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

Good morning, ladies and gentlemen. Welcome to Vivo's first quarter 2026 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 mutar 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 their respective forward-looking statements. Present at this conference, we have Mr. Cristian Gebara, CEO of the company, Mr. Rodrigo Monari, CFO and Investor Relations Officer, and Mr. João Pedro Soares Carneiro, IR Director. Now, I will 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 2026 earnings call. Today, our CEO, Christian Shibata, will begin by presenting Vivo's execution in connectivity and digital services, as well as highlight our key ESG accomplishments for the quarter. Then, Rodrigo Monari, our CFO, will comment on our controlled cost evolution, free cash flow generation, profitability, and shareholder distribution in the period. With that, let me turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you for joining us today. Vivo began 2026 at a strong pace. Once again, we delivered growth above inflation across our core metrics, supported by customer base expansion, resilient revenue performance, and continued margin improvement. On the operational side, postpaid remains a key driver of value creation. Our postpaid base grew 6.9% year-over-year, reaching 72.1 million access representing 69.5 percent of our mobile base this execution reflects a healthy combination of net ads discipline pricing and focus on customer experience fiber also remains an essential growth vector we reached 8 million homes connected advancing 11.5 percent year-over-year with our footprint expanding to 31.5 million homes best beyond scale Fiber strength convergence deepens customer relationship, reduces churn, and supports a stronger revenue profile. Regarding our financial results, total revenue grew 7.4% when compared to the previous year. Mobile service revenues delivered a 6.6% increase, while fixed revenues grew 5.1%, underscoring the sustained contribution from Fiber and our B2B portfolio. In terms of profitability, EBITDA rose 8.9% year-over-year, lifting margins to 40.2%. Operating cash flow reached R$4.2 billion, an 8.5% improvement, while net income expanded 19.2% to R$1.3 billion. Free cash flow generation totaled R$2.2 billion during the quarter. our efficient operations allow us to remain fully committed to shareholder returns. So far, we have allocated 7 billion reais for distribution in 2026, reaffirming our confidence in meeting our guidance for the year. Moving to slide four, we highlight the ongoing transformation of our revenue mix as it continues to drive positive impact on our top line. In the first quarter, Total revenues grew 7.4% year-over-year, led by a well-balanced contribution from both mobile and fixed services, as well as the growing relevance of our new business. Postpaid revenues rose 7.8% year-over-year, demonstrating the strength of our value proposition, balanced pricing, and enhanced FTTH revenues. Also improved, advancing 9.3% driven by sustained demand for high-quality connectivity and convergence. It's also worth highlighting the strong performance of our handsets and electronics line that grew 26.6% year-over-year, fueled by a more competitive portfolio and a new go-to-market strategy that enhanced the availability of in-store devices, accessories, and electronics in general. Our new business continues to play a central role in our strategy. They now represent 12.1% of total revenues, an increase of 1.8 percentage points versus first quarter 25, with meaningful contributions from both B2C and B2B solutions. This progress emphasizes our long-term vision of revenue diversification, scaling of digital services, and consolidation of our ecosystem. As a result of our commercial momentum, post-trade and fiber revenues now account for over 74% of service revenues, highlighting a structurally stronger and more resilient revenue mix as we begin 2026. On slide 5, we show how our solid mobile operation was once again driven by Vivo's differentiated network and superior customer experience. By the end of this quarter, of the first quarter, our total mobile base reached 103.7 million access, represented year-over-year improvement of 1.3%. Post-paid, excluding machine-to-machine and dungles, remains a key growth engine, expanding 7.2% to 51.6 million access, while machine-to-machine and dungles also delivered a health increase of 6.4%. Commercial performance was particularly strong this quarter, with postpaid net additions accelerating 22.7% compared to last year, further underlining Vivo's leadership in this segment. Importantly, this evolution comes with value. Postpaid terms remain well controlled at 1.0%, confirming the depth of our customer relationships and loyalty. At the same time, mobile art has reached a record level, up 5.7% year-over-year as customers continue to migrate to higher-value plants and consume more data. In prepaid, while access growth is still negative, revenue is gradually improving, with the year-over-year decline narrowing to minus 1% this quarter. This is the result of ongoing efforts to stabilize the base, enhance monetization, and prioritize customer occurrence. Overall, these results showcase the resilience and quality of our mobile platform. combining continuous phosphate expansion, record ARPU, low churn, and consistent recovery of prepaid revenues. This gives us confidence in our strategy and supports sustainable growth throughout the year. With that, let's move to fiber. Turning to slide six, we further highlight the strength of our fiber business and growing role of convergence as a key differentiator for VIVO. Fiber access demonstrates continuous momentum. maintaining double-digit year-over-year increase and reaching 