SABESP Announces Dividend Payment in the Form of Interest on Own Capital

SAO PAULO, Dec. 16, 2010 /PRNewswire-FirstCall/ -- Companhia de Saneamento Basico do Estado de Sao Paulo - SABESP (BM&FBovespa: SBSP3; NYSE: SBS), informs that on December 14th, 2010, the Board of Executive Officers proposed and the Board of Directors resolved on, pursuant to item XI of article 14, and paragraph 1 of article 29 of the Company's Bylaws, the payment of dividends in the form of interest on own capital related to the period from January to December 2010, to the Shareholders registered as such on December 27th, 2010.

The dividends as interest on own capital, totaling R$ 455,992,217.27 corresponding to R$ 2.0014 per common share will be paid no later than 60 days after the 2011 Annual Shareholders' Meeting.

Income tax shall be withheld from payment of dividends as interest on own capital, pursuant to the laws in force, except for the immune or exempt shareholders proving such condition until January 31st, 2011, and corresponding documents shall be sent to the Company's headquarters.

Referring to the entities of Supplementary Private Pension, Insurance Companies and Fapi, such proof shall occur by means of Declaration, a model of which is available at the Investors Area, in the item Information to Shareholders on the website http://www.sabesp.com.br/.

The aforementioned interest on own capital will be computed in the calculation of the mandatory minimum dividends, as provided for in the caput of Article 29 of the Company's Bylaws, pursuant to article 9, paragraph 7, of Law 9,249/95.

The shareholders will have their credits available on the initial date of payment of such right, as set forth in above item I, in accordance with their checking account and domicile provided to Banco Itau Unibanco S.A.

The shares now are traded ex-interest from December 28th, 2010.

Further information may be obtained at any of Banco Itau Unibanco S.A.'s branches, which are specialized in assisting shareholders.

The complete version is available at the Company's website: http://www.sabesp.com.br/

For further information, please contact: Mario Arruda Sampaio Phone: [phone] E-mail: [e-mail] Angela Beatriz Airoldi Phone: [phone] E-mail: [e-mail]

SABESP

CONTACT: Mario Arruda Sampaio, +011-55-11-3388-8664,
[e-mail], or Angela Beatriz Airoldi, +011-55-11-3388-8793,
[e-mail]

Web Site: http://www.sabesp.com.br/