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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.

Hi. Good morning, everyone. Thanks for taking my questions. I have three, if I might. The first one is on sales growth. Sorry, I have three, if I might. So the first one is on sales growth. Telco sales increased 5% overall in the first quarter. Do you think is it possible to sustain this growth trend for the remaining quarters? This is, of course, excluding M&A. My second question, in terms of margin, do you expect to reach flat EBITDA margin for the full year, or do you see increasing risks from demand for low-cost offers? And my final question is on Clarinet. Now that the transaction is closed, can you provide us some color on your targets for this asset in terms of sales growth normalized EBITDA margin and CapEx, it would be great. Many thanks.

Okay, thank you very much for your questions. In terms of sustainability of this level of growth, I think two comments on that. First of all, part of this growth in the first quarter was driven by resale sales. So as you know, those have high volatility And as such, we cannot be sure that they will be coming regularly every quarter. They will come, obviously, but I cannot say that this will be at the same level of the first quarter. The second comment regarding the more recurrent business, We are very confident that on B2B we will be able to continue to grow at the same level. On B2C, we will further see the impacts that were already mentioned in the presentation, but I would highlight a few. The first one is that this year we didn't do the usual inflation-driven price increases. Last year, we raised prices by 4%, 4.something percent, if I remember well. 3%, sorry. 4.3. 4.3% in this year. As you know, there was no price increase. So that will have an impact, obviously. Then the second one is that in the new competitive dynamics, we significantly increased data allowances, mobile data allowances to our customers, which means that mobile data revenues will suffer in the sense that the customers have more availability of data. And the final one, so these first two are, they are already visible in the first quarter. The last one is more evolving, which is the fact that the mix of gross ads is changing in this new competitive environment. Obviously, our discount brand is bringing customers, which means that the mix, the ARPU suffers from the mix with an increased level of discount sales or gross ads. Having said this, I would also say that still today, the discount gross ads represent less than 10% of the overall growth. So we are confident that all in all, maybe not at this level because of the reasons I just mentioned, but we will be able to continue to evolve positively on top line. And for sure, going to the second question on EBITDA margins, because not only that, but also we continue to execute our transformation program. which will bring increased efficiency and will contribute to better EBITDA margins. Finally, on clarinets, you asked a few questions that I would call guidance for the future of clarinets. As you know, we don't usually give guidance, but I would say that we will bring some more additional clarinets on the second quarter. as we are reporting the numbers from Clarinet and we'll elaborate a little bit more on that.

Very clear. Any thanks.

Thank you. We will now take the next question from the line of Fernando Cordero from Banco Santander. Please go ahead.

Hello. Good afternoon. Thanks for taking my two questions. The first one is related with the sustained increase in your footprint. In that sense, you're increasing your footprint by 5.6% year-on-year. That is almost or a little bit more than 300,000 new homes. In that sense, I would like to understand which is your commercial dynamics or your commercial success in these new areas. And at which extent, let's say, the kind of penetration that you or market share that you are looking in these new areas. Should we assume that the increased footprint should be having similar north market share that in legacy areas in two or three years' time? And the second question is related with the comment that you have made on the increased demand from naked internet, particularly in your discount brand. In that sense, I would like to understand which is your reading from this increased demand on naked internet, and in that sense, which is then particularly for new map for the increased penetration of your services at which extent pay TV would be less relevant going forward. So in that sense, just understanding the key service in your bundle is migrating from pay TV to . Thank you.

Thank you. On the first question, we are very happy with the commercial success on the new FTTH areas. but I don't think it would be fair to expect that in a couple of years we will reach the same level of market share we have on other areas for historical reasons. As you know, these are areas that only had one competitor, but the position of that competitor historically is very, very strong, so it will take certainly more than a couple of years to go up to the level of market share we have in other regions of the country. But we are very happy with the pace that we are experiencing on those areas and the commercial success as a whole. In terms of naked internet, I think in summary, I would say that most of these naked internet growth ads, this is additional marketing. So we are not seeing any movements or cutting movement movements we are not seeing people disconnecting at all zero so our reading is that the market is increasing in this new competitive dynamic and more people are coming more homes are coming into the market as you know probably know we have a lot of recent immigration to this country a lot of new families established in the country And maybe those have a higher weight of naked than the traditional Portuguese consumer. But again, I'll stress this. We are not seeing anyone disconnecting pay TV, migrating from triple play to naked internet.

Very clear.

Thank you. We will now take the next question. From the line of AJS from JP Morgan, please go ahead.

Hi there. I've got three questions. The first is just around the consumer gross ads. You mentioned that your discount brand has accounts around about 10% of the gross ads. I was wondering how that compares to what you saw during 2024 and whether there's been a material step up in that. The second question, which is slightly related, is how does your EBITDA margin differ between your main brand and your second brand when you're providing the service? And then the last one is just around the telco expansionary capex. Do you expect this to trend towards zero? And if so, when would you expect it to get to that number? Thank you.