8 million connections. This performance clearly reflects customer preference for high-quality connectivity and integrated solutions, with VivoTotal once again standing out. Growth is progressively driven by convergence. VivoTotal access expanded 32.6% year-over-year, reaching 3.6 million customers, and now represents 44.7% of our FTTH base, an expansion of more than 20 percentage points in just two years. This confirms the attractiveness of our convergent proposition and its ability to capture even more customers. Our fiber footprint also expanded, with homes past reaching 31.5 million, up 6.2% year-over-year. while the take-up rating proved to 25.4%. This combination strengthens our conviction in achieving network penetration above 30% over time as we continue to translate fiber expansion into customer-based growth. Moving to slide seven, we give more color on the acceleration of our B2C businesses supported by stronger totalization of our customers' needs and growing relevance of service beyond connectivity. On a last 12-month basis, total B2C revenues reached 45.7 billion, growing 5.9% year-over-year. This performance shows the resilience of our core connectivity as well as a strong acceleration in new business that expanded 31.5% in our account for 3.2% of total revenues. Monetization trends remain very solid. B2C revenue per RGU increased to 67.2 reais, underlining the effectiveness of our strategy to deepen customer engagement, drive gross selling, and extract greater lifetime value from our existing base. Looking specifically at new business, we continue to see robust and well-balanced growth across Our main verticals, video and music OTTs remain the largest contributing, growing 24.8% over the year. Consumer electronics delivered another strong results with revenues up 56% supported by higher demand during the period. Health and wellness continue to stand out as one of our fastest growing categories with revenues up nearly 68% supported by the strong scaling of Vale Saúde. that now exceeds 500,000 subscribers, up 13% over the year. This highlights our ambition to scale services that are adjacent of our connectivity solution. In parallel, we maintain the expansion of our financial services capabilities. Through VivoPay, we launched our proprietary installment plan. broadening access to credit and enabling a more seamless purchasing experience for handsets and electronics, while further supporting monetization and customer retention. Altogether, these developments emphasize Vivo's evolution into a broader digital platform, while connectivity remains our core foundation. An increasingly diversified ecosystem of services is enhancing customers' lifetime value, expanding opportunity, and positioning us for sustainable growth over the long term. On slide eight, we provide an update on the development of our B2B business and how the ongoing shift in our revenue mix toward digital solutions continues to gain traction. B2B revenues reached 13.7 billion reais, growing 11.8% year-over-year, once again, delivering a remarkable performance. Digital B2B remains the main growth lever, advancing 23.8% and reaching 5.4 billion reais over the last 12 months, while B2B connectivity also posted robust growth of 5.2%, demonstrating the solidity of our enterprise services. Within Digital B2B, performance remains well balanced across the portfolio. Cloud services expanded 29% over the year, supported by rising demand for scalable infrastructure and hybrid environments. IoT and messaging advanced 70.3%, while digital solutions grew 21.1%, driven by broader adoption of customized enterprise offers. Data protection. In this context, B2B is gaining relevance within Vivo's overall revenue mix, reinforcing the segment's role as a key growth pillar evidenced by accelerating demand from companies undergoing digital transformation across multiple industries. A clear example of this strategic position is our partnership with Marcel Martinho in the agribusiness sector. This initiative illustrates Vivo's leadership in enabling data-driven, sustainable and competitive operations tailored to customers' needs. More broadly, partnerships like this underline how our role is evolving beyond connectivity, positioning Vivo as a trusted digital partner for enterprise customers. Turning to slide nine, we show how ESG remains a core pillar of Vivo's strategy, with consistent progress across people, environment, and governance, translating into tangible outcomes for our stakeholders. Vivo continues to be recognized by major global benchmarks. We lead B3 corporate sustainability index across all sectors for the third time. Are still the only Brazilian telco included in the Dow Jones best in class world index. And for the sixth consecutive year, we're recognized by CDP for supplier climate engagement. On the people front, we continue to expand initiatives focused on employee well-being, including Hospital Púrpura that offers structured care journeys and has seen growing adoption since its launch. Today, the platform is available to more than 80,000 people, including employees and their relatives. Vivo was named the winner of Anatel's 2026 Accessibility Ranking, reinforcing our position as a leader in digital inclusion. From a governance standpoint, following the appointment of a new board member in April, Wayman now accounts for 42% of our board of directors, marking another important milestone as we continue to foster diversity across all levels of the company. On the environmental agenda, we strengthened our external commitment by joining additional initiatives of the UN Global Compact in Brazil, underscoring the credibility and consistency of our ESG roadmap. With that, I will hand over to Rodrigo, who will walk you through the financial results.

