Telefonica Brasil S.A.

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to the Telefonica Brasil First Quarter 2021 Readiness Conference Call. Today with us, representing the management of Telefonica Brasil, we have Mr. Christian Gebara, CEO of the company, Mr. David Melcon, CFO and Investor Relations Officer, and Mr. Luis Plaster, IR Director. We also have a simultaneous webcast with slide presentation on the internet that can be accessed on the site www.telefonica.com.br. There will be a replay facility for this call on the website. After the company's remarks are over, there will be a question and answer session. At that time, further instructions will be given. Should any participant need assistance during the conference, please press Start Zero for an operator. Before proceeding, let me mention that any forward-looking statements are being made under the safe harbor of the Security Litigation Reform Act of 1996. Forward-looking statements are based on the company's management beliefs and assumptions and on information currently available. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the company's future results and could cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr. Luiz Plaster, Investor Relations Director of Telefônica Brasil, Mr. Plaster, you may begin your conference.

Thank you. Good morning and welcome to our first quarter of 2021 earnings conference call. The call will be divided in two parts. First, our CEO, Christian Gebara, will go over main financial and operating figures, initiatives in the digital space, and ESG highlights. Then, our CFO, David Melcon, will give you more color on our cost and CAPEX structure. Digitalization Initiatives, Free Cash Flow, and Shareholder Remuneration. Now I hand it over to Christian.

