Telefonica Brasil S.A.

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to the Telefônica Brasil first quarter of 2022 earnings conference call. Today, with us representing the management of Telefônica Brasil, we have Mr. Christian Gebara, CEO of the company, Mr. Davi Melcon, CFO and Investor Relations Officer. and Mr. João Pedro Carneiro, IR Director. We also have a simultaneous webcast with slide presentation on the internet that can be accessed at the site www.telefonica.com.br slash IR. 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 the time, further instructions will be given. Should any participant need assistance during this conference, please press star zero for an operator. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities 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. João Pedro Carneiro, Investor Relations Director of Telefonica Brasil. Mr. Carneiro, please proceed.

Good morning, everyone, and welcome to Telefónica Brasil's earning call for the first quarter of 2022. Today's call will be divided in two parts. To start, our CEO, Christian Gebara, will briefly comment on the acquisition of Oi's mobile assets, then go over Vivo's financial and operating highlights, followed by an update about our digital ecosystems and ESG initiatives. Afterwards, David Melcon, our CFO, will go through our cost and capex structure, net income, free cash flow, and shareholder remuneration. Now, I'll hand it over to Christian.

Thank you, João. Good morning, everyone, and thank you for joining our running call. Starting on slide three, we show how the long-waited deal with all these old mobile assets will generate value for Vivo and reinforce our leadership in the mobile segment. We acquired 43 MHz of spectrum on a nationwide basis, 2.7 thousand sites and 12.5 million mobile access, of which 4.6 million are post-paid. As a result, Vivo's total access base will jump from 100 million to 112 million, allowing us to become mobile market leader in five additional Brazilian states, extending our leadership to 17 states that represent 60% of Brazil's GDP and 67% of the population. Regarding synergies, our initial calculations point to an NPV of R$ 5.4 billion in cost and capex savings and avoidance, net of investments and integration costs. This is composed of optimizations amounting to R$ 1.8 billion in network, R$ 1.7 billion in spectrum and R$ 1 billion in commercial on top of R$ 0.9 billion in fiscal benefits. Moreover, the customer base being incorporated generated approximately 135 million reais in monthly net revenues in March 2022, from which we expect to extract margins above 70%, both in EBITDA and operating cash flow terms, when the synergies reach their running rate. Moving to the steps we have ahead, during the next week we will start to proceed with the full customer base migration, when users coming from OE will be fully integrated in our network and systems. This migration will be done gradually and should be completed by the end of the first quarter of 2023. For more details about the assets and synergies, please access the specific presentation available on our investor relations website. Now, going to slide four. We had a very positive result in the first quarter of 2022, reaching an impressive milestone of 100 million access, the largest ever in our history, and our post-paid customer base totaled 51 million access in the quarter after growing 11% year-over-year, while our FTTH homes connected continued to grow remarkably, up 29% year-over-year. Such strong performance drove our top line to grow 4.6% year-over-year, the best annual evolution we had since 2015, with mobile service revenues up 5.7% While our fixed business expanded 1.9%, confirming the positive trend theme over the past couple of quarters. This positive revenue performance was enough to offset cost pressures arising for alternative business models and higher inflation, resulting in EBITDA growth of 1.3% versus first quarter 2021. Our strong operating momentum combined with solid financial trends led to a free cash flow generation of 2.5 billion reais, This allows us to continue investing in growth technologies and in organic opportunities while maintaining the best shareholder remuneration profile of the industry. On the next slide, you can see that we continue to successfully transition into an improved mix of revenues, with inflation-linked products such as mobile postpaid, handset, fiber, IPTV, and B2B solutions representing almost 80% of our results. This premium product exposure is unique to Vivo, helping us navigate well during tighter economic cycles supported by our outperforming core businesses. Moving to slide 6, here we detail the evolution of our mobile and fixed core revenues with positive performance across the board. On the left-hand side, you can see that our mobile revenues rose 6.1% year-over-year. as our strong bottom of net additions both in postpaid and prepaid combined for more rational competitive environment helped us reach mid single digit growth in both products. On top of that, handset revenues had another robust quarter up 10% versus first quarter 21. Moving to our core fixed business, revenues grew 11.9% year over year driven by 26% expansion of FTTH. which on a 