Telefonica Brasil S.A. American Depositary Shares (Each representing One Common Share)

I live in this special place, I live in the heart of the Pantanal, in the heart of these people who have a lot Thank you. is is is is No coração do Brasil

Somos um sol em busca do sol Somos tempo que não volta O remanso das marés As pegadas dos nossos pés Somos estrelas que tocam o chão Somos tão cheios de razão Somos tão, tão Que a vida passe e a gente não vê Todo amor é tudo e tudo tem seu tempo

Se eu fecho os olhos é tentando olhar pra dentro Pra ver se eu me encontro em tanto esquecimento Somos tão, tão, tão distraídos Que a vida passa

Who am I? Who am I? Who am I? Who am I?

Sei que já passou tanto tempo Nem me lembro mais quando foi A última vez que conversamos sem pensar No que foi, no que é e o que será Tenta entender, tenta aceitar Que tudo está melhor como está Tenta devolver, tenta perdoar

Sei que já passou tanto tempo Nem me lembro mais quando foi A última vez que conversamos sem pensar no que foi

Tenta entender, tenta aceitar Que tudo está melhor como está

The time doesn't stop, and you're stuck in a hurry. But don't let the now, the melody, the color, the light, the subtlety, the beauty, pass. Time doesn't stop, but you do. For art. . . .

I'm going for the roots.

Oh yeah? Then I'm going for the fiber.

Now look at this manual. Stability speaks, right? With this internet, it even looks like I'm in the game. Do you want reverse?

This is a fiber duel, huh, Gui?

Very cool, huh?

Thank you very much.

Best of three, let's go!

The game is running smoothly here, huh?

Ah, it's flying here. It's too fast playing online.

At least I didn't have to take it from the internet, huh, Gui?

Call Gui!

You're playing well, huh? But I want my revenge.

OVE. Originality. Your best accessory.

Wow, you're not letting anything pass, huh? I'm like Vivo, right, friend? I'm going to block. I didn't get it. Just go to the Vivo app and activate the protection. And if I lose or take my cell phone, Vivo will block my device. Then no one has access to anything. My contacts, apps, bank. Okay, but how do I block? Just talk to Vivo. On the phone, on the site, on the app or go to a store. It's closed, it's there. It's closed, it's me, right? Because I closed everything closed here. Let's go! Block to protect, Vivo solves. Vivo in safe mode.

Uma semana sem te ver A mil km de você A sauda de chegado Ainda bem que eu tenho um celular com 5G

Good morning ladies and gentlemen and welcome to Vivo's third quarter 2025 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 on the globe icon located on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, mute the original audio. Para acessar nossa conferência em português, clique no ícone do globo localizado no canto inferior direito de 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 you that all attendees will only be listening to the conference during the presentation, and then we will start the Q&A 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 Giubara, CEO of the company, Mr. Davi Malcolm, 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. Please, Mr. Carneiro, you may begin your conference.