Thank you, Blaster. Good morning, everyone, and thank you for joining our earning calls. We started 2021 with strong operational momentum and a return to total revenue growth. Consumption and overall market dynamics are beginning to improve, and our core revenues are accelerating. In the first quarter, we delivered 1.1 million post-paid net additions, the highest since 2017, and our total post-paid customer base now stands at 46 million. In Fiverr, we posted another quarter of strong growth and take-raise, thanks to our best-in-class broadband products. SPTH net ads of 368,000 was the best performance ever for a single quarter. Taking People's Fever's total customer base to 3.7 million subscribers, 41% higher than the first quarter 2020. In total, we closed the quarter with 96 million access, including mobile and fixed. Core revenues of 4.7% year-over-year already represent 88.1% of total revenues, and this quarter we saw FTTH revenues break the $1 billion The combination of sustainable operating performance and financial discipline are the pillars of our elevated shareholder remuneration, which is characteristic to Vivo. So far this year, we have deliberated R$ 700 million of interest on capital, which represents a dividend yield of 7.9% in the last 12 months. Furthermore, we continue to improve returns through our share buyback program. To date, we have 5.4 million shares in Treasuries, equivalent of 0.32% of the company's total capital. On slide 4, Total Revenue resumed a positive evolution this quarter due to continued traction of our core businesses. They represent the main factors of growth going forward and are built on cutting-edge high-speed connectivity in e-mobile and fixed, combined with a differentiated offer of digital products and services both for B2C and B2B customers. At Vivo, we want to offer more than just the best telco experience. Our aim is to deliver on all our customers' digital life needs, whether that be advice, content, cybersecurity, or cloud solutions for their business. Non-core businesses were down 24.1% year-over-year, mainly because they are made up of mature technologies that have less and less relevance for our customers. Turning to our wireless revenue performance on Flight 5. Mobile revenues achieved R$ 7.1 billion in the first quarter of 2021, with an increase of 1.1% over the year, driven mainly by prepaid revenues, which grew 4%, and the ongoing recovery of handset sales that were close to 11% higher than last year. In post-paid, we highlight VivoSelfie. A set of co-branded plans that offer selection of quality content, such as Disney+, Netflix, and Spotify, increasing our pool and driving a deeper relationship with our customers. Additionally, we focus on younger and increasingly digital mobile users. We co-created the Vivo Easy plan together with DJ Alok. Vivo Easy is 100% digital experience where we can customize the amount of data, voice, digital services, and other benefits According to your needs. Looking at our prepaid base, we are seeing an encouraging trend of increased recurrence and a positive shift in customer behavior. Digital pop-ups jumped 28.8% in the quarter and the number of customers recharging was 8.3% higher year-over-year. Then into slide six. People's Network Quality and Focus on Improving the Customer Journey allow us to maintain solid leadership in the mobile segment with 33.1% market share as of March 2021. Our POSPAY churn repeated similar trends seen previous quarter and stood at record level of 1.1%. When looking at convergent and family-planned customers, engagement levels increase and churn is up to 50% lower The volume of post-pay net additions continues its positive trajectory, reaching 666,000 this quarter, the highest level since the fourth quarter 2017. Turning to core fixed business, revenues are brought to present a strong year-over-year growth of 72% given the demand for high-speed broadband and digital services. FTTX revenues were up 20.3%, with FTTH revenues advancing an impressive 61.2% year-over-year, driven by ARPA increases, enhanced sales of OTT bundles, and the wrap-up of new activations. According with the expansion of our fiber footprint, we continue to see significant IPTV revenue revolution that was up 25% 0.9% year-over-year. Another positive result in the quarter was the return to growth of data and ICT revenues that rose 9.5% year-over-year. This is a promising sign that companies are gradually starting to invest again. Cloud revenues are gaining relevance and practically doubled year-over-year, confirming the large opportunity in B2B with companies engaging in a profound digitalization process to thrive in this new environment. Moving to slide 8, vivus harvesting from a well-executed strategy to capture opportunities in fiber and after sizable and rapid expansion of home past in the last years is experienced accelerated demand for its premium UBB offer. In the first quarter, we posted record FTTH net ads of 368,000. This is more than twice what we had a year before and 1.5 times what we saw last quarter. At the same time, Vivo Fibre customers are demanding higher speeds and a wider variety of content options. In fact, around 30% of our gross additions were bundled with OTTs or head speeds above 300 megabits. Moreover, more than 35% of our net additions were convergent customers. With that, we're able to increase FTTH ARPO by 16.2%, reaching R$95. In addition, on the top right-hand side