12-month basis is getting closer to reach the landmark of 5 billion reais in revenues. Additionally, B2B data, ICT and digital services continue to outperform, up 13.1% year-over-year as demand for complete solutions continues to grow with companies increasing their digital footprint. Moving to slide 7, here we show how our operating results confirm that our customers continue to choose Vivo when opting for high-quality connectivity. We closed first quarter 22 with 85.3 million mobile access, up 7.1% year-over-year, with an impressive 10.6% increase of our post-paid base. This performance was driven by continued prepaid to hybrid migration, while churn remained at historic low levels and portability figures more than doubled. hitting another record. In fact, around 25% of all net additions in the quarter came from other carriers, which attests that the strength of our brand, good value proposition and a matched customer experience are paying off. Regarding our FPTH operations, we expanded our homes by 4.2 million premises year-over-year, reaching a total of 20.5 million HPs in 341 cities, while connecting 1.1 million new customers, thus totaling 4.8 million homes connected. For the foreseeable future, we continue to execute on our convergent strategy that is being spearheaded by our Vivo Total offer, which truly bundles FTTH broadband, mobile post-paid and digital services in a single plan. We believe that this solution will be key for us to reach our targets in terms of FTTH penetration, while reinforcing our strategy of increasing the lifetime value of our customer base. On slide 8, we update our digital B2B figures which is composed of high growth tech services that already account for 5% of our total revenues. We closed the last 12 months ended in March 2022, we've joined 2.2 billion reais in B2B digital revenues, growing an impressive 41% year over year. Cloud businesses continue to command this performance by nearing triple-digit growth rates as we distribute the best solutions available in the market by partnering with companies that are hyperscalers, adding managed services. In addition, IoT and messaging revenues rose 32% year over year, while digital solutions grew 24%. These positive figures reflect our successful strategy of providing our B2B customers a wide range of solutions that go beyond connectivity, leveraging one of the most relevant B2B omnichannel platforms in the country. On slide 9, we provide more color on the new elements of our B2C digital ecosystem that will help us leverage its development even further. As you know, we announced the creation of Vivo Ventures, with an initial investment of R$320 million to be disbursed over the next five years. The goal here is to acquire 10% to 20% stakes in up to 20 growth-stage startups with pre-money valuation of over R$100 million, which must be focused on providing innovative solutions related to entertainment, smart home, financial services, education, health, and other segments that have relevant cross-sell potential with our current value proposition. With that in mind, Vivo increased its participation in the Brazilian tech market, helping the investees to escalate their business and, as a result, accelerate our digital ecosystem, while profiting from the financial return that these players can potentially provide us with. Going to the right-hand side of the slide, we show how our existing services have adapted to the change in conception patterns of our customers. In this sense, we recently launched VivoPlay, A CapEx Light video streaming platform offering access to live channels that can be bundled with a wide range of over-the-top applications for affordable prices, starting from 29.9 reais per month. Currently, we have the third largest telco in the world in terms of number of partnerships with different content providers, attesting the attractiveness of Vivos Kids access, such as brand, channel, customer base, and billing capability. Moving to the bottom of the slide, we highlight the recent reposition of our media tech arm, Terra, that runs the fourth largest news portal in the country, with almost 70 million unique users and over 650 million page views per month. Terra will leverage on its unique big data capability to offer customized data-driven solutions related to content and advertising. Moving to slide 10, where we present some of our ESG accomplishments and projects that represent the cornerstones of our company's purpose, digitalize to bring closer. Regarding the environment, in the first quarter of 2022, we reached 23 operating power plants for the use of distributed generation on track to comply with our target of having over 80 plants in operation by the end of 2022. We have also advanced in matters of governance, equality and diversity. As of April 2022, we've elected a new board of directors, increasing the number of women to four, accounting for 32% of the new composition. On the diversity front, we hired 375 new black interns, 50% of the available positions, who joined us in the first quarter of this year, and launched the Accoyer platform, to promote assistance for victims of racism in partnerships with Zumbidos Palmares University. Now I pass the word to Davi to comment on our financial results.