Good morning, everyone, and welcome to Vivo's third quarter 2025 earnings call. Christian Giubbata, our CEO, will start us off by commenting on Vivo's connectivity and digital services performance, as well as present our main ESG highlights for the period. Then David Melcon, our CFO, will give more details on cost and CapEx management, free cash flow generation, profitability for the period, as well as an update on shareholder remuneration for 2025. With that, let me turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you for joining us today. I'm pleased to announce that Vivo delivered another set of strong results, presenting real growth across all key lines, fueled by a powerful commercial performance and a relentless focus on customer experience. In mobile, our post-paid segment continues to lead the way. With access growing 7.3% year-over-year, Postpay now accounts for 68% of our total mobile customer base, which has reached approximately 103 million connections. On the fiber front, we have 7.6 million homes connected, an impressive 12.7% increase year-over-year, and our footprint covers 30.5 million homes nationwide. Total revenues rose by 6.5%, driven by consistent results in both mobile and fixed services. Mobile service revenues grew 5.5% while fixed services saw a 9.6% increase. This balanced growth highlights the strength of our diversified portfolio and our ability to meet demand across multiple segments. EBITDA grew 9% year-over-year, with our margin expanding to 43.4%. This reflects our continued focus on operation efficiency and disciplined cost management. As a result, operating cash flow reached R$11.2 billion in the first nine months of the year, up 12.4% compared to the same period last year. Net income rose 13.4%, totaling R$ 4.3 billion, while free cash flow approached R$ 7 billion, with a margin of 15.6%. These strong financial results enabled us to return R$ 5.7 billion to shareholders by the end of September, reaffirming our commitment to sustainable value creation. Moving to slide 4, we show how our top line continues to grow at a strong pace driven by an increasingly robust and diversified revenue mix. In the quarter, total revenues reached R$14.9 billion, once again led by the solid performance of our postpaid and FTTH segments that grew 8% and 10.6% respectively. These two pillars clearly demonstrate how high-quality convergent services can boost monetization. Our new businesses also continue to gain traction, now accounting for 11.7% of our total revenues over the last 12 months, an increase of 2 percentage points year-over-year. This evolution underscores the success of our strategy to diversify and modernize our revenue base, ensuring sustainable growth in a highly dynamic and competitive market. Now on slide five, we highlight the key drivers behind our continuous strength in mobile. In the third quarter, we recorded our highest ever post-pay net additions, surpassing 1 million nail access X machine to machine and dungles. These outstanding results reflect the success of our value-driven strategy and reinforces our leadership in the mobile market. Postpaid access grew 7% year-over-year, reaching nearly 50 million customers, while 5G adoption continues to accelerate with more than 21 million customers now benefiting from our award-winning technology. In fact, in September, Vivo's 5G network was recognized by OpenSignal as the fastest in the world for the second consecutive year. Customer retention remains a top priority. Postpaid churn acts machine-to-machine, and Dangos reached just 0.98%, a testament to the loyalty of our high-value customer base, though we still see room for further improvement. ARPU rose 3.9% year-over-year, reaching a record high of R$31.5, supported by upselling and growing demand for data. These results demonstrate the effectiveness of our customer-centric approach, our ability to innovate, and the strength of our mobile platform as a key growth engine. On slide six, we explored the continued capabilities of our fiber business and its convergence with mobile. FTTH access, once again, Posted double-digit year-over-year growth, continuing the strong momentum we've seen in recent quarters. This performance is largely driven by our flagship convergent over Vivo Total, that saw an impressive 52.7% increase year-over-year. Notably, Vivo's convergent base already nears 62% of all fiber access. This reinforces the market's clear shift toward bundle solutions. Our fiber footprint also continued to expand. In the last 12 months, we passed over 2.2 million new homes, reaching a total of 30.5 million. The take-up ratio improved to 24.9%, reflecting stronger demand and better conversion. Churn continues to trend downward, marking the fifth consecutive quarter year-over-year improvement. For Vivo Total specifically, churn is 50% lower than our already below-market fiber churn, highlighting the stickiness and value of the offer. Today, nearly 85% of FTTH sales in our stores are done through Vivo Total. This not only boosts lifetime value, but also drives higher user expenditure, with Gross Hour Pool reaching R$230 per month for Vivo Total subscribers. On this plan, we have reached 1.7 mobile postpaid lines per fiber connection, a clear demonstration of how Convergence supports both lower churn and sustain ARPU growth for mobile and fiber. Turning to slide seven, we dive into how our B2C segment is evolving. We focus on how new businesses are driving incremental value and enhancing customer monetization. Over the last 12 months, total B2C revenues reached R$ 44.1 billion, up 5% year-over-year. This growth is supported by both our core connectivity services and the expanding contribution of new businesses that grew 15.3% and now represent 3.1% of total revenues. Revenue per RGU continues its upward trajectory, reaching 64.6 reais per month. This reflects our success in deepening customer engagement and expanding share of wallet. Looking at the breakdown of new businesses, we see strong performance across key verticals. Our video and music OTTs remain a major growth driver. with revenues up 19.9% over the year. Meanwhile, one of our health and wellness initiatives, Vale Saúde Sempre, now has around 450,000 subscriptions, up 27% versus last year, with plans starting at just R$ 17.90 per month. In financial services, Vivo Seguro, continues to scale rapidly, already counting with 600,000 insured devices, a growth of 42% year-over-year. Today, over 40% of our smartphones sold in vivo stores are bundled with insurance, underscoring the relevance of this offer. These performances emphasize our strategy of positioning Vivo as a comprehensive digital platform, where connectivity is just the starting point for a broader ecosystem of services tailored to our customers' evolving demand. Heading to slide 8, we highlight how our B2B segment is increasingly being driven by expansion of digital services. Over the past 12 months, B2B revenues reached R$ 13.2 billion, up 15% year-over-year. This performance was led by digital B2B that grew an impressive 34.2% and now accounts for 8.6% of our total revenues. Connectivity also continued to grow steadily, rising 5.6% in the same period. A major milestone this quarter was the signing of the largest IoT deal in the world. This partnership includes the installation of approximately 4.4 million smart water meters in the cities of São Paulo and São José dos Campos by 2029. Vivo will also provide the platform to monitor and process the data generated by these devices, reinforcing our leadership in large-scale digital infrastructure. This combination of robust revenue growth and strategic partnerships positions Vivo as a key enabler of digital transformation across multiple industries. With regards to ESG, on the next slide, we've reinforced vivo leaderships now with both new commitment to biodiversity and long-term environmental stewardship. This quarter, we launched the Futuro Vivo Forest, a 30-year initiative dedicated to regenerating the Amazon. This project will preserve 800 hectares of native forest by planting nearly 900,000 trees in the states of Maranhão and Pará, bringing back the local fauna in the region. Beyond its environmental impact, the initiative also brings benefits to the local communities, aligning sustainability with social inclusion. The announcement was made during the Encontro Futuro Vivo, an event that brought together acknowledged leaders to reflect on the future life of our planet. It marks a new chapter in our ESG journey focused on long-term regeneration and climate resilience. In governance, Vivo continues to stand out. We ranked first place across all sectors in B3's Corporate Sustainability Index, EZB3, and received recognition for excellence in corporate social responsibility under the ISO 26000 standard. We were also honored with several awards this quarter. Vivos Compliance Program was named Program of the Year at the Leaders League Compliance Summit, and we were recognized as the top company in TMT category in Exames Magazine's Melhores e Maiores ranking. Finally, we are proud to be ranked sixth among the best companies to work for in Brazil by Great Place to Work and to be the only Brazilian company and the only one in our industry featured on Fortune's Change the World list. These achievements reflect our ongoing commitment to creating shared values for society, the environment and our stakeholders. With that, I will hand the floor to David, who will walk you through our financial performance for the period. Thank you.