of the slide, we show the evolution of FTTH HomePath, up 4.6 million year-over-year, that were further enhanced by our multiple expansion partnerships. aimed at reducing time to market and capex allocation. On slide 9, we give more color on PI Brazil, our neutral fiber network that expects to be fully operational by the second half of the year, further accelerating FTTH deployment. PI Brazil is partnership between FIVO, Telefónica Infra, and CDPQ, and the setup of the company is progressing according to plan. On April 6th and 23rd, we received the approvals from the Brazilian and European antitrust agencies, and we are now waiting on Anatel. This initiative will allow us to accelerate our fiber rollout and consolidate our leadership. VIVO will manage all commercial and customer service activities while remunerating VIVO Brazil for the use of its network. VIVO Brazil will start with 1.6 million home paths And we carved out from Vivo and expected to reach more than 5 million homes past over four years taking fiber to both greenfield and brownfield cities. On slide 10, we showed the progress of our objectives to build a digital ecosystem. Combining Vivo's unmatched set of enables, such as customer base, brand, channel capability, big data, and billing capabilities to mention the key ones, With partnerships with some of the most relevant players in the digital space, we are creating new platforms that complement our telco services. The aim is to capture growth and further engage our client base, resulting in increased loyalty and higher recurrent revenues. One of those platforms is VidaVie. We have just signed a binding agreement with Teladoc, one of the largest telemedicine companies in the world, which represents another step towards the creation of a health marketplace around vivo. Our plan is to provide a set of services such as immediate and scheduled doctor appointments, grant discounts in more than 27,000 drug stores nationwide, make pre-screening of symptoms through an artificial intelligence engine, and give digital certificates, exam requests, and prescriptions to patients. The platform has been established to include and attract other players and partners, and its initial focus will be on people without private health plans. Moving to the right-hand side of the slide, we present our strategic partnerships with DOTS, an engagement platform based on one of the most important loyalty programs in Brazil, and CDF, one of the key B2B2C marketplaces for home assistance and tech support in the country. We are very excited about both. Not only are we strengthening our grasp of customers' digital lives through the combination of our businesses, But VIV is also executing its plan to have equity stakes in companies with great growth prospects that are the champions of their segments. Talking about financial services on slide 11, we are enthusiastic about the recent launch of our very own digital account, VivoPay. The service allows customers to carry out banking transactions like paying bills and making cash transfers via PICs. Recharge your prepaid plans and purchasing credits for mobile apps like Google Play, Uber, and Spotify. This initiative allows Ziva to be part of a journey to promote financial inclusion, focus on prepaid customers with top-up recurrences that probably do not have a bank account. Additionally, VivoMoney, our 100% digital personal loan platform, is delivering consistent progress, having doubled its credit origination quarter over quarter. Finally, we launched the Vivo Itaú Card, a co-branded credit card created in partnership with Itaú that offers up to 10% cashback and other important benefits that will help us scale our marketplace and stimulate in-store commercial activity. On slide 12, I would like to comment on Vivo's most recent ESG highlights. as we believe that having a social and environmental footprint is key to fulfilling our purpose of digitalize to bring closer. To help the most vulnerable families still affected by the economic downturn, we are participating in the campaign United Against Hunger with the NGO Cheirando for Coins to raise funds for the purchase of food kits in support of the Movimento Panela Cheia. For every donated kit by FIBO's employees, Fundação Telefônica FIBO donates two more. Also, in the social sphere, FIBO is the first Brazilian company of the sector with the ISO 26000 certificate, which validates the compliance of our initiatives on human rights, diversity and social impact, for the implementation of the best practices in the market. This alignment encompasses all the measures regarding our employees, partners, suppliers, and also the society. In addition, we are proud to announce our first solar power plant in the northern region of Brazil, located in Maraba, in the state of Pará. It has the capacity to generate 2,190 megawatts hour per year, which will be used to power 632 of our energy consumption units This is the 16th out of 70 renewable power plants we plan on having up and running by the end of the year. Finally, we are rated as having the best reputation of the sector by the poll conducted by Merkel, jumping 13 positions compared to 2019. These initiatives enhance our performance and sustainability, which is based on economic, environmental, and social balance, and contributes to our main purpose of bringing people together. I now turn the call over to David, our CFO, to take us through the financial highlights.

