considerations

The following summarizes the material U.S. federal income tax consequences applicable to the ownership and disposition of preferred shares or ADSs. The discussion that follows is based upon laws, regulations, rulings
and decisions now in effect, all of which are subject to change (possibly with retroactive effect) or differing interpretations. We have not sought, and will not seek, any ruling from the U.S. Internal Revenue Service, or the IRS, with respect to
the tax consequences discussed herein. Consequently, the IRS may disagree with or challenge any of such tax consequences.

This discussion deals only with preferred shares or ADSs held as capital assets and does not purport to deal with persons in special tax situations, such as financial institutions, insurance companies, tax-exempt
organizations, regulated investment companies, real estate investment trusts, dealers in securities or currencies, persons holding shares as a position in a "straddle" or as part of a "hedging" or "conversion" transaction for tax purposes, U.S.
Holders (as defined below) whose functional currency is not the U.S. dollar, partnerships or other entities treated as partnerships for U.S. federal income tax purposes, or persons liable for alternative minimum tax. Furthermore, this discussion
does not purport to deal with persons who own, directly or indirectly, 10.0% or more of the total combined voting power of all classes of our stock entitled to vote or 10.0% or more in value of our outstanding stock. Holders should consult their own
tax advisors concerning the application of U.S. federal income tax laws to their particular situations as well as any consequences of the ownership and disposition of preferred shares or ADSs arising under the laws of any other taxing jurisdiction.

This summary assumes that we are not a passive foreign investment company ("PFIC") for U.S. federal income tax purposes. See the discussion under " U.S. Holders  Passive Foreign Investment Company ("PFIC")
Rules" below.

U.S. Holders

A U.S. Holder is a beneficial owner of preferred shares or ADSs that is, for U.S. federal income tax purposes: a citizen or resident of the United States, a corporation, or any other entity taxable as a corporation,
created or organized in or under the laws of the United States or any state thereof or the District of Columbia, an estate the income of which is subject to U.S. federal income tax regardless of its source, or a trust if (i) a court within the
United States is able to exercise primary supervision over the trust's administration and one or more United States persons have the authority to control all substantial decisions of the trust or (ii) the trust has in effect a valid election to be
subject to tax as a U.S. person.

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If a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds or disposes of preferred shares or ADSs, the tax treatment of a partner in that partnership will
generally depend on the status of the partner and the activities of the partnership. Partners in partnerships holding preferred shares or ADSs should consult their own tax advisors about the U.S. federal income tax consequences to them of holding or
disposing of preferred shares or ADSs.

Treatment of ADS

For U.S. federal income tax purposes, a U.S. Holder of an ADS is considered the owner of the preferred shares represented by the ADS. Accordingly, the conversion of ADSs to preferred shares or the conversion of
preferred shares to ADSs will not be a taxable transaction for U.S. federal income tax purposes, and, except as otherwise noted, references in this discussion to the ownership of preferred shares include ownership of the preferred shares underlying
the corresponding ADSs.

Receipt of Distributions

For U.S. federal income tax purposes, a U.S. Holder generally will recognize, to the extent of our current and accumulated earnings and profits, dividend income on the receipt of cash dividends on preferred shares equal
to the U.S. dollar value of such dividends on the date of receipt (with the value of the dividends computed before reduction for any withholding tax or other applicable Brazilian tax paid). Amounts distributed in excess of our earnings and profits
will decrease (but not below zero) a U.S. Holder's adjusted tax basis in the preferred shares, and any remaining amount of the distribution will be taxed as gain from the sale or exchange of the preferred shares.

Subject to certain exceptions for short-term positions, the amount of dividends received by certain U.S. Holders (including individuals but not corporations) prior to January 1, 2011 with respect to our ADSs or
preferred shares will be subject to taxation at a maximum rate of 15.0% if the dividends represent "qualified dividend income". Dividends paid on our ADSs or preferred shares will be treated as qualified dividend income if the ADSs or preferred
shares are readily tradable on an established securities market in the United States and we are not a PFIC (as discussed below). Under current guidance issued by the IRS, our ADSs should qualify as readily tradable on an established securities
market in the United States as long as they are listed on the NYSE, but no assurances can be given that our ADSs will be or will remain readily tradable under future guidance. Currently, dividends paid with respect to ADSs, but not to preferred
shares held directly by U.S. Holders, should constitute "qualified dividend income".

Dividends paid on preferred shares will not be eligible for the dividends received deduction available to U.S. corporations under certain circumstances.

If we distribute foreign currency with respect to our preferred shares, for U.S. federal income tax purposes, the amount of the distribution will generally equal the fair market value in U.S. dollars of such foreign
currency on the date of receipt. A U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt, and will generally recognize gain or loss when it sells or exchanges the foreign currency. Such gain
or loss will be taxable as ordinary income or loss from U.S. sources. The amount of any property other than money that we distribute with respect to our preferred shares will equal its fair market value on the date of distribution.

Distributions to U.S. Holders that are treated as dividends generally will be treated as income from sources outside the United States, and generally will be foreign source "passive" income for foreign tax credit
purposes. Subject to the requirements and limitations imposed by the Code and the Treasury Regulations thereunder, a U.S. Holder may elect to claim any Brazilian tax withheld or paid with respect to any dividends distributed on shares as a foreign
tax credit against the U.S. federal income tax liability of the U.S. Holder. In addition, subject to certain limitations, U.S. Holders who do not elect to claim the foreign tax credit may claim a deduction for any Brazilian tax withheld or paid with
respect to shares. Complex rules determine the availability of the foreign tax credit, and U.S. Holders should consult their tax advisors to determine whether and to what extent U.S. Holders may claim foreign tax credits.

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Section 305 of the Code provides special rules for the tax treatment of preferred stock. According to the Treasury Regulations under that section, the term preferred stock generally refers to stock which enjoys certain
limited rights and privileges (generally associated with specified dividend and liquidation priorities) but does not participate in corporate growth to any significant extent. While our preferred shares have some preferences over our common shares,
the preferred shares are not fixed as to dividend payments or liquidation value; thus, although the matter is not entirely clear, we believe and have taken and intend to continue to take the position, that the preferred shares should be treated as
"common stock" within the meaning of Section 305 of the Code. If the preferred shares are treated as "common stock" for purposes of Section 305 of the Code, distributions to U.S. Holders of additional shares of such "common stock" or preemptive
rights relating to such "common stock" with respect to their preferred shares or ADSs that are made as part of a pro rata distribution to all shareholders in most instances will not be subject to U.S. federal income tax. On the other hand, if the
preferred shares are treated as "preferred stock" within the meaning of Section 305 of the Code, and if a U.S. Holder receives a distribution of additional shares or preemptive rights as described in the preceding sentence, such distributions
(including amounts withheld in respect of any Brazilian taxes) will be treated as dividends that can be included in the U.S. Holder's gross income to the same extent and in the same manner as distributions payable in cash. In that event, the amount
of such distribution (and the basis of the new shares or preemptive rights so received) will equal the fair market value of the shares or preemptive rights on the date of distribution.

Sale, Exchange or Other Taxable Disposition of Preferred Shares

Upon a sale, exchange or other taxable disposition of preferred shares, a U.S. Holder will generally recognize gain or loss in an amount equal to the difference between the amount realized on the sale, exchange or other
taxable disposition and the U.S. Holder's adjusted tax basis in the preferred shares so sold, exchanged or otherwise subject to disposition. Any gain or loss recognized will generally be capital gain or loss, and the capital gain or loss will
generally be long-term capital gain or loss if the U.S. Holder has held or is treated as having held the preferred shares for more than one year at the time of such sale, exchange or other taxable disposition. Long-term capital gains recognized by
individuals are currently subject to reduced rates of taxation. The deductibility of capital losses is subject to limitations. The gain or loss from the sale or other disposition of shares will generally be treated as income from sources within the
United States for foreign tax credit purposes. Consequently, in the case of a sale, exchange or other taxable disposition of preferred shares, a U.S. Holder may not be able to claim a foreign tax credit for Brazilian tax imposed on the gain unless
it has other income from foreign sources against which it can appropriately apply the credit.

Passive Foreign Investment Company ("PFIC") rules

Based upon the nature of our current and projected income, assets and activities, we do not believe that we are, and we do not expect the preferred shares to be considered shares of, a PFIC for U.S. Federal income tax
purposes. In general, a foreign corporation is a PFIC if, for any taxable year in which the U.S. Holder holds stock in the foreign corporation, at least 75.0% of such corporation's gross income is passive income or at least 50.0% of the value of
such corporation's assets (determined on the basis of a quarterly average) produce passive income or are held for the production of passive income. The determination of whether the preferred shares constitute shares of a PFIC is a factual
determination made annually and thus may be subject to change. Subject to certain exceptions, once a U.S. Holder's preferred shares are treated as shares in a PFIC, they remain shares in a PFIC. Dividends received by a U.S. Holder from a PFIC will
not constitute qualified dividend income.

If, contrary to our belief, we were treated as a PFIC, a U.S. Holder would be subject to special rules with respect to (i) gain realized on the sale or other disposition of preferred shares and (ii) any "excess
distribution" by us to the U.S. Holder (generally, any distribution during a taxable year that exceed 125.0% of the average annual taxable distribution the U.S. Holder received on the preferred shares during the preceding three taxable years or, if
shorter, the U.S. Holder's holding period for the preferred shares). Under those rules (i) the gain or excess distribution would be allocated ratably over the U.S. Holder's holding period for the preferred shares, (ii) the amount allocated to the
taxable year in which the gain or excess distribution is realized and to taxable years before the first day we became a PFIC would be taxable as ordinary income, and (iii) the amount allocated to each other year (with certain exceptions) would be
subject to tax at the highest U.S. federal income tax rate in effect for that year, and an additional amount equal to the interest charge generally applicable to underpayments of tax would be imposed in respect of the tax attributable to each such
year.

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A U.S. Holder that owns preferred shares during any year we are a PFIC must file IRS Form 8621. In general, if we are treated as a PFIC, the rules described in the second paragraph of this section can be avoided by a
U.S. Holder that elects to be subject to a mark-to-market regime for stock in a PFIC. A U.S. Holder may elect mark-to-market treatment for its preferred shares, provided that the preferred shares constitute "marketable stock" as defined in Treasury
Regulations. A U.S. Holder electing the mark-to-market regime generally would treat any gain recognized under mark-to-market treatment or on an actual sale as ordinary income and would be allowed an ordinary deduction for any decrease in the value
of preferred shares in any taxable year and for any loss recognized on an actual sale, but only to the extent, in each case, of previously included mark-to-market income not offset by previously deducted decreases in value. A U.S. Holder's basis in
preferred shares would increase or decrease by gain or loss taken into account under the mark-to-market regime. A mark-to-market election is generally irrevocable. Another election to treat us as a qualified electing fund would not be available
because we do not currently plan to provide U.S. Holders with information sufficient to permit U.S. Holders to make such election.

Non-U.S. Holders

A Non-U.S. Holder is a holder of our preferred shares or ADSs who is neither a U.S. Holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

Non-U.S. Holders will generally not be subject to U.S. federal income or withholding tax on dividends received from us with respect to preferred shares, unless such income is considered effectively connected with the
Non-U.S. Holder's conduct of a trade or business in the U.S. (and, if required by an applicable income tax treaty, the income is attributable to a permanent establishment or, in the case of an individual Non-U.S. Holder, a fixed base maintained in
the United States).

Non-U.S. Holders will generally not be subject to U.S. federal income tax on any gain recognized upon the sale, exchange or other taxable disposition of preferred shares unless the gain is effectively connected with the
Non-U.S. Holder's conduct of a trade or business in the U.S. (and, if required by an applicable income tax treaty, the income is attributable to a permanent establishment or, in the case of an individual Non-U.S. Holder, a fixed base maintained in
the United States) or such Non-U.S. Shareholder is an individual who is present in the United States for 183 days or more during the taxable year of such sale, exchange or other taxable disposition and certain other conditions are met. If the first
exception applies, the Non-U.S. Holder will be subject to U.S. federal income tax on the sale, exchange or other taxable disposition as if such Non-U.S. Holder were a U.S. Holder, as described above. If the second exception applies, then the
Non-U.S. Holder will generally be subject to U.S. federal income tax at a rate of 30.0% on the amount by which such Non-U.S. Holder's U.S. source capital gains exceed such Non-U.S. Holder's U.S. source capital losses.

In addition, any effectively connected dividends or gains realized by a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to an additional branch profits tax at a rate of
30.0% (or such lower rate as may be specified by an applicable income tax treaty).

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to dividends paid in respect of shares to non-corporate U.S. Holders or the proceeds received on the sale, exchange or redemption of shares by non-corporate U.S.
Holders, and such amounts may be subject to U.S. backup withholding tax (currently at a rate of 28.0%) . Backup withholding will not apply, however, to a U.S. Holder that (i) is a corporation or comes within certain enumerated categories of  persons
and, when required, demonstrates this fact or (ii) furnishes a correct taxpayer identification number and makes certain other required certifications. Generally, a U.S. Holder will provide such certifications on IRS Form W-9 (Request for Taxpayer
Identification Number and Certification) or other substitute form. A U.S. Holder that is required to but does not furnish us with its correct taxpayer identification number may also be subject to penalties imposed by the Internal Revenue Service.
Non-U.S. Holders will generally not be subject to United States information reporting or backup withholding. However, Non-U.S. Holders may be required to provide certification of their non-U.S. status in connection with payments received in the
United States or through certain U.S.-related financial intermediaries. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that the required information
is timely furnished to the IRS.

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HOLDERS OF PREFERRED SHARES OR ADSS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY CONSEQUENCES OF THE OWNERSHIP AND
DISPOSITION OF PREFERRED SHARES OR ADSS ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.

Documents On Display

You may read and copy the reports and other information we file with the Securities and Exchange Commission, including this annual report and the exhibits thereto, at the Commission's Public Reference Room at 100 F
Street, N.E., Washington, D.C. 20549 and at the Commission's regional offices at 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604, and 3 World Financial Center, Room 4300, New York, New York 10281. You may also obtain copies of these
materials by mail from the Public Reference Room of the Commission at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the Commission's Public Reference Room by calling the Commission in
the United States at 1-800-SEC-0330. You may also access our annual reports and some of the other information we file with or submit to the Commission electronically through the Commission's website at www.sec.gov.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

Virtually none of our revenues or costs are exposed to foreign currency fluctuations since they are not directly or indirectly pegged to the U.S. dollar or any other foreign currency. We have some exposure to foreign
exchange risk as a portion of our capital expenditures is comprised of investments in technology equipment which, while not denominated in foreign currencies, are indirectly impacted by the changes in exchanges rates as they contain imported parts.
In 2008, approximately 56.0% of our capital expenditures included such equipment.

The interest rates risk arises from the possibility of the Company incurring in losses derived from interest rate variations that increase the financial expenses related to financings raised in the market. The Company
continuously monitors the market interest rates with the purpose of evaluating the possible need of hiring operations to protect itself against the volatility risk of these rates. If interest rates increased by 1.0% the additional amount of annual
interest expense would increase by R$1,408 thousand.

Item 12. Description of Securities Other Than Equity Securities

Not applicable.

PART II

Item 13. Defaults, Dividend Arrearages and Delinquencies

Not applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

Pursuant to the Reverse Stock Split, our shareholders approved the reverse split of all shares representing the Company's capital stock at the ratio of twenty (20) shares for one (1) share of the same type. See "Item 4
Information on the Company History and Organizational Structure Reverse Stock Split".

Item 15. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon and as of the date of the Company's evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the disclosure controls and procedures are effective, at the reasonable assurance level, to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is (i) recorded,
processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and (ii) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.

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Management's Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance
regarding the reliability of our financial reporting for external purposes in accordance with IFRS. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions;
providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles; providing reasonable assurance that receipts and expenditures of
Company assets are made only in accordance with management and directors' authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of Company assets that could have a material effect on our financial
statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control  Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was effective as of December 31, 2008.

Attestation Report of the Registered Public Accounting Firm

See report of PricewaterhouseCoopers Auditores Independentes, an Independent Registered Public Accounting Firm included under ''Item 18. Financial Statements'', on page F-1 and F-1B.

The effectiveness of the Company's internal control over financial reporting as of December 31, 2008 has been audited by PricewaterhouseCoopers Auditores Independentes, the Company's registered independent accounting
firm, which opinion is stated in their report, included herein.

Changes in Internal Controls

There has been no change in the Company's internal controls over financial reporting during the Company's fiscal year ended December 31, 2008 that has materially affected or is reasonably likely to materially affect the
Company's internal control over financial reporting.

Item 16A. Audit Committee Financial Expert

We are not subject to any listing standards that require us to form an audit committee pursuant to the Sarbanes-Oxley Act or a board of auditors formed pursuant to local laws that could substantially discharge the
duties of an audit committee formed pursuant to the Sarbanes-Oxley Act. See "Item 6. Directors, Senior Management and Employees  Fiscal Council (Conselho Fiscal)". As a result, we have not identified a member to our Board of Directors
who would qualify as an audit committee financial expert.

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Item 16B. Code of Ethics

The Company has adopted a Code of Ethics that applies to its Directors, Officers, managers, controlling shareholders and members of the Fiscal Council in accordance with CVM rules satisfying the requirements of
Brazilian Law. A copy of this Code of Ethics is incorporated herein by reference to Exhibit 11.1 to the Company's Registration Statement on Form 20-F filed on August 10, 2005. The Company's Code of Ethics does not address all of the principles set
forth by the SEC in Section 406 of the Sarbanes-Oxley Act. However, it does contain many of the principles set forth in the SEC's definition of a Code of Ethics, including standards that are (i) reasonably designed to promote full, fair, accurate
and timely disclosure in reports and documents that the Company files with, or submits to, the SEC, and (ii) reasonably designed to deter certain wrongdoing, principally the prohibition against trading on inside information. Since the adoption of
its Code of Ethics, Contax has not granted any implicit or explicit waivers from any provision thereof to the officers described above.