Thank you, Christian, and good morning, everyone. Starting with slide 10, we take a closer look at the evolution of our cost structure and provide an update on the sale of concession-related assets. On the left-hand side, you will see that total cost reached R8.5 billion in the quarter, up 4.6% year-over-year, growing below inflation for the period. This performance highlights our ability to strike the right balance between commercial intensity, operational efficiency, and ongoing digitalization efforts. Cost of services and goods sold rose 9%, driven by the increase in service cost. This was due to the accelerated growth of digital solutions, particularly in the B2B segment. On the other hand, the cost of goods sold declined by 5%, benefiting from an improved margin profile in the sale of handsets and accessories. Operating costs grew just 2.6% year-over-year. Personal expenses increased 3.2%, mainly due to the salary adjustments, which we partially offset with a more efficient management of our benefit programs. Our largest cost line, commercial and infrastructure, rose slightly above 4%, with higher commercial activity being mitigated by gains from digitalization. This quarter was marked by the acceleration of the sale of assets related to the fixed void concession, resulting in a net gain of 232 million reais, up from 95 million in the same period last year. These gains include 199 million reais from real estate and 34 million reais from copper. we reaffirm our confidence in delivering R4.5 billion in asset sales over the coming years. As a result, EBITDA grew 9% over the year, reaching R6.5 billion with a 100 basis point expansion in margin to 43.4%. Moving to slide 11, we highlight our operating cash flow performance. CAPEX totaled 6.9 billion reais in the first nine months this year, up 3% year-over-year. Important are CAPEX to revenues ratio decline 60 basic points to 15.7%, reflecting our ongoing focus on efficiency and prioritization of high return investments. As a result, operating cash flow before leases reached R11.2 billion, a 12.4% increase compared to the same period last year. After leases, operating cash flow rose 15.2%, totaling R7.2 billion, with a 16.4% margin. This performance underscores the strength of our result profile and the effectiveness of our investment strategy. Looking ahead, we see significant potential to further optimize leasing costs. On average, there are 1.4 operators using the same towers as us. But in similar mature markets, this number exceeds 2 operators per tower. This opens opportunities for contract renegotiation and increased infrastructure sharing that will further enhance our ability to generate cash. On slide 12, we present how our resilient operating performance continues to support profitability and cash generation. Net income for the first nine months this year reached R4.3 billion, up 13.4% year-over-year. This growth was consistent across all quarters this year, where we have been growing double-digit, reflecting our solid execution and financial management. Our net cash position strengthened further, reaching R3 billion at the end of September, a significant increase of R1.7 billion a year earlier. Including IFRS 16 effects, our net debt stands at R11.1 billion, with a leverage ratio of just 0.5 times EBITDA over the last 12 months, underscoring how robust our financial structure is. Free cash regeneration remains healthy, totaling 6.9 billion reais in the period. While this represents a slight year-over-year decline due to some facing effects, the third quarter already shows a 5.5% increase, signaling a positive trend. These results reinforce our ability to consistently generate value even in a recovering macroeconomic scenario. Moving to the last slide of the presentation, we reaffirm our commitment to shareholders' return. From January to October this year, we have already distributed R5.7 billion to shareholders through a combination of interest on capital, capital reduction and share buybacks. In addition, we declare another 2.7 billion Reais in interest on capital to be paid before April 2026, further supporting our guidance to distribute at least 100% of net income for both 2025 and 2026. Since the beginning of the year, we repurchased 48.4 million shares, equivalent to 1.5% of our current capital stock. Our buyback program of up to 1.75 billion R$ to be repurchased until February next year remains active and aligned with our capital allocation strategy. It's also worth noting that our share continues to gain market relevance, now ranking as the 34th most lucid share in the Brazilian Stock Exchange, an improvement of 11 positions year-over-year. These actions reflect our strong commitment to value creation and consistent shareholders remuneration. Thank you and now we can move to the Q&A.