Thank you, Christian, and good morning, everyone. On July 13, we saw how costs in the first quarter remained stable year over year. This is a result of our unremitting focus on efficiency measures at the ramp-up of our digitalization and simplification efforts. It's also important to point out that our cost-pay mix is going through a significant transformation. As Christian detailed before, we are launching a new revenue stream and investing in the shift towards becoming a digital hub. Vivo is no longer a pure telco company and already offers B2C and B2B customers a diverse set of services that go beyond connectivity. These segments have their own peculiarities and this quarter we decided to show cost accordingly to convey a more transparent view on how they impact our business. Cost of service and good sorts that are directly linked to supporting and enhancing revenue growth account for 30% of the total cost and increase 19% year-over-year. These costs are a catalyst to underpin positive revenue trends. In this specific quarter, the increase was driven by the encouraging performance of handset sales, the gradual recovery of B2B, and the growing relevance of digital content and services. OPEX Form Operations, where we constantly focus on the elimination of non-quality costs, contracted 6.5% year-over-year, benefited by our significant effort to find efficiency and adapt our operating model to our customers' ever-changing needs. Network and commercial expenses dropped 1.1% year-over-year, mainly due to savings related to call centers, billing, collections, and higher usage of alternative digital channels. On July 14, we present some key figures to illustrate how our efficiency-oriented mindset is fast-tracking the digitalization and simplification journey, resulting in enhanced customer engagement, cost reduction, and increased lifetime value of Vivos customer base. In the first quarter this year, we had 917 robots executing automated processes with an average assertiveness of 91%. More than 200 million reais have already been saved since December 2020 from front and back office processes as a result of these initiatives. We are also seeing a significant evolution of commercial activity through digital channels. Online FTTH sales, for example, rose 83% year-over-year and the share of digital migrations from pre- to post-job 14.9 percentage points in the same period. Shifting to eCare and considering its impact on customer preference, the MiUbibo app added 2.7 million unique users year-over-year and now has 19.4 million. Appealing penetration is 88% of 13.6 percentage points year-over-year, and payments using digital platforms represent now 65% of all collections. Moving to slide 15, First quarter, CAPEX evolution is impacted by stationality, and we continue to accelerate investments in forward-looking activities. The underlying driving is our focus on fiber and commitment to quality, as mobile data consumption continues to climb. In the quarter, 83% of our 1.9 billion reais of CAPEX was dedicated to growth and transformation, while FTTH related We continue to deploy fiber and connecting more customers than ever, resulting in record FTTH net additions, as Christian pointed out. Fiber-to-the-Site is also evolving at a similar pace, and more than 90% of vivo sites in the 50 biggest cities have top-quality backhaul to cope with the incremental data traffic expected for the coming years. With the advent of IT and the fact that we have the most comprehensive fiber footprint in a continental-sized country like Brazil, Vivo is in a unique and privileged position. We have the best combination of assets to maximize value capture from this opportunity and accelerate growth. I would also like to share a brief update about our grant sharing agreement with Vivo. This operator has already an additional 348 sites with 4G coverage, and the ongoing pilots aimed at consolidating our mobile network in cities with less than 30,000 inhabitants are progressing very well. Regarding 2G switch-off, the tests are advancing as expected, and we intend to roll out by the third quarter this year. On electric steam, we present our strong shareholder remuneration. This is backed by consistent net profit and free cash flow generation. We reported robust net income in the quarter amounting to almost R$ 1 billion, impacted by higher depreciation and financial expenses that were partially offset by lower income taxes. The payment of 220 dividends and interest on capital for a total of R$ 5.4 billion, equivalent to R$ 3.25 per share, will take place as follows. 2.6 billion reais will be paid on July 13th this year and 2.8 billion reais on October the 5th. On the right-hand side of the slide, we show that due today, we have already declared 700 million reais of interest on capital based on this year's net income. In addition, we continue actively executing our Share by Back program and have 5.4 million shares in Vivo Treasury, representing 0.3% of the company's total capital. To conclude, moving to slide 17, in the first quarter, free cash flow rose 3.7% year-over-year due to sound operating and financial management. The result is a solid balance sheet and improved metrics. Netcash, as of March, stood at R$ 5 billion, giving us a unique position to fund the acquisition of OIS mobile assets, expected by year-end. This strong financial position allowed us to consistently invest in our core businesses, diversify our portfolio, increase engagement, and as a result, expand Vivos Relevance in our customer digital life. Thank you, and now we can move to the Q&A.

