VIV

We would like to inform that all attendees will only be listening the conference during the presentation, then we will start the questions and answers section, when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Vivo's executive board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events, and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements.

Present at this conference, we have Mr. Christian Gebara, CEO of the company, Mr. Rodrigo Monari, CFO and Investor Relations Officer, and Mr. João Pedro Soares Carneiro, IR Director. Now, I will turn the conference over to Mr. João Pedro Soares Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you may begin your conference.

Good morning, everyone, and welcome to Vivo's second quarter 2026 earnings call. Today, our CEO, Christian Gebara, will present Vivo's ongoing execution in connectivity and new businesses, as well as share our key ESG highlights for the quarter. Rodrigo Monari, our CFO, will give you more color on cost evolution, cash generation, profitability, and shareholder distribution going forward. With that, let me turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you for joining us today. Building on the positive performance from the beginning of the year, Vivo delivered another quarter of solid execution, combining healthy operational and financial trends. These numbers demonstrate the strength of our business model, the quality of our customer base, and the consistency of our strategy within a dynamic environment. Customer engagement remains at the center of our growth story. In mobile, we kept adding customers with postpaid access at 73.2 million, up 6.9% year-over-year. In fiber, homes connected reached 8.2 million, advancing 11.3% year-over-year, while our footprint expanded to 32 million home passed. These accomplishments reflect our sustained commercial momentum, supported by the attractiveness of our value proposition and customers' recognition of the quality and differentiation we deliver.

Financially, total revenue increased above inflation once again, up 7.6% year-over-year, while Mobile service revenues advanced 6.6%, while fixed revenues grew 6%, highlighting the improvement of fiber and the positive contribution of our B2B operations. Profitability continues to outpace revenue growth. EBITDA advanced 10.9% year-over-year with a margin of 41.8%. In the H1 of the year, operating cash flow totaled BRL 8.2 billion, while net income rose 17.9% to BRL 2.8 billion. Free cash flow generation reached BRL 4.9 billion, underscoring the strength of our cash generation capabilities. Our operation excellence and financial discipline support attractive shareholder returns. Year-to-date, we declared BRL 2.2 billion in Interest on Capital to be paid by April of 2027 or before, represent an evolution of 34.5% versus the same period last year, and remain fully committed to our shareholder remuneration guidance for this year.

On slide four, the benefits of our diversified ecosystem are becoming increasingly evident, supporting growth across connectivity, digital services, and the sale of handsets and electronics. Total revenues increased 7.6% year-over-year in the quarter, reflecting balanced contributions across our top line. Mobile service revenues advanced 6.6%, while FTTH revenues delivered an even stronger performance of 10.7%. Another highlight was the handsets and electronic segment. That soared 27.8% year-over-year, marking its highest annual evolution in five years. This performance reflects the success of our commercial initiatives and the growing relevance of Vivo as a destination for customer technology products. As our ecosystem expands, the quality and predictability of revenues keep improving. Recurring revenues attain 84.8% of service revenues, extending a positive trend that has consistently strengthened over recent quarters. This evolution further reinforces the resilience of our business model and the sustainability of our trajectory. Turning to slide five.

Our mobile operation stands out through its ability to combine customer growth, monetization, and retention. Total mobile base increased 2.6% year-over-year as postpaid access rose 7.3%, reaching 52.4 million customers, while machine-to-machine and dongles grew 6.1%, reinforcing our leadership across multiple mobile segments. Commercial activity remains solid with postpaid net additions rising 14.1% year-over-year. This performance confirms Vivo's competitiveness and the attractiveness of our offers. At the same time, we remain focused on successfully executing our more for more strategy. Mobile ARPU reached a new high of BRL 32.5, with postpaid churn at stable levels of only 1%. Notably, even after recent price adjustments, customer loyalty remained unchanged, reflecting our superior network and service excellence. The evolution of 5G is an important part of this story. Today, nearly 1/3 of our mobile base, excluding machine-to-machine and dongles, uses 5G every day.

As usage continues to ramp up, we are further enhancing customer experience while creating new opportunities to deepen engagement and support future revenue expansion. Overall, these results underscore the resilience and monetization potential for our mobile platform. The combination of postpaid expansion, record ARPU, resilient churn levels, and growing 5G adoption demonstrate how Vivo is creating a solid foundation for ongoing profitable growth. On slide six, we illustrate how scale, quality, and convergence underpin Vivo's ability to raise the bar in the fiber market. We closed the quarter with 8.2 million fiber accesses, an increase of 11.3% year-over-year. Once again, convergence was the key driver of this performance. Vivo Total reached 3.8 million customers, up 29.4% compared to last year, and further increasing its relevance within our fiber base. This reinforces a trend that we have seen for several quarters.

Customers increasingly demand integrated solutions that unite connectivity, convenience, and superior experience. Beyond growth, our customer base profile remains a clear differentiator. Fiber churn declined to just 1.4%, reaching historically low levels and reflecting the depth of our customer relationships, as well as the trust in the services we deliver. This high level of loyalty supports the long-term sustainability of our fiber business and contributes to stronger lifetime value generation. Commercial momentum also remained healthy throughout the period. FTTH net additions reached 213,000 access, 6% higher than a year ago. At the same time, we have continued to expand our footprint with both speed and discipline. Homes passed reached 32 million, while take-up improved to 25.6%. This pattern of network expansion and rise in penetration confirms that we are successfully converting infrastructure investments into profitable customer growth. Moving to slide seven.

We continue to see the benefits of our strategy to expand beyond connectivity and build a distinguished ecosystem capable of serving a broader range of customer needs. This approach is translating into consistent growth and stronger monetization. On a last 12-month basis, B2C revenues reached BRL 46.6 billion, advancing 6.8% year-over-year. This performance reflects both the resilience of our connectivity business and accelerating contribution of new business revenues that expanded 33.6% versus last year. The sustainability of this growth is reflected in customer monetization. B2C revenue per RGU reached BRL 68.5 per month, continuing the upward trend observed over the past several quarters. As customers adopt more products and services within the Vivo platform, we strengthen engagement and deepen the relationship with our more than 56 million clients. New business endures as one of the most dynamic components of our portfolio.

Consumer electronics revenues increased 63.8%, health and wellness advanced 58.2%, video and music OTTs grew 25.7%, and financial services expanded 12.8%. Together, these businesses now represent 3.4% of total revenues. Innovation also remains an important differentiator. During the quarter, we reinforced Vivo's position as a leading digital hub by introducing exclusive benefits related to Gemini AI and Google Cloud Storage for eligible customers. In addition, we expanded the attractiveness of our offers through partnerships such as YouTube Premium, providing customers with a richer digital experience and further increasing the relevance of our plans. Through tailored offerings, digital innovation, and growing portfolio of services, we strengthen customer lifetime value and create new avenues for future expansion. Turning to slide eight. Our B2B business continues to demonstrate the strength of Vivo's strategy to evolve from a connectivity provider into a trusted technology partner for enterprise accounts across multiple industries.

B2B revenues reached BRL 13.9 billion on a last 12-month basis, up 9.2% year-over-year. Digital B2B remains the main growth factor, advancing 14.9%, while connectivity revenues rose 5.8%. Looking at the portfolio, cloud services continued to lead performance with 20.9% growth. Digital solutions increased 20.2%. Cybersecurity advanced 10%, and IoT and messaging grew 1% year-over-year. What stands out is not only the performance itself, but also the breadth of our capabilities. Today, enterprises seek partners capable of delivering tailored end-to-end solutions rather than isolated products. This trend continues to expand Vivo's opportunities across both private and public sectors. A good example of this approach is our recent partnership with EcoRodovias to expand mobile coverage along 400 km of highways in Goiás and Minas Gerais, benefiting approximately 1.4 million people.