Thank you. We're going to start the Q&A section for investors and analysts. If you wish to ask a question, please press on the raise hand button. If your question has already been answered, you can leave the queue by clicking on the same button. Wait, I'll pull four questions. Our first question comes from Luis Chagas from XP. Please, Mr. Chagas, your microphone's open.

Hi, Christian, David, and João. Good morning. Congrats on the robust results again. So my question regards mobile services revenues. So we saw a slight deceleration in MSR in this quarter. So how do you see the competitive environment in mobile? Did it affect performance in this quarter? Thank you.

Thank you, Luis. Christian, okay, I will answer your question. And we grew 5.5% over here. It's good also to split, you know, the mobile postpaid service revenue grew 8% and the prepaid minus 7.6%. Starting with the prepaid. The prepaid, it's a better performance than we had last quarter. that's signaling a positive trend. And even when you compare the quarter over quarter growth, there is a positive growth. So we are bringing up revenues in prepaid while we keep migrating prepaid to postpaid. In postpaid, our growth was 8%. It's also a very strong growth considering the amount of revenues coming from postpaid. Out of our total mobile, we are talking about 8.3 billion reais coming from the postpaid segment. And we had Also the best and net ad performance of the last quarters. Now, if you look back to the third quarter of 24 and you follow every single quarter, it's the first time that we surpassed 1 million postpaid net ads. So that's a strong performance. And the churn... if we keep it in the 1% level, if we exclude machine-to-machine and dungles, it's below 1%. At the same time, we've been able to increase ARPU at around 4% when you compare year over year. So that's a positive result. Of course, there is always small seasonality impact of price increase. If you look back in August 24, we increased price for 40% of our hybrid customer base. And this August 25, we increased for the same segment, the hybrid, we just increased for 25% of the customer base. So going forward, although it's a competitive market, we have positive trends of mobile service evolution in the next quarters. I don't know, Luis, if there's anything else that you want me to address.

Yeah, thank you, Christian. Thank you, Luis.

Our next question comes from Gustavo Farias from UBS. Please, Mr. Farias, your microphone's open.

Hi, everyone. I'm Christian DeVisual. Thanks for taking my question. So two on my end. The first one on leasing, if you could comment further on the leasing efficiencies you guys are pursuing on specific measures and possibly, if possible, the timing, we should expect them to start to have further impacts, higher impacts on the leasing payments. That was my first question. And the second question, if you could give us an updated outlook for the sale of assets related to the concession migration. We saw most of it came from real estate. So how should we expect them to behave going forward in the next several quarters? Thank you.

Gustavo, thank you for the question. So regarding the first one on leases, I mean, the evolution of lease depreciation and interest accruals, I mean, remain consistent compared with previous period. In fact, if you look to EBITDA after leases, grew even more than EBITDA before leases, in the quarter, but also in the full year. So for the first nine months, around two percentage points, even more, 0.2. I mean, when we look about payments, there is always volatility across the quarters. But I think it's important to look to the number we have this quarter, which is around 1.3 billion reais. And this is consistent and is somewhat flattish compared to the fourth last quarter. So this is important because that shows a positive trend resulting from the negotiation that we are having with the Towers Company. So for the coming years, it is difficult to talk about any precise quarters. But the information that we also show in this presentation has to do with the current tenancy ratio that in Brazil we believe is quite low. We are talking about 1.4 tenancy ratio in Brazil. When we talk about other countries where they have the same number of carriers, we are talking about above two tenants per tower. So this brings opportunity to negotiate, not only in terms of unitary costs, but also being more rational in terms of deployment strategy, but more importantly, increasing the infrastructure that we sell that that we share with other other operators now so all the deployment that we will do in the coming years will be um our aim is to maximize the compensation with the unitary cost and sharing sharing more so we are expecting um also positive trends coming for the next year in this line

Can I go to the second one, Gustavo, if you have any other doubts about leases that we can follow on or otherwise I go to the copper and real estate.

Yeah, thank you, Davi. It was pretty clear.