Thank you.

We will now begin the question and answer session. If you have a question, please press star 1. Please hold while we poll for questions. In case you are following the conference call via webcast, please click on question to the host to send your questions. Questions will be taken in the order they are received. We do ask that when you pose your question that you pick up your handset to provide optimal sound quality. Our first question comes from Marcelo Santos, JP Morgan.

Hi, good morning. Thanks for taking my questions. I have two. The first is if you could please comment a bit on the competitive environment in mobile. You have a little bit lower growth this quarter, so I'm just wondering if there's something to do with competition. And the second question is about the Fiber to the Home ads. You had very strong ads. Should we expect a strong pace to continue throughout the year? And are these ads coming more from the competition or from conversion of your Fiber to the Curb and DSL subscribers? Thank you.

Hi, Marcelo. This is Christian. So, just talk a little bit about the mobile, therefore your first question. I would highlight first the strong commercial activity that we had this quarter. Importantly that we are comparing this quarter with a quarter last year that COVID was just impacting the last 15 days. This year we started We have strong January and February, not compared to what was pre-pandemic, but then we also had lockdown in March, that impacted results mainly in bus fare and headsets. But with all that said, I would highlight our growth in the prepaid. It's 4%, it's important growth. I also have to bear in mind that the government aid Thank you very much. And the terminals, all the handsets and accessories, they also had a good growth, you know, comparing to the year that was before pandemic, you know, that was 2020, we could grow 11%, even considering, as I said, lockdown in the last 15 days of this quarter in 2021. The postpaid... was more flat revenues, but the increase in net ads was very accelerated. If you look at the numbers without machine-to-machine, it was close to 700,000. That is the highest number for net ads in postpaid since 2017. If I add to this number, the machine-to-machine is 1.1 million. That's also a very, very extremely high. We've turned very controlled. So it's more, I think, a situation of the market. And then there is also the impact of the price increase that was significant. Thank you very much. FTTH has been growing a lot. As you know, I think every quarter we've been beating the previous number. There are two things here to consider. First, that we're expanding our network. As we said a few years ago, that we'd expand our network. Today, we ended this quarter with 16 million home paths. Now we are occupying this network, so that's the first move. And second, of course, people are now much more demanding a very good ultra broadband connection in their homes and offices, and Vivo stands out here because of our leadership and because we have a reach that no one has in Brazil, giving us an accelerated demand that ended the quarter with 3.7 million customers in FTTH, and the net ads of 368,000. These customers, depending on the city, they come for different nature. Some cities we are entering for the first time, it's Greenfield cities, most of the cities that we launch are in Greenfield, so these customers were not people before, so we are capturing new customers from competition, all type of competitors. Some of them are in São Paulo, that there is an overlay of DSL, Some of them were already missed to our competitor and come back to vivo. And there is also some overlay at TTC. We don't give the figure, but it's blended. Depending on the city, you can assess more or less what is the nature. But there is a lot of greenfield. And going forward with Fire Brazil, they are going to be just new cities, new greenfields. So in this case, there is no overlay and there is no substitution of legacy technologies.

Thank you.

Our next question comes from Christian Faria, Bradesco BBI.

Hi, good morning, everybody. Thanks for taking my questions.

I have two. First, it's related to the SQH.

So, if we saw that the increase in this quarter compensates the disconnection in other technologies,

We are looking forward to continue, so if you can see a growth in the total user base for 2021. And the other question is related to the new initiative that the company is doing, so regarding the dots and the new agreement with the telemedicine company. So what we can expect in the next revenue Looking forward to 2022 in terms of composition and representation in the total.