Beyond enhancing connectivity, projects like this highlight Vivo's ability to develop customized initiatives that create value for customers and society. On slide nine, we highlight the continued advancement of our ESG agenda through initiatives that generate measurable impact and recognition from leading institutions. On the environmental front, we continue to expand programs that combine education awareness and circular economy principles. Through the third edition of Vivo Recicle, aligned with Vivo's Volunteer Day, we promoted environmental education and electronic waste collection across 33 schools, benefiting approximately 32,000 students, teachers, and community members. As a result, the volume of materials collected increased 28% year-over-year, demonstrating growing engagement with responsible consumption and recycling practices. We also achieved important milestones in waste management and environmental stewardship. Through our certified recycling seal, 100% of our packaging is now recyclable across all Brazilian states, exceeding our original target by 66 percentage points.

In parallel, the Floresta Futuro Vivo progressed with the planting of its first seedlings in the engagement of local communities, reinforcing our commitment to regeneration and biodiversity preservation. From a governance perspective, Vivo was awarded the Pró-Ética seal and achieved the maximum score in FTSE Russell's ESG assessment. These achievements were complemented by several recognitions, including being named the best ESG company in the sector by Exame for the third consecutive year, and ranking first in LinkedIn top companies in São Paulo. We also surpassed our 2025 gender and racial diversity targets under the UN Global Compact Brazil's Ambition 2030 initiative. With that, I would like to hand over to Rodrigo, who will walk you through our financial results. Thank you.

Thank you, Christian, and good morning, everyone. Turning to slide 10, our results continue to demonstrate the scalability of our business model as disciplined cost management and evolving business mix translated into double-digit EBITDA expansion and further margin improvement. Total costs increased 5.3% year-over-year. This was mainly driven by higher costs of services and goods sold, rising 10.2% as a result of the performance in handset sales, digital solutions, and new business revenues. These costs remain closely linked to commercial activity and ongoing diversification of our revenue mix. At the same time, operating expenses remained under control, rising only 3.2%. Commercial and infrastructure rose 5.7% year-over-year, supported by business growth and ongoing investments in customer experience and network quality. Personnel expenses grew below inflation at 3.2% year-over-year, highlighting our efforts to drive productivity and efficiency across the organization.

Bad debt showed a behavior consistent with our disciplined credit practices and the resilient quality of our customer base, remaining flat year-over-year in nominal terms and reducing as a percentage of gross revenue. We are also on track in our migration from concession to authorization plan, generating BRL 202 million in proceeds from copper sales in the quarter. Going forward, we expect to further advance in the value capture through these initiatives. As a result, EBITDA grew double digits for the first time in 11 quarters, at 10.9% year-over-year, and margins expanded by 1.3 percentage points to 41.8%. This illustrates our ability to capture growth while preserving cost discipline and operational productivity. On slide 11, we stay focused on investing for future growth while sustaining efficiency and financial discipline.

As we capture opportunities across mobile, fiber, and digital services, we are steadily enhancing the infrastructure and capabilities that underpin our long-term competitiveness. CapEx totaled BRL 2.6 billion in the quarter, equivalent to 16.4% of revenues, slightly below the previous year. These investments were mainly focused on supporting growing fiber and expansion of 5G coverage, now presenting 978 cities. This represents an increase of 325 cities compared to the same period last year, reaching more than 73% of the Brazilian population. As a result of our investment strategy, we are enhancing our returns and cash generation profile. In the H1 of 2026, operating cash flow before leases reached BRL 8.2 billion, growing 11.3% year-over-year and exceeding the pace of CapEx expansion. This reflects our ability to combine network expansion with operational excellence, translate top-line growth and higher profitability into stronger cash flow.

Moving to the next slide, we present the progress in profitability, cash flow, and balance sheet management. Net income for the H1 of the year was BRL 2.8 billion, up 17.9%, delivering the strongest first half year-over-year evolution in three years. This result reflects the consistent execution discussed throughout the presentation, supported by revenue growth above inflation, margin expansion, and a greater contribution from more valuable revenue streams across our portfolio. Free cash flow has followed a positive trajectory since third quarter 2025, reflecting our consistent ability to convert operating performance into cash. While quarterly results can be affected by temporal effects that distort year-over-year comparability, the underlying trend remains sound. This is evidenced by the BRL 4.9 billion of free cash flow generated in the H1 of 2026, reinforcing the robustness of our cash generation profile and the strength of our balance sheet.

As in prior years, cash generation remains subject to same quarterly phasing effects, with the overall growth trend remaining unchanged. Net debt to EBITDA was stable at just 0.4x, while our net cash position remained at robust levels, providing significant financial flexibility and supporting future opportunities. By combining organic growth, ongoing business transformation, strong cash generation, and prudent financial management, we are creating a firm foundation for long-term value while maintaining one of the strongest balance sheets in the sector. On slide 13, shareholder remuneration remains one of the main pillars of our capital allocation framework. We have already disbursed BRL 7 billion to shareholders as part of our remuneration guidance for 2026, an increase of 32% compared to the same period of 2025. Additionally, we still have a share buyback program of up to BRL 1 billion in place until February 2027.

Enforced to this track record, the total amount declared since the beginning of the year stands at BRL 2.2 billion, to be paid by early 2027. This represents a growth of 34.5% compared to the previous year. Looking ahead, we remain committed to distributing at least 100% of our 2026 net income, reflecting our confidence in business fundamentals, strong cash flow profile, and continued focus on value creation for shareholders. Thank you. We are now ready to move to the Q&A session.

We are going to start the questions and answers section for investors and analysts. If you wish to ask a question, please press the button Reaction and then click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Mr. Luís Chagas from XP. Please, Luís your microphone is already enabled.

Hello, guys. Hi, Christian. Hi, Rodrigo. Hi, João. Congrats on the results, thank you for the opportunity of making questions. I have two questions here. The first one, what is your perspective on the current competitive landscape on mobile? In which segments has competition been most intense? The second one is about prepaid. In this quarter, prepaid posted positive sequential adds. How does that reflect a change in your commercial approach versus a change in competition? Should we treat this as a structural inflection or a quarter specific effect?

Hi, Luís. That's Christian, okay. Thank you for your comments and your question. The competitive environment, I think, remains similar to the previous quarter. It's balanced, but in some markets and some segments, a little bit more aggressive. I think Vivo strategy stands on upselling data, digital services, and totalization of customers

As I have been saying, with a very disciplined monetization. The results of this quarter, once again, proved that we've been successful, especially in the postpaid segment, because we've been upselling, first from prepaid to hybrid, but also hybrid to postpaid. Overall, we have positive portability, and churn remained very controlled in the same level of 1% in the second quarter of 2026. The pricing strategy, we've been adjusting front book prices for pure postpaid and for hybrid. We did that in March, as you know. Also, we did back book pricing for our customer base also in April for more than 75% of the hybrid and almost 80% of the pure postpaid. We're keeping our strategy with great results, and net adds being positive, as I said, and the postpaid growth at 7.9%.

Although the competition is there, we are very attentive, specifically in some markets where we have more players competing and also in some segments. Regarding prepaid, you asked me the most competitive one. I believe prepaid remains very competitive. Actually, I think could be more rational, capitalizing the fact that connectivity services are essential, and they are quite cheap, the price that we have in prepaid compared to most countries. We have also initiatives like, zero-rating strategy for WhatsApp and et cetera, that makes it maybe more difficult in the future to migrate to hybrid, since most of the offers have BRL 30 per month as prepaid. We've been able to capture customers. As you could see, the net adds, that they're positive. That's good to keep prepaid growing. We have a slightly negative evolution, but better than other quarters.

As you know, prepaid revenues represent just 30% of the total mobile service revenues for Vivo. We need to be capturing prepaid customers to be able to, in the future, migrate them to the hybrid. I think that's more or less what you I don't think it's a big change in the strategy. Having net adds, I think, is part of our commercial activity. Again, I think the price difference is still very high between prepaid and the entry point of hybrid.

Thank you, Christian. Very good answer. Thank you.