Thank you. Thank you, Christian, and good morning, everyone. Moving to slide 10. we provide more color on the evolution of our cost structure and how improvements in cost mix turn it into everyday growth in the forest quarter. Total costs reached slightly over R$ 9 billion, reflecting strong commercial momentum alongside continued control across our cost base. Looking at the composition, cost of services and goods sold increased 12%, with higher volumes in handset and accessory sales as well as the expansion of new business revenues. This cost line is fully linked to revenue-generating activities and our ongoing business mix transformation. On the other hand, operating costs grew 3.9% year-over-year. Commercial and infrastructure, our largest cost component, rose below inflation for the period, maintaining the trend for the 50 consecutive quarters. At the same time, we continue to assess opportunities to deploy AI across our operations, further enhancing the consumer journey and supporting gains in efficiency. Despite the progress already achieved, we remain focused on moderating the evolution of Topps line. During the quarter, proper revenues showed a slight deceleration, reflecting a tactical decision to pause sales in March. Sales resumed in late April, keeping us on track to deliver the plan R$ 4.5 billion in concession-related assets by the end of 2018. With regard to BEDET, the overall trend remains stable, representing 2% of gross revenue. This favorable cost mix results in a high single-digit year-over-year EBITDA growth, with the margin expanding to above 40% in the quarter. we present the progress of our operating cash flow in the first quarter. CapEx totaled 2 billion reais, reflecting continual investment in our network, consistent with our strategic priorities. This represents capital intensity in line with first quarter classified and below the previous year's average, as we continue optimizing CapEx allocation. Operating cash flow before this is totally 4 billion reais, That resulted in a 10% year-over-year increase in operating cash flow after leases, amounting to R$3 billion. This performance demonstrates our ability to convert EVDA into cash through a combination of efficient initiatives in both on- and lease assets. So, this translated into further margin expansion, both before and after leases, confirming the resilience of our cash profiles. Turning to slide 12, we highlight how our financial management discipline results in a higher profitability. Net income in the first quarter had the highest yearly growth in over two years, confirming our operational execution diligence and reflecting the sustained evolution across our core business. Pre-cash flow was up around 4% year-over-year, with the quarterly comparison influenced by timing effects. Looking ahead, we remain confident in our capacity to deliver a strong performance year by year. Our net cash position advanced materially, up 65% year over year. Our net debt over the DDA also improved, now reaching only 0.4 times in the last 12 months, underlying the ongoing strengthening of our balance sheet. was another robust cash generation partner, keeping Vivo in a very strong position to invest with responsibility while maintaining attractive returns. Finally, on slide 13, we would like to highlight that shareholder remuneration remains a priority of our strategy as we reiterated our guidance for the year. As of today, 7 billion reais has already been confirmed to be distributed during the year. includes the interest and capital declared in 25 and paid in April this year, as well as the capital reduction scheduled for payment in July 26. In addition, we have declared R$ 890 million year-to-date to be paid by April 27. Also, in February 26, our Board approved a new Shababek program of up to R$ 1 billion to be executed through February 27. This initiative is fully aligned with our efficient capital allocation strategy and our focus on long-term value creation for shareholders. To conclude, we reaffirm our commitment to distribute at least 100% of the net income generated in 2026, supported by our strong cash generation and conservative leverage profile. Thank you. We are now ready to move to the Q&A session.

Thank you. We are going to start the question and answer section for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Luis Chagas with XP. You can open your microphone.

