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

Hello everyone. Thanks for joining NOSH second quarter 3035 results conference call. We'll have a presentation followed by Q&A as usual. But this time we'll start with Manuel Llanes, who is the ex-comm member in charge for B2B. He will go through some slides on CloudInert Portugal. It's easier to get more callers since this is the first quarter that we are actually consolidating the company. Then our TSO will go through the rest of the presentation before Q&A. Now I hand you over to Mehran.

Thank you, Peter. Hi, everyone. I'd like to give you a quick update on Clarinet and to explain why we believe that we have now on IT a much bigger and better growth engine. The first note is that Clarinet's acquisition to a four times larger and faster-growing market. Basically, we estimate the telco market in Portugal to be the V3 market in Portugal to be worth 1.1B, and the IT market in Portugal to be worth around 4.6, with basically much, much higher structural growth. We believe that this growth is possible basically by driving expansion in three key purchase areas where either we have significant competitive advantages or have a high growth potential. We'll see that in the next stage. We'll be able to reinforce our position in managed services and in professional services as well. Actually, basically, we double the size of our IT services business with the acquisition of Foreignet. And we also believe that even the resale part of the business is key in the sense that it puts the non-group in the center of the deal flow of the key manufacturers in Portugal, the hardware and software, and that presents a very relevant opportunity for services growth, as most of the manufacturers will tell you. The second is that IT brings, or this acquisition, brings relevant scale and a full breadth of not only solid offer, partnerships, and talents to our IT business. First of all, Clarinet brings the set of practices that we aim to be bred in in the IT arena and the full breadth. So it is a great way to structure the way we look at the IT business and the practices of cloud and infrastructure, applications, security, workplace, data and AI and third-party software. We believe that these are the exact arenas where we want to be present, where we believe we have the synergies and the competencies and we believe that we now have the full breadth with which to address the market. The second is that we are, as a group now, very relevant to a number of key technology partners in this market. the transversal partners of Microsoft, HPE, and HP, and the practice-specific partners of Cisco, AWS, Cloudflare, Dell, Adobe, EasyVista, Fortinet, Palo Alto, and Google. I believe these are very relevant names in the technology arena, and I believe that they all regard the NAR group as a relevant partner in Portugal. The third note is that we have now as a group a very relevant scale and a very relevant company. We have 19 plus FTEs, managing professional and managed services in IT in Portugal, a very large engineering team, and over 200 task certifications with which to help our Portuguese customers address their digital transformation needs. We believe that we, with this acquisition, we have very relevant growth lever support First of all, we have an increase, actually a very significantly increased sales footprint in enterprise and mid-market, which crossing with the full breadth of IT services brings a full potential that is very relevant for the future. The second is we have practices in our portfolio, namely cloud, cyber, security, and data and AI, which have in themselves very high potential for growth. And third, we have a strategic cooperation with the Clarinet Group that benefits us both ways. First of all, the ability to serve multinational customers and the second, to leverage the scale of our practices in multinational environment of the Clarinet Group. So back to the beginning of my very short presentation. The idea was to say that we have a bigger and better growth engine for IT with which to show you progress in the next few quarters.