So going to the second question, Gustavo, as we stated, and now we restate it, now we, from the migration, we will capture no benefits coming from the sale of copper, approximately 3 billion reais positive cash effect, net of extraction costs from the sales of around 1%. 20 000 tons of copper and cable coating okay that was what we said and restate here again and then additionally to that 1.5 billion reais proceeds from the sale of assets okay here the real estate piece net of the desmobilization costs okay so these are the two figures that we that we stated before and now for the third quarter We started delivering that. So we recorded like R$232.4 million. And that's divided in sales of copper, R$33.7 million, and real estate, R$198.7 million. That compared to R$32.4 million compared to R$95 million that we had one year before. in the third quarter of 2024. That is also what we anticipated. The benefits of the immigration are starting now, but it will ramp up and accelerate in 2026 and 2027, with the project expected to be completed in 2028. So if you compare also what we had in the next and the last year, copper was around 63, real estate was 32. adding to 95. Now we had 34 actually in copper and 199 in real estate. Copper seems to be in a positive trend and will be in a positive trend because we have been able to sell more and more. And real estate depends on the asset that we sell each quarter. So adding to the 1.5 that I described before.

Hi, Christian. Just to follow up. So Is it fair to think that the sale of real estate could be a little volatile based on what you commented, Ray?

You're right.

Sorry.

It depends on what we sell. And some quarters we're going to see more and some quarters we're going to see less. So this quarter was a good one. Because to the total of 1.5, we're talking about around 200. But we still have another 1.3, no?

Okay. And about the copper, it should follow a more volatile or a more stable pace of sales?

I think more positive evolution. Positive evolution. We are going up. It's starting next quarter, it will be in January that we are going to, because you know, as you know, we have 1.2 million customers connected to the copper. So what we are doing now, we are replacing to new technology, in this case fiber. and liberating the copper, and the extraction will start in full speed starting next quarter. So we're going to see a positive trend in copper and a more volatile in real estate, although out of the 1.5, we talked about 200 here now.

Thanks, Christian.

Our next question comes from Marcelo Santos from JP Morgan. Please, Mr. Santos, your microphone is open.

Hi, good morning, Christian, David, João. Thanks for the opportunity for asking questions. The first question, I wanted to go back to something that was asked first about the mobile, specifically on prepaid trends. I mean, you mentioned that you had sequential growth, but actually that's the second quarter of sequential growth in prepaid. So it looks like a different trend than we have been seeing, despite you continue to migrate clients to postpaid. So can you talk a bit what's going on on the prepaid? Is it something more like Vivo-led trends? some initiatives you're putting forward or a market is a bit better just just want to know if you could throw us a bit some more color on the positive trends and we're seeing prepaid and the second question is regarding m&a in the isp space so uh i would like to better get a feeling of what's your appetite for inorganic moves specifically on the isp space thank you very much

All right, Marcelo, we see a positive trend in the prepaid. Here is each company works in a different way. What we see here is the customer base that we have recharging every month is going up. Also, our ability to offer more data to our customer base is impacting, and also digital services is impacting in a slight ARPU increase. So, although there is a very challenging landscape for competitive and also our strong migration to hybrid, that has a negative impact in the prepaid revenue results, we see, yes, a positive trend for prepaid as well. As much as we see also a very positive in the postpaid, as I said before, net ads are in record numbers, churn is in lowest levels. So the combination of both give us optimistic trend for mobile service revenue for the future.

Thank you.

About ISPs, the specific question was, can you repeat it, please?

I just wanted to get a sense of your appetite for inorganic moves in the ISP space, whatever you can discuss about this.

Okay, great question, Marcelo. We reached almost 31 million home paths in fiber. The number of customers that we have are also growing. As you could see, net ads of Vivo has been in the highest level and compared to the other players in a very strong gap. It's a positive gap for us. And churn is going down. We highlighted our churn level as 1.46. But when you go to the Vivo Total Fiber churn level, it's low as 0.7%. Now, as you follow the market, that is a record churn level for any player in our market. So going forward, of course, we believe that considering the size of the Brazilian market, that getting more homes passed is in our objectives. Brazil has 90 million homes, maybe 60 million are more addressable to a fiber deployment. And we have at the moment a little bit less than half of it. So we want to be competitive. in a stronger position in this market. So we could do that organically, as we've been doing. We have CapEx for HomePass in a very low level. We've been improving that, optimizing that. So we're talking about lower than R$200 per HomePass. And we need to connect more over our own network. So the first one, deploying more network, we're going to do by our own, although... we find a network that follows some of our criteria, technical quality and also not so much overlap with our network and in the right pricing. So far, we haven't found any like this. There's some movement in the market. Some of these assets we already assessed and analyzed. We couldn't get to an agreement due to maybe failing in one of these three criteria that I just described for you. Also, we have the opportunity to penetrate more our network. We have just acquired FibroZil and still waiting for the antitrust final approval. Their take rate was around 16%, actually our take rate over their network. But I do believe now having the full control of the network will allow us to improve the stake rate closer to the one that we have in our own network that is around 25%. So it will be a combination of more network organically or if we find an asset that comply with the three criteria that I just described and more penetration in our own network. And this penetration will be following this very strong and positive trend that we have. As you could see, net ads are above 225,000 clients. That's the best result that we have this year. And we are in a positive trend because we are acquiring more customers and we are retaining more customers as turn level is in a very low historical situation.