Item 16C. Principal Accountant Fees and Services

Fees for professional services provided by PricewaterhouseCoopers Auditores Independentes, the Company's independent registered public accounting firm in each of the last two fiscal years in each of the following
categories are as follows:

|              |  |                        |  |     
|------------- |  | ---------------------- |  | ----
|              |  | Total Fees            
|              |  |                       
|              |  | 2008                   |  | 2007
|              |  |                        |  |     
|              |  | (in thousands ofreais)
|Audit Fees(1) |  | 882                    |  | 601 
|             
|Total         |  | 882                    |  | 601 

____________

|    |                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Audit Fees for the years ended December 31, 2008 and 2007 consist of fees billed for professional services rendered for the audits and reviews of the consolidated financial statements of the Company and other services normally provided in
  connection with statutory and regulatory filings. The audit fees include expenses related to compliance with SOX.



Pre-approval of Policies and Procedures

Our Board of Directors is currently responsible for the oversight of our independent auditor's work. Our Board of Directors' policy is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu
and, with respect to IFRS, PricewaterhouseCoopers. These services may include audit services, audit-related services, tax services and other services, as described above. In such an event, the Board of Directors sets forth its pre-approval in
detail, listing the particular services or categories of services which are pre-approved, and setting forth a budget for such services. The Board of Directors has designated its chairman, currently Mr. Fernando Antônio Pimentel Melo, to issue
such pre-approval in certain circumstances.

Item 16D. Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

During 2006 and 2007, the Company implemented three different buyback programs, which resulted in the repurchase of 719.0 thousand common shares and 2,705.0 thousand preferred shares. Of these totals, 544.0 thousand
common shares and all of the 2,705.0 thousand preferred shares were cancelled, with the remaining 175.0 thousand common shares being held in treasury without reducing the Company's capital stock.

On September 2008, the Company approved a forth buyback program of approximately R$40 million. By the end of September, we had completed the program and repurchased 52,337 common and 861,664 preferred
shares. All of these shares were canceled in January 2009, resulting in a Company's stock capital of 14,942,685 shares, comprised of 5,772,435 common and 9,170,250 preferred.

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On September 2008, the Company approved a forth buyback program of approximately R$40 million. By the end of September, we had completed the program and repurchased 52,337 common and 861,664 preferred shares. All of these shares were canceled in January 2009, resulting in a Company's stock capital of 14,942,685 shares, comprised of 5,772,435 common and 9,170,250 preferred.

Altogether, the Company invested R$201 million in all of its buyback programs, of which R$41 million were invested in 2006, R$120 million in 2007 and R$40 million in 2008.

|                  |  |                                  |  |                              |  |                                                                         |  |                                                                                    |  |           |  |        |  |           |  |       
|----------------- |  | -------------------------------- |  | ---------------------------- |  | ----------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | --------- |  | ------ |  | --------- |  | ------
|                  |  | Total Number of Shares Purchased |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Programs |  | Maximum Number of Shares That Could Have 
        Been PurchasedUnder the Programs
|                  |  |                                  |  |                              |  |                                                                         |  |                                                                                   
|Periods in 2008   |  | Preferred                        |  | Common                       |  | Preferred                                                               |  | Common                                                                             |  | Preferred |  | Common |  | Preferred |  | Common
|                  |  |                                  |  |                              |  |                                                                         |  |                                                                                    |  |           |  |        |  |           |  |       
|January 1 to 31   |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|February 1 to 29  |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|March 1 to 31     |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|April 1 to 30     |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|May 1 to 31       |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|June 1 to 30      |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|July 1 to 31      |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|August 1 to 31    |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|September 1 to 30 |  | 861,664                          |  | 52,337                       |  | 42.00                                                                   |  | 52.50                                                                              |  | 861,664   |  | 52,337 |  | 978,452   |  | 52,337
|October 1 to 31   |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|November 1 to 30  |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|December 1 to 31  |  |                                 |  |                             |  |                                                                        |  |                                                                                   |  |          |  |       |  |          |  |      
|                  |  |                                  |  |                              |  |                                                                         |  |                                                                                    |  |           |  |        |  |           |  |       
|Total             |  | 861,664                          |  | 52,337                       |  | 42.00                                                                   |  | 52.50                                                                              |  | 861,664   |  | 52,337 |  | 0*        |  | 0     

*the program was terminated and no more shares can be bought pursuant to it. 
  ** Numbers are shown in the grouped (ratio 20:1) format for comparison purposes.

PART III

Item 17. Financial Statements

We have responded to Item 18 in lieu of responding to this item.

Item 18. Financial Statements

See pages F-1 through F-60.

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|        
|--------
|Item 19.
|        
|No.     
|        
|        
|1.1     
|        
|2.1     
|        
|4.1     
|        
|4.2     
|        
|4.3     
|        
|4.4     
|        
|4.5     
|        
|4.6     
|        
|4.7     
|        
|4.8     
|        
|4.9     
|        
|4.10    

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|     |  |                                                                                                                                                                                                                                                                                                  
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                                                                                                                                                                                                                      
|     |  |                                                                                                                                                                                                                                                                                                  
|    
|4.11 |  | Amendment, dated October 1, 2004, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais LTDA. and TNL Contax S.A. (Incorporated by reference to Exhibit 4.9 to the Company's Registration Statement on Form 20-F filed on June 29, 2007).  
|    
|4.12 |  | Amendment, dated April 1, 2005, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais LTDA. and TNL Contax S.A. (Incorporated by reference to Exhibit 4.10 to the Company's Registration Statement on Form 20-F filed on June 29, 2007).   
|    
|4.13 |  | Amendment, dated May 10, 2006, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais S.A. and TNL Contax S.A. (Incorporated by reference to Exhibit 4.11 to the Company's Registration Statement on Form 20-F filed on June 29, 2007).     
|    
|4.14 |  | Amendment, dated December 29, 2006, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais S.A. and TNL Contax S.A. (Incorporated by reference to Exhibit 4.12 to the Company's Registration Statement on Form 20-F filed on June 29, 2007).
|    
|4.15 |  | Amendment, dated September 11, 2007, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais S.A. and TNL Contax S.A.                                                                                                                        
|    
|4.16 |  | Amendment, dated January 08, 2008, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais S.A. and TNL Contax S.A.                                                                                                                          
|    
|4.17 |  | Amendment, dated April 25, 2008, to the Contact Center Service Agreement between Orbitall Serviços e Processamento de Informações Comerciais S.A. and TNL Contax S.A.                                                                                                                            
|    
|8.1  |  | List of Subsidiaries.                                                                                                                                                                                                                                                                            
|    
|11.1 |  | Code of Ethics of Contax Holding. (Incorporated by reference to Exhibit 11.1 to the Company's Registration Statement on Form 20-F filed on August 10, 2005).                                                                                                                                     
|    
|12.1 |  | Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. (Filed herewith)                                                                                                                                                        
|    
|12.2 |  | Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. (Filed herewith).                                                                                                                                                       
|    
|13.1 |  | Certifications of the Chief Executive Officer and the Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (Furnished herewith).                                                                                                                   

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SIGNATURES

Contax Participações S.A. hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

|                     |  |                                   
|-------------------- |  | ----------------------------------
|                     |  | CONTAX PARTICIPAÇÕES S.A.         
|                    
|                     |  | By: /s/ Francis James Leahy Meaney
|                     |  | Name: Francis James Leahy Meaney  
|                     |  | Title: Chief Executive Officer    
|                    
|Dated: June 29, 2009 |  |                                   

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Contax Participações S.A.

Consolidated and Combined Financial Statements at December 31, 2008 and 2007 and for the two years in the period ended December 31, 2008 and Report of Independent Registered Public Accounting Firm.

Table of contents:



|                                                                    |  |    
|------------------------------------------------------------------- |  | ---
|Reports of Independent Registered Public Accounting Firm            |  | F-1
|Consolidated Balance Sheets, Dec. 31, 2008 and 2007                 |  | F-2
|Consolidated Income Statement, Dec. 31, 2008 and 2007               |  | F-3
|Consolidated Statement of Changes in Equity, Dec. 31, 2008 and 2007 |  | F-4
|Consolidated Cash Flow Statement, Dec. 31, 2008 and 2007            |  | F-5
|Notes to the Consolidated Financial Statements                      |  | F-6

89

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##### 

Contax Participações S.A.Financial Statements as of and for the 
Year Ended December 31, 2008

---

##### 

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Shareholders 
Contax Participações S.A.

In our opinion, the accompanying consolidated balance sheets and the related consolidated income statements, consolidated statements of changes in equity and consolidated cash flow statements present fairly, in all material respects, the financial
position of Contax Participações S.A. and its subsidiariesat December 31, 2008 and 2007, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2008in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial
statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting
appearing under Item 15 of the Companys Annual Report on Form 20-F for the year ended December 31, 2008. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting
based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of
internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

F-1

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Table of Contents

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PricewaterhouseCoopers Auditores Independentes 
Rio de Janeiro, Brazil 
June 30, 2009

F-1B

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|                                            
|--------------------------------------------
|Contax Participações S.A.                   
|                                            
|Consolidated Balance Sheet as of December 31
|In thousand of reais                        
|                                            

|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|-------------------------------------------------- |  | ----- |  | ------- |  | ------- |  | ----------------------------------------------------------- |  | ----- |  | --------- |  | ---------
|Assets                                             |  | Notes |  | 2008    |  | 2007    |  | Equity  Capital and reserves                               |  | Notes |  | 2008      |  | 2007     
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|Non-current assets                                 |  |       |  |         |  |         |  | Capital and reserves                                        |  |       |  |           |  |          
|Property and equipment                             |  | 12    |  | 307,700 |  | 274,559 |  | Issued capital                                              |  | 17    |  | 223,873   |  | 223,873  
|Intangible assets                                  |  | 13    |  | 84,467  |  | 67,976  |  | Reserves                                                    |  | 18    |  | 136,383   |  | 77,320   
|Judicial deposits                                  |  | 22    |  | 35,338  |  | 17,787  |  | Treasury shares                                             |  | 19    |  | (49,848 ) |  | (10,913 )
|Recoverable taxes                                  |  | 10.2  |  | 7,269   |  | 5,568   |  | Retained earnings                                           |  | 20    |  | 8,569     |  | 6,725    
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|Deferred income and social contribution tax assets |  | 10.3  |  | 32,430  |  | 26,909  |  |                                                             |  |       |  |           |  |          
|Other assets                                       |  |       |  | 18,652  |  | 12,567  |  |                                                             |  |       |  | 318,977   |  | 297,005  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  | Minority interest                                           |  |       |  | 2,079     |  |          
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                   |  |       |  | 485,856 |  | 405,366 |  |                                                             |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  | 321,056   |  | 297,005  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|Current assets                                     |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|Trade and other receivables                        |  | 15    |  | 102,134 |  | 84,863  |  | Non-current liabilities                                     |  |       |  |           |  |          
|Recoverable taxes                                  |  | 10.2  |  | 1,944   |  | 991     |  | Borrowings                                                  |  | 21    |  | 203,750   |  | 100,060  
|Other receivables                                  |  |       |  | 8,573   |  | 6,070   |  | Taxes payable                                               |  | 10.2  |  | 1,787     |  | 2,391    
|Cash and cash equivalents                          |  | 16    |  | 355,928 |  | 240,310 |  | Obligations under finance leases                            |  | 23    |  | 9,884     |  | 25,970   
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  | Provision for contingencies                                 |  | 22    |  | 64,151    |  | 46,860   
|                                                   |  |       |  | 468,579 |  | 332,234 |  | Deferred revenue                                            |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  | Other non-current liabilities                               |  |       |  | 94        |  | 44       
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  | 279,666   |  | 175,325  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|                                                   |  |       |  |         |  |         |  | Current liabilities                                         |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  | Trade and other payables                                    |  |       |  | 76,847    |  | 72,466   
|                                                   |  |       |  |         |  |         |  | Borrowings                                                  |  | 21    |  | 14,219    |  | 300      
|                                                   |  |       |  |         |  |         |  | Payroll and related charges                                 |  | 24    |  | 181,924   |  | 143,349  
|                                                   |  |       |  |         |  |         |  | Obligations under finance leases                            |  | 25    |  | 16,086    |  | 18,218   
|                                                   |  |       |  |         |  |         |  | Taxes payable                                               |  | 10.2  |  | 22,272    |  | 14,163   
|                                                   |  |       |  |         |  |         |  | Dividends and interest on capital payable                   |  | 20    |  | 23,311    |  | 14,271   
|                                                   |  |       |  |         |  |         |  | Amounts payable to shareholders for reverse split of shares |  | 17(i) |  | 16,850    |  |          
|                                                   |  |       |  |         |  |         |  | Other payables                                              |  |       |  | 2,204     |  | 2,503    
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  | 353,713   |  | 265,270  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  | 633,379   |  | 440,595  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                  
|Total assets                                       |  |       |  | 954,435 |  | 737,600 |  | Total equity and liabilities                                |  |       |  | 954,435   |  | 737,600  
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          
|                                                   |  |       |  |         |  |         |  |                                                             |  |       |  |           |  |          

The accompanying notes are an integral part of these consolidated financial statements.

F-2

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##### 

Table of Contents

|                               
|-------------------------------
|Contax Participações S.A.      
|                               
|Consolidated Income Statement  
|For the Years Ended December 31
|In thousands of reais          
|                               

|                                             |  |       |  |             |  |            
|-------------------------------------------- |  | ----- |  | ----------- |  | -----------
|                                             |  | Notes |  | 2008        |  | 2007       
|                                             |  |       |  |             |  |            
|                                            
|Continuing operations                        |  |       |  |             |  |            
|Revenue                                      |  | 5     |  | 1,774,728   |  | 1,365,815  
|Cost of services                             |  | 7     |  | (1,507,603) |  | (1,174,106)
|                                             |  |       |  |             |  |            
|                                            
|Gross profit                                 |  |       |  | 267,125     |  | 191,709    
|                                            
|Finance income                               |  | 6     |  | 32,547      |  | 16,647     
|Selling, general and administrative expenses |  | 7     |  | (119,772)   |  | (86,755)   
|Finance costs                                |  | 9     |  | (32,597)    |  | (20,193)   
|Other operating income (expenses), net       |  | 8     |  | (18,626)    |  | (15,579)   
|                                             |  |       |  |             |  |            
|                                            
|Profit before tax                            |  |       |  | 128,677     |  | 85,829     
|                                            
|Income tax and social contribution:          |  | 10.1  |  | (45,848)    |  | (28,087)   
|                                             |  |       |  |             |  |            
|                                            
|Profit for the year                          |  |       |  | 82,829      |  | 57,742     
|                                             |  |       |  |             |  |            
|                                             |  |       |  |             |  |            
|                                            
|Attributable to:                             |  |       |  |             |  |            
|Minority interest                            |  |       |  | 3           |  | -          
|Equity holders of the parent                 |  |       |  | 82,826      |  | 57,742     
|                                            
|Earnings per share                           |  |       |  |             |  |            
|Basic earnings per share                     |  |       |  |             |  |            
|Common shares                                |  | 11.1  |  | 3.89        |  | 3.51       
|Preferred shares                             |  | 11.1  |  | 6.22        |  | 3.51       
|                                            
|Diluted earnings per share                   |  |       |  |             |  |            
|Common shares                                |  | 11.2  |  | 3.89        |  | 3.36       
|Preferred shares                             |  | 11.2  |  | 6.22        |  | 3.51       

The accompanying notes are an integral part of these consolidated financial statements.