You got it.

Our next question comes from Marcelo Santos by JPMorgan. Please, Marcelo, the floor is now yours.

Hi. Thank you for allowing me to make questions. The first question is I want to double-click on the mobile competition and mobile plans. We saw an emergence of Lite plans, like Vivo Lite, in the range of BRL 30, BRL 35 per month, and competitors are also doing something similar. What is the risk of cannibalization of the higher-priced hybrid plans? I just wanted to get your comments on this new development. It looks like a new category of plans is emerging with a lower price than what we were seeing before. Just wanted to hear you, the pros and the cons and hear your view. I want to see how you see the benefits of this plan. And the second question, maybe more to Rodrigo. What are the main initiatives you have ongoing to secure savings on the lease line?

I know you have a lot of things going on, just wanted you to provide an update on how that's going. Thank you very much.

Marcelo, thank you for your question. That's Christian here. The Lite plans, they are very segmented, okay? These plans represent a simpler customer proposition than traditional postpaid offerings. We provide the streamlined onboarding journey with very alike characteristic, similar to the digital subscription services. What they allow us is to address customer segment that may not qualify for traditional hybrid plans. First, they have, as I said, less onboarding friction and lower bad debt exposure because they are on credit cards. What we are targeting here is prepaid customers that we would not migrate to hybrid because of credit scoring, for instance, and we could do that through the credit card payment. I fear, as you said, we have BRL 30 per month, but that's for annual subscription. We guarantee 12 month with no bad debt risk.

We have the monthly one that is BRL 45 per month. That's comparable to some below-the-line hybrid offers that we see in the market. Again, we don't get the risk of the bad debt, and when it's cheaper, we guarantee the annual contribution of the customer. That's compared to what we have today in the market in the prepaid, as I said before, that its average offer among players is BRL 30 for a month. 15 days or BRL 30 for 30 days. Again, we believe we're pursuing a more for more strategy. Again, because we're guaranteed recurrency from a prepaid customer that we don't have it guaranteed. Also, we reduce or eliminate any bad debt exposure or risk. Marcelo, have I answered you?

Yes, you have. Thank you very much.

Hi, Marcelo. Thank you for your question. Let's see. First, leasing, it's important to remember there is a lot of phasing in leasing payments. If you look in a 12-month base, our leases are increasing only 1.8% year-over-year. Which means we are on track in our goal to remain, keep leases payments growing below mobile services revenue. We try to share the initiatives in some pillars here. One of them is to negotiate the contract with the tower hosts. The other one is to find some efficiencies in terms of usage and technology regarding the tower hosts. The third one is more structural. We try to find some kind of new company that could be useful for us to increase the tenant ratio for each tower used. As you know, in Brazil, we have an average 1.4 tenants per tower.

In the U.S., it's more than two. We see some room to increase this rate. Then, that's the overall of our initiatives.

Okay. Very clear. Thank you very much.

Our next question comes from Mr. Gustavo Miele from Goldman Sachs. Please, Gustavo, the floor is now yours.

Hi, Christian, Rodrigo, João. Good morning. Thanks for the opportunity. I would like to ask two questions. The first one would be regarding profitability. We see that this is the third quarter in a row that device sales appears to be a positive highlight for the company. One question that we usually receive from investors is the impact that this could have on company's margins. My question would be whether this makes sense, if this should be diluted for margins going forward, and if there's any lever that we should think about for the remainder of the year that could offset this impact of mix on margins until the end of 2026. This would be my first question. The second one is more straightforward.

We note that there is apparently a non-recurring event on the financial results, which is a financial revenue of BRL 56 million related to a tax amnesty program. Just want to make sure whether this is purely non-recurring or maybe if we should think about this repeating in the results of the H2 of this year. Thank you very much.

Gustavo, that's Christian. It's non-recurring. As it was stated, it's a non-recurring effect. Going to the EBITDA. I think what's important to see the evolution of our EBITDA. We've been growing EBITDA in 10.9%, even when we exclude any other effect that you may consider here, a corporate sale or wherever, the evolution is very strong. I think the strategy of selling devices and electronics in general is a very successful strategy. Apart from the numbers that it brings to revenues or EBITDA, it also allow us to bring more customers to our stores. We have 1,700 stores that are ready to attract people. Once they are there, apart from buying these products, we are also able to sell services.

When we talk about electronics, it's important to realize that it's not only smartphone anymore, we are also selling accessories and other products that we have much better margin than smartphones. When I sell a smartphone attached to the case, to the charger, and whatever, I have different margins when I compare the smartphone one and with the other ones. EBITDA has a very strong evolution. Margins have a strong evolution. More important than that, what I think we showed here is that the EBITDA minus CapEx evolution, as absolute number, has a very strong positive evolution. In margins over revenues, also presenting strong evolution. That comes as part of our strategy to have more smartphones and electronics. Again, driving customers to stores online and offline, and also contributing to the sale of more services and more electronics with better margin than smartphones.

That's very clear, Christian. Thank you very much.

Thank you, Gustavo.

Our next question comes from Mr. Rogério Araújo from Bank of America. Please, Rogério, you may now speak.

Hey, good morning, Christian, Rodrigo, and JP. Thanks for the opportunity. Two questions on our side. One is a follow-up on the mobile market. We heard on a competitor's call that Vivo was aggressive on discounts in the 2Q. Could you please clarify what may have driven that perception? Also, what should I expect going forward in terms of discounting? My second question is on churn ratio. Could you walk through the main drivers for lower churn versus competition? Is it purely the post-paid mix and conversions, or are there other factors? How do you see this lower churn translating to tangible benefits going forward? Thank you.

I think the tangible benefits are the strong evolution of our revenues along many consecutive quarters. I think that's the best answer why we believe that our churn represents the preference that customers have for Vivo and the loyalty they have for Vivo. I think here, Rogério, it's a combination of factors. I really don't know to whom I'm answering and what the comment was, I don't think we have more aggressive offers in the market. What we do have is the ability to offer the best convergent offer in the market. In a single plan, that is Vivo Total, we can offer all the services, That is driving preference and also driving loyalty. If you look the evolution that we have in Vivo Total, one year ago, we had 30% less customers. Now we have 3.8 out of the 8.2.

Additionally to the Vivo Total, we have convergent with different plans. That is another 1.5%. Vivo has been able to drive convergence in a way that, at the moment, is unreplicable. That is driving the general evolution of revenues, both in mobile and in fixed. It's also driving down the churn level in both mobile and in fixed. It also giving us room to sell more digital services as well. If you consider what is representing digital services in B2C, B2B added together is more than 12%. If I add to that, to the previous question about smartphone and electronics, is another 7%. 19% of our revenues are coming from services or products that are not 100% telecom. That is what is driving the preference for Vivo, the ability to do in one single shop, one-stop shopping strategy.

You can have everything from technology addressed by a company that is also recognized by superior customer experience, both with the best network in mobile and fixed, but also for the best customer service. I think that's the answer. That's what's going to keep us going and growing in the future quarters.

That is very clear. Thank you so much.

Our next question comes from Mr. Leonardo Olmos from UBS. Please, Leonardo, you may now speak.

Hi, everyone. Good morning. Can you hear me well? Yeah? All right. Christian, you gave an interview discussing the probable acceleration of asset sales in the H2. There's also some headwinds, negative effects on net income this quarter. My question is, should we expect an acceleration on net income in the H2 of 2026 and, as a consequence, an acceleration of dividends? Thank you.

I'm not giving additional guidance, what I'm going to explain, Leo, to your question, what is copper and real estate, and why I'm positive about the increase on the number that we see there. I think only before I start that, I think in the past we said that depreciation would be higher these two quarters because of the legacy technology that we are depreciating. We are ending up the depreciating process right now. It gives also a positive upside for the third and the fourth quarter regarding net income. For copper and real estate, if you see, we said that we would sell BRL 3 billion in copper. No, up to now, 2025 and 2026, we reached more or less BRL 443 million. Okay? It's still missing BRL 2.5 billion.