Perfect. Thank you very much for both answers.

Our next question comes from Luca Brindgin from Bank of America. Please, Mr. Brindgin, your microphone is open.

Hi, good morning, everyone. Thank you for taking my questions. I also have two from my side. So the first one is regarding concessions, a follow-up. on the previous question on the migration, not only talking about the assets that were being sold, but also on the synergies and efficiencies that you mentioned we would be seeing in terms of cost savings. Have you already started to see anything now and how is the timeline for those to be captured? And we start to see them in results. And then the second one on B2B digital, It continues to perform really well. And do you guys think you should continue to see this pace of expansion? And what are the verticals within this segment that you think will be the drivers for the coming quarters? Thank you.

So going to the first one, Luca, yes, we're not giving numbers of this like saving related to cost efficiency, no. Of course, it will mostly impact our commercial and infrastructure line. But it will be captured gradually until 2028. We're not showing what's the number quarter by quarter. Here now, the focus is in trying to capture as quickly as we can what I just described before. of the copper extraction and the sale of net and real estate, that it's required now for that to migrate customers. We're gonna do that as fast as we can, protecting the revenue, protecting the customers, And again, when we do that, of course, we're going to be in the end capturing a lot of other synergies of people that are dedicated to that and other indirect costs that we have to deal with this concession. For the moment, we're going to be giving more clarity in the number that we gave to the market, that is the R$4.5 billion. To the second question about B2B, yes, we are very positive about the evolution of the B2B digital services. As you described before, it has a very strong positive trend. If you look at the last 12 months' revenues, there's a year-over-year growth of 34.2%. The areas that we see growth are the same. Cloud, important one. Here, we've been doing many things. We bought IPNet, so we're expanding our portfolio, trying to be much more diversified, just not only having a very strong dependency in Microsoft, but adding Google, Oracle, among others. Also going up... in the managed services. That's why these acquisitions, VITA and IPNet, were essential, because we could bring in some talent and certified professionals to help us in managed service, and we can look into other assets. Then there's IoT messaging. I think here at IoT, we gave the great example of SAP ESPY. We see that the beginning of a huge opportunity in IoT. That's in the water business, but we also see in the agribusiness and we are closing many deals there. So we grew 25% year over year in this line as well. Cyber is the one that had a very strong growth, but the volume is still lower. Maybe is where we're going to focus in the future as well. As a group and as Vivo, we see great opportunity for cybersecurity. And then there are other solutions and IT product sales that we also see a positive trend. So we do believe that the penetration of digital services in B2B through Vivo will grow. Today, on average, we have 15%. It's much higher in the top. segments of our portfolio of clients, but we want to increase it much more in the SME segment. And we see huge opportunity leverage our channel capability. We have 5,000 sales reps and of course the brand and the combination of connectivity with digital services.

Super clear. Thank you for the answers.

Thank you, Luca.

Our next question comes from Victor Tomita from Goldman Sachs. Please, Mr. Tomita, your microphone's open.

Hello, good morning, all, and thanks for taking our questions. Two questions from my side. The first one is that you cited the competitive environment when discussing mobile in some prior answers. Could you give a bit more color, a bit of an update on how you are seeing the competitive situation in mobile going into Q4? And my second question would be if you could give a bit more color on the topic also of sales and copper and real estate assets, but more from an operational standpoint in terms of communicating with copper users, as mentioned, moving them to fiber, mobilizing field teams to extract copper, negotiating real estate, et cetera. How has that execution side been going? Whether there have been any surprises on that execution side relative to what you expected, just so we can have a bit more of a qualitative view of how this is going. Thank you.