F-3

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##### 

Table of Contents

|                                           
|-------------------------------------------
|Contax Participações S.A.                  
|                                           
|Consolidated Statement of Changes in Equity
|For the Years Ended December 31            
|In thousands of reais                      
|                                           

|                                                   |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|-------------------------------------------------- | ---- |  | ------------ |  | ---------------------------------- |  | ------ |  | --------- |  | ----------------- |  | -------------- |  | ------------------------------------ |  | --------- |  | ---------------- |  | ---------
|                                                   | Note |  | Sharecapital |  | Capitalreserve onsharesubscripiton |  | Legal  |  | Statutory |  | Unrealizedreserve |  | Treasuryshares |  | Retainedearnings/(accumulatedlosses) |  | Total     |  | Minorityinterest |  | Total    
|                                                   |      |  |              |  |                                    |  |        |  |           | 
|                                                   |      |  |              |  |                                    |  |        |  |           | 
|                                                   |      |  |              |  |                                    |  |        |  |           | 
|                                                   |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|                                                  
|Balance at January 1, 2007                         |      |  | 223,873      |  | 9,386                              |  | 8,146  |  | 110,711   |  | 17,219            |  | (780)          |  | 2,967                                |  | 371,522   |  |                  |  | 371,522  
|Profit for the year                                |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  | 57,742                               |  | 57,742    |  |                  |  | 57,742   
|Acquisition of own shares                          | 19   |  |              |  |                                    |  |        |  |           |  |                   |  | (119,317)      |  |                                      |  | (119,317) |  |                  |  | (119,317)
|Cancelation of own shares                          | 19   |  |              |  |                                    |  |        |  | (108,580) |  |                   |  | 108,580        |  |                                      |  |           |  |                  |  |          
|Sale of treasury shares                            | 19   |  |              |  | (132)                              |  |        |  |           |  |                   |  | 604            |  |                                      |  | 472       |  |                  |  | 472      
|Allocation of the net income for the year:         |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|Legal reserve                                      | 18.2 |  |              |  |                                    |  | 2,699  |  |           |  |                   |  |                |  | (2,699)                              |  |           |  |                  |  |          
|Statutory reserve                                  | 18.3 |  |              |  |                                    |  |        |  | 38,464    |  |                   |  |                |  | (38,464)                             |  |           |  |                  |  |          
|Unrealized profit reserve                          | 18.4 |  |              |  |                                    |  |        |  |           |  | 12,044            |  |                |  | (12,044)                             |  |           |  |                  |  |          
|Payment of dividends (R$ 0,85 per thousand shares) | 20   |  |              |  |                                    |  |        |  |           |  | (12,637)          |  |                |  | (777)                                |  | (13,414)  |  |                  |  | (13,414) 
|                                                   |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|                                                  
|Balance at December 31, 2007                       |      |  | 223,873      |  | 9,254                              |  | 10,845 |  | 40,595    |  | 16,626            |  | (10,913)       |  | 6,725                                |  | 297,005   |  |                  |  | 297,005  
|                                                  
|Acquisition of own shares                          | 19   |  |              |  |                                    |  |        |  |           |  |                   |  | (38,935)       |  |                                      |  | (38,935)  |  |                  |  | (38,935) 
|Dividends lapsed                                   | 18.1 |  |              |  | 28                                 |  |        |  |           |  |                   |  |                |  |                                      |  | 28        |  |                  |  | 28       
|Profit for the year                                |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  | 82,826                               |  | 82,826    |  | 3                |  | 82,829   
|Allocation of the net income for the year:         |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|Legal reserve                                      | 18.2 |  |              |  |                                    |  | 4,620  |  |           |  |                   |  |                |  | (4,620)                              |  |           |  |                  |  |          
|Statutory reserve                                  | 18.3 |  |              |  |                                    |  |        |  | 54,415    |  |                   |  |                |  | (54,415)                             |  |           |  |                  |  |          
|Payment of dividends (R$ 0,85 per thousand shares) | 20   |  |              |  |                                    |  |        |  |           |  |                   |  |                |  | (21,947)                             |  | (21,947)  |  |                  |  | (21,947) 
|Minority interest                                  |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  | 2,076            |  | 2,076    
|                                                   |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|                                                  
|Balance at December 31, 2008                       |      |  | 223,873      |  | 9,282                              |  | 15,465 |  | 95,010    |  | 16,626            |  | (49,848)       |  | 8,569                                |  | 318,977   |  | 2,079            |  | 321,056  
|                                                   |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          
|                                                   |      |  |              |  |                                    |  |        |  |           |  |                   |  |                |  |                                      |  |           |  |                  |  |          

The accompanying notes are an integral part of these consolidated financial statements.

F-4

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Table of Contents

|                                
|--------------------------------
|Contax Participações S.A.       
|                                
|Consolidated Cash Flow Statement
|For the Years Ended December 31 
|In thousands of reais           
|                                

|                                                       |  |            |  |          
|------------------------------------------------------ |  | ---------- |  | ---------
|                                                       |  | 2008       |  | 2007     
|                                                       |  |            |  |          
|                                                      
|Cash flows from operating activities                   |  |            |  |          
|Profit for the year                                    |  | 82,829     |  | 57,742   
|Adjustments to reconcile net income:                   |  |            |  |          
|Depreciation and amortization                          |  | 118,043    |  | 100,610  
|Provision for doubtful accounts                        |  |            |  | 4,021    
|Deferred income tax and social contribution            |  | (5,002 )   |  | 3,637    
|Impairment of goodwill                                 |  | 1,788      |  |          
|Contingencies and other provisions                     |  | 16,401     |  | 14,097   
|Loss (gain) on sale of permanent assets                |  | 123        |  | (67)     
|Changes in assets and liabilities:                     |  |            |  |          
|(Increase) decrease in accounts receivable             |  | (17,271 )  |  | (35,016) 
|(Increase) decrease in recoverable taxes               |  | (2,654 )   |  | 3,195    
|(Increase) in other assets                             |  | (8,588 )   |  | (1,115)  
|Increase in payroll and related accruals               |  | 38,576     |  | 30,967   
|Increase in trade and other payables                   |  | 4,381      |  | 24,705   
|Increase (decrease) in payable taxes                   |  | 7,505      |  | (1,512)  
|Increase (decrease) in other liabilities               |  | 16,601     |  | 1,273    
|Interest acrrued                                       |  | 2,044      |  | 639      
|                                                       |  |            |  |          
|                                                      
|Net cash provided by operating activities              |  | 254,776    |  | 203,176  
|                                                       |  |            |  |          
|                                                      
|Cash flows from investing activities                   |  |            |  |          
|Proceeds from sale of property and equipment           |  | 130        |  | 99       
|Additions to property, equipment and intangible assets |  | (167,930 ) |  | (133,418)
|Judicial deposits                                      |  | (17,550 )  |  | (9,502)  
|                                                       |  |            |  |          
|                                                      
|Net cash used in investing activities                  |  | (185,350 ) |  | (142,821)
|                                                       |  |            |  |          
|                                                      
|Cash flows from financing activities                   |  |            |  |          
|Payment of capital lease                               |  | (18,218 )  |  | (21,027) 
|Proceeds from short-term borrowings                    |  | 13,041     |  |          
|Proceeds from long-term borrowings                     |  | 103,690    |  | 100,060  
|Payment of dividends, net of dividends lapsed          |  | (13,386 )  |  | (11,532) 
|Share buyback                                          |  | (38,935 )  |  | (119,317)
|Proceeds from sale of treasury stock                   |  |            |  | 472      
|                                                       |  |            |  |          
|                                                      
|Net cash provided by (used in) financing activities    |  | 46,192     |  | (51,344) 
|                                                       |  |            |  |          
|                                                      
|Increase in cash and cash equivalents                  |  | 115,618    |  | 9,011    
|                                                       |  |            |  |          
|                                                      
|Cash and cash equivalents at beginning of period       |  | 240,310    |  | 231,299  
|                                                      
|Cash and cash equivalents at end of period             |  | 355,928    |  | 240,310  
|                                                       |  |            |  |          
|                                                      
|                                                       |  | 115,618    |  | 9,011    
|                                                       |  |            |  |          
|                                                       |  |            |  |          

The accompanying notes are an integral part of these consolidated financial statements.

F-5

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

1 General Information and Adoption of IFRS in 2008

1.1 General information

Contax Participações S.A. (the Company), established on July 31, 2000, is a publicly-held company, listed in Brazil (BOVESPA) and in the United States of America (NYSE), registered corporate purpose of which is to hold
interests in other commercial enterprises and civil entities as a partner, shareholder or quotaholder in Brazil or abroad. It is incorporated and domiciled in Rio de Janeiro, Brazil, and the address of its registered office is Rua do Passeio, 48/56.

The Company has (i) as wholly-owned subsidiary, TNL Contax S.A. (TNL Contax), a contact center service provider, whose purpose is to provide tele-assistance services in general and (ii) as indirect subsidiary, TODO BPO e
Soluções em Tecnologia S.A. (TODO), an information technology company, whose purpose is to provide information technology services. The Company and its subsidiaries are together referred to herein as the Group
or we.

(i) TNL Contax

TNL Contax, is a privately-held company, which corporate purpose is providing tele-assistance services in general, offering a variety of integrated customer interaction solutions between its customers and their consumers, including telemarketing
operations, customer services, customer retention, technical support and bill collection through a variety of communication channels, including telephone contacts, internet access, e-mail, fax, development of technological solutions related to the
tele-assistance services, among others.

(ii) TODO

TODO was established in September 2008 to effect the acquisition of the total capital of Colabora BPO e Soluções em Tecnologia S.A., for a consideration of R$ 2,094. In October 2008 the Company further increased its investment in
TODO by R$ 8 million and merged the acquired company with TODO (see Note 14).    TODO is a  privately-held company, whose corporate purpose is to provide information technology services, software development and integrated, full and customized
solutions, including the management of full or partial value chain of outsourced processes of business in general; back office processing; customer relationship management, among others.

These consolidated financial statements were approved by the board of directors and authorized for issue on June 29, 2009.

F-6

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

1.2 Adoption of IFRS in 2008

The accounting policies applied by the Group were changed retroactively as from January 1, 2007 (the transition date), to comply with International Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). These are the first consolidated financial statements of the Group that have been prepared in accordance with IFRS. The transition to IFRS was accounted for in accordance with IFRS1 First time
adoption of International Financial Reporting Standards.

IFRS 1 requires an entity to comply with all accounting pronouncements effective at the reporting date (which in the case of the Group is December 31, 2008) for its first IFRS financial statements, since transition date.

IFRS 1 provides limited exemptions from these requirements in specified areas where the cost of complying with them would likely exceed the benefits of information provided to the users of financial statements. IFRS 1 also prohibits retrospective
application of certain IFRS requirements in some areas, particularly where retrospective application would require judgments by management about past conditions.

The Group did not use any of the exemptions available in IFRS 1.

The Groups consolidated financial statements as of and for the year ended December 31, 2008, filed with the Brazilian securities commission (Comissão de Valores Mobiliários - CVM) have been prepared in accordance with the
accounting practices adopted in Brazil (BR GAAP). The changes in the accounting policies as a consequence of the transition to IFRS are described in the Note 30 as are the reconciliations of the Groups consolidated financial
statements prepared in accordance with BR GAAP and IFRS.

2 Basis of Preparation

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as issued by the IASB. They have been prepared under the historical cost convention, as modified by revaluation of
financial instruments (including derivatives) at fair value.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Groups accounting policies. The
areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

F-7

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

3 Significant Accounting Policies

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board or IASB. The principal accounting policies applied in the
preparation of these consolidated financial statementsare set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

3.1 Consolidation

(a) Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.

(b) Minority interests

The Group applies a policy of treating transactions with minority interests as transactions with parties external to the Group. Disposals to minority interests result in gains and losses for the Group and are recorded in the income statement.
Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.

3.2 Revenue recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of the Groups activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after
eliminating sales within the group.

F-8

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Groups activities as described
below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type
of transaction and the specifics of each arrangement.

The Group sells telemarketing, contact center and credit recovery services to other companies. These services are provided on a time, position or performance basis or as a fixed-price contract.

Revenue from telemarketing and contact center services is recognised under the percentage-of-completion method. For time contracts the stage of completion is measured on the basis of hours delivered. For position contracts, the stage of completion
is measured on the basis of how many contact center positions were utilized by the client.

Revenue from credit recovery services are recognized based on the fee percentage agreed with the client over the recovered credits and the clients confirmation of such recovered credits.

If circumstances arise that may change the original estimates of revenues, costs or extent of progress toward completion, estimates are revised. These revisions may result in increases or decreases in estimated revenues or costs and are reflected in
income in the period in which the circumstances that give rise to the revision become known by management.

3.3 Costs and expenses

The operating costs and expenses are recorded on an accrual basis and pertain mainly to personnel expenses.

3.4 Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognized as assets of the Group at their fair value at the commencement of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is
included in the balance sheet as a finance lease obligation.

F-9

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss. Contingent
rentals are recognized as expenses in the periods in which they are incurred.

Operating lease payments are recognized as expenses on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

In the event that lease incentives are received to enter into operating leases, such incentives are recognized as a liability. The aggregate benefit of incentives is recognized as a reduction of rental expense on a straight-line basis, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

3.5 Share-based payments

Share-based payments to employees are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of share-based transactions are set out in Note 26.

The fair value determined at the grant date of the share-based payments is expensed on a straight-line basis over the vesting period, based on the Groups estimate of the number of equity instruments that will eventually vest. At each balance
sheet date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognized in profit or loss over the remaining vesting period.

3.6 Finance income and finance costs

Finance income and finance costs pertain mainly to interest and inflation restatement resulting from financial investments loan contracts and leasing contracts, all recorded on an accrual basis.

F-10

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

3.7 Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

Provisions for deferred and payable income tax and social contribution and tax credit on temporary differences are established at the composite base rate of 34%, comprised of a 25% federal income tax rate plus a 9% social contribution rate.

Prepaid income tax and social contribution are recorded as Recoverable taxes.

3.7.1 Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible. The Groups liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

3.7.2 Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and their corresponding tax bases used, and is computed using the balance sheet liability method.
However, deferred income tax is not accounted for if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and is only recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized.

Deferred tax assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance
sheet date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and
liabilities.

F-11

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.

3.8 Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, other short-term highly liquid investments with an original maturity of three months or less, and banks overdrafts.

3.9 Trade receivables

Trade receivables are recognized initially at fair value which generally represents invoiced amounts and subsequently at outstanding amounts less provision for impairment. A provision for impairment of trade receivables is established when there is
objective evidence, in addition to whatever guarantees may have been provided by the client, that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the
debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the
assets carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is
recognized in the income statement within Selling, general and administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts
previously written off are credited against Selling, general and administrative expenses in the income statement.

3.10 Judicial deposits

The Group questions, in some situations, the legality and/or applicability of certain liabilities and/or lawsuits filed against the Group. Pursuant to these questionings, following the court orders or managements strategy, amounts may be
deposited in specific bank accounts under the Groups name. Such deposits do not settle the disputed amounts, but entitle the Group to carry the questioning processess. In these situations, although the deposits are still assets of the Group
which are inflation restated, the amounts are only realeased upon receipt of a favourable ultimate unappealeble court decision. Judicial deposits are considered to be investing activities for cash flow statement purposes.

F-12

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

3.11 Property and equipment

Property and equipment held for use in the supply of services, or for administrative purposes, are stated in the balance sheet at original cost, less any subsequent accumulated depreciation and subsequent accumulated impairment losses, when
applicable.

Property and equipment are depreciated using the straight-line method over the useful lives of the related assets. Given the complex nature of our telecommunications and IT systems, the estimates of useful lives require considerable judgment and are
inherently uncertain, due to rapidly changing technology and practices in our business sector, which could cause early obsolescence of such systems. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in profit or loss.

3.12 Intangible assets

Intangible assets represent principally software, and are reported at cost less accumulated amortization and accumulated impairment losses. Amortization is charged on a straight-line basis over their estimated useful lives. The estimated useful life
and amortization method are reviewed at the end of each annual reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

3.13 Impairment of non-financial assets

Assets that have indefinite useful lives, such as goodwill, are not amortized but tested for impairment at least annually. In addition, at each balance sheet date, the Group reviews its long-lived non-financial assets (such as property and equipment
and intangible assets), to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, in connection with events or changes in circumstances that indicate that the carrying amounts of
those assets may not be recovered, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to
which the asset belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units
for which a reasonable and consistent allocation basis can be identified.

F-13

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Recoverable amount is the higher of the asset or group of assets fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized
immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognized immediately in profit or loss. Impairment loss recognized on goodwill is
never reversed in subsequent periods.

3.14 Borrowings

Borrowings are recognized initially at fair value, net of transaction costs. Subsequently, borrowings are accounted for at amortized cost, with interest recognized in income over the borrowing period using the effective interest rate method (Note
21).

3.15 Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made for the amount of the
obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

F-14

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

3.16 Payroll and related charges

The amounts relate to vacation payable to employees and are recognized on a monthly basis in proportion to the twelve month acquisition period thereof.

The subsidiary TNL Contax has a profit sharing program, for all of its employees, pursuant to an agreement entered into with FITTEL - Interstate Federation of Employees of Telecommunications Companies. This profit sharing program, in which all the
employees take part, is based on increasing operating gains and individual performance and the amounts recognized are based on the achievement of such performance targets.

3.17 Trade payables

Trade payables are initially recognized at fair value which generally represents invoiced amounts.

3.18 Financial assets

3.18.1 Classification

The Group classifies its financial assets in the loans and receivables category. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current
assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. The Groups loans and receivables comprise trade and other receivables in the balance sheet

3.18.2 Recognition and measurement

Loans and receivables are carried at amortized cost using the effective interest method. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired.

3.19 Financial liabilities and equity instruments issued by the Group

3.19.1 Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

F-15

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

3.19.2 Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

3.19.3 Financial liabilities

Financial liabilities are classified as either financial liabilities at fair value through profit & loss or other financial liabilities.

3.19.4 Derecognition of financial liabilities

The Group derecognizes financial liabilities when, and only when, the Groups obligations are discharged, cancelled or they expire.

3.20 Segment information

The Group has one business segment: providing tele-assistance services in general, and operates in one geographical area.

3.21 Dividends distribution

Dividends distribution to the Companys shareholders is recognized as a liability in the period in which the dividends are approved by the Companys shareholders.

4 Critical Accounting Estimates and Assumptions

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

F-16

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

4.1 Provision for contingencies

The preparation of our consolidated financial statements requires us to make estimates and assumptions regarding contingencies that affect our overall financial condition or relate to the changes in the actual value of liabilities at the date of the
financial statements and accounting for the expenses arising during the reported period. Such contingencies include those related to the legal proceedings discussed in Note 23 to our consolidated financial statements.

Provisions for contingencies are recognized for the amounts of probable losses determined by management based on legal advice from our in-house and external legal counsel regarding the outstanding contingent matters. We continuously evaluate the
provisions for contingencies based on changes in relevant facts, circumstances and events, such as judicial decisions, that may impact our estimates, which in turn could have a material impact on our results of operations and shareholders
equity. While management believes that the current provisions for contingencies are adequate, there can be no assurance that these factors will not change in the future.

4.2 Deferred and recoverable income tax and social contribution

We record deferred tax assets arising from temporary differences between the accounting bases of assets and liabilities and their tax bases. Deferred tax assets are recognized to the extent the Group expects to generate sufficient future taxable
profit based on projections and forecasts prepared by the Groups management. These projections and forecasts include several assumptions related to the performance of the Group, exchange rates, service volumes, tax rates and other factors that
could differ from current estimates.

There is no time limit for the use of tax losses according to current Brazilian tax regulations. However, accumulated tax losses may be offset up to 30.0% of the annual taxable profit.

5 Revenue

5.1 Information about major customers

Included in total revenue of R$ 1,774,728 for the year ended December 31, 2008 (2007 - R$ 1,365,815) we have recognized revenues of R$ 906,917 (2007 - R$ 692,074) resulting from sales to the Groups largest customer.

