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CIA. DE SANEAMENTO BÁSICO DO ESTADO DE SÃO PAULO - SABESP
Rui de Britto Álvares Affonso
Chief Financial Officer and Investor Relations Officer
Mario Azevedo de Arruda Sampaio
Head of Capital Markets and Investor Relations

SABESP announces 3Q08 results
São Paulo, November 19, 2008 - Companhia de Saneamento Básico do Estado de São Paulo – SABESP (Bovespa: SBSP3; NYSE: SBS), one of the largest water and sewage services providers in the world based on the number of customers, announces today its results for the third quarter of 2008 (3Q08). The Company’s operating and financial information, except when indicated otherwise, is presented in Brazilian Reais, in accordance with the Brazilian Corporate Law. All comparisons in this release, unless otherwise stated, refer to the same period of 2007.		SBSP3: R$ 25.88 / share  SBS US$ 22.84 (ADR=2 shares) Total shares: 227,836,623  Market value: R$ 5.9 billion  Closing price: 11/18/2008

1. Financial Highlights

In 3Q08, net operating revenue totaled R$ 1.6 billion, a 6.8% increase compared to 3Q07. Costs and expenses, stood at R$ 1.1 billion, 15.4% higher than in 3Q07. EBITDA fell by 4.8%, from R$ 732.8 million in 3Q07 to R$ 697.4 million in 3Q08.

Earnings before financial expenses (EBIT) dropped 6.9%, from R$ 577.0 million in 3Q07 to R$ 537.1 million in this quarter.

2. Gross operating revenue

In 3Q08, gross operating revenue grew R$ 105.2 million, or 6.5%, from R$ 1.6 billion in 3Q07 to R$ 1.7 billion in 3Q08. The main reasons for this increase were:
• The 3.89% increase in 3Q08 from the 4.1% tariff adjustment as of September 2007;
• The 0.2% increase from the 5.10% tariff adjustment as of September 2008; and
• The 2.5% growth in billed water and sewage volume, 2.6% of which corresponded to retail, and 2.2% to wholesale.

3. Billed volume

The following tables show billed water and sewage volume per customer category and region in 3Q07 e 3Q08, and first nine months of 2007 and 2008.

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4. Costs, administrative and selling expenses

In 3Q08, costs, administrative and selling expenses grew R$ 141.1 million, or 15.4% .

4.1. Payroll and benefits

In 3Q08, payroll and benefits grew R$ 16.8 million or 5.2%, from R$ 322.2 million to R$ 339.0 million, due to:

4.2. Supplies

In 3Q08, supplies grew R$ 6.2 million or 19.9%, when compared to the same period of the previous year, from R$ 31.2 million to R$ 37.4 million. The main reasons for this increase were:

4.3. Treatment supplies

In 3Q08, expenses with chemical products grew R$ 6.2 million or 23.9%, from R$ 25.9 million in 3Q07 to R$ 32.1 million in 3Q08. This increase refers to a higher use of chemical products due to the proliferation of algae in the Guarapiranga Reservoir and the readjustment of some products’ price, such as ferric sulfate (+22%), aluminum sulfate (+39.4%) and lime (+10.5%) . The use of substitute chemical products mitigated the increase in this expense.

4.4. Services

In the 3Q08, this item grew R$ 64.5 million or 59.6%, from R$ 108.3 million to R$ 172.8 million. The main factors leading to this increase were:

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• Expenses with advertising campaigns focused on social environmental initiatives, such as Onda Limpa, Pura, Planeta Sustentável, among others, in the amount of R$ 6.3 million, which will be recurring for the coming quarters;
• Expenses with risk contracts for the recovery of credits in the amount of R$ 9.6 million due to the extension of collection contracts by result of the contracted company in the several areas of the São Paulo Metropolitan Region. In the same period last year, we had only 3 contract lots, whereas in 2008 we have 10 lots (2 per Distribution Business Unit in the Metropolitan Region), intensifying collection operations;
• Preventive and corrective maintenance in the water and sewage treatment systems in the amount of R$ 7.2 million;
• Higher expenses with paving and pavement replacing services in the amount of R$ 4.3 million due to: i) account reconciliation with municipal governments; and ii) improvement in the quality of the materials used in asphalt replacement, a recurring expense;
• Telephony services due to the capacity expansion of the Client Service Center and end of the contract of special tariffs for mobile phones;
• Expenses with fire prevention, detection and fighting, in the amount of R$ 1.4 million in the IT area;
• Hydrometer reading and bill delivery in the amount of R$ 1.6 million, due to the expansion of the TACE (external technical sales service) agreement scope, including building examination, increase in water connection and tariff adjustment;
• Software maintenance in the amount of R$ 1.7 million with the update of antispam software and modernization of the commercial system;
• Increase of R$ 1.7 million in surveillance services due to the expansion of the area with electronic monitoring;
• Increase of R$ 1.6 million in expenses with the PURA (Program for the Rational Use of Water) as a result of the partnership established between Sabesp and the São Paulo municipal government to improve hydraulic facilities in municipal agencies;
• Car rental expenses totaling R$ 1.2 million as of 2008;
• Professional services in the amount of R$ 6.2 million due to the hiring of consultancy and advisory firms, as well as other specialized services focused on several areas, such as: implementation of Added-Value Management (GVA), valuation of the EMAE (Metropolitan Company of Water and Energy), hiring of the FIPECAFI (Actuarial and Economic Research Institute Foundation) to update the amounts related to the complementation of pensions, and others.