Hi, everyone. Thank you for the time here and the space to make questions. So from my side, I have two questions. So the first one regards broadband. Vivo is executing very well with Vivo Total and is gaining clients consistently while the market is somewhat mature. So the question here is how do you see competition in the broadband segment and if you see any room to increase prices in fiber? And over the next three years, What's your goal in terms of vivo totals penetration in your FTTH space? And the second question is about prepaid, which is virtually stable year over year, while the front book prices have been stable for some time. Do you see any room to increase prices in prepaid? Thank you.

So, Luis, this is Christian, okay? I have many questions. I'm going to go for the ones that I remember, the last one. So, we increased... around 25% of our customer base price in the back book of fiber in January. So we are following the right timing to do this increase. We also had Vivo Total price increase in April. Okay, so we are following the annual price evolution that we normally have, and our focus is strongly in Vivo Total. And then I will give you more detail about your first question before I'm gonna go to prepaid that you asked also. Yes, prepaid, yes, we do believe there is room for price increase. We are moving now more to the monthly tariff. We are not giving WhatsApp. That's also a way to monetize. And our revenues, if you compare to the first quarter of 25, decreased 1%. That is a much lower pace than it used to decrease before. So if you look back, for instance, in the first quarter of 25, we were declining more than 11%. Now it's only 1%. This is a combination of more customers. and our ability to keep them engaged with Vivo and selling better plans, in this case, is longer plans that can also increase their ARPU. Your first question was related to fiber. Yes, fiber is very competitive, as you described. Our strategy is to have more and more Vivo Total customers. For you to have an idea, in the first quarter of 24 of our total fiber customers Just 24% of our Vivo Total. Now it's closer to 45%. Apart from that, we have another 20% that are converged but not in Vivo Total. Yes, our strategy is to keep in Vivo Total because churn is much lower of Fiverr customers when they are in this convergent plan. And apart from Vivo Total, we are also upselling more digital services as the one that I described. think successfully, the video ones, there are more than 4.4 million customers already with that. So once we sell more servers to the same customer, that's why also we highlighted the revenue per customer because we do believe it's a very relevant metric to understand the recurrency and how healthy our revenues are because they come from the ability to have more loyal customers, spending more money with Vivo, increasing their lifetime value. Regarding fiber as well, the market is very fragmented. But in the first quarter, number one player is Vivo, and we got 200,000 net ads. The second player, minus 80%. Our market share is 19.2%. One year ago, it was 18.4%. So that gives us a very, like, clearness that we are following the right strategy, and that's the one that we're going to continue to follow, expanding more network, penetrating more network, and selling more convergences and plus digital services.

Thank you, Christian.

Thank you, Luis.

Our next question comes from Leonardo Olmos with UBS. You can open your microphone.

Hi, everyone. Good morning. So I want to discuss a little bit more. So if you look at commercial infrastructure, positive surprise, but that debt was a negative one. And so I just wanted to check on if you're growing so much B2B and a few of revenues that have lower margin, but they are positive in terms of free cash flow. So the overall discussion I have is, if you have a margin contraction that impacts net income, but the free cash flow is positive, but dividends is linked to net income. You see where I'm going? If you have lower net income and lower dividends, how can we see in dividends the increase you're delivering free cash flow? I'm not sure I was clear, but it's just one question I have. So how can you see increasing dividends proportionate to the free cash flow increase you are delivering?

Leo, thank you for your question. I will try to answer if I understood them correctly, but our net income is increasing 19.2%, and we already have a commitment of distributing 7 billion reais this year. That is way above what we distributed last year. So I don't see a concern about shareholder remuneration. And apart from that, as you know, we already declared another tranche of interest on capital and also a new program for share buyback. Going to your question about costs, that I don't know if the one that you are also elaborating, you were right. We had a very positive result in commercial and infrastructure. We had... as I said, increased in everything that is related and linked to revenue expansion. In talking about B2B, we have an increased commercial activity in digital B2B solutions because we're doing very strongly in these lines, in all of them, cyber, cloud, and et cetera. And, of course, there are some cost of services linked to that. Apart, I think, from the B2B digital services, and also there's part of that that is B2C. When I sell more OTT, video OTTs, I'm also contributing to more cost of services sold. But I think good sold is also an important driver of this quarter. But our revenues grew 26.6%. So, again, costs linked to revenues. Going to the provision of bad debt. We are very clear. Our B2C bad debt has not changed. We have more or less the same level. Actually, I would say that if I exclude one single E2B customer, my bad debt would go to 1.88%. My average bad debt over revenues last year was 1.92%. So that's not a story about B2B not performing. I'm talking about one single B2B customer that didn't perform last year. So we're giving you full transparency in the bad deadline. All the rest, B2C, and all the rest in B2B is 100% under control. So that's more or less the explanation that I had about costs. And about, I don't know if you have anything else about free cash flow that I can try to respond.