F-17

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

6 Finance Income

|                                                      |  |        |  |       
|----------------------------------------------------- |  | ------ |  | ------
|                                                      |  | 2008   |  | 2007  
|                                                      |  |        |  |       
|                                                     
|Interest revenue                                      |  |        |  |       
|Bank deposits (i)                                     |  | 30,345 |  | 15,681
|Interest and inflation restatement on escrow deposits |  | 1,599  |  | 492   
|Other                                                 |  | 603    |  | 474   
|                                                      |  |        |  |       
|                                                     
|                                                      |  | 32,547 |  | 16,647
|                                                      |  |        |  |       
|                                                      |  |        |  |       

|(i) | Finance income with bank deposits was higher in 2008 due to increase in the average amount of funds available for investments, mainly deriving from receipts of tranches related to BNDES financing between October 2007 and June 2008, totaling R$
211,826 thousand.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

7 Cost of Services Rendered and Operating Expenses

|                                    |  |           |  |                |  |          
|----------------------------------- |  | --------- |  | -------------- |  | ---------
|                                    |  | 2008     
|                                    |  |          
|                                   
|                                    |  | Cost of   |  | Selling,       |  |          
|                                    |  | services  |  | general and    |  |          
|                                    |  | rendered  |  | administrative |  | Total    
|                                    |  |           |  |                |  |          
|                                   
|Personnel (i)                       |  | 1,110,073 |  | 55,919         |  | 1,165,992
|Third-party services (ii)           |  | 207,667   |  | 31,995         |  | 239,662  
|Depreciation                        |  | 105,302   |  | 12,740         |  | 118,042  
|Facilities (iii)                    |  | 72,820    |  | 1,915          |  | 74,735   
|Marketing, sponsorship and donation |  |           |  | 16,747         |  | 16,747   
|Other                               |  | 11,741    |  | 456            |  | 12,197   
|                                    |  |           |  |                |  |          
|                                   
|                                    |  | 1,507,603 |  | 119,772        |  | 1,627,375
|                                    |  |           |  |                |  |          
|                                    |  |           |  |                |  |          

F-18

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

|                                    |  |           |  |                |  |          
|----------------------------------- |  | --------- |  | -------------- |  | ---------
|                                    |  | 2007     
|                                    |  |          
|                                   
|                                    |  | Cost of   |  | Selling,       |  |          
|                                    |  | services  |  | general and    |  |          
|                                    |  | rendered  |  | administrative |  | Total    
|                                    |  |           |  |                |  |          
|                                   
|Personnel (i)                       |  | 863,257   |  | 42,822         |  | 906,079  
|Third-party services (ii)           |  | 158,276   |  | 23,956         |  | 182,232  
|Provision for impairment of trade   |  |           |  |                |  |          
|accounts receivable                 |  |           |  | 4,033          |  | 4,033    
|Depreciation                        |  | 93,630    |  | 7,010          |  | 100,640  
|Facilities (iii)                    |  | 49,423    |  | 1,436          |  | 50,859   
|Marketing, sponsorship and donation |  |           |  | 7,171          |  | 7,171    
|Other                               |  | 9,520     |  | 327            |  | 9,847    
|                                    |  |           |  |                |  |          
|                                   
|                                    |  | 1,174,106 |  | 86,755         |  | 1,260,861
|                                    |  |           |  |                |  |          
|                                    |  |           |  |                |  |          

|(i)   | Personnel cost has presented an increase due to the growth of the business volume. The Group provisioned for its 2008 profit sharing program the amount of R$ 22,544 thousand (R$ 15,483 thousand in 2007) as negotiations had not been concluded
with FITTEL. The management carried out the provision taking into account its best estimate to conclude the negotiations, verifying the background of previous negotiations, technical analysis and the current status of this negotiation.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     
|(ii)  | The third-party services in Cost of Services refer mainly to expenses with workstation maintenance and data processing, while the third-party services considered as Selling, general and administrative expenses refer to
expenses with consulting services, traveling, legal advice and others.                                                                                                                                                                                        
|     
|(iii) | Basically, represent expenses with property rental and contact center operating infrastructure.                                                                                                                                                                                                                                                                                                                                                                                              

F-19

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

8 Other Operating Income (Expenses), Net

|                                      |  |           |  |         
|------------------------------------- |  | --------- |  | --------
|                                      |  | 2008      |  | 2007    
|                                      |  |           |  |         
|                                     
|Other Operating Income                |  |           |  |         
|Reversals of contingencies (Note 22)  |  | 4,186     |  | 14,675  
|Penalty on overdue accounts           |  | 537       |  |         
|Recovered expenses                    |  | 814       |  | 318     
|                                      |  |           |  |         
|                                     
|                                      |  | 5,537     |  | 14,993  
|                                      |  |           |  |         
|                                     
|Other Operating Expenses              |  |           |  |         
|Provision for contingencies (Note 22) |  | (17,425 ) |  | (24,783)
|IPTU (i)                              |  | (2,402 )  |  | (2,108) 
|Other (ii)                            |  | (4,336 )  |  | (3,681) 
|                                      |  |           |  |         
|                                     
|                                      |  | (24,163 ) |  | (30,572)
|                                      |  |           |  |         
|                                     
|                                      |  | (18,626 ) |  | (15,579)
|                                      |  |           |  |         
|                                      |  |           |  |         

|(i)  | IPTU - municipal tax paid on property.                                     
|---- | ---------------------------------------------------------------------------
|    
|(ii) | Includes impairment of goodwill of R$ 1,788 thousand in 2008 (Nil in 2007).

9 Finance Costs

|                                                        |  |           |  |         
|------------------------------------------------------- |  | --------- |  | --------
|                                                        |  | 2008      |  | 2007    
|                                                        |  |           |  |         
|                                                       
|Interest and inflation restatement on other liabilities |  | (92 )     |  | (87)    
|CPMF                                                    |  |           |  | (6,903) 
|Interest and inflation restatement of contingencies     |  | (7,274 )  |  | (4,683) 
|Interest on BNDES financing (Note 21) (i)               |  | (16,520 ) |  | (2,249) 
|Interest on obligations under finance leases            |  | (7,123 )  |  | (5,194) 
|Other financial expenses (ii)                           |  | (1,588 )  |  | (1,077) 
|                                                        |  |           |  |         
|                                                       
|                                                        |  | (32,597 ) |  | (20,193)
|                                                        |  |           |  |         
|                                                        |  |           |  |         

|(i)  | It includes the annual cost of first-tier banks letters of guarantee given as collateral of BNDES loans (Note 21), recognized over the borrowing term.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(ii) | Basically refer to financial discounts granted to customers and taxes on foreign operations.                                                           

F-20

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

10 Income Taxes

Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34%, represented by a 25% federal income tax rate plus a
9% social contribution rate.

10.1 Income tax recognized in profit or loss

|                                           |  |           |  |         
|------------------------------------------ |  | --------- |  | --------
|                                           |  | 2008      |  | 2007    
|                                           |  |           |  |         
|                                          
|Current                                    |  |           |  |         
|Income tax                                 |  | (37,321 ) |  | (17,613)
|Social contribution                        |  | (14,149 ) |  | (6,837) 
|                                           |  |           |  |         
|                                          
|                                           |  | (51,370 ) |  | (24,450)
|                                           |  |           |  |         
|                                          
|Deferred                                   |  |           |  |         
|Income tax on temporary additions          |  | 11,121    |  | 5,315   
|Social contribution on temporary additions |  | 4,004     |  | 1,914   
|Income tax losses                          |  | (7,053 )  |  | (7,989) 
|Social contribution tax losses             |  | (2,550 )  |  | (2,877) 
|                                           |  |           |  |         
|                                          
|                                           |  | 5,522     |  | (3,637) 
|                                           |  |           |  |         
|                                          
|Total tax expense                          |  | (45,848 ) |  | (28,087)
|                                           |  |           |  |         
|                                           |  |           |  |         

The total charge for the year is reconciled to the accounting profit as follows:

|                                                |  |           |  |         
|----------------------------------------------- |  | --------- |  | --------
|                                                |  | 2008      |  | 2007    
|                                                |  |           |  |         
|Profit before tax                               |  | 128,677   |  | 85,829  
|                                                |  |           |  |         
|                                                |  |           |  |         
|Income tax expense calculated at 34%            |  | (43,750 ) |  | (29,182)
|Non-deductible expenses (i)                     |  | (4,143 )  |  | (956)   
|Others                                          |  | 2,045     |  | 2,051   
|                                                |  |           |  |         
|Income tax expense recognized in profit or loss |  | (45,848 ) |  | (28,087)
|                                                |  |           |  |         
|                                                |  |           |  |         
|Effective income tax and social contribution    |  | 35.63%    |  | 32.72%  

|(i) | This refers basically to expenses with fines, donations, free products and sponsorships deemed non deductible, among others.
|--- | ----------------------------------------------------------------------------------------------------------------------------

F-21

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

The tax rate used for the 2008 and 2007 reconciliations above is the corporate tax rate of 34% payable by corporate entities in Brazil on taxable profits under tax law in that jurisdiction.

10.2 Tax assets and liabilities

|                                                                                                  |  |        |  |         |  |       |  |             
|------------------------------------------------------------------------------------------------- |  | ------ |  | ------- |  | ----- |  | ------------
|                                                                                                  |  |        |  | Current |  |       |  | Non- current
|                                                                                                  |  |        |  |        
|                                                                                                  |  | 2008   |  | 2007    |  | 2008  |  | 2007        
|                                                                                                  |  |        |  |         |  |       |  |             
|                                                                                                 
|Tax assets:                                                                                       |  |        |  |         |  |       |  |             
|Recoverable income tax and social contribution, net of income tax and social contribution payable |  |        |  | 239     |  |       |  |             
|Withholding income tax (i)                                                                        |  |        |  |         |  | 4,737 |  | 3,688       
|Withholding PIS/COFINS/CSLL                                                                       |  | 743    |  | 322     |  |       |  |             
|Recoverable INSS                                                                                  |  | 1,201  |  | 430     |  |       |  |             
|Recoverable ISS (ii)                                                                              |  |        |  |         |  | 2,532 |  | 1,880       
|                                                                                                  |  |        |  |         |  |       |  |             
|                                                                                                 
|                                                                                                  |  | 1,944  |  | 991     |  | 7,269 |  | 5,568       
|                                                                                                  |  |        |  |         |  |       |  |             
|                                                                                                  |  |        |  |         |  |       |  |             
|                                                                                                 
|Tax liabilities:                                                                                  |  |        |  |         |  |       |  |             
|Income tax and social contribution, net of recoverable income tax and social contribution         |  | 4,858  |  |         |  |       |  |             
|ISS                                                                                               |  | 9,816  |  | 8,296   |  |       |  |             
|PIS and COFINS                                                                                    |  | 6,816  |  | 5,089   |  |       |  |             
|Social security paid by installments (iii)                                                        |  | 768    |  | 768     |  | 1,787 |  | 2,391       
|Other recoverable taxes                                                                           |  | 14     |  | 10      |  |       |  |             
|                                                                                                  |  |        |  |         |  |       |  |             
|                                                                                                 
|                                                                                                  |  | 22,272 |  | 14,163  |  | 1,787 |  | 2,391       
|                                                                                                  |  |        |  |         |  |       |  |             
|                                                                                                  |  |        |  |         |  |       |  |             

|(i)   | Withholding income tax on financial investment redemptions, due to the share buyback program, classified in the long term, since short-term recovery is not expected.                                                         
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii)  | Recoverable ISS is classified in the long term by virtue of the repayment terms with Municipal bodies.                                                                                                                        
|(iii) | It refers to the payment in installments related to INSS (National Institute of Social Security) delinquency notice of joint liability, which has been fully transferred to third parties, not affecting TNL Contaxs results.

F-22

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

10.3 Deferred tax balances

|                                                 |  |        |  |       
|------------------------------------------------ |  | ------ |  | ------
|                                                 |  | 2008   |  | 2007  
|                                                 |  |        |  |       
|                                                
|Income tax on temporary differences (i)          |  | 23,146 |  | 12,024
|Social contribution on temporary differences (i) |  | 8,332  |  | 4,328 
|Income tax losses                                |  | 700    |  | 7,753 
|Social contribution losses                       |  | 252    |  | 2,803 
|                                                 |  |        |  |       
|                                                
|                                                 |  | 32,430 |  | 26,909
|                                                 |  |        |  |       
|                                                 |  |        |  |       

|(i) | Tax credits on temporary differences, mainly on provisions, positive and negative, except for provision for contingent liability of Oi Fixa (Note 22 (iii)). The Company and its subsidiary TNL Contax recorded deferred tax credits arising from
temporary differences, tax loss carryforwards and social contribution.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

Deferred tax assets/(liabilities) arise from the following:

|                                              |  |                 |  |                   |  |                
|--------------------------------------------- |  | --------------- |  | ----------------- |  | ---------------
|                                              |  | 2008           
|                                              |  |                
|                                              |  | Opening balance |  | Charged to income |  | Closing balance
|                                              |  |                 |  |                   |  |                
|                                             
|Temporary differences                         |  |                 |  |                   |  |                
|Depreciation                                  |  | (2,284)         |  | 7,609             |  | 5,325          
|Contingent liabilities                        |  | 12,006          |  | 5,119             |  | 17,125         
|Profit sharing program                        |  | 5,264           |  | 2,401             |  | 7,665          
|Provision for impairment of trade receivables |  | 1,367           |  | (4 )              |  | 1,363          
|                                             
|                                              |  | 2007           
|                                              |  |                
|                                              |  | Opening balance |  | Charged to income |  | Closing balance
|                                              |  |                 |  |                   |  |                
|                                             
|Temporary differences                         |  |                 |  |                   |  |                
|Depreciation                                  |  | (1,528)         |  | (756 )            |  | (2,284)        
|Contingent liabilities                        |  | 7,592           |  | 4,414             |  | 12,006         
|Profit sharing program                        |  | 3,060           |  | 2,204             |  | 5,264          
|Provision for impairment of trade receivables |  |                 |  | 1,367             |  | 1,367          

F-23

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

11 Earnings per Share

|                           |  |                 |  |     
|-------------------------- |  | --------------- |  | ----
|                           |  | Cents per share
|                           |  |                
|                           |  | 2008            |  | 2007
|                           |  |                 |  |     
|                          
|Basic earnings per share   |  |                 |  |     
|Common shares              |  | 3.89            |  | 3.51
|Preferred shares           |  | 6.22            |  | 3.51
|                          
|Diluted earnings per share |  |                 |  |     
|Common shares              |  | 3.89            |  | 3.36
|Preferred shares           |  | 6.22            |  | 3.51

11.1 Basic earnings per share

The earnings and weighted average number of shares used in the calculation of basic earnings per share are as follows:

|                                                                                               |  |            |  |           
|---------------------------------------------------------------------------------------------- |  | ---------- |  | ----------
|                                                                                               |  | 2008       |  | 2007      
|                                                                                               |  |            |  |           
|                                                                                              
|Profit for the year attributable to equity holders of the parent                               |  |            |  |           
|Common shares                                                                                  |  | 21,956     |  | 20,172    
|Preferred shares                                                                               |  | 60,870     |  | 37,570    
|                                                                                              
|Weighted average number of shares for the  purposes of basic earnings per share (all measures) |  |            |  |           
|Common shares                                                                                  |  | 5,642,517  |  | 5,747,315 
|Preferred shares                                                                               |  | 9,780,208  |  | 10,704,436
|                                                                                               |  |            |  |           
|                                                                                              
|                                                                                               |  | 15,422,725 |  | 16,451,751
|                                                                                               |  |            |  |           
|                                                                                               |  |            |  |           

11.2 Diluted earnings per share

The earnings used in the calculation of all diluted earnings per share measures are the same as those for the equivalent basic earnings per share measures, as outlined above.

