Telefonica Brasil S.A.

Good morning, ladies and gentlemen. Welcome to Vivo 3rd Quarter 2023 earnings call. This conference is being recorded and the replay will be available at the company's website at ri.telefonica.com.br. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon located on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select Mute Original Audio for a better experience. We would like to inform you that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer section when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Vivos Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore depends on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this conference, we have Mr. Christian Jabara, CEO of the company, Mr. David Malcolm, CFO and Investor Relations Officer, and Mr. João Pedro Carneiro, IR Director. Now, I'll turn the conference over to Mr. João Pedro Carneiro, Investor Relations Director of Vivo. Please, Mr. Carneiro, you may begin the conference.

Good morning, everyone. Welcome to Vivo's third quarter 2023 earnings call. The presentation will be divided in two parts. First, our CEO, Christian Jabada, will walk us through Vivo's financial and operating highlights, followed by an update on our new sources of revenue and ESG advances. Then, our CFO, David Melcon, will comment on our financial performance and shareholder remuneration in more detail. I now hand the call over to Christian.

Thank you, João. Good morning, everyone. Appreciate you joining us. I start by presenting the highlights of another very strong quarterly result. We delivered a revenue growth of 7.5% year-over-year and an EBITDA increase of 11.7% year-over-year, both well above inflation. The customer base mix keeps improving. Postpaid access surpassed the mark of 60 million customers and homes connected with FTTH summed up 6 million access. Our high value subscriber base is shooting our growth engine. This growth was combined with improved profitability. EBITDA was at an all-time high, reaching R$5.5 billion in the quarter, with a margin of 42.2%, leading to improved bottom-line performance, as net income reached R$3.4 billion year-to-date, up 15.9% year-over-year. As we continue to reduce our capex intensity to meet the level guided for the year of up to R$9 billion, cash flow generation speeds up. Over the first nine months of 2023, our operating cash flow grew 27.1% year-over-year to R$8.9 billion, while our pre-cash flow expanded 16.7% to R$7.6 billion. As such, we are committed to keep an attractive level of shareholder remuneration. Up to October 2023, we already declared R$2.6 billion in dividends and interest on capital, while also invested R$380 million to buy back our own shares. Moving to slide 4, we show the breakdown of our revenue growth. Our focus on best-in-class technology is contributed to total revenue growing 7.5% year-over-year, well above inflation. On the mobile side, the continuous upselling to post-paid plans coupled with price and rationality allowed mobile service revenues to reach an organic expansion of 9.0% year-over-year in the second comparable quarter since the acquisition of part of OiMobile's assets. Handsets and electronics posted a 13.5% annual increase as we outpaced the market in the selling of high-value 5G devices and offer a broader portfolio of electronics. FTPH and corporate data, ICT, and digital services continue to grow double-digit, meeting the demand for high-quality connectivity and digital services. These services are the drivers for the positive expansion of our fixed revenues. Turning to slide five, we can see the improvement of our mix of customers, as POS paid already represents 62% of total mobile access. Our mobile leadership has been reinforced as we continue to deliver an unmatched value proposition to our customers. This strong operational momentum combined with our pricing strategy resulted in an 11% annual growth in our pool, reaching its highest value in the last three years. While average spending increases, PostPayChain has reduced 39% in the last four years, reaching a very low level of 1.09% per month. With customers staying longer and spending more with us, we see a clear pathway to deliver sustainable real growth on a consistent base. On slide 6, we detail the advance of our top-notch fiber operation. Vivos Fiber's footprint is present in 439 cities throughout the country, totaling 25.1 million homes passed, which keeps up on track to reach the target of 29 million homes passed by the end of next year. In the last 12 months, we added 2.8 million fiber-to-the-home premises and connected 715,000 homes, increasing our network take-up rate after reaching 6 million users while also improving our R pool profile. In addition, VivoTotal, our fiber mobile convergent offer, surpassed the mark of 1 million customers. more than doubling its base over the last 12 months. This offer has the lowest churn and the highest lifetime value, putting Vivo in a unique position to benefit from convergence in the long term. Going to slide 7, you can see that the digital B2B services added up to 3.2 billion reais in the last 12 months, up 28% year-over-year, already representing 6% of Vivo's total revenue, even though the services are currently provided by Vivo to only around 10% of our 1.5 million B2B customers. Going forward, we see a significant opportunity to increase the penetration of digital solutions in our existing B2B customer base, mainly in SMEs. With that in mind, Vivo, my business, has a new position and focus on integrated digital solutions for micro, small, and medium enterprises tailored by size and sector. We offer accessible products related to cloud, sales management, web presence, and efficient tools to help these entrepreneurs adapt their business to compete and prosper. Moving to slide eight, we give an update on the evolution of some of our new sources of revenue in the B2C segment. Financial services generated R$106 million in revenues during the quarter, up 45% year-over-year. Here we highlight Vivo Money that ended the quarter with a portfolio of R$307 million in personal loans, more than doubling year-over-year. In the end of July, we announced that Vivo Money has a new investor, Polygonal, that has committed to invest up to R$250 million over the next two years to strengthen the expansion of our credit services. The distribution of video and music OTTs through our invoice totalled R$144 million of revenues in the quarter, up 33% year-over-year, coming from 2.8 million OTT subscribers. Our partnership with the main content providers allows us to expand average customer spend, decrease churn, and increase lifetime value. More recently, we broadened our electronic portfolio that includes notebooks, smartphone accessories, smart home devices, among others, to complement the experience provided through our connectivity services. This product generated 79 million reais in revenues last quarter, up 28% year-over-year. We know that revenues from financial services, OTPs and electronics beyond smartphones Put together, represented 3% of Vivo's total revenues over the last 12 months. As they keep this strong growth pace, we are confident that these new businesses will have a greater relevance over the next years. On slide 9, we highlight some advances in environmental and social fronts. We have a target to achieve net zero emissions by 2040. And to help us reach this goal, we established a program with 125 carbon-testing suppliers to diagnose, train, and encourage these partners to move towards this commitment. On energy, VIV is the first company in the sector operating in energy self-production modality. We announced a partnership with Valera in the state of Minas Gerais that comprises four solar parks. There are two important reconnections. First, Vivo was the only telco and Brazilian company in fortunes change the world list due to the Vivo Recycles program, our main initiative in circular economy. We were also highlighted once again in the Great Place to Work ranking, being one of the top 10 best companies to work in Brazil. Now, David will walk us through our financial performance.