Thank you. Just one second, Christian. Just getting here better, the first question is my team. The first is... Okay, I think the first question is about, I think what, I'll try to answer what I got here, Christian, if you have more questions about. I think when you see how much what is non-core business, as I would call, the non-core revenues, the more legacy and mature technologies, they are all in the fixed side of the business. and they are reducing the irrelevance in our total revenue. So if you consider that fixed voice, ADSL and DTH, you represented like 15%. of our revenues, total revenues, no mobile fixed, in 2020. Now in 2021, in the same quarter, it represents a little bit less than 12%. So what is new, and here it's adding mobile and FTTH and advanced data from B2B, is growing and is replacing, yes, for your question, yes, is replacing revenues coming from What we call non-core businesses or legacy that's fixed voice, DSL, DTH, that combine are decreasing 24%. Our perspective, and that's why the figure that you see in the fixed business is improving quarter over quarter. Here, maybe there is something that changes quarter to quarter because of B2B deals, but the essence of the revenues, the core of the revenues, you see a replacement of FTTH over what is legacy. And this replacement is making each quarter more More impact in the positive numbers that are represented in the growth. If you consider that just FTTH already represents 1 billion reais in the quarter in revenues. Note that's a very strong name. If I add to this number what is IPTV that is very combined with TTH, we are already talking the total revenue more than 10% or 13% coming from these two services. So the replacement is there, is going to happen because we continue to accelerate the footprint of our network. and many more. So, we are working with these partnerships, not only the one that we signed with CDPQ for Brazil, but the one that we also have with American Tower, the franchise and etc., is improving our reach and it will give us more revenues related to fiber and all the service that go beyond fiber. Now, so relates a little bit to the second question. When we sign a contract to CDF, it gives technical support. They are very connected to people who have doubts and they need support in connecting their homes. So we are selling fiber, but we are also sending a service to help customers to interact and to automate their homes. So CDF comes with this perspective of what can I build beyond the fiber, beyond the connected home, and that's one of the deals that we are presenting today here. DOTS is a different type of deal. It's more related to the prepaid and hybrid customers. We want to give them more engagement in our platforms with our company. So if you give them points, it's good because they're going to use DOTS and they're going to top up and they're going to recharge and they're going to use more of my service to get more DOTS. And then I have engagement and it's profitable because I have more customers with also upsells for the current expenditure. The same can be said about our loan platform PeopleMoney that's going to be also connected to DOTS, so give us opportunities to join efforts with the two companies, both of us trying to generate value around our digital ecosystem. And the third thing that we are announcing today is the health partnership. We talked before that we have interest in health and education. This time we are able to already share communication about the binding agreement that we just signed with StellaDoc, one of the largest telemedicine companies in the world. It's not going to be the only partner. We are open to other partners to create a real ecosystem. Again, we're going to leverage on our footprint, our customer base, our big data, our brand, our bidding capability to drive customers, engage customers, and increase lifetime value of these customers with the Vivo platform. So, I don't know if I answered all your questions because the first one I missed maybe some of it, but that's a general perspective about Fiber and new partnerships. And then results of the new partnerships, it's going to be a sum of different ones. In this call, we are talking about health.tdf, we are talking about Vivo Money, Vivo Pay, and also the co-branded with Itaú. We are open to do more and we may announce more every single quarter because that's the perspective that we have going forward to create this ecosystem around the connectivity that we are the leader. So connectivity in homes, offices, not to mention also cloud deals that we are doing, the cybersecurity. So it's home, offices, and also beyond the mobile data and segments and what I described for DOTS. The same is for people using our digital plan. that we are also planning to get also partnerships with large digital companies like Spotify, Uber, Rappi and many others.

Okay, thanks.

And the number of customers, it's like you also asked about the customer base. You know, I think it's more the value of the customer base that we are bringing. I think it's important to say that we are bringing more customers, positive than at the neutral broadband. But beyond the positive number is also the output that is increasing because we are combining new services together with our core connectivity service.

Thank you so much.

Our next question comes from Victor Gomes, Banco UBS.

Good morning, everyone. Congratulations on the results. About the V&V partnership, can you give us any color on how it works for Telefonica?

Will you have a stake in the new company? Will you earn a regular share for the company acquired? Thank you.

We just signed a fine in the agreement. It's not a J.P. so far. What we're going to do in the beginning to check the market and to prove the value proposition is... Sorry, is the video there? What we are trying to say is to sell... A service is going to have a monthly payment. So what we're going to try to adapt here is our ability to have a recurrent services and also to view this customer. So the customer will have a monthly payment that will give them access to a health platform, depending on the type of service that they hire. It will have, I don't know, small, medium, and large, not only to give you some color on type of plans that we may have here. And they may have some doctor appointments already included, all of them with telemedicine. but they also get some benefits in other partners that we are putting together in this marketplace. So they have discounts in drugstores and they may have also any other type of benefits related to other services like a diagnostic or even physical doctors because we are also considering having some partnership there. So at this point it's a binding agreement with exclusive agreement having FIBA and Teladoc together with this We are also planning a possible JV where we're going to have a stake in the company. It's too early to give you details about that, so for now is our position in creating this marketplace. And Teladoc will be powering all the digital capabilities because you can also give digital prescriptions We will also have content. content very related to health and well-being and we're going to leverage all our channels capabilities including our Terra Portal, the Terra Portal that is also one of the largest in Brazil to promote and to create this ecosystem around Vida Vida and the health and well-being content that we are just describing with some services included in the monthly payment of the customer.