F-24

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

The following table shows the weighted average number of shares for the purposes of diluted earnings per share and the weighted average number of shares used in the calculation of basic earnings per share as follows:

|                                                                                                       |  |            |  |           
|------------------------------------------------------------------------------------------------------ |  | ---------- |  | ----------
|                                                                                                       |  | 2008       |  | 2007      
|                                                                                                       |  |            |  |           
|                                                                                                      
|Weighted average number of shares used in the  calculation of basic earnings per share                 |  |            |  |           
|Common shares                                                                                          |  | 5,642,517  |  | 5,747,315 
|Preferred shares                                                                                       |  | 9,780,208  |  | 10,704,436
|                                                                                                       |  |            |  |           
|                                                                                                      
|                                                                                                       |  | 15,422,725 |  | 16,451,751
|                                                                                                       |  |            |  |           
|                                                                                                       |  |            |  |           
|                                                                                                      
|Weighted average number of shares used in the calculation of diluted earnings per share (all measures) |  |            |  |           
|Common shares (i)                                                                                      |  | 5,642,517  |  | 6,005,323 
|Preferred shares                                                                                       |  | 9,780,208  |  | 10,704,436
|                                                                                                       |  |            |  |           
|                                                                                                      
|                                                                                                       |  | 15,422,725 |  | 16,709,759
|                                                                                                       |  |            |  |           

|(i) | The effects of the stock-option plans issued by the Company were not taken into consideration in the calculation of earnings per share for the year ended December 31, 2008 as it would generate an anti-dilutive effect.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-25

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

12PropertyandEquipment

|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|------------------------ |  | --------- |  | --------- |  | -------------- |  | ------------ |  | ------------ |  | ---- |  | ------- |  | ---------
|                         |  | Telecom   |  | Furniture |  | Improvements   |  |              |  |              |  |      |  |         |  |          
|                         |  | and IT    |  | and       |  | on third party |  | Construction |  |              |  |      |  |         |  |          
|                         |  | systems   |  | fixtures  |  | assets         |  | in progress  |  | Building (i) |  | Land |  | Other   |  | Total    
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|Cost or valuation        |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|At January 1, 2007       |  | 216,313   |  | 40,078    |  | 123,445        |  | 877          |  |              |  |      |  | 17,062  |  | 397,775  
|Additions                |  | 40,524    |  | 12,385    |  | 31,811         |  | 653          |  | 2,628        |  | 831  |  | 5,621   |  | 94,453   
|Disposals                |  | (714)     |  | (3)       |  | (176)          |  |              |  |              |  |      |  |         |  | (893)    
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|At December 31, 2007     |  | 256,123   |  | 52,460    |  | 155,080        |  | 1,530        |  | 2,628        |  | 831  |  | 22,683  |  | 491,335  
|Additions                |  | 71,400    |  | 16,537    |  | 31,328         |  | 2,447        |  | 81           |  |      |  | 6,997   |  | 128,790  
|Disposals                |  | (1,975)   |  | (102)     |  | (68)           |  |              |  |              |  |      |  | (1)     |  | (2,146)  
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|At December 31, 2008     |  | 325,548   |  | 68,895    |  | 186,340        |  | 3,977        |  | 2,709        |  | 831  |  | 29,680  |  | 617,979  
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|Accumulated depreciation |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|At January 1, 2007       |  | (94,843)  |  | (10,069)  |  | (23,224)       |  |              |  |              |  |      |  | (4,046) |  | (132,182)
|Charge for the year      |  | (64,983)  |  | (5,672)   |  | (13,692)       |  |              |  |              |  |      |  | (1,105) |  | (85,453) 
|Disposals                |  | 714       |  |           |  | 145            |  |              |  |              |  |      |  |         |  | 859      
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|At December 31, 2007     |  | (159,112) |  | (15,742)  |  | (36,771)       |  |              |  |              |  |      |  | (5,152) |  | (216,776)
|Charge for the year      |  | (67,565)  |  | (8,172)   |  | (16,679)       |  |              |  | (105)        |  |      |  | (2,873) |  | (95,394) 
|Disposals                |  | 1,813     |  | 57        |  | 21             |  |              |  |              |  |      |  |         |  | 1,891    
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|At December 31, 2008     |  | (224,864) |  | (23,857)  |  | (53,429)       |  |              |  | (105)        |  |      |  | (8,025) |  | (310,279)
|                         |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|Carrying amount          |  |           |  |           |  |                |  |              |  |              |  |      |  |         |  |          
|                        
|December 31, 2008        |  | 100,684   |  | 45,038    |  | 132,911        |  | 3,977        |  | 2,604        |  | 831  |  | 21,655  |  | 307,700  
|December 31, 2007        |  | 97,011    |  | 36,719    |  | 118,309        |  | 1,530        |  | 2,628        |  | 831  |  | 17,531  |  | 274,559  

F-26

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

The following useful lives are used in the calculation of depreciation:

|                                   |  |          | 
|---------------------------------- |  | -------- | 
|Telecom and IT systems             |  | 3 years 
|Improvements on third party assets |  | 10 years
|Furniture and fixtures             |  | 8 years 
|Building                           |  | 25 years
|Other                              |  | 10 years

|(i) | The property recorded under Building was acquired on December 21, 2007. Depreciation started in 2008.
|--- | -------------------------------------------------------------------------------------------------------

13 Intangible Assets

|                         |  |         
|------------------------ |  | --------
|                         |  | Software
|                         |  |         
|Cost                     |  |         
|At January 1, 2007       |  | 73,117  
|Additions                |  | 38,965  
|Disposals                |  | (1)     
|                         |  |         
|At December 31, 2007     |  | 112,081 
|Additions                |  | 39,140  
|Disposals                |  | (267)   
|                         |  |         
|At December 31, 2008     |  | 150,954 
|                         |  |         
|                         |  |         
|Accumulated amortization |  |         
|At January 1, 2007       |  | (28,983)
|Amortization expense     |  | (15,122)
|                         |  |         
|At December 31, 2007     |  | (44,105)
|Amortization expense     |  | (22,649)
|Disposals                |  | 267     
|                         |  |         
|At December 31, 2008     |  | (66,487)
|                         |  |         
|                         |  |         
|Carrying amount          |  |         
|December 31, 2008        |  | 84,467  
|December 31, 2007        |  | 67,976  

Management has estimated a useful life of 5 years for softwares.

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

14 Subsidiaries and Business Combinations

In September 2008, the Groups acquired 100% of the share capital of Colabora BPO e Soluções em Tecnologia S.A. (Colabora) through its newly formed subsidiary TODO in a exchange of shares where 100% of the shares of
Colabora were exchanges for 20% of the shares in TODO. The acquired business was subsequently merged into TODO and the Company further increased its capital investment in TODO by R$ 8 million in November 2008. The acquired business was in
pre-operating stage as of December 31, 2008 and recognized no revenues for the year ended December 31, 2008.

Details of purchase consideration and net assets acquired are as follows:

|                                         |  |         
|---------------------------------------- |  | --------
|                                         |  | Software
|                                         |  |         
|Shares exchanged                         |  | 2,000   
|Direct costs relating to the acquisition |  | 94      
|                                         |  |         
|Total purchase consideration             |  | 2,094   
|                                         |  |         
|                                         |  |         

The assets and liabilities as of September 30, 2008 arising from the acquisition are as follows:

|                                       |  |            |  |          
|-------------------------------------- |  | ---------- |  | ---------
|                                       |  |            |  | Acquires
|                                       |  |            |  | carrying 
|                                       |  | Fair value |  | amount   
|                                       |  |            |  |          
|Intangible assets - software (Note 13) |  | 306        |  | 306      
|                                       |  |            |  |          
|Fair value of net assets               |  | 306        |  | 306      
|Goodwill                               |  | 1,788      |  |          
|                                       |  |            |  |          
|Total purchase consideration           |  | 2,094      |  |          
|Purchase consideration settled in cash |  | 94         |  |          
|                                       |  |            |  |          
|                                       |  | 2,000      |  | 306      
|                                       |  |            |  |          

Goodwill was initially attributted to the expected future profitability of the acquired business and synergies expected from the combined operations of the Group and GSW. The goodwill amount has been fully impaired (recognized in Other
operating expenses, net) by management as of December 31, 2008, based on impairment analysis performed on detailed forecasts prepared post acquisition.

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

There were no acquisitions in the year ended 31 December 2007.

Details of the Companys subsidiaries at 31 December 2008 are as follows:

|           |  |                   |  |              |  |            |  |                                        
|---------- |  | ----------------- |  | ------------ |  | ---------- |  | ---------------------------------------
|           |  | Place of          |  |              |  |            |  |                                        
|           |  | incorporation     |  | Proportion   |  | Proportion |  |                                        
|Name of    |  | (or registration) |  | of ownership |  | of voting  |  |                                        
|subsidiary |  | and operation     |  | interest - % |  | power held |  | Principal activity                     
|           |  |                   |  |              |  |            |  |                                        
|          
|TNL Contax |  | Brazil            |  | 100%         |  | 100%       |  | Telephonic customer assistance services
|TODO       |  | Brazil            |  | 80%          |  | 80%        |  | Technology services                    

15 Trade Receivables

|                                              |  |          |  |        
|--------------------------------------------- |  | -------- |  | -------
|                                              |  | 2008     |  | 2007   
|                                              |  |          |  |        
|Trade receivables                             |  | 105,599  |  | 88,884 
|Provision for impairment of trade receivables |  | (3,465 ) |  | (4,021)
|                                              |  |          |  |        
|                                              |  | 102,134  |  | 84,863 
|                                              |  |          |  |        
|                                              |  |          |  |        

Total trade receivables (net of allowances) held by the Group at December 31, 2008 amounted to R$ 102,134 thousand (2007 - R$ 84,863 thousand).    The average credit period on sales is 20 days. Interest is charged at 1% per month on the
outstanding balance.

Provision for impairment of trade accounts receivable is recorded to recognize incurred losses in relation to accounts receivable, whose calculation is based on estimates considering the situation of each customer and the guarantees provided by
them. The basis for measurement of the provision considers the position of each overdue client individually. Significant financial difficulties of the debtor, identification that the debtor has entered into bankruptcy or financial reorganization,
and default or delinquency in payments are considered indicators that the trade receivable is impaired. At December 31, 2008, R$ 8,365 thousand (2007 - nihil) of the trade receivables balance was due from Itaucard Bank. There were no other
customers who represented more than that in the total balance of trade receivables.

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Ageing of receivables overdue but not impaired:

|                           |  |       |  |      
|-------------------------- |  | ----- |  | -----
|                           |  | 2008  |  | 2007 
|                           |  |       |  |      
|                          
|Until 30 days overdue      |  | 4,585 |  | 8,788
|30-60 days overdue         |  | 537   |  | 290  
|60-90 days overdue         |  | 252   |  | 3    
|90-120 days overdue        |  | 911   |  | 88   
|More than 120 days overdue |  | 2,259 |  | 787  
|                           |  |       |  |      
|                          
|                           |  | 8,544 |  | 9,956
|                           |  |       |  |      
|                           |  |       |  |      

Movement in the provision for impairment of trade receivables:

|                                            |  |       |  |      
|------------------------------------------- |  | ----- |  | -----
|                                            |  | 2008  |  | 2007 
|                                            |  |       |  |      
|                                           
|Balance at beginning of the year            |  | 4,021 |  |      
|Impairment losses recognized on receivables |  |       |  | 4,021
|                                            |  |       |  |      
|Write-off during the year                   |  | (556) |  |      
|Balance at end of the year                  |  | 3,465 |  | 4,021
|                                            |  |       |  |      
|                                            |  |       |  |      

In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited
due to the customer base being large and unrelated. Accordingly, the directors believe that there is no further credit provision required in excess of the allowance for doubtful debts.

Ageing of impaired trade receivables:

|                                   |  |       |  |      
|---------------------------------- |  | ----- |  | -----
|                                   |  | 2008  |  | 2007 
|                                   |  |       |  |      
|                                  
|Impaired trade receivables overdue |  |       |  |      
|30-60 days overdue                 |  |       |  | 529  
|60-90 days overdue                 |  |       |  | 747  
|90-120 days overdue                |  |       |  | 757  
|More than 120 days overdue         |  | 3,465 |  | 1,988
|                                   |  |       |  |      
|                                  
|                                   |  | 3,465 |  | 4,021
|                                   |  |       |  |      
|                                   |  |       |  |      

F-30

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

16 Cash and Cash Equivalents

|                           |  |         |  |        
|-------------------------- |  | ------- |  | -------
|                           |  | 2008    |  | 2007   
|                           |  |         |  |        
|Cash and banks (i)         |  | 6,336   |  | 114,440
|Financial investments (ii) |  | 349,592 |  | 125,870
|                           |  |         |  |        
|                           |  | 355,928 |  | 240,310
|                           |  |         |  |        
|                           |  |         |  |        

|(i)  | The amounts are kept in a current account, as the Group has accounts payable due on the first days of each month, relating to the payment of suppliers, taxes and payroll.                                                                                                                                     
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(ii) | Financial investments are indexed to the variation of the Interbank Deposit Certificate (CDI) rate and are represented by Bank Deposit Certificates - CDBs and purchase and sale commitments. Higher amount invested in 2008 is due to increased
    operating cash generation, less investments in the period.

17 Issued Capital

|                                                           |  |               |  |        
|---------------------------------------------------------- |  | ------------- |  | -------
|                                                           |  | Share capital
|                                                           |  |              
|                                                           |  | 2008          |  | 2007   
|                                                           |  |               |  |        
|5,824,772 fully paid ordinary shares (2007 - 5,824,772)    |  | 82,237        |  | 82,237 
|10,031,914 fully paid preferred shares (2007 - 10,031,914) |  | 141,636       |  | 141,636
|                                                           |  |               |  |        
|                                                           |  | 223,873       |  | 223,873
|                                                           |  |               |  |        
|                                                           |  |               |  |        

17.1 Fully paid ordinary shares

|                                         |  |            |  |        
|---------------------------------------- |  | ---------- |  | -------
|                                         |  | Number     |  | Share  
|                                         |  | of shares  |  | capital
|                                         |  |            |  |        
|                                        
|Balance at January 1, 2007               |  | 6,074,361  |  | 82,237 
|Share cancellation on July 31, 2007      |  | (177,415 ) |  |        
|Share cancellation on October 1, 2007    |  | (72,174 )  |  |        
|                                         |  |            |  |        
|                                        
|Balance as of December 31, 2007 and 2008 |  | 5,824,772  |  | 82,237 
|                                         |  |            |  |        
|                                         |  |            |  |        

Each common share is entitled to one voting right in the resolutions of the General Meeting.

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

17.2 Non-participating preference shares

|                                         |  |              |  |        
|---------------------------------------- |  | ------------ |  | -------
|                                         |  | Number       |  | Share  
|                                         |  | of shares    |  | capital
|                                         |  |              |  |        
|                                        
|Balance at January 1, 2007               |  | 12,148,695   |  | 141,636
|Share cancellation on July 31, 2007      |  | (1,202,910 ) |  |        
|Share cancellation on October 1, 2007    |  | (913,871 )   |  |        
|                                         |  |              |  |        
|                                        
|Balance as of December 31, 2007 and 2008 |  | 10,031,914   |  | 141,636
|                                         |  |              |  |        
|                                         |  |              |  |        

The preferred shares issued by the Company shall not have voting rights, but shall have priority of refund in the event the Company is liquidated, without premium, and in the payment of non-cumulative minimum dividends of (a) 6% per year, on the
amount resulting from the division of the subscribed capital by the number of shares of the Company or (b) 3% of net equity value of shares, prevailing the highest amount between (a) and (b). The payment of such minimum statutory dividends is
subject to the existence of distributable profits or realized profit reserves.

(i) Reverse split of shares

At the Extraordinary General Meeting held on October 17, 2007, the reverse split of all shares representing the Companys capital stock was approved, at the ratio of 20 shares for 1 share of the same type. As per a communication made to the
shareholders, a term of until November 16, 2007 was granted to carry out the adjustments to share positions. The information disclosed regarding the amount of shares prior to this date does not include a retroactive effect of the reverse split of
shares.

Share fractions resulting from reverse split were divided, grouped into whole numbers and sold at Bovespa auction on August 13, 2008, as per Notice to the Market dated August 12, 2008. The amounts resulting from this auction totaled R$ 22,106
thousand, out of which R$ 5,256 thousand were transferred to shareholders of fractioned shares. The R$ 16,850 thousand non-transferred amount corresponds to shareholders whose shares are either blocked or their records are not updated and
will be exclusively paid upon the presentation of the supporting documentation evidencing the unblocked shares and/or shareholders identification, whichever is the case.

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

18 Reserves

|                                      |  |         |  |       
|------------------------------------- |  | ------- |  | ------
|                                      |  | 2008    |  | 2007  
|                                      |  |         |  |       
|                                     
|Capital reserve in share subscription |  | 9,282   |  | 9,254 
|Legal reserve                         |  | 15,465  |  | 10,845
|Statutory reserve                     |  | 95,010  |  | 40,595
|Unrealizede profit reserve            |  | 16,626  |  | 16,626
|                                      |  |         |  |       
|                                     
|                                      |  | 136,383 |  | 77,320
|                                      |  |         |  |       
|                                      |  |         |  |       

18.1 Capital reserve in share subscription

|                             |  |       |  |      
|---------------------------- |  | ----- |  | -----
|                             |  | 2008  |  | 2007 
|                             |  |       |  |      
|                            
|Balance at beginning of year |  | 9,254 |  | 9,386
|Sale of treasury shares      |  |       |  | (132)
|Dividends lapsed             |  | 28    |  |      
|                             |  |       |  |      
|                            
|Balance at end of year       |  | 9,282 |  | 9,254
|                             |  |       |  |      
|                             |  |       |  |      

The capital reserve presents a balance of R$ 9,282 thousand on December 31, 2008, as a result of the utilization of part of this reserve in the first share buyback program, pursuant to the resolution of the Board of Directors as of June 29,
2006. The reserve was fully used to finance the fourth share buyback program, and shares remained in treasury (Note 19.4) .

18.2 Legal reserve

|                                  |  |        |  |       
|--------------------------------- |  | ------ |  | ------
|                                  |  | 2008   |  | 2007  
|                                  |  |        |  |       
|                                  |  |        |  |       
|Balance at beginning of year      |  | 10,845 |  | 8,146 
|Allocation of profit for the year |  | 4,620  |  | 2,699 
|                                  |  |        |  |       
|                                  |  |        |  |       
|Balance at end of year            |  | 15,465 |  | 10,845
|                                  |  |        |  |       
|                                  |  |        |  |       

Pursuant to Article 193 of Brazilian Corporate Law, Contax Participações S.A. is obliged to allocate 5% of its annual net income determined under the accounting practices adopted in Brazil to a legal reserve, up to 20% of the
Companys capital stock. This allocation is optional when the legal reserve added to capital reserves exceed 30% of the capital stock. This reserve may be used to increase capital or offset losses, and may not be distributed as dividends.

F-33

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##### 

Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

18.3 Statutory reserve

|                                     |  |        |  |          
|------------------------------------ |  | ------ |  | ---------
|                                     |  | 2008   |  | 2007     
|                                     |  |        |  |          
|                                    
|Balance at beginning of year         |  | 40,595 |  | 110,711  
|Cancelation of own shares            |  |        |  | (108,580)
|Appropriation from retained earnings |  | 54,415 |  | 38,464   
|                                     |  |        |  |          
|                                    
|Balance at end of year               |  | 95,010 |  | 40,595   
|                                     |  |        |  |          
|                                     |  |        |  |          

Pursuant to Article 194 of Brazilian Corporate Law and to Article 29 of the Companys Bylaws, the Company created a Statutory Reserve to ensure the realization of investments by the Company, as well as to preserve its working capital. The
Statutory Reserve is limited, together with all other profit reserves, to the amount of the capital stock.

