NOS, S.G.P.S., S.A.

Hello, everyone, and welcome to Norge First Quarter 2025 results presentation. I'm Pedro Cotadias, Investor Relations. We have the full team, the full executive team with us in the room today. We'll start with our CFO, Luis Nascimento, who will take you through a short presentation highlighting our main achievements and KPIs for the quarter. And then the team will be available to address any questions you may have in the Q&A. Thanks for joining and I'll hand you over to Luís.

Good morning and welcome to NOS first quarter conference call. As usually we will go briefly through the results of the quarter and then we'll go into the Q&A. So we will begin with the three main highlights of the first quarter. The closing of Clarinet acquisition, a critical step to leverage NOS ICT and tech capabilities. and to improve NOS value proposition. The second, a strong revenue growth while accelerating our operational transformation based on AI solutions and digitalization. And a healthy free cash flow generation from operations and structural lower investments. A quick view on the main KPIs. Revenue increased by 4.5% and EBITDA rose 4.3%. This positive performance, along with a CAPEX reduction of minus 1.8, led to improved EBITDA minus CAPEX of 12% and a sustained free cash flow generation of 5.2. Recurring free cash flow, excluding extraordinary income related to legal procedures on activity fees, grew 9.8%. Net income decreased 13%, but also excluding the non-recurrent activity fees grew almost 21%, reflecting a solid operational performance. A strategy update on NOS main priorities. With another strong quarter of fiber-to-dome expansion, over 5.8 million households are now covered by NOS gigabit fixed network, with FTTH representing 84% of households passed. This is a significant increase of 63,000 households during the first quarter and 311 houses year-on-year. On the 5G front, Nour demonstrates 5G leadership in Portugal through its extensive network with almost 4.8 5G stations, providing 97% of population coverage. This robust infrastructure supports innovative initiatives such as the first 5G standalone network in Portugal and the first 5G voice over new radio call. On the innovation side, NOS maintains its leadership in Portuguese patent applications for the second year, filling 22 patents in 2024, covering AI technologies across several areas, reflecting NOS' significant investments and focus in AI. As we shared in previous quarters, ICT is a strategic pillar for NOS strategy built on a strong brand recognition, a large and diverse customer base and proven capabilities. So NOS acquisition of the Clarinet concluded this March is a key element in our strategic expansion into the fast growing Portuguese ICT market. This inorganic growth strategy coupled with investment on GenAI position NOS for significant growth in the tech space and establishes NOS as a key player in the tech sector. Just another comment on Clarinet. Clarinet acquisition was only concluded in the end of March. Consequently, Clarinet's assets and liabilities are already incorporated into the balance sheet for this period. but the income statement does not yet reflect Clarinet operating results, as full consolidation will be implemented in the second quarter. About generative AI, NOS is scaling AI across its entire operation. Over 125 use cases have been identified across all areas, and 250 employees have already completed GenAI training, but the program aims for 100% company-wide AI adoption. In 2025, NOS scale program will implement six AI-driven solutions, including service automation. I will give you an example on the chatbot from Woo, which is designed to enhance customer interaction, but also to reduce interaction volume. scaling to operational performance sites. Despite a challenging competitive landscape, NOS achieved a 1.8% year-on-year increase to almost 10.7 RGUs. This growth was driven by a 2% increase in fixed RGUs and a 3% increase in mobile. Unique fixed accesses increased almost 28,000 to 1.5 million, but first quarter showed some new dynamics. Net ads slowed down to 2.5 due to the increase in competition, and wool-naked internet is gaining momentum, changing the mix of new customers. Mobile increased 145,000, but first quarter shows contrasting trends. Post-paid net additions remained very resilient despite competition and posted very strong numbers. Prepaid net additions operationally decreased by 85,000 in this first quarter, with two main drivers. The typical quarter seasonality that accounts for 70% of the reduction, with the remaining 25% attributed to the new competitive dynamics, which are expected to persist in the following quarters. Now moving to cinemas and outdoor visual. A later Easter holidays that only began in April this year and several postponed movies releases led to a 4.2 decline in cinema tickets in this first quarter. But the audiovisual segment performed strongly, driven by Mufasa, Sonic 3 and Captain America, all top four movies in Portugal this quarter. In total, six audiovisual films ranked in the top ten this quarter, boosting our performance. On financial performance side, NOS consolidated revenues grew 4.5% to 421 million, driven by strong performance in both telcos and audios and cinema segments. Telco revenues increased by 4.6%, primarily due to the strong growth in the B2B business that posted a 13% growth, supported by a health growth of recurring services across all segments, and by a significant growth of 4.2 million in resale. The B2C segment posted a 1.4% growth, showing first signs of deceleration, driven by the competitive environment that impacted both operational activity and ARPU. The M&E segment also reported positive growth, increasing by 1.5%, driven by audiovisuals' double-digit growth and despite cinema decline. So, NOS operational performance and generative AI efficiency program continue to deliver a 4.3 EBIT increase with a robust contribution both from telco and media segments which recorded increases of 4.3 and 3.1. NOS CAPEX continues the downward trajectory a decrease of 1.8 to 90 million, largely driven by a substantial 23% reduction in telco expansionary investment, reflecting the completion of our 5G rollout, and the efficient FTTH expansion, leveraging third-party networks and the vote-up agreement. The 6.4% increase in base light telco capex is temporary, resulting from network licenses acquisitions that were accelerated in this first quarter. M&E capex fell 30% to 4 million, but reflects the return to a more normal spending levels after the first quarter 24 with higher investments caused by the Hollywood strikes in previous quarters. As a result, Improved operational performance and efficient capex management drove a 12.2% year-on-year increase in EBITDA L minus capex. And consolidated net income fell 13% to 59 million, primarily due to the reduction of the extraordinary income related to legal procedures on activity fees that dropped from 22 million to 3.8 this quarter. However, Recurring net income grew by 21% to 55 million, mainly driven by a solid EBITDA growth, lower financial expenses in result of the reduction of interest rates, and positive impacts from joint ventures, particularly a provision reversion on Sport TV. Very similar reality in free cash flow, with strong operating performance and lower investments, resulting in a 5.2% increase in free cash flow to 83 million, But excluding the known recurring activity fees, recurring free cash flow grew by 9.8%, driven by a beta growth, lower capex, and lower financial expenses. Finally, NOS demonstrates strong financial health, maintaining a conservative financial leverage ratio of 1.5 times, well below the reference of 2 times that we have. The company also benefits from a lower average cost of debt, 3.3%, reflecting the favorable interest rate environment. As of March 31st, NOS held $352 million in cash and liquidity, so reflecting a very solid position. With this, we conclude our presentation, and we are now happy to answer to your questions.

Thank you. Thank you. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To answer your question, please press star 1 and 1 again. Once again, please press star 1 and 1 if you wish to ask a question. Please stand by while we compile the Q&A roster. We will now take the first question from the line of Joao Pinto from JB Capital. Please go ahead.