If I look to real estate, we already sold BRL 206 million, if you continue with the BRL 1.5 billion, it's still missing a lot for the total number. The two together is more or less BRL 650 million total sale, we said that would be BRL 4.5 billion, it's still missing BRL 3.85 billion to reach our number. Going forward, if you look the trend of the copper, it was BRL 86 million the first quarter. It's already BRL 200.5 million in the second quarter, the trend is to go up in the third and the fourth quarter.

In real estate, we didn't sell anything this quarter and in the previous one, we organized ourselves to start selling more in the next quarters. I think that was part of the thing that was in the interview. We selected 47 properties that are valued around BRL 600 million. We put them for sale.

We have to wait to see. We started to have some offers, we want to sell that in the better price, in the best price for the company. That's what I said, that I see the opportunity of starting selling some of them in the third and the fourth quarter. Of course, if that comes along, it has a direct impact in the net income for the quarters.

Yeah. This is very promising. Thank you very much. Have a good day.

Sure, Leo.

Our next question comes from Mr. Phani Kanumuri from HSBC. Please, Phani, you may now speak.

Hi. Good morning, everyone. My first question is on an extension to the previous question asked by other analysts. You have these light plans that you have introduced. Have you, till date, seen any cannibalization of your own control base that has shifted downwards towards the light plan? The second question is regarding the prepaid churn. This quarter, it seemed that you had a very low prepaid churn compared to others. Wanted to understand if there is some factor there. Thank you.

As I said, Phani, it is not cannibalizing hybrid. It is a different value proposition. It is targeted to a different type of customer. It is more addressed to prepaid customers that cannot have the hybrid plan in the standard way, due to different reasons. Maybe credit scoring that we see that one of the most attractive one. The credit card penetration in Brazil has gone up in the last years. There are customers with the ability to get a credit score for a bank that maybe doesn't get from us. They now have an opportunity to have an annual plan or a monthly plan, where we don't have the bad debt risk, and we can offer a very attractive offer. The hybrid will be differentiated by other characteristics.

Specifically, the one that I can build the customer, and the customer doesn't need to use his or her credit in the credit card. Prepaid churn is not something that we follow very closely because the no prepaid is driven by other metrics. More importantly, is to attract and to keep a very healthy customer base with high recurrency. That's what we aim in the prepaid. That's basically the way we measure this segment.

Okay. Did you see any change in the recurrence from the customer in the prepaid segment?

It's going very well. I think, as I said, the evolution of the revenues are slightly negative, but is better than previous quarter. I think we've been working closely to increase this recurrency. Once it becomes very recurrent, there's always a very attractive way for us to migrate these customers to hybrid. Now we have also a second option, to migrate these customers to Vivo Easy Lite. Where I can get a guaranteed annual fee if he prefers the offer that is annual. The annual plan has more or less the same logic that customers are used to have when they subscribe digital plans.

Okay. Yeah. Thanks, everyone. Thanks, Christian. Thanks, Rodrigo.

Thank you.

Our next question comes from Mrs. Maria Clara Infantozzi from Itaú. Please, Mrs., you may now speak.

Hi, Christian, Rodrigo, and João. Thanks for the opportunity. I have two questions from my side. The first one on fiber and the second one on CapEx. First on fiber, how should we think about the next phase of growth for the BU? Should we expect acceleration of organic growth ahead, or M&A could be an important piece of growth in the next years? If you could provide an update about the competitive environment in fiber, it would be really helpful. The second question, when it comes to CapEx, it came slightly above our expectations. I was wondering if this is somehow related to accelerating investment in fiber. Could you please elaborate on that, please? Thank you.

Maria Clara, thank you for the question. Yes, we've been growing fiber in a very healthy way, as you said. I think we're increasing the number of home passed and we're also increasing the number of net adds. I think that's the strongest, by far, evolution of the fiber business in the Brazilian market. We've been doing that organically. Actually, we also bought the other partners that we had in FiBrasil. Now we control almost 100% of all the infrastructure that we have today to provide fiber. We are growing on average between 2 and 2.5 million home passed per year. We grew in net adds almost 900,000 customers last year. All the strategy is also driven by convergence, so we are also deploying network where we have our customers, especially postpaid, to be able to address it with Vivo Total.

Going forward, we see a market that is much larger than the footprint that we have today. We could do that, continue to grow it organically or access M&A opportunities where we could find someone with no overlay or with a limited overlay with our network, with the technical conditions of the network and the CP, the ones that we expect to have, because we have a high-quality network and high-quality equipment and customer premise, and the right pricing. We are very attentive to see if we find the right target. If we don't, we will continue to build it ourselves. I don't have many more to share. Only that our strategy has been very successful because net adds and the churn level, also, I think are the great reflect of the preference that customers have for the service that we provide.

We continue that because we see fiber as a value creation opportunity because of our unique assets. The brand, the channels, the customer service, the digital ecosystem, and our ability today to offer the best plan of convergence in the market in a single plan. Regarding CapEx. The CapEx is, there is also the seasonality of the CapEx. The intensity of this quarter doesn't reflect what we envision for the year. I think, as we said last year, we've been working for CapEx optimization in the ratio CapEx over revenues. We continue with this positive trend. Because CapEx has seasonality and also because we see revenues growing in a very positive way in all lines, and some lines are also not driven by CapEx.

That give us a lot of room to continue with the trend of gradual improvement in CapEx intensity in an annual base.

Very clear. Thank you, Christian.

Our last question comes from Mr. Daniel Federle from Bradesco BBI. Please, Mr., you may now speak.

Hello. Good morning, everyone. Congratulations for delivering a very solid mobile services revenue growth amid intensifying competition. My first question is that I would like to hear from you, if it's possible for Vivo to remain immune while competitors are delivering much lower growth. The industry seems to be suffering. If it's possible for Vivo to remain a part of these industry trends. The second question. One of the main concerns from investors has been that the control price, the front book price, has not been increased so far. It seems that someone needs to make the first move. Given that Vivo is outperforming competitors, do you see room for Vivo to be this first mover, increasing front book prices in the control plan? Thank you.

Thank you for the question. We've been always analyzing opportunities, because there's inflation, so we need to have it to consider. I think, going to your first question. I think our ability to grow is the ability also to raise price when it's needed because we have inflation, and we need to address it. Our costs are addressed by inflation, so we need also our revenues to be addressed by inflation. I think we've been very brave to do it. As I said, we did that in the front and in our customer base. I think also our ability to continue to grow revenues is driven by convergence. Convergence not only fixed and mobile, but also convergence of all services to the same customer. We've been very obsessed about selling more digital services, selling more insurance, selling more other products.

As I said, electronic products to our customers, I think that is paying off to be the right strategy to keep revenues growing, even when we are the leader or even when we have the largest amount of revenues. I think that's the answer to your first question. To the second question, as I said before, I think there is maybe some segments that are not being addressed by inflation that they should. Prepaid for me is the key one. If prepaid is not addressed with a price correction driven by inflation, it's difficult to migrate to an entry plan that is much higher than the prepaid average monthly fee. We are analyzing the market as a whole. We'll be bringing news as we brought the one now that you just have found out the light.

That is also a great way to get recurrency, guarantee low bad debt, and also we're going to come up with different ways also to address this in the prepaid and the entry level of the hybrid plan.

Okay, just to confirm. The prepaid prices, they need to increase before increasing price-

No.

In the control segment. That's the-

I'm not just saying that. I'm saying that I'm analyzing the whole segments, and I'm also analyzing the prepaid as well. Not saying that one has to be before the other one. Said that it's part of the strategy.

Okay.

Because they are very connected.

Okay. Thank you very much, Christian. Very clear.

The questions and answers section is over. We would like to hand the floor back to Mr. Christian Gebara for the company's final remarks.