18.4 Unrealized profit reserve

|                                     |  |        |  |         
|------------------------------------ |  | ------ |  | --------
|                                     |  | 2008   |  | 2007    
|                                     |  |        |  |         
|                                    
|Balance at beginning of year         |  | 16,626 |  | 17,219  
|Minimum statutory dividends          |  |        |  | (12,637)
|Appropriation from retained earnings |  |        |  | 12,044  
|                                     |  |        |  |         
|                                    
|Balance at end of year               |  | 16,626 |  | 16,626  
|                                     |  |        |  |         
|                                     |  |        |  |         

The unrealized profit reserve, as provided for in the Companys Bylaws, aims at not distributing the portion of unrealized profit as dividends.

19 Treasury Shares

19.1 First share buyback program

At the Extraordinary Meeting of the Board of Directors held on June 29, 2006, the share buyback proposal was approved, with funds registered in the Capital Reserve and Statutory Reserve accounts, totaling the buyback of 5,886,972 common shares and
11,773,944 preferred shares, fully cancelled as per resolution of the Extraordinary General Meeting held on November 28, 2006.

F-34

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

19.2 Second share buyback program

At the Extraordinary Meeting held on November 30, 2006, the Board of Directors approved the launch proposal of the share buyback program, with funds registered in the Capital Reserve and Statutory Reserve accounts, which amounted to the buyback of
5,298,302 common shares of which 3,548,300 common shares were cancelled, and 24,058,194 preferred shares which were cancelled, on July 31, 2007. As a result, 1,750,000 common shares purchased remained in treasury, as per resolution at the
Extraordinary General Meeting held on July 27, 2007.

19.3 Third share buyback program

At the Extraordinary Meeting, held on July 26, 2007, the Board of Directors approved the new share buyback program with funds registered in the Capital Reserve and Statutory Reserve accounts, totaling the buyback of 18,277,422 preferred shares
cancelled, and 3,193,472 common shares, of which 1,443,472 common shares were cancelled on October 17, 2007. As a result, 1,750,000 common shares remained in treasury, pursuant to the resolutions of the General Extraordinary Meeting, totaling
3,500,000 common shares in treasury.

19.4 Fourth share buyback program

At the Extraordinary Meeting held on September 5, 2008, the Board of Directors approved a new share buyback program, with funds from Capital Reserve and Statutory Reserve accounts, totaling the buyback of 861,664 preferred shares and 52,337 common
shares, which remained in treasury.

The Extraordinary General Meeting held on December 17, 2008 approved the cancellation of 52,337 common shares and 861,664 preferred shares held in treasury, without decreasing the Companys capital stock, and 166,018 common shares remaining in
treasury. All of these shares were canceled in January 2009.

F-35

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

|                               |  |          |  |          |  |         |  |         |  |        
|------------------------------ |  | -------- |  | -------- |  | ------- |  | ------- |  | -------
|                               |  | Thousand |  | Buyback  |  | Average |  | Maximum |  | Minimum
|                               |  | Shares   |  | Price    |  | Price   |  | Price   |  | Price  
|                               |  |          |  |          |  |         |  |         |  |        
|                              
|Preferred Shares               |  |          |  |          |  |         |  |         |  |        
|                              
|1st Buyback Program            |  | 11,774   |  | 21,517   |  | 1.83    |  | 1.95    |  | 1.61   
|Share Cancellation             |  | (11,774) |  | (21,517) |  | 1.83    |  |         |  |        
|2nd Buyback Program            |  | 24,058   |  | 46,242   |  | 1.92    |  | 2.00    |  | 1.84   
|Share Cancellation             |  | (24,058) |  | (46,242) |  | 1.92    |  |         |  |        
|3rd Buyback Program            |  | 18,277   |  | 46,424   |  | 2.54    |  | 2.65    |  | 2.46   
|Share Cancellation             |  | (18,277) |  | (46,424) |  | 2.54    |  |         |  |        
|4th Buyback Program            |  | 862      |  | 36,206   |  | 42.00   |  | 42.81   |  | 41.59  
|                               |  |          |  |          |  |         |  |         |  |        
|                              
|                               |  | 862      |  | 36,206   |  |         |  |         |  |        
|                               |  |          |  |          |  |         |  |         |  |        
|                              
|Common Shares                  |  |          |  |          |  |         |  |         |  |        
|                              
|1st Buyback Program            |  | 5,887    |  | 19,097   |  | 3.24    |  | 3.41    |  | 3.12   
|Share Cancellation             |  | (5,887)  |  | (19,097) |  | 3.24    |  |         |  |        
|2nd Buyback Program            |  | 5,298    |  | 16,144   |  | 3.05    |  | 3.29    |  | 2.97   
|Share Cancellation             |  | (3,548)  |  | (10,812) |  | 3.05    |  |         |  |        
|3rd Buyback Program            |  | 3,193    |  | 11,287   |  | 3.53    |  | 3.62    |  | 3.52   
|Share Cancellation             |  | (1,443)  |  | (5,102)  |  | 3.54    |  |         |  |        
|Sale of Shares                 |  | (180)    |  | (604)    |  | 3.36    |  |         |  |        
|                               |  |          |  |          |  |         |  |         |  |        
|                              
|                               |  | 3,320    |  | 10,913   |  | 3.29    |  |         |  |        
|                              
|Reverse Split of Shares (1/20) |  | 166      |  | 10,913   |  | 65.74   |  |         |  |        
|                              
|4th Buyback Program            |  | 52       |  | 2,729    |  | 52.50   |  | 52.94   |  | 51.73  
|                               |  |          |  |          |  |         |  |         |  |        
|                              
|                               |  | 218      |  | 13,642   |  |         |  |         |  |        
|                               |  |          |  |          |  |         |  |         |  |        
|                              
|                               |  | 1,080    |  | 49,848   |  |         |  |         |  |        
|                               |  |          |  |          |  |         |  |         |  |        
|                               |  |          |  |          |  |         |  |         |  |        

20 Retained Earnings and Dividends

|                                                        |  |           |  |         
|------------------------------------------------------- |  | --------- |  | --------
|                                                        |  | 2008      |  | 2007    
|                                                        |  |           |  |         
|                                                       
|Balance at beginning of year                            |  | 6,725     |  | 2,967   
|Net income for the year - equity holders of the Company |  | 82,826    |  | 57,742  
|Minumum statutory dividends                             |  | (21,947 ) |  | (777)   
|Appropriation to reserves                               |  | (59,035 ) |  | (53,207)
|                                                        |  |           |  |         
|                                                       
|Balance at end of year                                  |  | 8,569     |  | 6,725   
|                                                        |  |           |  |         
|                                                        |  |           |  |         

F-36

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##### 

Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

According to the Companys by-laws, Contax Holding is obligated to distribute dividends for each fiscal year in the amount of not less than 25% of the net profit, determined under the accounting practices adopted in Brazil, adjusted in
accordance with clause 202 of Law No. 6404/76. The Company may also distribute quarterly dividends, as long as the total amount of dividends paid does not exceed the capital reserve. In accordance with Brazilian Corporate Law, on December 31, 2008,
management proposed the payment of R$ 38,573 thousand as the minimum mandatory dividends, prescribed by Law No. 6404/76.

On April 4, 2008, the distribution of R$ 13,414 thousand as dividends, proposed by management on December 31, 2007, was deliberated and approved by the Annual General Meeting. On April 29, 2008 the dividends were paid to the Companys
shareholders owning shares on April 4, 2008, inflation restated based on the Referential Rate - TR, since January 1, 2008.

The annual dividend distributed to holders of preferred shares (the Preferred Dividend) has priority in the allocation of Adjusted Net Income when determining the Preferred Dividend in relation to the general dividend. Remaining amounts
to be distributed, if any, are allocated first to the payment of a dividend to holders of common shares in an amount equal to the Preferred Dividend and the remainder, if any, is distributed equally among holders of preferred shares and common
shares.

The Preferred Dividends corresponds to a non-cumulative preferred dividend equal to 6% of share capital determined in according to accounting practices adopted in Brazil, in proportion of preferred shares to total capital, or 3% of
shareholders equity book value per share, whichever is greater.

21 Borrowings

|                       |  |          |  |          |  |                |  |                   |  |         |  |        
|---------------------- |  | -------- |  | -------- |  | -------------- |  | ----------------- |  | ------- |  | -------
|Purpose                |  | Openning |  | Maturity |  | Guarantees     |  | Financial charges |  | 2008    |  | 2007   
|                       |  |          |  |          |  |                |  |                   |  |         |  |        
|                      
|BNDES(operation        |  |          |  |          |  |                |  |                   |  |         |  |        
|expansion and upgrade) |  | 10/2007  |  | 09/2013  |  | Bank guarantee |  | TJLP(i)+ 2% p.a.  |  | 217,969 |  | 100,360
|                       |  |          |  |          |  |                |  |                   |  |         |  |        
|                       |  |          |  |          |  |                |  |                   |  |         |  |        
|                      
|Current                |  |          |  |          |  |                |  |                   |  | 14,219  |  | 300    
|Non-current            |  |          |  |          |  |                |  |                   |  | 203,750 |  | 100,060

|(i) | The Brazilian long-term annual interest rate (TJLP), was 6.25% in 2008.
|--- | -----------------------------------------------------------------------

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

On August 23, 2007, the subsidiary TNL Contax entered into a loan agreement with BNDES in the amount of R$ 216,514 thousand with the purpose of financing the expansion of its installed capacity, improving current facilities, qualifying human
resources, improving the quality of services and productivity, and investing in marketing actions.

The loan was obtained within the scope of the Program for the Development of the Software Industry and Correlated Services - PROSOFT-Company.

On October 5, 2007, the subsidiary received the first tranche, in the amount of R$ 100,002 thousand. In 1H08, the second, third and fourth tranches were disbursed on January 28 and 30 and June 12, 2008, in the amounts of R$ 40,001 thousand
and R$ 10,001 thousand and R$ 61,822 thousand, respectively. On November 18, 2008, the last tranche was disbursed in the amount of R$ 4,904 thousand.

Interest is payable on a quarterly basis up until September 15, 2009, becoming monthly for the period between October 15, 2009 until the maturity date or settlement of contract. The principal amount shall mature monthly as from October 15, 2009,
through September 2013.

TNL Contax contractually opted for tendering guarantees through sureties from first-tier financial institutions, in this case, receivables and covenants structures shall not be applicable.

Annual costs related to these sureties amounted to R$ 1,782 thousand in 2008 and are recognized in the income statement over the borrowing term within Finance costs (Note 9).

Movement in balance for the year ended on December 31, 2008:

|        |  |         |  |         |  |                  |  |                   |  |        
|------- |  | ------- |  | ------- |  | ---------------- |  | ----------------- |  | -------
|Purpose |  | 2007    |  | Funding |  | Interest Payment |  | Financial charges |  | 2008   
|        |  |         |  |         |  |                  |  |                   |  |        
|       
|BNDES   |  | 100,360 |  | 116,730 |  | (13,860)         |  | 14,738            |  | 217,969
|        |  |         |  |         |  |                  |  |                   |  |        
|        |  |         |  |         |  |                  |  |                   |  |        

F-38

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##### 

Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Schedule of annual repayments until the maturity of the agreement:

|     |  |          
|---- |  | ---------
|     |  | Principal
|     |  |          
|    
|2009 |  | 13,546   
|2010 |  | 54,182   
|2011 |  | 54,182   
|2012 |  | 54,182   
|2013 |  | 40,638   
|     |  |          
|     |  | 216,730  
|     |  |          
|     |  |          

Interest payment amounts will be determined based on future TJLP rates.

22 Provision for Contingencies and Judicial Deposits

|              |  |                   |  |                             |  |        |  |       
|------------- |  | ----------------- |  | --------------------------- |  | ------ |  | ------
|              |  | Judicial deposits |  | Provision for contingencies
|              |  |                   |  |                            
|              |  | 2008              |  | 2007                        |  | 2008   |  | 2007  
|              |  |                   |  |                             |  |        |  |       
|Contingencies |  |                   |  |                             |  |        |  |       
|Tax           |  | 1,469             |  | 1,342                       |  | 11,927 |  | 7,776 
|Labor         |  | 33,869            |  | 16,445                      |  | 51,651 |  | 38,955
|Civil         |  |                   |  |                             |  | 573    |  | 129   
|              |  |                   |  |                             |  |        |  |       
|             
|              |  | 35,338            |  | 17,787                      |  | 64,151 |  | 46,860
|              |  |                   |  |                             |  |        |  |       
|              |  |                   |  |                             |  |        |  |       

The changes in provisions for contingencies in the year ended December 31, 2008 are shown below:

|                             |  |                      |  |          |  |                  |  |             |  |       |  |         
|---------------------------- |  | -------------------- |  | -------- |  | ---------------- |  | ----------- |  | ----- |  | --------
|                             |  | Tax                  |  |          |  |                  |  |            
|                             |  |                      |  |          |  |                  |  |            
|                            
|                             |  | Tax on services -ISS |  | INSS (i) |  | PIS/ COFINS (ii) |  | Labor (iii) |  | Civil |  | Total   
|                             |  |                      |  |          |  |                  |  |             |  |       |  |         
|                            
|Balance at January 1, 2008   |  | 1,098                |  | 5,196    |  | 1,482            |  | 38,955      |  | 129   |  | 46,860  
|Additions                    |  |                      |  |          |  | 2,707            |  | 14,277      |  | 441   |  | 17,425  
|Uses                         |  |                      |  |          |  |                  |  | (3,222 )    |  |       |  | (3,222 )
|Reversals                    |  |                      |  |          |  |                  |  | (4,186 )    |  |       |  | (4,186 )
|Indexation                   |  | 836                  |  | 608      |  |                  |  | 5,827       |  | 3     |  | 7,274   
|                             |  |                      |  |          |  |                  |  |             |  |       |  |         
|                            
|Balance at December 31, 2008 |  | 1,934                |  | 5,804    |  | 4,189            |  | 51,651      |  | 573   |  | 64,151  
|                             |  |                      |  |          |  |                  |  |             |  |       |  |         
|                             |  |                      |  |          |  |                  |  |             |  |       |  |         

F-39

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##### 

Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

The provisions for contingencies reflect managements best estimates for the amounts deemed sufficient to cover probable losses from pending lawsuits on the balance sheet date and take into account the advices of the Groups legal
advisors. The Company and its subsidiaries maintain judicial deposits to ensure the right to challenge and/or to appeal in tax and labor claims.

TNL Contaxs tax assessment notice related to INSS contributions amounted to R$ 19,170 thousand, updated to December 2008. Out of this amount, R$ 4,570 thousand are accrued. Concerning the remaining R$ 14,600 thousand, TNL Contax
filed a defense as it disagrees with tax authoritys understanding. Managements understanding as supported by the Groups external legal advisors is that the Groups likelyhood of loss is possible, and therefore no provision has
been accounted for in this respect.

(i) Mainly comprised of provision to regulate contributions to SENAC and SEBRAE entities, and of payments to INSS (National Institute of Social Security), according to the FPAS (Pension and Social Assistance Fund) codes of payment table.

(ii) Contingent amount related to the deduction of the ISS cost on the calculation basis for determination of PIS/COFINS.

(iii) The labor claims filed against TNL CONTAX by employees and former employees hired by it during its operations amounted to R$ 37,870 thousand. According to the services agreement executed between Oi Fixa and TNL Contax, labor claims arising
from the migration of employment contracts shall be incumbent upon that Group, whose amount was recorded as counter-entry to Other assets.    The amount of labor claims under Oi Fixas responsibility represents R$ 13,781
thousand.

The subsidiary TNL Contax has contingent liabilities classified with possible risk of losses for tax and civil contingencies in the amounts of R$ 36,681 thousand and R$ 581 thousand, respectively. These amounts are not provisioned.

23 Obligations Under Finance and Operating Leases

23.1 Leasing arrangements

Finance leases relate to IT equipment and furniture for the maintenance of the Groups operations with lease terms of 3, 4 and 5 years. The Group has contractual rights to purchase the equipment for a nominal amount (significantly below fair
value) at the conclusion of the lease agreements. The Groups obligations under finance leases are secured by the lessors title to the leased assets.

F-40

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

23.1.1 Finance lease liabilities

|                                        |  |              |  |                 |  |       
|--------------------------------------- |  | ------------ |  | --------------- |  | ------
|                                        |  |              |  | Balance payable
|                                        |  |              |  |                
|                                        |  | Number of    |  |                 |  |       
|Lessor                                  |  | installments |  | 2008            |  | 2007  
|                                        |  |              |  |                 |  |       
|                                       
|CIT                                     |  | 48           |  | 4,143           |  | 7,416 
|                                       
|Unibanco                                |  | 48           |  | 3,121           |  | 6,611 
|                                       
|HP Financial                            |  | 36           |  |                 |  | 970   
|                                        |  | 48           |  | 4,881           |  | 9,625 
|                                        |  | 60           |  | 9,140           |  | 12,803
|                                       
|IBM Leasing                             |  | 36           |  |                 |  | 118   
|                                        |  | 48           |  | 190             |  | 378   
|                                        |  | 60           |  | 4,496           |  | 6,267 
|                                        |  |              |  |                 |  |       
|                                       
|                                        |  |              |  | 25,970          |  | 44,188
|                                        |  |              |  |                 |  |       
|                                        |  |              |  |                 |  |       
|                                       
|Included in the financial statement as: |  |              |  |                 |  |       
|Current obligations                     |  |              |  | 16,086          |  | 18,218
|Non-current obligations                 |  |              |  | 9,884           |  | 25,970

23.1.2 Operating leasing arrangements

Operating leases relate to warehouse facilities with lease terms of between 5 to 8 years, with an option to extend for the same period. All operating lease contracts contain market review clauses in the event that the Group exercises its renewal
  rights. The Group does not have any contractual rights to purchase the leased asset at the expiry of the lease period.

