Telefônica Brasil S.A. Q4 FY2025 earnings call

• Vivo's 2025 performance was remarkable with growth above inflation in key lines. • Mobile postpaid segment showed strong growth and 5G adoption accelerated. • Fiber footprint expanded and Vivo Total subscribers increased. • B2C and B2B revenues exhibited growth, with new businesses and digital B2B contributing. • Sustainability was a key aspect with strong ESG achievements. • Disciplined cost management and CapEx allocation led to growth in operating cash flow and free cash flow

Mobile: Postpaid segment accesses expanded 6.5% year-over-year to 70.8 million, representing 69% of the mobile base; 5G customer base rose to 23.1 million users across 716 cities, with a 5G take-up ratio of 27.8%. Financial: Total revenues in the fourth quarter rose 7.1%, EBITDA grew 8.1% versus the fourth quarter of 2024, excluding concession migration effects EBITDA advanced 17.7% year-over-year; operating cash flow was up 13.4% compared to 2024, representing 26.1% of revenues; net income totaled BRL 7.2 billion for the year, free cash flow increased by 11.4% to BRL 9.2 billion. Fiber: Closed 2025 with 7.8 million homes connected and a footprint extending to 31 million homes; FTTH accesses increased 12% year-over-year to 7.8 million; Vivo Total subscribers up 41% year-over-year. B2C: Total revenues reached BRL 44.8 billion, up 5% year-over-year; new businesses grew 20.7% year-over-year, accounting for 3.3% of total revenues. B2B: Revenues amounted to BRL 13.5 billion, up 13.7% compared to 2024; digital B2B advanced 29.5% year-over-year, now representing 8.8% of Vivo's revenues

• Committed to distributing at least 100% of net income in 2026. • Plan to combine capital reductions, interest on capital, dividends, and share buyback. • Expect net income to grow in 2026, benefiting from reduction of depreciation and amortization and potential interest reduction. • Board approved a new share buyback program of up to BRL 1 billion to be executed until February 2027

• Macroeconomic, industry, and other factors may cause actual results to differ from forward-looking statements. • Competition in the telecom market, potentially impacting market share and pricing. • Volatility in lease expenses due to ongoing renegotiation with tower companies. • Fragmented fiber market with challenges for consolidation

Q: Congrats on the results. My question will be all centered on distributions, a little bit long, but all center on distributions. So if you could first discuss the drivers for the mix in 2026 between buybacks, interest on capital and capital reduction...

A: Leonardo, thank you for the question. So the first one, we have a commitment for the last 2 years to distribute at least 100% of our net income...

Q: I want to ask questions about two key topics. The first one is CapEx. So maybe, David, could you please discuss what are the puts and takes for the CapEx outlook in 2026? And the second question will be about competitive environment, how you're seeing it, especially on mobile? And what is the outlook for passing price increases this year?

A: Marcelo, I will take the questions. Christian here. So CapEx, we're not giving guidance...

Q: Congrats on the results. I have a couple here. The first one, there was a reduction in the lease expenses. If you could please provide some details on why and also expected trend. This is the first one.

A: Rogério, thank you for the question. The evolution of the lease depreciation and interest accrual remained consistent with previous periods...

Q: The first question is on the total net adds and the market share in mobile. If we exclude Dongles and M2M, your number of subscribers has been coming down. Any reason for that? And your market share is down like 1 percentage point from last year. So what is -- I mean, what is driving this trend? The second thing is that if you look at your B2B strategy, it has been growing really well. What are the further steps to maintain this growth in Brazil? And how is the penetration coming in the SME segment?

A: I don't see mobile market share changing...

Q: I have two questions here. The first one, can you please provide us an update on how you perceive the competitive environment in the fiber industry and also refresh us how you see any potential M&A in these industries? And the second one, could you please share your thoughts on how you see profitability expansion going forward? Are there any specific areas of the business in which you see some potential for further efficiencies? And how should we balance future efficiencies with the expansion of B2B?

A: Sorry, the second question is related to cost in B2B or cost in general?

Q: Congrats on the strong results. I just want to hear your thoughts on how important it is for a telco to have a convergence operation at the moment in Brazil. We see, Vivo focusing on the Vivo Total. It seems to be a big success. So how important is this for the whole strategy? And second, if you could just provide a little bit more information about your expectation for AI as a source of savings for costs in the upcoming years.

A: Daniel, thank you for your initial comments. I cannot answer for all the other operators because I think we have different strategies...

Q: The first one, maybe a double-click on the previous question about M&A. So we've been exploring M&A in fiber, in most of our recent notes. And Vita obviously stands out particularly now without Oi as a shareholder. So my question is, would you consider a large M&A to strengthen your fiber footprint? And the second question, we've seen stronger portability figures for Claro in the fourth quarter, mostly impacting TIM and likely related to new sales. So my question is, how are you perceiving this competition driver in mobile? And if this, by anyhow, changes your commercial strategy?

A: Gustavo, thanks for the question. No, it doesn't change our strategy... The question-and-answer session is over. I would like to hand the floor back to Mr. Christian Gebara for the company final remarks. Please, Mr. Christian, the floor is yours.

A: Okay. Thank you, everyone, for participating, and for so many questions...