Comunicado ao Mercado - Block VIVENDI Julho 2015 (ENG) Final

TELEFÔNICA BRASIL S.A.

Publicly-Held Company

CNPJ MF 02.558.157/0001-62 - NIRE 35.3.001.5881-4

NOTICE TO THE MARKET

Telefônica Brasil S.A. ("Company") hereby announces that on this date its controlling company, Telefónica S.A., announced in the markets where its shares are traded a material fact informing that it has signed an agreement with Vivendi S.A., the content of which is reproduced below in the form of free translation.

São Paulo, July 29, 2015.

Alberto Manuel Horcajo Aguirre

Investor Relations Officer Telefônica Brasil S.A. - Investor Relations Tel: +55 11 3430-3687

Email:ir.br@telefonica.comwww.telefonica.com.br/ir

TELEFÔNICA BRASIL S.A.

Publicly-Held Company

CNPJ MF 02.558.157/0001-62 - NIRE 35.3.001.5881-4

RAMIRO SÁNCHEZ DE LERÍN GARCÍA-OVIES

General Secretary and Secretary to the Board of Directors TELEFÓNICA, S.A.

TELEFÓNICA S.A., ("Telefónica") pursuant to article 82 of the Spanish Securities
Market Act (Ley del Mercado de Valores), hereby reports the following

SIGNIFICANT EVENT

Telefónica has entered today into an agreement with Vivendi, S.A. through which Telefónica has committed to deliver 46.0 million of its treasury shares, representing 0.95% of its share capital, in exchange for 58.4 million preferred shares of Telefonica Brasil, S.A, (received by Vivendi, S.A. in the context of the acquisition of GVT Participaçoes, S.A.) representing approximately 3.5% of the share capital of Telefonica Brasil, S.A.
Under this agreement, Vivendi, S.A. has committed, among other obligations: (i) to refrain from selling the Telefónica shares during specified periods (lock up), and (ii) to comply with certain restrictions that, in case of sale, and once the lock up periods have lapsed, would ensure an orderly sale of such shares.
The execution of this agreement is subject to approval by the Brazilian competition authority (CADE).
Madrid, July, 29, 2015.

SPANISH NATIONAL SECURITIES MARKET COMMISSION -MADRID-
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