Okay, thank you. In terms of the discount brand growth stats and the dynamics of that, yes, we are seeing it's picking up. So we are seeing much higher numbers, much higher weight on the total number of growth stats than in 2024. Still, even with this growth, as I mentioned, we are well below double-digit numbers in terms of weight of the Wu brand, the discount brand. It's picking up. So it's increasing. It's weight on the total growth as we are making. But even picking up, I don't expect to ever reach, for example, 20%. I don't think it will get to that level. It will be always below that. So it's material, but still a minor part of our commercial activity. In terms of margins... EBITDA margin at this level, I cannot give an intelligent answer in the sense that we have an integrated operation, so we don't allocate every single cost to the discount. In terms of contribution margin, so direct costs and direct revenues, it has a slightly lower margin than the main brand because, first of all, as you know, the prices are lower. But also, you have to take this into consideration, acquisition costs are much, much lower. We are using mainly digital as an acquisition channel, so with much, much lower costs than we have in the NOS brand. In terms of customer equipments, be it set-top box in those that have pay TV or the routers, are different equipments, which for us cost significantly less. So we have the cost structure adapted to the fact that we have lower revenues. And in terms of margin, it's inferior, but it's not that significant. Last question on CapEx. Well, it's never zero in the sense that there are always new construction appearing And we have to cover that new construction, so we call that expansion. It's never zero, but in terms of 5G, it's getting close to that. In terms of coverage, we are done 100% of our plan. We already covered more than 99% of the population. In terms of FTTH, we still have expansion plans for this year, much less. next year. And then, as I mentioned, it will be basically new areas, new residential buildings that are built and we have to cover.

That's really helpful. And can I just ask a follow-up on your price, on your ARPUs? So you kind of mentioned the headwinds from no price rises, you know, you've got bigger data allowances, so less top-ups, and then obviously you've got this trend towards maybe more discount growth ads. So what are you guys looking to do to support the ARPUs? What measures are they taking internally which could actually hold this ARPU growth to be a little bit stronger? Thank you.

Well, first of all, we are defending the NOSH, the main brand and the value proposition and the products or services of the main brands. increasing its attractiveness to our customers. So in the strategy, in the block of our strategy that we call counter-offer, in the sense that we offer a different service, different experience to the discount brands, and we are having success in that. So mainly making sure that in terms of weight of the growth sets and weight of the customer base, the main brand still dominates significantly. That's the main objective. In terms of the second brand, again, we are trying to push for as many services per customer as possible. So, yes, we mentioned that we have a lot or a significant number of customers adopting only naked Internet, but still we have a significant part that subscribe to pay TV, Internet, and mobile. So we are pushing the number of services, and that applies to the discount brands, and it applies also to the NOS brand, where we still today increase the number of convergent customers and the number of mobile themes per unique customer. So we still have levers to counter-attack to these challenges. which will be a normal decline, we still have weapons to fight it, and we are fighting it.

Okay, great. Thank you very much.

Thank you. We will now take the next question. From the line of Roshan Ranjit from Deutsche Bank, please go ahead.

Afternoon, everyone. I've got three questions, please. Firstly, on the 25%, I guess, competitive dynamics impact that you flagged in prepay, this has now been, I think, around six months since we've had the Digi launch. It's possible to get a sense of how that impact has trended. Has it been an increasing trend? impact as the months have passed, or did it start with a kind of big bang? We read about some quality issues initially, and it's kind of trended down to a more normalized level. Any sense of how that has evolved over time will be extremely helpful, please. Secondly, on B2B, we saw another strong quarter on the low margin business. I think through 24, we saw a similar trend and that business actually translated into a more recurring revenue stream. Is that something which we could expect going forward? And is that more within the kind of larger corporate segment or still within the SME bucket? And thirdly, In terms of wholesale agreements, you've previously been quite strong in your views and saying it's not something which you want to go down. But as Digi continues to roll out Fiber progressively within Portugal, is this something which you may consider, or are you a bit more open to do a discussion here? Thank you.

Thank you very much for your questions. In terms of the trends and the momentum of the new player, The scenario that we are seeing is the last that you mentioned. Basically, there was some impact, some big bang on the entry. But after, I don't know, maybe four or five weeks, what we have been seeing consistently is the momentum going down and they are losing steam. And the recent weeks, that is very clear. So in terms of, obviously, they're still there. But in terms of dynamics, the trends, the impact is going down, not up, which obviously is good news from our side. In terms of B2B, you're right. It's now recurrent revenues, but they are becoming more and more recurrent. And so they have volatility, but they will be getting more and more recurrent going forward. That's what we can expect. Finally, on the wholesale agreements, the straight answer is no. We are not considering any kind of agreements.

That's great. Thank you.

Thank you. There are no further questions at this time. I would like to turn the conference back to Pedro Costa Diaz, head of IR, please.

Okay. So thanks very much for tuning in. Please don't hesitate to reach the IR team for any further questions or comments you may have. We'll be back in July for second quarter 25 results presentation. So until then, thanks very much and goodbye.