Thank you all for being with us again. I think we restate all our messages, but I believe this quarter proved more than ever our ability to drive revenues up, our ability to keep growing EBITDA. Also, our ability to monetize all our assets from the migration, from a concession to an authorization that is still in the beginning of the journey. More importantly, our ability to drive cash flow generation. We are very driven by the EBITDA minus CapEx, minus leases, and I think we've been able to prove that in all these different lines, the company has been able to drive up. At the same time, being very attractive for customers. Net adds in a very solid trend, churn in a very downwards trend in all services and products, and also being able to differentiate our revenue mix. Going forward, we continue to do that.

Of course, keeping shareholder remunerations as the top of our agenda. Thank you so much, and if you have additional questions, please reach us. Okay, thank you.

Vivo's conference is now closed. We thank you for your participation and wish you a very nice day.

Good morning, ladies and gentlemen. Welcome to Vivo's first quarter 2026 earnings call. This conference is being recorded, and the replay will be available at the company's website at ri.telefonica.com.br. The presentation will also be available for download. This call is also available in Portuguese. To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. After that, select Mute Original Audio.

[Non-English content] We would like to inform that all attendees will only be listening to the conference during the presentation, and then we will start the question and answer section when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Vivo's executive board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events, and therefore depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements.

Present at this conference, we have Mr. Christian Gebara, Chief Executive Officer of the company, Mr. Rodrigo Rossi Monari, Chief Financial and Investor Relations Officer, and Mr. João Pedro Soares Carneiro, IR Director. I will turn the conference over to Mr. João Pedro Soares Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you may begin your conference.

Good morning, everyone, welcome to Vivo's first quarter 2026 earnings call. Today, our CEO, Christian Gebara, will begin by presenting Vivo's execution in connectivity and digital services, as well as highlight our key ESG accomplishments for the quarter. Rodrigo Monari, our CFO, will comment on our controlled cost evolution, free cash flow generation, profitability, and shareholder distribution in the period. With that, let me turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you for joining us today. Vivo began 2026 at a strong pace. Once again, we delivered growth above inflation across our core metrics, supported by customer base expansion, resilient revenue performance, and continued margin improvement. On the operational side, postpaid remains a key driver of value creation. Our postpaid base grew 6.9% year-over-year, reaching 72.1 million access, representing 69.5% of our mobile base. This execution reflects a healthy combination of net adds, disciplined pricing, and focus on customer experience. Fiber also remains an essential growth vector. We reached 8 million homes connected, advancing 11.5% year-over-year, with our footprint expanding to 31.5 million homes passed. Beyond scale, fiber strength convergence deepens customer relationship, reduces churn, and supports a stronger revenue profile.

Regarding our financial results, total revenue grew 7.4% when compared to the previous year. Mobile service revenues delivered a 6.6% increase, while fixed revenues grew 5.1%, underscoring the sustained contribution from fiber and our B2B portfolio. In terms of profitability, EBITDA rose 8.9% year-over-year, lifting margins to 40.2%. Operating cash flow reached BRL 4.2 billion, an 8.5% improvement, while net income expanded 19.2% to BRL 1.3 billion. Free cash flow generation totaled BRL 2.2 billion during the quarter. Our efficient operations allow us to remain fully committed to shareholder returns. So far, we have allocated BRL 7 billion for distribution in 2026, reaffirming our confidence in meeting our guidance for the year. Moving to slide 4.

We highlight the ongoing transformation of our revenue mix as it continues to drive positive impacts on our top line. In the first quarter, total revenues grew 7.4% year-over-year, led by a well-balanced contribution from both mobile and fixed services, as well as the growing relevance of our new business. postpaid revenues rose 7.8% year-over-year, demonstrating the strength of our value proposition, balanced pricing, and enhanced customer experience. FTTH revenues also improved, advancing 9.2%, driven by sustained demand for high-quality connectivity and convergence. It's also worth highlighting the strong performance of our handsets and electronics line that grew 26.6% year-over-year, fueled by a more competitive portfolio and a new go-to-market strategy that enhanced the availability of in-store devices, accessories, and electronics in general. Our new business continued to play a central role in our strategy.

They now represent 12.1% of total revenues, an increase of 1.8 percentage points versus first quarter 2025, with meaningful contributions from both B2C and B2B solutions. This progress emphasize our long-term vision of revenue diversification, scaling of digital services, and consolidation of our ecosystem. As a result of our commercial momentum, postpaid and fiber revenues now account for over 74% of service revenues, highlighting a structurally stronger and more resilient revenue mix as we begin 2026. On slide 5, we show how our solid mobile operation are once again driven by Vivo's differentiated network and superior customer experience. By the end of this quarter, of the first quarter, our total mobile base reached 103.7 million access, representing year-over-year improvement of 1.3%.

Postpaid, excluding machine-to-machine and dongles, remains a key growth engine, expanding 7.2% to 51.6 million access, while machine-to-machine and dongles also delivered a healthy increase of 6.4%. Commercial performance was particularly strong this quarter, with postpaid net additions accelerating 22.7% compared to last year, further underlining Vivo's leadership in this segment. Importantly, this evolution comes with value. Postpaid churn remain well controlled at 1.0%, confirm the depth of our customer relationships and loyalty. At the same time, mobile ARPU reached a record level, up 5.7% year-over-year, as customers continue to migrate to higher value plans and consume more data. In prepaid, while access growth is still negative, revenue is gradually improving with the year-over-year decline narrowing to -1% this quarter.

This is the result of ongoing efforts to stabilize the base, enhance monetization, and prioritize customer acquisition. Overall, these results showcase the resilience and quality of our mobile platform, combining continuous postpaid expansion, record ARPU, low churn, and consistent recovery of prepaid revenues. This gives us confidence in our strategy and support sustainable growth throughout the year. With that, let's move to fiber. Turning to slide six, we further highlight the strength of our fiber business and growing role of convergence as a key differentiator for Vivo. Fiber access then demonstrate continuous momentum, maintaining double-digit year-over-year increase and reaching 8 million connections. This performance clearly reflects customer preference for high-quality connectivity and integrated solutions with Vivo Total once again standing out. Growth is progressively driven by convergence.

Vivo Total Access expanded 32.6% year-over-year, reaching 3.6 million customers, and now represents 44.7% of our FTTH base, an expansion of more than 20 percentage points in just 2 years. This confirms the attractiveness of our convergent proposition and its ability to capture even more customers. Our fiber footprint also expanded, with homes passed reaching 31.5 million, up 6.2% year-over-year, while the take-up rate improved to 25.4%. This combination strengths our conviction in achieving network penetration above 30% over time as we continue to translate fiber expansion into customer base growth. Moving to slide 7, we give more color on the acceleration of our B2C business, supported by stronger totalization of our customers' needs and growing relevance of service beyond connectivity.

On a last twelve-month basis, total B2C revenues reached BRL 45.7 billion, growing 5.9% year-over-year. This performance shows the resilience of our core connectivity as well as the strong acceleration in new business that expanded 31.5% and now account for 3.2% of total revenues. Monetization trends remain very solid. B2C revenue per RGU increased to BRL 67.2, underlining the effectiveness of our strategy to deepen customer engagement, drive cross-selling, and extract greater lifetime value from our existing base. Looking specifically at new business, we continue to see robust and well-balanced growth across our main verticals. Video and music OTTs remain the largest contributor, growing 24.8% year-over-year. Consumer electronics delivered another strong results, with revenues up 56%, supported by higher demand during the period.

Health and wellness continue to stand out as one of our fastest-growing categories, with revenues up nearly 68%, supported by the strong scaling of Vale Saúde that now exceeds 500,000 subscribers, up 13% year-over-year. This highlights our ambition to scale services that are adjacent of our connectivity solution. In parallel, we maintain the expansion of our financial services capabilities. Through Vivo Pay, we launched our proprietary installment plan, broadening access to credit and enabling a more seamless purchasing experience for handsets and electronics while further supporting monetization and customer retention. Altogether, these developments emphasize Vivo's evolution into a broader digital platform. While connectivity remains our core foundation, an increasingly diversified ecosystems of services is enhancing customers' lifetime value, expanding opportunity and positioning us for sustainable growth over the long term.