Yeah, no, no. Actually, you answered more than I asked for, so thank you. I think those are all positive news. And the net income increase, like you said, 19%, goes to dividends, so quite positive.

I will ask something else that you didn't ask me, but I got the opportunity about costs. Last quarter, By the end of last quarter, the quarter that we are talking about, we had to technically stop the sale of copper. There was, for a moment, a change in the tax over copper sale. We extracted the copper, but we didn't sell. Fortunately, that tax change was reverted. So now we are able to continue in the increasing pace of selling copper, as we said before. Because some people may say, oh, you sold more copper in the fourth quarter than you sold in the first quarter. That's correct. I extracted a larger amount, but it didn't sell because I had a tax impact that I was not expecting that fourth quarter was reverted. And here we prioritize the return to our shareholders. So that's why. we're going to see a better movement of copper sales this quarter, the second one.

Yeah, super clear, Christian. Thank you, and have a good day, y'all.

Thank you.

Our next question comes from Marcelo Santos with JP Morgan. You can open your microphone.

Hi, good morning, Christian, Rodrigo, João. Thanks for the opportunity for asking questions. I wanted to go a bit back on Luis' question regarding the back – actually, your answer to his question regarding the back book price. Could you please remind us when did you increase last year and, like, what time for each product and so far what you did this year? I just wanted to recap here year over year to understand the calendar effects. And the second question is regarding CapEx. Could you provide us with considerations regarding the CapEx outlook for this year? Thank you very much.

Marcelo, in the hybrid, last year we had price increase in back book, okay, April and August. And now we are doing April again around 76% of our hybrid customer base. The remaining, we're expecting to do that in August, but it's to be confirmed. Post-paid, last year, April, remaining August. This year, again, around 80% in April, remaining probably in August. Fiber, it was more distributed along January and June, and again, We started Fiber also in January, and again, probably June, the rest. Vivo Total, last year, April, this year, April, 100%. Is that clear?

You gave some percentages for this year. Would it be something we need to open for last year? Like you said, 75%. you're going to do this April on hybrid. How much was in?

You gave two numbers, 25 and 80%. 76% was in hybrid. 79% was in post-date.

Okay, super clear.

Okay. Second question, CapEx, no?

Yes, CapEx. Marcelo, take for a question. First, we would like to highlight that our CapEx intensity remain in line with first quarter 25 and below the average of full year 25. As we are committed to deploying resources with discipline, most of the CapEx is focused on the mobile network enhancement along with fiber expansion and customer connections to sustain our leadership in our position, okay? At this point, there are no structural differences in composition or CAPEX strategies for this year.

What to highlight here, if you look to operating cash flow, EBITDA minus CAPEX, we came from a margin in the first quarter of 23.6%, went to 25%, and now we are in 26.2%. That is 100% aligned with our strategy of optimizing CAPEX, but also having the ability to increase in new businesses, keeping EBITDA absolute revolution in a very strong positive way. So now our breaking cash flow over revenues is 26.2%.

Just a quick follow-up here. I mean, the first line, Rodrigo, you said is capex intensity remains in line with what happened. But for the year, in the past, you used to say that capex intensity should gradually go down like 2026, that was my understanding of previous goals. Is this something you're still committed to see capital intensity percentage of revenue?

Yeah, but that's, we always said that the annual, annual capex intensity. Sure. Yeah, it's always difficult to be discussing quarter over quarter. So over the year, we are committed to improve capex intensity, and that's what I'm going to do in 2026.

Sure. That was my question. Thank you very much. Thank you.

Our next question comes from Rogério Araújo with Bank of America. You can open your microphone.

Hi, everyone. Good morning. Thanks for the opportunity. I have a couple here. First, in this office sales from the concession immigration, you reiterated the expected amount by 28. But how can we think about the level expected in the remaining quarters of 2026? So you resumed sales in end of April. Should we expect something linear throughout 2028? And also on the remuneration to shareholders, regardless of the net profit you committed with 7 billion, just a follow-up here, is this at least 7 billion? Or is this... absolute number 7 billion. This is first one. And the second one is, your main peer has been engaged in negotiations with the tower companies in Brazil. And this has been leading to reductions in these payments. We haven't seen the same at Vivo. Is there room for similar negotiations? And how should we expect it to play out regarding magnitude and timing? Thank you.