23.1.3 Payments recognized as an expense

|                         |  |        |  |       
|------------------------ |  | ------ |  | ------
|                         |  | 2008   |  | 2007  
|                         |  |        |  |       
|Operating lease payments |  | 73,565 |  | 50,194
|                         |  |        |  |       
|                         |  |        |  |       

F-41

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##### 

Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

23.2 Contractual obligations

|                        |  |                       |  |           |  |           |  |          
|----------------------- |  | --------------------- |  | --------- |  | --------- |  | ---------
|                        |  | Payment due by period
|                        |  |                      
|                        |  |                       |  | Less than |  |           |  | More than
|Contractual obligations |  | Total                 |  | 1 year    |  | 1-5 years |  | 5 years  
|                        |  |                       |  |           |  |           |  |          
|Capital (finance) lease |  | 25,970                |  | 16,086    |  | 9,884     |  |          
|Operating lease         |  | 161,228               |  | 51,998    |  | 105,898   |  | 3,331    
|                        |  |                       |  |           |  |           |  |          
|                        |  | 187,198               |  | 68,084    |  | 115,782   |  | 3,331    
|                        |  |                       |  |           |  |           |  |          

24 Payroll and Related Charges

|                 |  |         |  |        
|---------------- |  | ------- |  | -------
|                 |  | 2008    |  | 2007   
|                 |  |         |  |        
|Payroll          |  | 49,212  |  | 42,439 
|Vacation accrual |  | 57,867  |  | 45,733 
|Related charges  |  | 50,919  |  | 39,101 
|Others           |  | 23,926  |  | 16,076 
|                 |  |         |  |        
|                 |  | 181,924 |  | 143,349
|                 |  |         |  |        

Related charges are mainly comprised of social obligations.

25 Financial Instruments and Risk Assessment

25.1 Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance. The capital structure of the Group
  consists of debt, which includes the borrowing disclosed in Note 21, cash and cash equivalents and equity attributable to equity holders of the parent comprising issued capital, reserves and retained earning as disclosed in Notes 17, 18 and 20,
  respectively.

The Groups policy is to maintain a strong capital base so as to maintain growth, and an optimal capital structure to reduce the cost of capital and to provide returns for its shareholders.

F-42

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##### 

Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Management believes that the resources available to the Company are sufficient for its present requirements and will be sufficient to meet its anticipated requirements for capital expenditures and other cash requirements for the 2009 fiscal year.

The gearing ratio at the year end was as follows:

|                          |  |            |  |          
|------------------------- |  | ---------- |  | ---------
|                          |  | 2008       |  | 2007     
|                          |  |            |  |          
|Debt (i)                  |  | 243,939    |  | 144,548  
|Cash and cash equivalents |  | (355,928 ) |  | (240,310)
|                          |  |            |  |          
|Net debt                  |  | (111,989 ) |  | (95,762) 
|Equity (ii)               |  | 321,056    |  | 297,005  
|                          |  |            |  |          
|Net debt to equity ratio  |  | (35% )     |  | (32%)    
|                          |  |            |  |          

|(i)  | Debt is defined as long- and short-term borrowings and finance leases, as detailed in Notes 21 and 23.
|---- | ------------------------------------------------------------------------------------------------------
|    
|(ii) | Equity includes all capital and reserves of the Group.                                                
|    

25.2 Categories of financial instruments

|                                 |  |            |  |            |  |         |  |        
|-------------------------------- |  | ---------- |  | ---------- |  | ------- |  | -------
|                                 |  | Fair value |  | Book value
|                                 |  |            |  |           
|                                
|                                 |  | 2008       |  | 2007       |  | 2008    |  | 2007   
|                                 |  |            |  |            |  |         |  |        
|                                
|Financial assets                 |  |            |  |            |  |         |  |        
|Cash and cash equivalents        |  | 355,928    |  | 240,310    |  | 355,928 |  | 240,310
|Loans and receivables            |  |            |  |            |  |         |  |        
|Trade and other receivables      |  | 102,134    |  | 84,863     |  | 102,134 |  | 84,863 
|Other receivables                |  | 17,530     |  | 11,678     |  | 17,530  |  | 11,678 
|                                 |  |            |  |            |  |         |  |        
|                                
|                                 |  | 475,592    |  | 336,851    |  | 475,592 |  | 336,851
|                                 |  |            |  |            |  |         |  |        
|                                 |  |            |  |            |  |         |  |        
|                                
|Financial liabilities            |  |            |  |            |  |         |  |        
|Trade and other payables         |  | 76,847     |  | 72,466     |  | 76,847  |  | 72,466 
|Borrowings                       |  | 217,969    |  | 100,360    |  | 217,969 |  | 100,360
|Obligations under finance leases |  | 22,015     |  | 44,188     |  | 25,970  |  | 44,188 
|                                 |  |            |  |            |  |         |  |        
|                                
|                                 |  | 316,831    |  | 217,014    |  | 320,786 |  | 217,014
|                                 |  |            |  |            |  |         |  |        
|                                 |  |            |  |            |  |         |  |        

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|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

25.3 Financial risk management objectives

The Financial Department monitors and manages the financial risks relating to the operations of the Group through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include credit risk and interest rate
risk.

25.4 Interest rate risk management

The associated risk arises from the possibility of the Group incurring in losses derived from interest rate variations that increase the financial expenses related to financings raised in the market. The Group continuously monitors the market
interest rates with the purpose of evaluating the possible need of hiring operations to protect itself against the volatility risk of these rates.

BNDES charges fixed interest rates over the TJLP interest rate on loans with the purpose of financing the expansion of its installed capacity, improving current facilities, qualifying human resources, improving the quality of services and
productivity, and investing in marketing actions. Since these rates are considerably low, the Group understands that there is low volatility risk for this part of the debt.

25.5 Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.

The credit risk associated with trade accounts receivable is not relevant, due to the financial size of the companies to which the Group provides services.

The provision for doubtful accounts is recorded to recognize probable losses in relation to accounts receivable, whose calculation is based on estimates considering the situation of each customer and the guarantees provided by them. The basis for
measurement of the provision considers the position of each overdue client individually.

The concentration of credit risk associated from costumers is not material since in December 31, 2008, important financial conglomerates were responsible for aproximated 58% of accounts receivables outstanding balance.

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|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

25.6 Concentration of credit risks

Financial instruments which expose the Group to concentration of credit risk consist primarily of cash equivalents and accounts receivable. All cash equivalents are maintained in Brazil with prime financial institutions. Management believes its
credit policies are prudent and reflect normal business terms and risk. The Group does not anticipate nonperformance by the counterparties and, accordingly, does not require collateral.

25.7 Sensivity analysis

The interest rates risk arises from the possibility of the Group incurring in losses derived from interest rate variations that increase the financial expenses related to financings raised in the market. The Group continuously monitors the market
interest rates with the purpose of evaluating the possible need of hiring operations to protect itself against the volatility risk of these rates. If interest rates increased by 1 percentage point the additional amount of annual interest expense
would be R$ 1,408 thousand.

25.8 Liquidity risks

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Management monitors
rolling forecasts of the Groups liquidity reserve on the basis of expected cash flow.

The table below analyses the Groups financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

|                                                 |  |           |  |         |  |         |  |       
|------------------------------------------------ |  | --------- |  | ------- |  | ------- |  | ------
|                                                 |  | 2008     
|                                                 |  |          
|                                                 |  |           |  | Between |  | Between |  |       
|                                                 |  | Less than |  | 1 and 2 |  | 2 and 5 |  | Over 5
|                                                 |  | 1 year    |  | years   |  | years   |  | years 
|                                                 |  |           |  |         |  |         |  |       
|                                                
|Borrowings (excluding finance lease liabilities) |  | 13,546    |  | 54,182  |  | 149,002 |  |       
|Finance lease liabilities                        |  | 16,086    |  | 7,119   |  | 2,765   |  |       
|Trade and other payables                         |  | 76,847    |  |         |  |         |  |       

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|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

|                                                 |  |           |  |         |  |         |  |       
|------------------------------------------------ |  | --------- |  | ------- |  | ------- |  | ------
|                                                 |  | 2007     
|                                                 |  |          
|                                                 |  |           |  | Between |  | Between |  |       
|                                                 |  | Less than |  | 1 and 2 |  | 2 and 5 |  | Over 5
|                                                 |  | 1 year    |  | years   |  | years   |  | years 
|                                                 |  |           |  |         |  |         |  |       
|                                                
|Borrowings (excluding finance lease liabilities) |  | 7,863     |  | 14,085  |  | 88,528  |  | 19,365
|Finance lease liabilities                        |  | 18,218    |  | 16,086  |  | 9,884   |  |       
|Trade and other payables                         |  | 72,466    |  |         |  |         |  |       

26 Share-based Payments

The Extraordinary General Meeting held on April 16, 2007, approved a stock option plan. The Board of Directors is responsible for managing the plan and introducing periodic stock option programs.

The Stock Option Plan initiated in 2007 provides for three beneficiaries who are entitled to a total of up to 1.9% of the subscribed and paid-up capital stock, representing 350,000 thousand common shares granted within the scope of plan in April
2007. Options may be exercised as of October 1, 2007, in four equal annual tranches.

The strike price of R$51.20 was calculated based on the weighted average quote of Bovespa within 30 days immediately prior to the concession date and will be monetarily restated in compliance with the General Market Price Index - IGP-M.

Share market value on the last business day of December 2008 was R$ 40.00 per share.

On December 31, 2008, a R$ 128 thousand (R$ 205 thousand in 2007) expense was verified based on the expectation of their realization.

In the first lot of the program, 8,983 options were exercised, corresponding to R$ 167 thousand.

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|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

Fair value of options was calculated using the Black & Scholes option pricing model, based on the following assumptions:

|                          |  |          |  |          |  |          |  |         
|------------------------- |  | -------- |  | -------- |  | -------- |  | --------
|                          |  | 1stblock |  | 2ndblock |  | 3rdblock |  | 4thblock
|                          |  |          |  |          |  |          |  |         
|                         
|Strike price (R$) (*)     |  | 51.20    |  | 51.20    |  | 51.20    |  | 51.20   
|Market price (R$) (*)     |  | 64.00    |  | 64.00    |  | 64.00    |  | 64.00   
|Options fair value        |  | 14.13    |  | 20.66    |  | 22.26    |  | 25.29   
|Share price volatility    |  | 19.64%   |  | 37.51%   |  | 23.54%   |  | 23.54%  
|Risk-free rate of return: |  | 11.08%   |  | 10.53%   |  | 10.30%   |  | 10.17%  
|Dividend yield:           |  | 1.40%    |  | 1.40%    |  | 1.40%    |  | 1.40%   

(*) On the plan's granting date

In 2008, the options corresponding to the 2nd lot of the Stock Option Plan were not exercised, resulting in the cancellation of 87,500 shares, provided for in the Stock Option Plan.

TODOs Extraordinary General Meeting held on October 29, 2008 approved the stock option plan, with the issue of 800 new registered common shares, with no par value.

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|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

27RelatedPartyTransactions

27.1BalancesandTransactions

|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|------------------------------- |  | -------- |  | --------- |  | ------- |  | ------------ |  | ------------ |  | ------------- |  | ----------- |  | -------------- |  | -------------- |  | ------------ |  | ---------- |  | --------- |  | ---------
|                                |  | 2008    
|                                |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  | Paggo          |  | Paggo          |  |              |  |            |  |           |  |          
|                                |  | Oi       |  | Oi        |  | Brasil  |  | Brasil       |  | Oi           |  | Telemar       |  | Amazônia    |  | Administradora |  | Administradora |  | Paggo        |  |            |  |           |  |          
|                                |  | Fixa (1) |  | Móvel (1) |  | CAP (1) |  | Veículos (1) |  | Internet (1) |  | Participações |  | Celular (1) |  | de Cartões (1) |  | de Crédito (1) |  | Acquirer (1) |  | Way TV (1) |  | BNDES (2) |  | Total    
|                                |  |          |  |           |  |         |  |              |  |              |  | (1)           |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Assets                          |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Accounts receivable             |  | 21,965   |  | 1,421     |  | 470     |  | 768          |  | 200          |  |               |  |             |  | 377            |  |                |  |              |  | 682        |  |           |  | 25,883   
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  | 21,965   |  | 1,421     |  | 470     |  | 768          |  | 200          |  |               |  |             |  | 377            |  |                |  |              |  | 682        |  |           |  | 25,883   
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Liabilities                     |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Suppliers                       |  | 1,625    |  | 35        |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  | 1,660    
|Loans and financing (Note 21)   |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  | 204,494   |  | 204,494  
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  | 1,625    |  | 35        |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  | 204,494   |  | 206,154  
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Revenues                        |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Revenues from services rendered |  | 724,012  |  | 237,179   |  | 4,861   |  | 7,727        |  | 5,424        |  | (17)          |  | 4,913       |  | 12,210         |  | 1,508          |  | 2,385        |  | 5,929      |  |           |  | 1,006,130
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Costs and expenses              |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|Cost of services                |  | (26,930) |  | (6,872)   |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  | (33,802) 
|Financial expenses (Note 9)     |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  | (14,305)  |  | (14,305) 
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  | (26,930) |  | (6,872)   |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  | (14,305)  |  | (48,106) 
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |             |  |                |  |                |  |              |  |            |  |           |  |          

(1) Companies that belong to the Telemar group of companies, indirect controlling shareholders of the Company
(2) BNDES is a major shareholder to Telemar

F-48

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|------------------------------- |  | -------- |  | --------- |  | ------- |  | ------------ |  | ------------ |  | ------------- |  | -------------- |  | ------------ |  | --------- |  | --------
|                                |  | 2007    
|                                |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  | Paggo          |  |              |  |           |  |         
|                                |  | Oi       |  | Oi        |  | Brasil  |  | Brasil       |  | Oi           |  | Telemar       |  | Administradora |  | Paggo        |  |           |  |         
|                                |  | Fixa (1) |  | Móvel (1) |  | CAP (1) |  | Veículos (1) |  | Internet (1) |  | Participações |  | de Cartões (1) |  | Acquirer (1) |  | BNDES (2) |  | Total   
|                                |  |          |  |           |  |         |  |              |  |              |  | (1)           |  |                |  |              |  |           |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Assets                          |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Accounts receivable             |  | 12,279   |  | 4,626     |  | 285     |  | 595          |  |              |  | 17            |  | 62             |  |              |  |           |  | 17,864  
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                                |  | 12,279   |  | 4,626     |  | 285     |  | 595          |  |              |  | 17            |  | 62             |  |              |  |           |  | 17,864  
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Liabilities                     |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Suppliers                       |  | 2,699    |  | 236       |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  | 2,935   
|Dividends                       |  |          |  |           |  |         |  |              |  |              |  | 3,508         |  |                |  |              |  |           |  | 3,508   
|Loans and financing (Note 21)   |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  | 100,360   |  | 100,360 
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                                |  | 2,699    |  | 236       |  |         |  |              |  |              |  | 3,508         |  |                |  |              |  | 100,360   |  | 106,803 
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Revenues                        |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Revenues from services rendered |  | 573,003  |  | 161,055   |  | 3,584   |  | 6,644        |  | 10,092       |  | 25            |  | 418            |  | 84           |  |           |  | 754,905 
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Costs and expenses              |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|Cost of services                |  | (24,225) |  | (6,700)   |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  | (30,925)
|Financial expenses (Note 9)     |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  | (1,873)   |  | (1,873) 
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                               
|                                |  | (24,225) |  | (6,700)   |  |         |  |              |  |              |  |               |  |                |  |              |  | (1,873)   |  | (32,798)
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         
|                                |  |          |  |           |  |         |  |              |  |              |  |               |  |                |  |              |  |           |  |         

(1) Companies that belong to the Telemar group of companies, indirect controlling shareholders of the Company 
(2) BNDES is a major shareholder to Telemar

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

27.2 Compensation of key management personnel

Key Management personnel comprises board members and executive statutory officers. Compensation paid or payable for services provided by employees is shown below:

|                            |  |       |  |      
|--------------------------- |  | ----- |  | -----
|                            |  | 2008  |  | 2007 
|                            |  |       |  |      
|                           
|Payroll and related charges |  | 2,735 |  | 2,164
|Fees                        |  | 1,150 |  | 1,023
|Profit sharing              |  | 2,360 |  | 1,725
|Stock options               |  | 129   |  | 204  
|                            |  |       |  |      
|                            |  | 6,374 |  | 5,116
|                            |  |       |  |      

28 Insurance

The Company and its subsidiary have a risk management program aiming at minimizing risks, obtaining in the market coverages compatible with its size and operations. Coverage was contracted by amounts deemed as sufficient by Management to cover any
eventual losses and casualties, taking into account the nature of its operations, the risks involved in its operations and the guidance of its insurance brokers, ensuring the integrity of assets and the continuity of its operations.

On December 31, 2008, the Group had the following main insurance policies contracted with third-parties:

|                                      |  |         |  |                 
|------------------------------------- |  | ------- |  | ----------------
|                                      |  | Secured |  |                 
|Branches                              |  | amounts |  | Maturity        
|                                      |  |         |  |                 
|                                      |  |         |  |                 
|Management civil liability            |  | 233,620 |  | January 13, 2009
|Fire of property, plant and equipment |  | 61,400  |  | May 16, 2009    
|Loss of profits                       |  | 42,654  |  | May 16, 2009    
|General civil liability               |  | 10,000  |  | May 16, 2009    

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

29 Events After the Balance Sheet Date

Start-up of Todos operations

Todo was created from Contaxs own IT area, which we believe will facilitate its development as a significant player in this business. Over time Todo intends to expand its operations mainly to offer services to companies that have their own
contact centers, providing technological solutions for this market, which shows a growing demand for specialist service providers.