On slide eight, we provide an update on the development of our B2B business and how the ongoing shift in our revenue mix toward digital solutions continues to gain traction. B2B revenues reached BRL 13.7 billion, growing 11.8% year-over-year, once again, delivering a remarkable performance. Digital B2B remains the main growth lever, advancing 23.8% and reaching BRL 5.4 billion over the last 12 months. While B2B connectivity also posted robust growth of 5.2%, demonstrating the solidity of our enterprise services. Within digital B2B, performance remains well-balanced across the portfolio. Cloud services expanded 29% year-over-year, supported by rising demand for scalable infrastructure and hybrid environments. IoT and messaging advanced 17.3%, while digital solutions grew 21.1%, driven by broader adoption of customized enterprise offerings. Data protection.

In this context, B2B is gaining relevance within Vivo's overall revenue mix, reinforcing the segment's role as a key growth pillar, as evidenced by accelerating demand from companies undergoing digital transformation across multiple industries. A clear example of this strategic positioning is our partnership with São Martinho in the agribusiness sector. This initiative illustrates Vivo's leadership in enabling data-driven, sustainable and competitive operations tailored to customers' needs. More broadly, partnerships like this underline how our role is evolving beyond connectivity, positioning Vivo as a trusted digital partner for enterprise customers. Turning to slide 9, we show how ESG remains a core pillar of Vivo's strategy. With consistent progress across people, environment, and governance translating into tangible outcomes for our stakeholders. Vivo continues to be recognized by major global benchmarks.

We lead B3 Corporate Sustainability Index across all sectors for the third time, are still the only Brazilian telco included in the Dow Jones Sustainability World Index. For the sixth consecutive year, we're recognized by CDP for supplier climate engagement. On the people front, we continue to expand initiatives focused on our employee well-being, including Hospital Púrpura, that offers structured care journeys and has seen growing adoption since its launch. Today, the platform is available to more than 80,000 people, including employees and their relatives. In addition, Vivo was named the winner of Anatel's 2026 accessibility ranking, reinforcing our position as a leader in digital inclusion.

From a governance standpoint, following the appointment of a new board member in April, women now accounts for 42% of our board of directors, marking another important milestone as we continue to foster diversity across all levels of the company. On the environmental agenda, we strengthened our external commitment by joining additional initiatives of the UN Global Compact in Brazil, underscoring the credibility and consistency of our ESG roadmap. With that, I will hand over to Rodrigo, who will walk you through the financial results. Thank you.

Thank you, Christian, good morning, everyone. Moving to slide 10, we provide more color on the evolution of our cost structure and how improvements in cost mix turned into EBITDA growth in the first quarter. Total costs reached slightly over BRL 9 billion, reflecting strong commercial momentum alongside continued control across our cost base. Looking at the composition, cost of services and goods sold increased 12%, with higher volumes in handset and accessory sales, as well as the expansion of our new business revenues. This cost line is fully linked to revenue-generating activities and our ongoing business mix transformation. On the other hand, operating costs grew 3.9% year-over-year. Commercial and infrastructure, our largest cost component, rose below inflation for the period, maintaining the trend for the 50 consecutive quarter.

At the same time, we continue to assess opportunities to deploy AI across our operations, further enhancing the consumer journey and supporting gains in efficiency. Despite the progress already achieved, we remain focused on moderating the evolution of this line. During the quarter, copper revenues showed a slight deceleration, reflecting a tactical decision to pause sales in March. Sales resumed in late April, keeping us on track to deliver the planned BRL 4.5 billion in concession-related assets by the end of 2028. With regards to bad debt, the overall trend remains stable, representing 2% of gross revenue. This favorable cost mix result in a high single-digit year-over-year EBITDA growth, with the margin expanding to above 40% in the quarter. On slide 11, we present the progress of our operating cash flow in the first quarter.

CapEx totaling BRL 2 billion, reflecting continued investment in our network consistent with our strategic priorities. This represents capital intensity in line with first quarter 2025 and below the previous year's average as we continue optimizing CapEx allocation. Operating cash flow before leases totaling BRL 4 billion. That resulted in a 10% year-over-year increase in operating cash flow after leases amounting to BRL 3 billion. This performance demonstrates our ability to convert EBITDA into cash through a combination of efficiency initiatives in both owned and leased assets. This translated into further margin expansion both before and after leases, confirming the resilience of our cash profile. Turning to slide 12, we highlight how our financial management discipline results in a higher profitability.

Net income in the first quarter had the highest yearly growth in over 2 years, confirming our operational execution diligence and reflecting the sustained evolution across our core business. Free cash flow was up around 4% year-over-year, with the quarter comparison influenced by timing effects. Looking ahead, we remain confident in our capacity to deliver a strong performance year by end. Our net cash position advanced materially, up 65% year-over-year. Our net debt over EBITDA also improved, now reaching only 0.4 times in the last 12 months, underlying the ongoing strengthening of our balance sheets. Overall, was another robust cash generation quarter, keeping Vivo in a very strong position to invest with responsibility while maintaining attractive returns.

On slide 13, we would like to highlight that shareholder remuneration remains a priority of our strategy as we reiterated our guidance for the year. As of today, BRL 7 billion has already been confirmed to be distributed during the year. This amount includes the interest on capital declared in 2025 and paid in April this year, as well as the capital reduction scheduled for payment in July 2026. We have declared BRL 890 million year to date to be paid by April 2027. In February 2026, our board approved a new share buyback program of up to BRL 1 billion to be executed through February 2027. This initiative is fully aligned with our efficient capital allocation strategy and our focus on long-term value creation for shareholders.

To conclude, we reaffirm our commitment to distribute at least 100% of the net income generated in 2026, supported by our strong cash generation and conservative leverage profiles. Thank you. We are now ready to move to the Q&A session.

Thank you. We are going to start the question and answer section for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Luis Chagas with XP. You can open your microphone.

Hi, everyone. Thank you for the time here and the space to make questions. From my side, I have two questions. The first one regards broadband. Vivo is executing very well with Vivo Total and is gaining clients consistently while the market is somewhat mature. The question here is how do you see competition in the broadband segment, and if you see any room to increase prices in fiber? Over the next three years, what's your goal in terms of Vivo Total's penetration in your FTTH base? The second question is about prepaid, which is virtually stable year-over-year while the front book prices have been stable for some time. Do you see any room to increase prices in prepaid? Thank you.

Luis, this is Christian. Okay, many questions. I'm gonna go for the ones that I remember, the last one. We increased around 25% of our customer base price in the back book of fiber in January. We are following the right timing to do this increase. We also had Vivo Total price increase in April. We are following the annual price evolution that we normally have. Our focus is strongly in Vivo Total. I will give you more detail about your first question before I gonna go to prepaid that you asked also. Yes, prepaid, yes, we do believe there is room for price increase. We are moving now more to the monthly tariff.

We are now giving WhatsApp, that's also a way to monetize. Our revenues, if you compare to the first quarter of 2025, decreased 1%. That is a much lower pace.

It used to decrease before. If you look back, for instance, in the first quarter of 2025, we were declining more than 11%. Now it's only 1%. This is a combination of more customers and our ability to keep them engaged with Vivo and selling better plans. In this case is longer plans that can also increase their ARPU. Your first questions were related to fiber. Yes, fiber is very competitive, as you described. Our strategy, it is to have more and more Vivo Total customers. For you to have an idea, in the first quarter of 2024 of our total fiber customers, just 24% of our Vivo Total now is closer to 45%. Apart from that, we have another 20% that are converged but not in Vivo Total.