Okay, Victor, I'll start with the second one. Okay, it's a good question. It's important to highlight that we've been doing that for a long time. It's not that we have started doing that. If you look at real estate, even during the concession period in the last years, we were able to get authorization from Anatel and we sold important properties. assets during the last years, and that we needed to mobilize and take out everything related to the concession from the real estate, and we were able to do that. We sold Martini Energy Carvalho, that was an important building for us. We sold... There's important neighborhoods of Sao Paulo. So we had already established here a real estate process to analyze, evaluate, and demobilize all the assets that we wanted to sell. And we continue doing that now with much more flexibility because we don't need more authorization to do that. Regarding the corporate and the customer, as you said, that's also a very good question. We've We did that in the past as well. It's not the first time that we do that. We were already very focused on replacing copper with fiber. But in the past, we needed to get full authorization of the customer. Now, of course, we communicate, we explain the benefit of fiber. But in the end, if the customer doesn't want to, We have also the possibility to say that we are running out of any type of assistance to this technology that give us the right to replace it. Mostly, what we see in most cases is that customers want to have the migration. We put in place a very robust process. We have a dedicated team. in a PMO focusing on doing that. And what we see here is not only we migrate customer, but we also can see opportunities to upsell. An example of a pure corporate client that we offer fiber to the voice and we can also offer broadband and ended up having a much better ARPA with these customers. In other cases, copper plus a fiber in a very low speed offering, we could also be able to offer upsell and also Vivo Total. So it's working pretty well. That's why it's giving us the opportunity to sell important assets in important neighborhoods where we were like finishing, concluding the migration to fiber to all the customers that we have. I think, I don't know if I answered, otherwise I go, Victor, to the first question.

Yeah, that was clear.

Okay, let's go to the first. Look, the market dynamics is, of course, competitive. It's not very different from what we saw in the previous quarters. We've been doing, as we normally do, adjusting price based on the inflation and the period that we can do that. focusing a lot in customer experience to retain as much as we can, playing convergence in the best way, innovating in our offering. We just launched the Vivo Easy Lite that is based in credit card that has been a huge success. And we'll be doing that in a very positive way, as you could see in the performance that we had in NetAds. Now, I think NetAds is a great example of the trend going forward. For the first time, we surpassed 1 million customers in postpaid net ads. And the postpaid churn is in a very low level. Now we're also able to increase our pool. So competition is there. We have different competition depending on the region. you've been able to respond to that both in prepaid hybrid and postpaid and also playing strongly the opportunity to sell more servers to the same customer adding not only the fiber to the mobile but also the digital services now our success performance selling digital services and mainly entertainment for these customers is also given here now we are reaching 4 million customers both mobile and some cases convergent another case just fiber that we are able to sell digital service this is only one example of one digital service but we are also able to sell others we expect this positive trend to continue keeping the very competitive environment that we have very clear thank you Thank you, Victor.

Our next question comes from Maria Clara Infantosi, from ITAUBBA. Please, Mrs. Maria Clara, your microphone is open.

Hi, Christian, Davison. Thanks for the opportunity. I have two questions here on my side. So the first one, can you please provide us an update how you perceive the competitive landscape in the fiber business? It caught our attention that our pool continues to fall for the second quarter in a row this time. And the second question would be related to CapEx. It also caught our attention the sequential increase this quarter. And with the integration of Fee Brazil soon, how should we think about the CapEx evolution in the following quarter? Thank you.

Hi, Marie-Claire, how are you? On the fiber, again, not to repeat myself, but it was a very strong quarter for us. We are talking about a revenue that's already 2 billion reais with a growth of 10.6%. Net ads is also a record level. If you look back the last five quarters, that's the strongest one. And churn, if you look back many years, is the lowest one. When we talk about specific ARPU, here you need to put into account. First, we are deploying new areas because we're expanding our network. Sometimes you have promotional entry offers. But more importantly, is that we are selling 85%, if you consider just one channel, our stores, fiber with mobile, in vivo total. And then there is a change in the allocation of ARPU because we're selling two services or more. to the same customers. And we also stated here that on average, Avivo Total customer has one fiber, but has 1.7 POS-PAID lines. Add to that that we also sell a lot of OTT, video OTT. So more than just looking at a specific service ARPU, We should look at the customer output, or we should look at the line of the absolute number of the fiber that, again, is growing double digits and is reaching 2 billion per quarter. So we are very happy with our performance. As I stated before, we want to expand to more areas. We want to penetrate more our network. We want to sell more convergence to our fiber customers. And also, we launched new speeds. even 10 gigas as one of the speed that we just commercially launched. So we also see opportunities to upsell in our customer base to one to two and up to 10. So the competitive scenario is hard as you can see we have thousands of customers but I think we have assets and attributes that are very difficult to be replicated and that's shown in our net ads that it's well above the second player sorry regarding capex we are keeping the low intensity that we have right now capex over revenues and I think this should be the metric to look forward

So even with the acquisition of FibroZil, we should think about a continuation of the declining capex over revenue strength, right?

Yeah, the acquisition, if it's approved, it's going to be less than two months and it brings EBITDA and brings a little bit of capex. Operating cash flow impact is almost zero. It's slightly positive, no?