Rogério, this is Christian. Yes, as I said before, we stopped for a while the sales, but resumed the sales of copper. Yes, you can expect increase in the number that we're going to present for copper sales along the year, quarter over quarter. That's your first question. The second question was about? Yeah, it's actually at least 7 billion. That's our confidence that we're going to reach is, again, the guidance is at least 100% of net income. Since we have already declared and paid and will be paying the other French in July of $7 billion, it means there is at least $7 billion for the year.

Perfect. Thank you. And regarding these negotiations with Tower Coast?

Yeah, we don't need to give what we are negotiating with our partners. Of course, we are negotiating with all of them. Our value related to leases, it's always like some phasing related to the numbers that we presented, but it's very well controlled. I think our goal is always to keep these payments growing below mobile service revenues. So we do that through coordinated efforts to reduce the unit cost, and that's the negotiation that we have with the tower. We also need to increase coverage. You understand that? We need to keep it like you are the number one company with 40% of the post-paid market. So we cannot stop that. So if you look back, at 2024, the amount we paid the first quarter was broadly in line with the levels paid in the final quarter of 2024. So, more than a year later, our list of disbursements remained very stable. So, here, our challenge is to continue to grow it below the growth of revenues that we have in mobile. Of course, we are negotiating with our companies, but we will not We're not let Vivo not being the leader in coverage, so that's why we're also investing in more coverage because Brazil needs it. So that's our target, and we are complying with all of this since the first time that we talked about this.

Okay, so just a follow-up here. So if you're not increasing the coverage, would it be dropping significantly?

It's going to be dropping, of course, because Brazil has many things. Now, there's not only negotiation. There is co-location. We have a very low level of co-location in Brazil. It's around 1.4, while what we see in Europe is above 2. So if I stop my network as it is today, Rogério, I would be negotiating to increase co-location for the tower companies that I have. And, of course, you would see it dropping. But as we need to drop it, at the same time, I need to expand coverage. So it's very difficult to get the right number every single quarter. But the trend going back to 2004, as I just mentioned, is extremely positive. And in the meantime, we're keeping our leadership in post-paid of 40%. We're number one in 5G. So that's our strategy, to keep the differentiating people as the best network of the country. At the same time, keeping controlled our lease expenditure. And it's also important, I just said before, when I was talking about the operating cash flow over revenues, I think it's also good to see, coming back to your question, operating cash flow after leases. I had 14.5% of margin in the first quarter of 2024. I went to 15.8% of margin of operating cash flow after leases in 2025. And now I'm presenting 17.1% of operating cash flow after leases over revenues. So I do believe that we are on the right track.

That's very clear. Thank you so much.

Thank you, Rodrigo, for the question.

Our next question comes from Leonardo Sintra with Itaú VVA. You can open your microphone.

Good morning, Christian, Rodrigo and João. Thanks for the opportunity to ask questions. I have two here. The first one about equipment sales. It was a positive surprise compared to our numbers. Can you expect this level going forward? And if you could elaborate a little bit more on the dynamics of cell phone sales, it would be very helpful. And the second one about AI initiatives. Could you comment a little bit more on the revenue opportunities from B2B leveraged by these AI initiatives? And also regarding costs, how are the AI initiatives progressing and what are you expecting in terms of margin improvement, particularly in terms of call centers and sale commissions dilution? Thank you.