Yes, our strategy is to keep in Vivo Total because churn is much lower of fiber customers when they are in this convergent plan. Apart from Vivo Total, we are also upselling more digital services as the one that I described, think successfully the video ones. There are more than 4.4 million customers already with that. Once we sell more service to the same customer, that's why also we highlighted the revenue per customer because we do believe it's a very relevant metric to understand, you know, the recurrency and how healthy our revenues are because it come from the ability to have more loyal customers spending more money with Vivo, increasing their lifetime value.

Regarding fiber as well, the market is very fragmented, but in the first quarter, number one player is Vivo, we got 200,000 net adds. The second player, minus 80. Our market share is 19.2%. One year ago was 18.4%. That give us a very like clearness that we are following the right strategy. That's the one that we're gonna continue to follow. Expanding more network, penetrating more network and selling more convergences and plus digital services.

Thank you, Christian.

Thank you, Luis.

Our next question comes from Leonardo Olmos with UBS. You can open your microphone.

Hi, everyone. Good morning. I want to discuss a little bit margin. If you look at commercial infrastructure, positive surprise, but bad debt was a negative one. I just wanted to check on you're growing so much B2B and a few of revenues that have lower margin, but they are positive in terms of free cash flow. The overall discussion I have is, if you have a margin contraction that impacts net income, but the free cash flow is positive, but dividends is linked to net income. You see where I'm going? If you have lower net income and lower dividends, how can we see in dividends the increase you're delivering free cash flow? I'm not sure I was clear, but it's just one question I have.

How can you see increase in dividends proportionate to the free cash flow increasing, increase you are delivering?

Leo, thank you for your question. I will try to answer if I understood them correctly. Our net income is increasing 19.2%, and we already have a commitment of distributing BRL 7 billion this year. That is way above what we distributed last year. I don't see a concern about shareholder remuneration. Apart from that, as you know, we already declared another tranche of interest on capital and also a new program for share buyback. Going to your question about costs that I don't know if the one that you are also elaborating, you are right. We had a very positive result in commercial and infrastructure. We had, as I said, increased in everything that is related and linked to revenue expansion.

Our, in talking about B2B, we have an increased commercial activity in digital B2B solutions because we are doing very strongly in these lines, in all of them, cyber, cloud and et cetera. Of course, there are some costs of services linked to that. Apart, I think from the B2B digital service, also there's part of that that is B2C. When I sell more OTT, video OTTs, I'm also contributing to more cost of services sold. I think goods sold is also an important driver of this quarter. Our revenues grew 26.6%. Again, costs linked to revenues. Going to other one that is the provision of bad debt. We are very clear. Our B2C bad debt has not changed. We have more or less the same level.

Actually, I would say that if I exclude one single B2B customer, my bad debt would go to 1.88%. My average bad debt over revenues last year was 1.92%. That's not a story about B2B not performing. I'm talking about one single B2B customer that didn't perform last year. We're giving you full transparency in the bad debt line. All the rest is B2C. All the rest in B2B is 100% under control. That's more or less explanation that I had about costs and about I don't know if you have anything else about free cash flow, Leo, that I can try to respond.

Yeah. No, no, actually you answered more than I, than I asked for, so thank you. I think those are all positive news. The net income increase, like you said, 19% goes to dividends. Quite positive. Thank you.

I will add something else.

Yeah.

No, I will add something else that you didn't ask me, but I got the opportunity about costs. Last quarter, by the end of last quarter, the quarter that we're talking about, there was, we had to practically stop the sale of copper. There was, for a moment, a change in the tax over copper sale. We extracted the copper, but we didn't sell. Fortunately, that tax change was reverted. Now we are able to continue in the increasing pace of selling copper, as we said before. Some people may say, "Oh, you sold more copper in the fourth quarter than you sold in the first quarter." That's correct. I extracted a larger amount, but I didn't sell because I had a tax impact that I was not expecting. That fortunately was reverted.

Here we prioritize the return to our shareholders. That's why we're gonna see a better movement of copper sales this quarter, the 2nd one.

Yeah. super clear, Christian. Thank you, and have a good day, y'all. Thank you.

Sure, Leo. Have a nice day.

Our next question comes from Marcelo Santos with JP Morgan. You can open your microphone.

Hi. Good morning, Christian Gebara, Rodrigo, João. Thanks for the opportunity for asking questions. I wanted to go a bit back on Luis' question regarding actually your answer to his question regarding the back book price. Could you please remind us when did you increase last year and, like, what time for each product and so far what you did this year? Just wanted a recap year-over-year to understand the calendar effect. The second question is regarding CapEx. Could you provide us with considerations regarding the CapEx outlook for this year? Thank you very much.

Marcelo, in the hybrid, last year, we had price increase in back book, okay, April and August, and now we are doing April again around 76% of our hybrid customer base. The remaining, we're expecting to do that in August, it's to be confirmed. postpaid, last year, April, remaining August. This year, again, around 80% in April, remaining probably in August. fiber, it was more distributed along January and June. Again, we started fiber also in January and again, probably June, the rest. Vivo Total, last year, April, this year, April, 100%. Is that clear?

You gave some percentages for this year. Would it be something you'll be willing to open for last year? Like you said, 75%, you're going to do this April on hybrid. How much was in? You gave two numbers, 75% and 80%.

76% was in hybrid. 79% was in postpaid.

Okay. Super clear.

Okay. Second question, CapEx, no?

Yes, CapEx.

Yes, CapEx.

Okay. You want to go.

Marcelo, thanks for your question. First, we would like to highlight that our CapEx intensity remain in line with first quarter 2025 and below the average of full year 2025, you know. As we are committed to deploying resources with discipline, most of the CapEx is focused on the mobile network enhancement along with fiber expansion and customer connections to sustain our leadership in our position. Okay? At this point, there are no structural differences in composition or CapEx strategy for this year. I also want to highlight here, if you look to operating cash flow, you know, EBITDA minus CapEx, we came from a margin in the first quarter of 2024, 23.6%, went to 25%, and now we are in 26.2%.

That is 100% aligned with our strategy of optimizing CapEx, but also having the ability to increase in new businesses, keeping EBITDA absolute evolution in a very strong, positive way. Now our operating cash flow over revenues is 26.2%.

Just a quick follow-up there. I mean, the first line, Rodrigo, you said is CapEx intensity remains in line with what happened. For the year, in the past, you used to say that CapEx intensity should gradually go down, like, 2026. That was my understanding of previous calls. Is this something you're still committed to see capital intensity percentage of revenue-

Yeah. Marcelo, we always said that the annual CapEx intensity.

Sure.

Yeah. It's always different to be discussing quarter-over-quarter. Over the year, we are committed to improve CapEx intensity, and that's what we're gonna do in 2026.

Sure. That was my question. Thank you very much.

Thank you.

Our next question comes from Rogerio Araujo with Bank of America. You can open your microphone.

Yeah. Hi, everyone, good morning. Thanks for the opportunity. I have a couple here. First, on these asset sales from the concession migration. You reiterated the expected amount by 2028, how can we think about the level expected in the remaining quarters of 2026? You resumed sales in end of April. Should we expect something linear throughout 2028? Also on the remuneration to shareholders, regardless of the net profit you committed with BRL 7 billion. Just a follow-up here. Is this at least BRL 7 billion, or is this the absolute number BRL 7 billion? This is first one and the second on leases. Your main peer has been engaged in negotiations with the tower companies in Brazil, this has been leading to reductions in these payments. We haven't seen the same at Vivo.

Is there room for similar negotiations and how should we expect it to play out regarding magnitude and timing? Thank you.

Rogerio, this is Christian. Yes, as I said before, we stopped for a while the sales, but resume the sales of copper. Yes, you can expect increase in the number that we're gonna present for copper sales along the year, quarter-over-quarter. That's your first question. The second question was about?

Yeah, it's.