So good morning and once again welcome to our conference call. Just an additional comment on Clarinet. This quarter we fully consolidated Clarinet Portugal for the first time. And for consolidation purposes, in accordance with the IFRS 15, revenues from contracts were quite a net tax as an agent should be recognized on a net basis. Therefore, the $216 million of quarter net gross revenues of 2024, under the Portugal cap, must now be consolidated for $130 million of net revenues. It's a 40% adjustment, but only for consolidation purposes. Well, now, following the update on Clarinet Portugal, we will now briefly review the quarterly results and then open for Q&A. The main highlights for this quarter are strong operational performance with the RGU trend significantly improving quarter-on-quarter, consolidated top-line revenues growing year-on-year and a bit increasing faster-than-revenues with AI and transformation programs progressing well, An operational performance, capex reduction and working capital improvement, pushing recurring free cash flow, and a solid balance sheet with leverage below reference level, despite the acquisition of cloud and network school and the dividend payment. So, a quick overview on our main KPIs. Revenues increased by 3.2% and the EBITDA rose 5.9%. This positive performance, along with a capex reduction of minus 2, led to improved EBITDA minus capex of 22%. Recurring free cash flow, excluding extraordinary income related to legal procedures and sell next hour sale, increased 8.8%. And net income, also excluding non-recurring activities, grew 16%, reflecting a solid operational performance. On the operational performance side, this was another strong quarter of Fibre2DOM expansion. Over 5.9 million households are now covered by NordGigabit 6 network, with the FTTH representing 86% of the households past. This is a significant increase of 78,000 households quarter on quarter and 313 year on year. But despite the challenging competitive market, Nordstrom offers and commercial capabilities delivered a very strong second quarter with a 2% increase to 10.7 million RGOs. With almost 58,000 net ads, this quarter not only represented a significant improvement compared to the previous quarter, but also exceeded the results of the second quarter of 2024. On unique successes, we increased almost 2% to 1.5 million. The second quarter showed some new dynamics, as net ads recovered to 8.3, driven by lower levels of churn, a competitive woo offers, and make a broadband that is gaining momentum and changing the mix of new customers. With 46 net ads in the quarter, mobile increased 3.3 year-on-year, reflecting a stronger performance both in postpaid and in prepaid. Postpaid had 160 net additions, posting very strong results above the previous six quarters, driven by WOU and not initiatives in app and cross-help. Prepaid net additions decreased by 70,000 in this quarter, but this not only represents a recovery, from Q1, but also exceeds the results of last year. So in summary, a solid operational performance and a strong recovery from the previous quarter. Now moving to audiovisuals and cinema business. A late Easter holiday and three strong releases led to a 44% increase in cinema ticket sales this second quarter. The audiovisual segment also performed strongly, driven by Lilo & Stitch and Mission Impossible. And we had five audiovisual films ranked in the top ten this quarter, boosting NOS performance. On the financial performance side. NOS consolidated revenues increased by 3.2% year-on-year to R$ 458 million, driven by the resilient performance of the telco segments and the robust growth of audiovisuals and cinema divisions. Telco revenues rose by 2.3%, primarily due to the strong growth on the B2B sector, which posted a 9.6% increase, supported by healthy growth in recurring services of 6%, along with a significant rise of resale. The B2C segment experienced a slight decline of 0.3%, indicating early signs of deceleration due to increased competition impacting our pool, despite stronger operational activity. The new IT business showed a small decline of 0.8%, mainly driven by a reduction in the volatile resale of equipment and licenses. However, this was almost fully offset by a solid 10% growth in IT services. So IT net revenues accounted for 49.3 million, while the gross revenues accounted for 77.9. The audiovisual and cinema division reported strong growth levels, increasing by 31% year-on-year, driven by a 44% increase in cinema attendance, supported by a strong lineup of movies. Norse operational performance. and the solid results of NOS transformation programs supported on GenAI driven efficiency program continue to deliver a solid 5.9 EBIT increase significantly above revenues with a robust contribution from telco, IT and media segments which recorded increases of 4.2, 18.8 and 34% respectively. At the same time, NARGE CapEx decreased 2% to 91.7 million, driven by a 3.6% reduction in customer-related investments and by a 2.3% decrease in base CapEx. Expansion CapEx, however, saw an exceptional increase this quarter, driven by a temporary peak in NARGE FTTH projects. IT CAPEX increased by 400,000 to 1.7 million, driven by customer-related investments to support business growth. And audiovisual and cinema CAPEX declined 20% to 4.2 million, reflecting a return to a more normal spending level. As a result, improved operational performance and efficient CAPEX management drove a 22% increase in EBITDA L- CAPEX. Consolidated net income declined by 28% to 58 million, primarily due to fewer positive extraordinary effects in second quarter 25 compared to the same period last year. These effects included a tower sale to sell nets and gains from legal procedures, which resulted in a net impact of minus 30.5 million this quarter. recurring net income increased by 16% to 57.4 million, mainly driven by a strong EBITDA growth, lower depreciations and amortizations, and reduced financial costs. This performance was achieved despite the 15 million decline in non-current income, mainly driven by an interconnection-favorable core decision during the second quarter. 24. Very a similar reality in free cash flow that declined by 72% to 38 million, primarily due to a minus 102 million in extraordinary effects related to the power sale and gains from legal procedure, which positively impacted by almost 83 million in second quarter 24. However, this quarter, these effects have a negative impact on additional 23 million in taxes. Despite this, a strong operational performance Lower investment and the reduction in working capital contributed to a 9% year-on-year increase in recurrent free cash flow, even after accounting for higher tax rate. Finally, this quarter, knowledge debt increased to 1,145 million, primarily due to the Clarinet Portugal acquisition and the dividend payment. Despite this increase, the company maintains a conservatively financial leverage ratio of 1.7, well below the reference threshold of 2 times. Additionally, Norse benefits from a lower average cost of debt, now below 3%, representing a decrease of 0.3 quarter on quarter and 1.1 year on year, reflecting the lower interest rate. And as end of March, the company held $278 million in cash and liquidity. With this, we conclude our presentation and we are now ready to answer to your questions.