4.5. Electric power

Electric power dropped R$ 4.2 million or 3.6%, from R$ 118.0 million to R$ 113.8 million. This result was due to:

• The 9.7% drop in the tariff from the captive market, which is responsible for 77.0% of total expenses with electric power;
• Optimization of contracts; and
• The 3.2% decrease in electric power consumption in the captive market.

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4.6. General expenses

In 3Q08, general expenses increased R$ 54.4 million or 86.9%, from R$ 62.6 million to R$ 117.0 million in provision due to:

4.7. Depreciation and amortization

In 3Q08, depreciation and amortization grew R$ 4.5 million or 2.9%, from R$ 155.8 million to R$ 160.3 million. This change was due to greater transfer of works to permanent assets in operation in 3Q08, versus the same period of the previous year.

4.8. Credit write-offs

In 3Q08 credit write-offs dropped R$ 21.3 million or 25.9%, from R$ 82.1 million to R$ 60.8 million, as described below:

This decrease was partially offset by the complementation of provisions, including:

4.9. Tax expenses

In 3Q08, there was a change of R$ 14.0 million or 160.9%, as a result of:

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5. Financial revenues and expenses

5.1. Financial expenses

In 3Q08 financial expenses grew R$ 50.0 million, or 32.7%, as follows:

This increase was partially offset by the settlement of the Eurobonds 2008 in June 2008, with a R$ 4.6 million variation in 3Q08.

Other financial expenses were due to obligations assumed with the municipalities related to the program contracts, in the amount of R$ 2.0 million.

5.2. Financial revenues

Financial revenues grew R$ 17.2 million, mainly due to interest over past due bills.

This increase is a result of the collection risk contracts in the São Paulo Metropolitan Region.

6. Foreign exchange and indexation

6.1. Variation on liabilities

The net effect of the variation on liabilities was R$ 250.6 million higher in 3Q08 versus 3Q07, due to the:

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• R$ 1.9 million decrease in monetary variation over debentures, resulting from a lower variation of the IGPM (General Market Price Index), of 1.55% in 3Q08, versus 2.57% in the previous period, partially offset by a higher variation of the TR, of 0.55% in 3Q08 versus 0.33% in the previous period, resulting in a higher monetary variation on other loans; and
• Other monetary variations from lawsuit indemnities with a R$ 4.8 million increase.

6.2. Variation on assets

The variation on assets grew R$ 353.9 million, mainly due to:

7. Non-operating result

Recorded a negative result of R$ 120.6 million, from R$ 4.8 million to R$ 125.4 million in the 3Q08, as a result of the following factors:

7.1. Non-operating revenue

Non-operating revenue increased R$ 16.8 million in 3Q08, mainly due to sale of 37 real estate properties in the Pinheiros neighborhood, in São Paulo city.

7.1. Non-operating expenses

Non-operating expenses climbed R$ 137.1 million, as a result, mainly, of the fixed asset write-off booked due to the settlement of the Third Amendment to the GESP Agreement that establishes the full incorporation of the assets verified at the Alto Tietê System’s equity appraisal report.

8. Operating indicators

The following table shows the continuous expansion of the services rendered by the Company:

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9. Loans and financing

In early November, Sabesp concluded the 9^th issue of simple debentures totaling R$ 220 million. Two series were issued, the 1^st of which in the amount of R$ 100 million, remunerated by the CDI + 2.75% for a five-year term, amortizable as of the third year, and the 2^nd, in the amount of R$120 million, remunerated by the IPCA + 12.87% for a seven-year term, amortizable as of the fifth year.

The table below shows the debt amortization schedule:

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10. Conference Calls

For more information, please contact:

Mario Arruda Sampaio
Phone: (55 11) 3388-8664
E-mail: maasampaio@sabesp.com.br

Angela Beatriz Airoldi
Phone: (55 11) 3388-8793
E-mail: abairoldi@sabesp.com.br

Statements contained in this press release may contain information that is forward-looking and reflects management's current view and estimates of future economic circumstances, industry conditions, SABESP performance, and financial results. Any statements, expectations, capabilities, plans and assumptions contained in this press release that do not describe historical facts, such as statements regarding the declaration or payment of dividends, the direction of future operations, the implementation of principal operating and financing strategies and capital expenditure plans, the factors or trends affecting financial condition, liquidity or results of operations are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. There is no guarantee that these results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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Income Statement

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Balance Sheet

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Cash Flow

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.