That's perfect. Thank you.

Our next question comes from Carlos Siqueira, BTG Pactual.

Hi. Good morning, Christian, Davi, and team. Thank you very much for taking my questions. I have a couple, please. One is I'm wondering if you can give us an idea, Christian, of what is the marginal cost for Vivo to increase Thank you very much. on the, you know, on leveraging Vivo's gigantic client base, offering new service. You're doing a great, you know, fantastic job adding new, more and more services every quarter. My question is, it's not a question really, it's if you can share with us your view for this type of services, looking maybe five years down the road, how much you expect that to represent a Vivo's business. You know, it doesn't, just an idea, just what your goal is or your dream maybe is on this type of services. Thank you.

Hi, Cadu. For the first question, we just launched 600 megabits, and I think there is additional cost to offer such a high speed to customers. So we need to be very rational how we do it and to which customers are willing to pay more to do so. So in B2B, more room for one giga, we already have this as an offer to companies requiring that even SMEs, they can have it. In the B2C, we are now with the 600 and also not in every place. As you said, there is some cost involved and we need to be careful and also be careful about the pricing. We need to differentiate pricing to give the value of the ones We've been very conservative and we hope the market is also conservative and the technology is impacted and the cost is important to be able to offer such speed to customers.

So we are doing that in a very thoughtful way and segmenting our customer base.

and offering that to customers that are willing to pay more, either because they live in places where the need is more demanding. I don't know, let's talk about some countryside homes that people are now leaving and they are very large homes and they want to have a very high speed because the offices there, the schools are there now because the kids are at home, that maybe they're willing to pay more and then we have to price in the right way and do so. So balancing the additional cost with the real demand and not Minimizing or taking value of the 100 megabits, 200, 300, that's also very good speed and much above other technologies and that respond to most of the demand of most of the customers that we have. In the second one, we're going to start giving more color on digital services, but I hear the difficulty that we have is I think the nature of the services are different. Not just defining what is B2C and B2B, that's already a huge difference. In B2B, it's hard to find a customer that we don't have a digital service already as part of the relationship that we have with this customer. That goes from antivirus, a cybersecurity solution, to a cloud solution. We are leveraging and penetrating digital services in most of our B2B customers. So, there are different types of customers, sizes of customers in B2B, so it's difficult to tell you the percentage, but I understand that the penetration will be very high. Almost in five years, I believe all our B2B customers need to have digital services that is built and sold and taken care by people's workforce and both the sales rep, but also the customer care. In the B2C, I would also segment in the two types of customers. At the top of the pyramid, I think we're going to distribute services from very well-known brands. And if you look, the number, the percentage of fiber already sold with Netflix, Disney+, we just set 30%, and this number is growing. So I think our ability to www.patreon.com and can be also, I just mentioned about the CDF, that's a support, technical support that we branded Vivo Guru. We also believe a high percentage of our customers should have this customer care Vivo Guru already included in their plan and we will charge for that. In the base of the pyramid, there I think we can launch new businesses that are totally not always connected to the relationship that the customer has with us. So when I launch PidaVid, of course I'm selling to my customer base, but I'm not bundling it with a plan because I'm talking about prepaid or hybrid customers that there is no bundle because the value of this new service can be similar to the value of the money they spent with a prepaid recharge. So it's a new business. So this new business will have value in two sides. Because I'm selling it, and because I may have a stake in a new and different company that can have its value by itself. So I see financial services going this direction, maybe health for sure, education for sure. So it's a different type of business. I'm not combining. I'm launching new platforms and new ecosystems. So once we have more clarity how to explain and To give you more detail and color about the numbers, we'll certainly do that, differentiate the B2C, B2B, what is totally bundled because has value combined, that's Netflix plus Fiverr, and versus what is a new business, like it's PeopleMoney, there's a new business that is a loan platform, VidaV, there is a new business, and many other things that will be launching in the following quarters. Don't know if I answered, Cadu, but it's what I can share at the moment.

