Telefônica Brasil S.A. Q2 FY2025 earnings call

• Mobile strategy: Focus on value and customer experience, with postpaid growth and 5G adoption. ARPU upward due to upselling and low churn.
• FTTH growth: Key growth engine with Vivo Total driving customer migration, expansion of fiber footprint, and acquisition of CDPQ stake in FiBrasil (pending approval).
• B2C new businesses: Strong growth in OTT subscriptions and Vivo Pay platform expansion with diverse offerings.
• B2B performance: Robust B2B revenue growth, especially in digital B2B services.
• ESG: Recognized for sustainability, volunteer day mobilized 10,000 employees, collected 27 tons of electronic waste (+17% YoY).

In the second quarter of 2025, Vivo's mobile segment saw Postpaid grow 7% YoY, comprising 67% of the total mobile customer base. Hybrid plus per postpaid access grew 7.1% YoY to BRL 49 million. The fiber segment expanded connected homes by 12.6% YoY to 7.4 million accesses, with FTTH access up 12.6% YoY. Total revenue rose 7.1% YoY to BRL 14.6 billion, driven by mobile services and fixed revenues. EBITDA grew 8.8% YoY to a 40.5% margin. Operating cash flow in H1 2025 was BRL 7.3 billion, up 12.5% YoY. Revenue mix had postpaid and FTTH revenues growing 10.9% and 10.4% YoY respectively, accounting for over 72% of service revenues. New businesses represented 11.2% of total revenues, up 1.7 percentage points YoY. B2B revenues were up 13.3% YoY over 12 months, with digital B2B growing 31.3% YoY and accounting for 8.2% of total revenues. B2C new businesses saw revenues up 14.7% YoY, representing 3% of total revenues, with strong growth in OTT subscriptions and Vivo Pay platform expansion.

• Expect to deliver BRL 4.5 billion in asset sales over coming years. Free cash flow generation robust, with BRL 5 billion+ paid to shareholders so far in 2025. Share buyback program with BRL 1 billion available for repurchase through Feb 2026.
• CapEx: CapEx to revenue ratio declined to 14.8% in H1 2025, with 76% of investments in growth initiatives (5G, fiber).
• Net income: Net income up 13.5% YoY in H1 2025, driven by solid operations and finance discipline.

• Regulatory risks: Pending approval for FiBrasil acquisition from CADE and ANATEL.
• Market risks: Mobile competitive environment and potential impact on ARPU and customer acquisition.
• Operational risks: Volatility in financial expenses due to seasonality and contingencies, CapEx optimization challenges.

Q: About leases and Fibrasil integration A: Christian discussed FiBrasil acquisition pending regulatory approval, with potential synergies from integrating FiBrasil's network. David talked about lease optimization efforts, with EBITDA after leases growing and lease payments stabilizing.

Q: Fiber-to-the-home ARPU and mobile competition A: Christian explained ARPU evolution in FTTH due to Vivo Total customer growth and price adjustments. On mobile competition, emphasized focus on upselling, 5G expansion, and customer loyalty.

Q: Net income and OpEx A: David discussed financial expenses impacted by seasonality and provisions, with net income growing 10% YoY. Christian talked about OpEx control, with personnel and G&A expenses managed through efficiency gains.

Q: Asset sales and B2B integration A: Christian provided update on asset sales related to concession migration, with ongoing integration of acquired B2B operations (IPNET, Vita IT) contributing to growth.

Q: Mobile net adds and fiber strategy A: Christian noted focus on migration from prepaid to hybrid and convergence, with plans to increase 5G take-up. On fiber strategy, discussed addressable market and potential for organic growth or M&A.

Q: Competitive landscape and cross-selling A: Christian mentioned plans for price adjustments in mobile and strategies to increase cross-selling through app usage and vertical expansion in B2B and B2C.