Todos first customer, when it begun its operations in April 2009, was Contax which outsourced its entire IT area to Todo.

30 Transition to IFRS

30.1 IFRS Transition basis, application of IFRS No. 1 - First-time Adoption

The Groups consolidated financial statements for the year ended December 31, 2008 are the first ones to be presented in accordance with IFRS.

The Group prepared its opening balance sheet as of January 1, 2007, the transition date for IFRS purposes. In the preparation of the consolidated financial statements on the transition date, according to IFRS No. 1, the Group applied the mandatory
exceptions and did not use any of the optional exemptions of full retrospective application of the IFRS.

30.2 Standards and interpretations effective in the current period

For the years ended December 31, 2008 and 2007, the Group has adopted the following:

(a) Standards and Interpretations in effect during the period:

- IFRIC 11 - IFRS 2: Group and Treasury Share Transactions.
- IFRIC 12 - Service Concession Arrangements.
- IFRIC 13 - Customer Loyalty Programs
- IFRIC 14 - IAS 19 -The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.

The application of these revised or new pronouncements have had no impact on the Groups consolidated financial position and results of operations.

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

(b) Standards and Interpretations early adopted by the Company:

- IFRS 8, Operating segments (effective 1 January 2009). IFRS 8 replaces IAS 14, Segment reporting, and aligns segment reporting with the requirements of the US standard SFAS 131, Disclosures about segments of an
enterprise and related information. The new standard requires a management approach, under which segment information is presented on the same basis as that used for internal reporting purposes. The Group has early adopted IFRS 8
from January 1, 2007. The application of IFRS 8had no impact on the Groups financial statements.

30.3. Revised or ammended standards and interpretations not effective and not early adopted

At the date of authorization of these financial statements, other than the Standards and Interpretations adopted by the Group the following Interpretations were in issue but not yet effective:

(a) Standards and Interpretations that may be relevant to the Groups operations

- IFRS 3 (revised), Business combination - (effective from July 1, 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to
be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in
the acquiree either at fair vale or at the non-controlling interests proportionate share of the acquirees net assets. All acquisition-related costs should be expensed. The Group will apply IFRS 3 (Revised) prospectively to all business
combinations from January 1, 2010.
- IAS 27 (revised), Consolidated and separate financial statements (effective from July 1, 2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in
control and these transactions will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is recognized
in profit or loss. The Group will apply IAS 27 (Revised) prospectively to transactions with non-controlling interests from January 1, 2010.

F-52

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

- IFRS 2 (Amendment) - Share-based payments (effective from January 1, 2009). The amended standard deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other
features of a share-based payment are not vesting conditions. As such these features would need to be included in the grant date fair value for transactions with employees and others providing similar services, that is, these features would not
impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The Group will apply IFRS 2 (Amendment) from
January 1, 2009, but is not expected to have a material impact on the Groups financial statements.
- IAS 1 (revised) - Presentation of financial statements (effective from January 1, 2009). The revised standard will prohibit the presentation of items of income and expenses (that is, non-owner changes in equity) in the
statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity. All non-owner changes in equity will be required to be shown in a performance statement, but entities can
choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be
required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The Group will apply IAS 1 (Revised) from
January 1, 2009. It is likely that both the income statement and statement of comprehensive income will be presented as performance statements
- IAS 23 (Amendment), Borrowing costs (effective from January 1, 2009). The amendment requires an entity to capitalize borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that
takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The Group will apply IAS 23 (Amendment) from January 1, 2009.
- IAS 32 (Amendment), Financial instruments: Presentation, and IAS 1 (Amendment), Presentation of financial statements - Puttable financial instruments and obligations arising on liquidation (effective from January
1, 2009). The amended standards require entities to classify puttable financial instruments and instruments, or components of instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the
entity only on liquidation as equity, provided the financial instruments have particular features and meet specific conditions.
The Group will apply the IAS 32 and IAS 1(Amendment) from January 1, 2009. It is not expected to have any impact on the Groups financial statements.

F-53

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

- IFRS 5 (Amendment), Non-current assets held-for-sale and discontinued operations (and consequential amendment to IFRS 1, First-time adoption) (effective from July 1, 2009). The amendment is part of the IASBs annual
    improvements project published in May 2008. The amendment clarifies that all of a subsidiarys assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IFRS 1 states that these amendments are applied prospectively from the date of transition to IFRSs. The Group
    will apply the IFRS 5 (Amendment) prospectively to all partial disposals of subsidiaries from January 1, 2010.
- IAS 36 (Amendment), Impairment of assets (effective from January 1, 2009). The amendment is part of the IASBs annual improvements project published in May 2008. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The Group will apply the IAS 36 (Amendment) and provide the required disclosure
where applicable for impairment tests from January 1, 2009.
- IAS 38 (Amendment), Intangible assets (effective from January 1, 2009). The amendment is part of the IASBs annual improvements project published in May 2008. A prepayment may only be recognized in the event that payment has been made in
advance of obtaining right of access to goods or receipt of services. The Group will apply the IAS 38 (Amendment) from January 1, 2009. It is not 
expected to
have an
impact on the Groups income statement.
- IAS 39 (Amendment), Financial instruments: Recognition and measurement (effective from January 1, 2009). The amendment is part of the IASBs annual improvements project published in May 2008.

| | . .This amendment clarifies that it is possible for there to be movements into and out
      of the fair value through profit or loss category where a derivative commences or ceases to qualify as a hedging instrument in cash flow or net investment hedge.                                                                                                                                                                      
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | . .The definition of financial asset or financial liability at fair value through profit or
      loss as it relates to items that are held for trading is also amended. This clarifies that a financial asset or liability that is part of a portfolio of financial instruments managed together with evidence of an actual recent pattern of short-term
      profittaking is included in such a portfolio on initial recognition.

F-54

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

| | . .The current guidance on designating and documenting hedges states that a hedging instrument needs to involve a party external to the reporting entity and cites a segment as an example of a reporting entity. This means that in order for
        hedge accounting to be applied at segment level, the requirements for hedge accounting are currently required to be met by the applicable segment. The amendment removes the example of a segment so that the guidance is consistent with IFRS 8,
    Operating segments, which requires disclosure for segments to be based on information reported to the chief operating decision-maker. The Group has only one segment.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | . .When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) are used.
        The Group will apply the IAS 39 (Amendment) from January 1, 2009. It is not expected to have an impact on the Groups financial statements.                                                                                                                                                                                                                                                                                  

- IAS 1 (Amendment), Presentation of financial statements (effective from January 1, 2009). The amendment is part of the IASBs annual improvements project published in May 2008. The amendment clarifies that some rather than all
      financial assets and liabilities classified as held for trading in accordance with IAS 39, Financial instruments: Recognition and measurement are examples of current assets and liabilities respectively. The Group will apply the IAS 39
      (Amendment) from January 1, 2009. It is not expected to have an impact on the Groups financial statements.

(b) Standards and Interpretations that are expected not to be relevant to the Groups operations

- IFRS 1 (revised) First-time adoption of IFRS and IAS 27 (revised), Consolidated and company financial statements statements (effective from January 1, 2009). The amended standard allows first-time adopters to use a deemed cost of either fair
    value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements. The amendment also removes the definition of
    the cost method from IAS 27 and replaces it with a requirement to present dividends as income in the separate financial statements of the investor. The Group will apply IFRS 1 (Amendment) from January 1, 2009, as all subsidiaries of the Group will
    transition to IFRS. The amendment will not have any impact on the Groups financial statements.

F-55

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

- IAS 28 (Amendment), Investments in associates (and consequential amendments to IAS 32, Financial Instruments: Presentation, and IFRS 7, Financial instruments: Disclosures) (effective from January 1, 2009). The
    amendment is part of the IASBs annual improvements project published in May 2008. An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included
    within the investment, for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. The Group will apply the IAS 28 (Amendment) to impairment tests related to investments in
  associates and any related impairment losses from January 1, 2009.
- IAS 19 (Amendment), Employee benefits (effective from January 1, 2009). The amendment is part of the IASBs annual improvements project published in May 2008.

|                                                                                                                                            | . .The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service
      gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation.
|------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                            | . .The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the
      defined benefit obligation.                                                                                                           
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                            | . .The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled within or after 12 months of employee service being rendered.                                                                                                                                                                                            
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                            | . .IAS 37, Provisions, contingent liabilities and contingent assets, requires contingent liabilities to be disclosed, not recognized. IAS 19 has been amended to be consistent.                                                                                                                                                                                                       
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                        
|The Group will apply the IAS 19 (Amendment) from January 1, 2009. It is not expected to have an impact on the Groups financial statements.

- There are a number of minor amendments to IFRS 7, Financial instruments: Disclosures, IAS 8, Accounting policies, changes in accounting estimates and errors, IAS 10, Events after the reporting period, IAS 18,
    Revenue and IAS 34, Interim financial reporting, which are part of the IASBs annual improvements project published in May 2008 (not addressed above). These amendments are unlikely to have an impact on the Groups
    accounts and have therefore not been analyzed in detail.

F-56

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

- IFRIC 16, Heges of a net investment in a foreign operation (effective from October 1, 2008). IFRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to
    differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the Group. The requirements of IAS 21, The effects of changes in foreign exchange rates, do apply to the hedged item. The Group
    will apply IFRIC 16 from January 1, 2009. It is not expected to have a material impact on the Groups financial statements.
- IFRIC 17, Distribution of Non-cash Assets to Owners is applicable from Junuary 1, 2009, and IFRIC 18, Transfers of Assets from Customers is applicable from July 1, 2009. In addition, amendments to IFRS 7, Financial
    instruments Disclosures made in March 2009 are applicable from January 1, 2009. The Group is still assessing whether those could impact its financial statements.

30.4 Reconciliation between IFRS and BR GAAP

There are no significant differences between IFRS and BR GAAP that affect the Groups consolidated financial statements.

The main reclassifications made in the financial statements for them to be in compliance with IFRS are as follows:

|(i)   | Deferred income and social contribution tax credits were reclassified as noncurrent assets.                                                                                                        
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(ii)  | Nonoperating income (expenses) was reclassified as operating income (expenses).                                                                                                                    
|(iii) | Judicial deposits were reclassified as noncurrent assets.                                                                                                                                          
|(iv)  | Differences in the classification of amounts payable to shareholders in the amount of R$ 16.850 as of December 31, 2008 (2007: 0) from non-current liabilities to current liabilities (Note 17(i)).

30.4.1 Shareholders equity reconciliation - BR GAAP x IFRS as of January 1, 2007

|                                                                 |  |        
|---------------------------------------------------------------- |  | -------
|BR GAAP shareholders equity                                     |  | 364,081
|IFRS adjustments                                                 |  |        
|Difference between adjustments to Law No. 11,638/07 and IFRS (i) |  | 7,441  
|                                                                 |  |        
|                                                                
|IFRS shareholders equity                                        |  | 371,522
|                                                                 |  |        

F-57

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

30.4.2 Shareholders equity reconciliation - BR GAAP x IFRS as of December 31, 2007

|                                                                 |  |        
|---------------------------------------------------------------- |  | -------
|BR GAAP shareholders equity                                     |  | 279,196
|IFRS adjustments                                                 |  |        
|Difference between adjustments to Law No. 11,638/07 and IFRS (i) |  | 17,809 
|                                                                 |  |        
|                                                                
|IFRS shareholders equity                                        |  | 297,005
|                                                                 |  |        
|                                                                 |  |        

30.4.3 Net income reconciliation - BR GAAP x IFRS as of December 31, 2007

|                                                                 |  |       
|---------------------------------------------------------------- |  | ------
|BR GAAP net income                                               |  | 47,374
|IFRS adjustments                                                 |  |       
|Difference between adjustments to Law No. 11,638/07 and IFRS (i) |  | 10,368
|                                                                 |  |       
|                                                                
|IFRS net income                                                  |  | 57,742
|                                                                 |  |       
|                                                                 |  |       

30.4.4 Shareholders equity reconciliation - BR GAAP x IFRS as of December 31, 2008

|                                                                 |  |        
|---------------------------------------------------------------- |  | -------
|BR GAAP shareholders equity                                     |  | 284,777
|IFRS adjustments                                                 |  |        
|Reversal of proposed dividends (ii)                              |  | 28,053 
|Difference between adjustments to Law No. 11,638/07 and IFRS (i) |  | 618    
|Deferred income and social contribution taxes                    |  | 7,608  
|                                                                 |  |        
|                                                                
|IFRS shareholders equity                                        |  | 321,056
|                                                                 |  |        
|                                                                 |  |        

30.4.5 Net income reconciliation - BR GAAP x IFRS as of December 31, 2008

|                                                                 |  |         
|---------------------------------------------------------------- |  | --------
|BR GAAP net income                                               |  | 92,412  
|IFRS adjustments                                                 |  |         
|Difference between adjustments to Law No. 11,638/07 and IFRS (i) |  | (17,191)
|Deferred income and social contribution taxes                    |  | 7,608   
|                                                                 |  |         
|                                                                
|IFRS shareholders equity (excluding minority interest)          |  | 82,829  
|                                                                 |  |         
|                                                                 |  |         

|(i)  | Under BR GAAP, upon application of Law 11,638/07, the Company applied the change in estimate for the usefull lives of its property and equipment qcquired under finance leases retrospectively to the acquisition date whereas under IFRS changes in
estimates are applied prospectively and, therefore, such change was implemented as from the transition date to IFRS, January 1, 2007 for IFRS purposes.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(ii) | Under BR GAAP, dividends payable are recognized when proposed by management. According to IFRS, dividends payable are only recognized when approved by the shareholders. As a result, under the consolidated IFRS financial statements, dividends payable
accounted for under BR GAAP, exceeding the minimum annual dividend payment amount, totaling R$ 28,053 thousand, was reversed.                     

F-58

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

30.5 Opening IFRS balance sheet as as January 1, 2007

|                                            |  |        
|------------------------------------------- |  | -------
|Assets                                      |  |        
|                                           
|Non-current assets                          |  |        
|Property and equipment                      |  | 265,593
|Intangible assets                           |  | 44,134 
|Judicial deposits                           |  | 7,938  
|Recoverable taxes                           |  |        
|Deferred income and social contribution tax |  | 30,551 
|Other assets                                |  | 10,062 
|                                            |  |        
|                                           
|Total non-current assets                    |  | 358,278
|                                           
|Current assets                              |  |        
|Trade and other receivables                 |  | 53,868 
|Recoverable taxes                           |  | 33,887 
|Other receivables                           |  | 4,415  
|Cash and cash equivalents                   |  | 231,299
|                                            |  |        
|                                           
|Total current assets                        |  | 323,469
|                                            |  |        
|                                           
|Total assets                                |  | 681,747
|                                            |  |        
|                                           
|Capital and reserves                        |  |        
|Issued capital                              |  | 223,873
|Reserves                                    |  | 144,682
|Retained earnings (losses)                  |  | 2,967  
|                                            |  |        
|                                           
|Total equity                                |  | 371,522
|                                            |  |        
|                                           
|Non-current liabilities                     |  |        
|Tax payable                                 |  | 2,745  
|Obligations under finance leases            |  | 44,122 
|Provision for contingencies                 |  | 28,899 
|                                            |  |        
|                                           
|Total non-current liabilities               |  | 75,766 
|                                           
|Current liabilities                         |  |        
|Trade and other payables                    |  | 47,761 
|Payroll and related charges                 |  | 112,382
|Obligations under finance leases            |  | 21,092 
|Tax payable                                 |  | 39,559 
|Dividends and interest on capital payable   |  | 12,390 
|Other payables                              |  | 1,275  
|                                            |  |        
|                                           
|Total current liabilities                   |  | 234,459
|                                            |  |        
|                                           
|Total liabilities                           |  | 310,225
|                                            |  |        
|                                           
|Total equity and liabilities                |  | 681,747
|                                            |  |        
|                                            |  |        

F-59

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Table of Contents

|                                      
|--------------------------------------
|Contax Participações S.A.             
|                                      
|Notes to the Consolidated Financial   
|Statements as of and for the          
|Years Ended December 31, 2008 and 2007
|In thousand of reais                  
|                                      

30.6 Reconciliation between US GAAP and IFRS

Upon preparing its first IFRS financial statements the Company identified differences between previously reported shareholders equity and net income under US GAAP related to share-based payments, as follows:

30.6.1 Shareholders equity reconciliation - US GAAP x IFRS as of January 1, 2007

|                             |  |        
|---------------------------- |  | -------
|US GAAP shareholders equity |  | 371,522
|IFRS adjustments             |  |        
|                            
|                             |  |        
|                            
|IFRS shareholders equity    |  | 371,522
|                             |  |        
|                             |  |        

30.6.2 Shareholders equity reconciliation - US GAAP x IFRS as of December 31, 2007

|                             |  |        
|---------------------------- |  | -------
|US GAAP shareholders equity |  | 294,881
|IFRS adjustments             |  |        
|Share-based payments (i)     |  | 2,124  
|                             |  |        
|IFRS shareholders equity    |  | 297,005
|                             |  |        
|                             |  |        

30.6.3 Net income reconciliation - US GAAP x IFRS as of December 31, 2007

|                         |  |       
|------------------------ |  | ------
|US GAAP net income       |  | 55,451
|IFRS adjustments         |  |       
|Share-based payments (i) |  | 2,291 
|                         |  |       
|                        
|IFRS net income          |  | 57,742
|                         |  |       
|                         |  |       

|    |  |                                                                                                                                                                                                                                                                                                                                             
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) |  | Under US GAAP the fair value of the stock-option plans of the Company was calculated at grant date and subsequently adjusted to changes in fair value from grant date at each to reporting date as a liability award, while under IFRS the fair value of the options is not revised at each reporting date as the awards are equity settled.

* * *

F-60

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