Very clear. Thank you for the answer.

The impact in CAPEX is much more than replaced or compensated by the positive impact inhibitor. So, you shouldn't be worried about the CAPEX impact of FibroZil.

Our next question comes from Mati Hoblard from Barclays. Please, Mr. Hoblard, your microphone is open.

Hello, and thank you for the presentation. I had a few follow-up questions. One on the lease costs, which you are saying could be contained or declined. I was wondering if this is still linked to the acquisition of some of the oil towers, and it was basically the prospects of continuing to rationalize your tower portfolio linked to that acquisition, or it was something more structural? The second question was about B2B and more specifically, data centers and cloud. Now, that may be very Eurocentric, my question, but certainly what we're seeing over here is that with geopolitical changes, sovereignty has become a big topic. And so a lot of countries and companies are thinking about, you know, having locally owned data centers. And I was wondering what was the debate there in Brazil and whether you guys had any data centers directly or plan to have in that context. And lastly, just to make sure I got the question about the fix Harpo right or rather the answer. Are you basically saying that one of the reasons why the ARPU is down is because, I guess there's a discount to the sum of the parts in your product, and maybe you're allocating it a bit more to the fixed business than the mobile business? I mean, that's really an accounting question. Thank you.

Yes, this is Christian here. Go to the last one and then Davi will jump to the first and then we go back. Yes, there is an allocation decision here. And I address that when we talk about Vivo Total. If you look at the number of customers that we have in Fiverr, 7.6 million. 3.2 are already in vivo total. And I guess that's looking at a specific service ARPU. Considering that our strategy is driven by selling more to the same customer, Convergence being the key element of this strategy is going to be hard because there is some allocation here. What is important is that in absolute numbers, we are growing revenues in double digits. And commercially speaking, net ads are in a very high level and churn is in the lowest level. Yes, and there is some accounting that may be impacting the distribution of revenues among the two technologies.

Matthew, this is David. So the first question about the leases. Look, this quarter we have no impact from what you mentioned about other carriers that just left the business a few years ago. What is benefiting the trend is that before we were five carriers, now we are three here in Brazil. That means that we had to review all the strategy of sharing infrastructure that before we were sharing because we were five and now we end up being single-gen in a percentage of our sites, that we see a big opportunity. So as I mentioned before, let's say in the next three, five years, we are going to renegotiate a significant part of our sites where the contracts are about to expire. And therefore, we are prepared to face those negotiations with an approach where we can maximize the value in terms of return on capital, particularly to understand which are the strategic sites, which are the sites that we could pay less, which are the sites that we could share with someone who is just having a similar site very near our existing infrastructure. So we will see synergies coming from this process that will be shown in our cash flows in the coming couple of years. years now so our plan is to continue uh showing uh positive numbers in terms of free cash flow um and we will keep you updated on the number that we have just shown this quarter so we are talking about a 1.4 um agent per per tower uh compared to other countries where it's it's about it's above two we could be talking about specific countries where us we're talking about 2.2 So here the 1.4 we want to keep you updated to see how we are progressing, make this number higher and this will fund all the new deployment that we need to have to keep having the best quality of 5G in Brazil.

Going to the second question, no, we don't see the same issue that you described in the US. Here what we are trying to have is a more diversified portfolio of vendors to have it much more spread among different players. Many players are now entering strongly in the cloud area. And that's good for us because we are the key commercial partner of all of them. And we have a relationship with customers that these players don't have. What we see some companies, they want to have a hybrid strategy, having some on-premise servers combined with a cloud solution, but nothing related to what we described before at the moment here in Brazil.

Oh, that's very clear. And just to follow up on that, do you guys have data center capacity? I mean, do you have infrastructure you own in Brazil that is important in size or is it essentially hyperscalers?

Yeah, we have a sales list back that we used to have a data center that we sold and we have an agreement to occupy part of this data center. Apart from that, we don't have other data center.

Thank you very much.

We use other big players in data center and we hire capacity from their data centers and resell it. So we have a commitment to use part of their capacity, but it's not ours.

That's very clear. Thank you, Christian. Thank you so much.

Thank you. The Q&A session is over. We'll now like to hand the floor back to Mr. Christian Jabada for the company's final remarks. Please, Mr. Jabada, the floor is yours.

Thank you. Thank you all again for participating in our call. Just want to highlight the strong results that we just presented, and more importantly, the positive outlook that we foresee, especially based on our strong performance and consistent commercial performance and our ability of monetize and retain customers in all services and in all segments if you have any other additional doubt please reach our team thank you again and see you soon vivos conference calls now close it we thank you for your participation and wish you a very good day