At least, like, BRL 7 billion. That's our confidence that we're gonna reach is, again, the guidance is at least 100% of net income. Since we have already declared and paid and will be paying the other tranche in July of BRL 7 billion, it means that is at least BRL 7 billion for the year.

Perfect. Thank you. Regarding leases, these negotiations with tower costs.

Yeah. We don't need to give what we are negotiating with everyone. Of course we are negotiating with all of them. Our value related to leases, it's like there's always some phasing related to the numbers that we presented. It's very well controlled. I think our goal is always to keep lease payments growing below mobile service revenues. We do that through coordinated efforts to reduce the unit cost, and that's the negotiation that we have with the tower. We also need to increase coverage. You understand that. We need to keep it like you are the number one company with 40% of the postpaid market. We cannot stop that.

If you look back at 2024, the amount we paid the first quarter was broadly in line with the levels paid in the final quarters of 2024. More than a year later, our leases versus remain very stable. Here our challenge is to continue to grow it below the growth of revenues that we have in mobile. Of course, we are negotiating with our companies, but we will not let Vivo not being the leader in coverage. That's why we're also investing in more coverage because Brazil needs it. That's our target. We are complying with all of this since the first time that we talked about this.

Okay. Just a follow-up here. If you're not increasing the coverage, would it be dropping significantly?

It's gonna be dropping, of course. Brazil has many things. No, there's not only negotiation, there is co-location. We have a very low level of co-location in Brazil. It's around 1.4, while what we see in Europe is above 2. If I stop my network as it is today, Rogerio, I would be negotiating to increase co-location with all the tower companies that I have. And of course you would see it dropping. As we need to drop it, at the same time, I need to expand coverage. It's very difficult to get the right number every single quarter. The trend, going back to 2004, as I just mentioned, is extremely positive. In the meantime, we're keeping our leadership in postpaid of 40%. We're number 1 in 5G.

That's our strategy, to keep the differentiating Vivo as the best network of the country. At the same time, keeping controlled our lease expenditure. It's also important, I just said before, when I was talking about the operating cash flow over revenues. I think it's also good to see, coming back to your question, operating cash flow after leases. I had 14.5% of margin in the first quarter of 2024. I went to 15.8% of margin of operating cash flow after leases in 2025, and now I'm presenting 17.1% of operating cash flow after leases over revenues. I do believe that we are in the right track.

That's very clear. Thank you so much.

Thank you, Rogerio, for the question.

Our next question comes from Leonardo Cintra with Itaú BBA. You can open your microphone.

Good morning, Christian, Rodrigo, and João. Thanks for the opportunity to ask questions. I have 2 here. The first one about the equipment sales. It was a positive surprise compared to our numbers. Can we expect this level going forward? If you could elaborate a little bit more on the dynamics of cell phone sales, it would be very helpful. The second one about AI initiatives. Could you comment a little bit more on the revenue opportunities from B2B leveraged by these AI initiatives?

Also regarding costs, how are you, how are the AI initiatives progressing, and what are you expecting in terms of margin improvement, particularly, in terms of call centers and sales commissions dilution? Thank you.

Leonardo, thank you for the questions. AI is in the beginning, of course, we are exploring revenue opportunities. Imagine that Vivo has already a large number of customers that are buying cloud from us, AI is very connected to cloud. We're gonna leverage all this relationship and all this customer base that we already have and all partnerships that we have with the largest cloud providers of the, of the world to exploit opportunities in AI. I cannot share you a number right now, of course, even when you talk about the big deals that we had with Sabesp, for instance, with Celmar China, they all have a piece of AI that will be implemented.

Because there's a lot of data being captured, there is a lot of automation being captured, and they will be driven as by machine learning and AI for sure. We cannot give you the number right now, but we are very, very positive about the opportunity of growing it even further. The impact in our OpEx, of course, it will be seen. Just to give you an one initiative that is in call center, we're gonna launch in 1 month, the beginning of our call center AI agent project. As I think I mentioned last quarter, we're gonna have a concierge handling all the calls, and then we're gonna have 3 agents focused on billing, in plans, and the other one in technical support.

Our aim here is to retain, in the next quarters, over 60% of the calls using these agents. There is a vast number of opportunities that we're gonna capture with AI. Going to electronics. That was a great quarter for smartphones, but also I want to highlight what is not smartphone, that is consumer electronics. That grew 56%. This is our ability. I'm talking about 12 months, no, the growth of the consumer electronics, and that's our ability to sell more of other things rather than smartphones. There are tablets, gaming devices, televisions, accessories to smartphones. We bought H2go, we have Ovi. We have many things that are expanding our portfolio. We now are expanding our portfolio to all our stores, not only the own ones, but also the resellers.

That we see, in a very positive way, our ability to keep even more from this footprint of being a retailer of technological products. In smartphones, we're also growing. Of course, it still represents a lot of our total revenues. If you talk about BRL 1.1 billion that we have for the quarter. The other consumer electronics that I told you is around 15% of this number, and the rest is the smartphones. Both are growing. That's why we're keeping 36.6. We don't give guidance, we are having a very strong commercial start for the second quarter. I don't see why we would change the trend.

Very clear. Thank you, Christian.

Our next question comes from Phani Kanumuri with HSBC. You can open your microphone.

Hi. Thanks for taking my questions. The first one is on, are you seeing any impact from higher oil prices on your operations, whether it's on the cost or on the customer behavior? The second question is regarding your ability to maintain the cost below revenue growth. You have been doing a good job. Is there a concern that this could grow above revenues in the future? Thank you.

Thank you, Phani. No concern. We're gonna keep the excellent trend in our cost evolution. As I explained, splitting what is linked to revenue and what is operational. No concern. Regarding oil, no impact. No direct impact. Very positive for us for the moment. The macro is not impacting our business. As I said about that either, we are in shape.

Thank you.

Next question from Daniel Fedele with Bradesco BBI.

Hi. Good morning, everyone. Thank you very much for taking my questions. In the 1, I would like to hear your thoughts regarding the competitive landscape, if it's getting better, getting worse, if it's stable. Specifically on the front book increases in the control plan. I understand that the entry plan is one of the most important ones in the portfolio. Last year, we've increased prices in February. This year so far, I think there were no increases. The second question is more like a follow-up because you mentioned that like back book prices, 76% was increased in April. The remaining, by the end of the year to be confirmed.

Just to understand if the to be confirmed means there are risks to not increase prices for the remaining of the existing clients? Thank you.

What? Daniel, how are you? It should be confirmed is the date. I'm not gonna increase 76. I'm not increase the remaining 24. I just need to get to the right month, you know, of the increase. I said that was in August, it should be confirmed it's gonna be in August or it gonna be in the end of July or in the beginning of September. I don't want to be precise about the exact date, of course, if you increase 76, I'm gonna increase the remaining 24. As competition, very competitive market, Vivo standing out. Strong net adds, low churn, ability to sell more services, differentiating our value proposition. We're gonna keep doing that's the way that we've decided to do to defend our positioning.

Offering more services to our customer base and try to attract more customers because we have a better value proposition that adds the best infrastructure with the largest portfolio of services. Regarding the control, the hybrid 1. Yeah, in some of the plans we had some increase in the prompt and in the other ones, like the entry 1, we're still considering. Again, we have the highest price if you consider what we offer with this price. Again, we believe that we have a right portfolio for the moment. Then again, we're gonna always be attentive if there is the opportunity to move up 1 single plan in our control.

Okay. Very clear, Christian. Thank Thank you very much.

[No-English content] Daniel. Thank you.

The question and answer section is over. We would like to hand the floor back to Mr. Christian Gebara for the company's final remarks.

Thank you, everyone. I understand that we are very clear in all the questions, but of course, if you have additional questions, we are all at your disposal to answer all of them. Again, we reaffirm our commitment of shareholder remuneration and growth of the revenue and EBITDA both inflation and optimizing CapEx allocation. Thank you so much.

Vivo's conference is now closed. We thank you for your participation and wish you a nice day.