Leonardo, thank you for the questions. AI is in the beginning, so, of course, we are exploring revenue opportunities. Imagine that Vivo has already a large number of customers that are buying cloud from us, and AI is very connected to cloud. So we're going to leverage all this relationship and all this customer base that we already have and all the relationships that we have with the largest cloud providers of the world to exploit AI. opportunities in AI. I cannot share you a number right now, but of course, even when you talk about the big deals that we had with Sabestri, for instance, with Sal Marcino, they all have a piece of AI that will be implemented, because there's a lot of data being captured, there's a lot of automation being captured, and they will be driven by machine learning and AI, for sure. So, we cannot give you the number right now, but we are very very positive about the opportunity of growing it even further. The impact in our office, of course, it will be seen. Just to give you one initiative that is in call center, we're going to launch in one month the beginning of our call center AI agent project. As I think I mentioned last quarter, we're going to have a concierge handling all the calls, and then we're going to have three agents focus on billing, in plans, and the other one in technical support. Our aim here is to retain in the next quarters over 60% of the calls using these agents. So there is a vast number of opportunities that we're going to capture with AI. Going to electronics, that was a great quarter for smartphones. But also, I want to highlight what is not smartphone, that is consumer electronics. And that grew 56%. This is our ability. And then I'm talking about 12 months, no? The growth of the consumer electronics. And that's our ability to sell more of other things rather than smartphones. There are tablets, gaming devices, televisions, accessories to smartphones. We bought i2go. We have Ovi. So we have many things that are expanding our portfolio. We now... are expanding our portfolio to all our stores, not only the own ones, but also the resellers. And that we see in a very positive way, our ability to even more from this footprint of being a retailer of technological products. In smartphones, you're also growing. Of course, it still represents a lot of our total. If you talk about 1.1, that is billion that we have for the quarter. The other consumer electronics that I told you is around 15% of this number. And the rest is smartphones. So both are growing. So that's why we're keeping 26.6. We don't give guidance. but we are having a very strong commercial start for the second quarter. So I don't see why we would change the trends.

Very clear. Thank you, Christian.

Our next question comes from Fanny Canomuri with HSBC. You can open your microphone.

Hi, thanks for taking my questions. The first one is on, are you seeing any impact from higher oil prices on your operations, whether it's on the cost or on the customer behavior? And the second question is, The second question is regarding your ability to maintain the cost below revenue growth. You have been doing a good job. Is there a concern that this could grow above revenues in the future? Thank you.

Thank you, Fadi. No, no concern. We're going to keep the excellent trend in our cost evolution. As I explained, splitting what is linked to revenue and what is operational. No concern. Regarding oil, no impact, no direct impact. So very positive for us for the moment. The macro is going to impact our business. And as I said, bad debt either. So we are in shape.

Thank you.

Next question from Daniel Fedele with Bradesco BVI.

Hi, good morning, everyone. Thank you very much for taking my questions. In the first one, I'd like to hear your thoughts regarding the competitive landscape, if it's getting better, getting worse, if it's stable. And specifically on the front book increases in the control plan, I understand that the entry plan is one of the most important ones in the portfolio. And last year, we've increased prices in February. And this year, so far, I think there were no increases. And the second question is more like a follow-up because you mentioned that, like, back book prices, 75% were increased. 76% was increased in April. And the remaining by the end of the year to be confirmed. Just understand if the to be confirmed means there are risks to not increase prices for the remaining of the existing clients. Thank you.

Daniel, how are you? No, it should be confirmed in the date. I'm not going to increase 76 and not increase the remaining 24. I just need to get to the right month of the increase. I said that it was in August, so it should be confirmed. Is it going to be in August or can it be in the end of July or in the beginning of September? I don't want to be precise about the exact date. But, of course, if I increase 76, I'm going to increase the remaining 24. As competition, very competitive market, but we were standing out. Strong net ads, low churn, ability to sell more services, differentiating our value proposition. So we're going to keep doing that. And that's the way that we decided to do to defend our positioning, offering more services to our customer base, and try to attract more customers because we have a better value proposition that has the best infrastructure with the largest portfolio of services. Regarding the control, the hybrid one, in some of the plans we had, some increase in the front. And in the other ones, like the entry one, we're still considering. But, again, we have the highest price if you consider what we offer with this price. So, again, we believe that we have a right portfolio for the moment. But, again, we're going to always be attentive if there is opportunity to move up one single plan in our control.

Okay, very clear, Christian. Thank you very much.

Obrigado, Daniel. Thank you.

The question and answer section is over. We would like to hand the floor back to Mr. Christian Gebara for the company's final remarks.

So, thank you, everyone. I understand that we are very clear in all the questions, but, of course, if you have additional questions, we are all at your disposal. to answer all of them. Again, we reaffirm our commitment of shareholder remuneration and growth of the revenue and EBITDA bulk inflation and optimizing capital allocation. Thank you so much.

Vivos Conference is now closed. We thank you for your participation and wish you a nice day.