Telefonica Brasil S.A.

Good morning ladies and gentlemen. Welcome to Vivo's first quarter 2024 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 on the lower right side of your Zoom screen, and then choose to enter the Portuguese room. After that, select Mute Original Audio. Para acessar nossa conferência em português, clique no ícone do globo ao lado inferior direito da sua tela Zoom e selecione a opção Portuguese Room. Ao acessar a nova sala, certifique-se de silenciar o áudio original. We would like to inform 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 Vivo's 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 depend 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. Cristian Gebara, CEO of the company, Mr. Davi Melcon, CFO and Investor Relations Officer, and Mr. João Pedro Soares Carneiro, IR Director. Now, I'll turn the conference over to Mr. João Pedro Soares Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you may begin your conference.

Good morning, everyone, and welcome to Vivo's first quarter 2024 earnings call. Today, our CEO, Christian Gebada, will walk us through Vivo's performance in connectivity and digital services for both B2C and B2B, as well as present our ESG advances. Then our CFO, David Melcon, will give more color on cost and CapEx management, free cash flow generation, followed by an update on shareholder remuneration for 2024. With that, I'll turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you all for joining us today. Before starting, I would like to express our solidarity with the population, our employees, customers, partners, and everyone affected by the tragedy in the state of Rio Grande do Sul. We are directing all efforts to restore our services in the affected areas as quickly as possible, acting on several fronts in this time of crisis. We joined forces with all operators and enabled roaming so that the customers of other telcos can connect to our network. In addition, we are offering data bonus of 10 gigabytes to our prepaid and hybrid customers in the region and considering the difficulty of accessing some of the most impacted communities, we are providing the civil defense of Rio Grande do Sul with 60 satellite phones aimed at using extreme situations. Moreover, through Fundação Telefônica Vivo, we launched the national match funding campaign open to the entire population to help with items of greatest need such as food hygiene and cleaning products regarding the operation we are evaluating the impact on infrastructure stores and the provision of service as a whole as we also face difficulties in accessing some locations to the roadblocks as well lack of electricity and damage provoked to our network Now moving to the results. We kick off 2024 reporting another robust quarterly result with revenue, EBITDA, and net income growing above inflation. Our customer base expanded in our main products. Postpaid access were up 6.6%, while homes connected to FTTH grew double digit by 12.3%. Total revenues increased by 6.5%, mainly driven by an outstanding performance of mobile service revenues that were up 9.3%. Our profitability figures were also a highlight. EBITDA grew 6.8% year-over-year and net income expanded by 7.3% on an annual comparison. As a result of the strong operating momentum coupled with stable capex intensity, operating cash flow summed up R$ 3.4 billion, while free cash flow generation reached R$ 2.4 billion in the first quarter of the year. The strong start to 2024 reaffirms VivoSolid's position to continue delivering sustainable growth and returns. On slide four, we show the breakdown of our top line expansion. Mobile service revenues that represented 64% of total revenue in the quarter grew at a fast pace fueled by double digit increase of postpaid revenues. Fixed revenues post a positive evolution as FTTH expanded at the meeting rate compensated the seasonal volatility of B2B digital revenues and the decline of other legacy service such as Fixed Voice and Corporate Broadband. This solid performance derives from our best-in-class value proposition for both B2C and B2B customers, combining connectivity with the broadest portfolio of services beyond the core. In first quarter 2024, B2B digital services summed up with B2C new businesses represented 9.5% of Vivo's total revenue. up 0.9 percentage point zero of a year that confirms the trends in so far of the escalating significance turning to slide five we highlight the main levers of our ongoing growth in mobile postpaid access continue to gain share in our customer base mix while within the post space segment the upselling for hybrid to pure postpaid increased by 75.7 percent zero of a year As Vivo is in a unique position to meet customers' ever-growing needs for connectivity, we see them staying longer and spending more with us. Post-pay churn remains at its lowest historical level, 0.97% per month, while increased ARPU by 7.7% year-over-year, considerably above inflation. Now moving to Fiverr. Vivo's FTTH footprint is available to 26.5% 8 million homes and businesses through Brazil, getting close to our target of 29 million homes passed by the end of this year. We continue to outpace the market in ad additions with more than 170,000 new access during the quarter, totaling 6.3 million homes connected. As we offer a more premium portfolio in terms of speeds and digital services, FTTH ARPU reached R$91.4, its highest value in the last few years. Average FTTH speed sold is accelerating, going from around 260 megabits to over 310 megabits. Vivo Total is an important driver of outstanding performance in fiber and phosphate. Our converged offer totalled 1.5 million customers, more than doubling versus the previous year, while presenting churn that is one percentage point lower than the standalone fiber. Vivo is in a privileged position to further increase its FTTH take-up ratio, leverage its distinctive capability of offering a combined fiber and mobile plan to a nationwide basis. As we commented at our Vivo Day, we want to start giving you more color on our results split by customer segment, underscoring how new businesses are contributing to the top line expansion. On slide 7, we show the evolution of our B2C revenues in the last 12 months that represented around 76% of Vivo's top line. B2C revenue grew almost double the inflation in the period because of our second-to-none connectivity that's been complemented by the advance of our new business portfolio. Revenues coming from these services summed up R$1.4 billion in the last 12 months, up 34% year-over-year, representing 2.6% of our total result. The distribution of 2.7 million subscriptions of video and music OTTs generated R$597 million in revenues, whereas financial services contributed with R$425 million in the last 12 months. One of the highlights was VivoMoney that ended the quarter with a portfolio of R$420 million in personal loans. Our credit portfolio will further accelerate with the advent of new products, such as financing of PIX transactions paid in multiple installments. On slide 8, we showed increasing relevance of digital services over total B2B revenues. During the last 12 months, B2B Digital Service reached 3.5 billion reais in revenues, up 20% year-over-year, representing 31% of our B2B business and almost 7% of Vivo's top line. In the first quarter of the year, we reinforced our absolute leadership in B2B by developing customized private network solutions for some of the most relevant companies in Brazil. We are confident about the opportunities to further increase the relationship we have with our 1.6 million B2B customers as we combine the best connectivity in the market with an unrivaled ecosystem composed of top-notch partners to support the digital transformation of Brazilian companies. Turning to slide nine, I highlight some advance of our ESG agenda. CDP, that has already considered VIVA as part of a list on climate change, also recognized us as the only Brazilian telco leading in supply engagement. Additionally, we rose three positions year over year in Merco's Corporate Reputation Business Monitor that placed us in the top 20 companies with the best reputation in the country. On the social front, VIVO continues to invest in Black talents. For our youth apprentices and internship programs, half of the positions were reserved for Black students, and the latter ended up having 60% of all positions filled by Black candidates. I'm also glad to share that Vivo was awarded by the United Nations for its initiatives regarding the movements of 2030 Ambition, Race is Priority and Mind in Focus. Due to these and many other ESG accomplishments that we achieved during the years, we were considered the most sustainable company in Brazil among all sectors in the listed Easy B3 ranking. Now the view we comment on our financial performance.