Thank you very much, Christian. Very clear. Thanks.

Our next question comes from Marcelo Santos, JP Morgan.

Hi, thanks for the follow-up. I have two questions. The first one is in the fiber expansion. We are seeing all players expanding fiber. We've planned to expand fiber aggressively in the next couple of years. What do you think is the potential market for home spastic fiber in Brazil? And do you see the risk of overlapping networks or difficulties for all the players to execute their plans? And that's the first question. The second question is you're going to have the 2G shutdown. How much savings could you get on that? And would that be more CapEx or OpEx? Thank you.

Marcelo, in the fiber, we announced that we aim to have at least 24 million home paths by 2024. We already have close to 17. We announced first quarter 16.3. We have the largest customer base. And we have the highest market share in the mobile. We have the combination of all the assets to be the leader in this market. So we are very confident about our plan. Brazil is huge. I think we have a gap in Hobbs' ultra broadband digitalization. So if you consider the low-target market of 60, 65 million homes and offices, that would be the market that's addressable by fiber. Some of these markets discovered by the smaller players. Some are uncovered today or they have a technology that is not fiber. So this is the number that maybe we should bear in mind. So we are now aiming for 2024 to get to 24. The risk of overlapping, I think, is there. I think it's not good because some of these deals that you just mentioned, there's someone behind that needs to occupy their network, their neutral networks, but they need to have a tenant, an anchor tenant, and additional tenants. So, for that to come true and to be profitable, I think the ones controlling this network should be very wise and not overlapped. In our case, we have a company that we co-control, so we may define what are going to be the target cities, and we will try to be as rational as we can. Although, as I said, we are the leader, we have the largest customer base, and we have a lot at stake, and we're going to do that because we've done that before, and we are the number one doing that successfully. The others, I think they are and they should be very attentive not to make a mistake of covering similar areas because I don't see more than one or two tenants covering different networks, neutral networks, to give the profitability that's required for this type of business. That was your first question. The second question was?

I will take the second one. It's about the... The second one is we are going to have and we already have 348 cities That's already implemented with coverage expansion. So this is a capex savings that, again, this is something that we have already, as we speak, we are already having these savings. And the third one, which has a big potential, again, would be a decommissioning some of the network that today we are joining with a team in small cities. So again, this will bring both OPEX to run those networks and also CAPEX to maintain those networks. So we see the three as a big opportunity to focus on quality and particularly to cope with incremental traffic and also expand to see what else can we accelerate here with them in the mobile space.

Perfect. Thank you both. Thank you very much.

Thank you, Marcelo.

Once again, if you have a question, please press star 1. Please hold while we poll for questions. If you have a question, please press star 1. This concludes the question and answer session. At this time, I would like to turn the floor back to Mr. Christian Gebara for any closing remarks.

So, thank you all for joining us. As I said before, it was like solid results, especially in the commercial performance in both the net ads that we had in phosphate and the net ads that we had in fiber that are core products and core revenue that give us optimism about 2021 as the situation hopefully is getting better with the vaccine and the economy recovering and we are in the right position to take advantage out of the accelerating growth that we see in these technologies and this business where we already have the leadership. Added to that, the new ventures that started to be more concrete and give us room to create a real ecosystem around our brand and strengthen loyalty and engagement of our customers. So if you have any more further questions about anything, you know our team is here at your disposal. Thank you and until next quarter.

Thank you. This concludes today's Telefonica Brasil 1K21 results conference call. You may disconnect your lines at this time. Have a great day.