VIV

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.

Good morning, ladies and gentlemen, and welcome to Vivo's Fourth Quarter and Full Year 2025 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. [Operator Instructions] [Foreign Language] I would like to inform you that all attendees will only be listening to the conference during the presentation, and then we will start the Q&A session 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, depends 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 actual 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. David Melcon, CFO and Investor Relations Officer; and Mr. Jo o Pedro Soares Carneiro, IR Director. Now I'll turn the conference over to Mr. Jo o Pedro Soares Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you may begin your conference.

Good morning, everyone, and welcome to Vivo's Fourth Quarter and Full Year 2025 Earnings Call. Today, our CEO, Christian Gebara, will start by commenting on Vivo's performance and connectivity and digital services as well as present our main ESG accomplishments for the year. Then David Melcon, our CFO, will walk us through Vivo's controlled cost and CapEx evolution, free cash flow generation, profitability and shareholder distribution during 2025. With that, let me turn the call over to Christian.

Thank you, Jo o. Good morning, everyone, and thank you for joining us today. I'm pleased to share that Vivo's 2025 performance was remarkable. We grew above inflation in all key lines, driven by solid commercial momentum and our continuous focus on offering the best customer experience in Brazil. Starting with mobile, the postpaid segment was a major highlight. Accesses expanded 6.5% year-over-year, reaching 70.8 million customers, now representing 69% of our mobile base. In fiber, we closed 2025 with 7.8 million homes connected and a footprint that extended to 31 million homes. This advance coupled with our commitment to quality and customer satisfaction reinforced our leadership in the fiber market and allowed us to accelerate fiber mobile convergence. Turning to our financial performance. Total revenues in the fourth quarter rose 7.1%, supported by balanced growth in both mobile and fixed services. Mobile service revenue progressed 7%, while fixed services improved 5.4%, reflecting the sustained contribution of fiber and corporate solutions. EBITDA grew 8.1% versus fourth quarter 2024. Excluding the effects of the concession migration from both years, EBITDA advanced 17.7% year-over-year, reflecting the success of our day-to-day execution. Operating cash flow also showed solid expansion, up 13.4% compared to 2024, representing 26.1% of our revenues. Net income grew at a double-digit rate in 2025, totaling BRL 7.2 billion for the year, while free cash flow increased by 11.4% to BRL 9.2 billion. These strong results enabled us to fulfill our promise of paying shareholders at least 100% of our annual net income. In 2025, we paid out BRL 6.4 billion, reaching a payout ratio of 103.4%. Next, on Slide 4, we illustrate how the transformation of our top line continues to advance, driven by diversified revenue mix and the rising contribution of our new businesses. Total revenues in the quarter reached BRL 15.6 billion, supported mostly by postpaid and FTTH that grew 9% and 9.8%, respectively. Notably, this quarter delivered the strongest growth in our handsets and electronics line in 3 years, up nearly 14% year-over-year, fueled by a broader portfolio, seasonal offers and a robust demand for electronics. Our new businesses also presented another standout year. Revenues increased 27% over the last 12 months and now account for 12.1% of total revenues, an expansion of 1.9 percentage points compared to the previous year. Both B2C and B2B solutions contributed meaningfully to this evolution, reflecting the success of our strategy to diversify our portfolio and scale digital services. Moving to the next slide. We continue to see the solid momentum of our mobile businesses boosted by Vivo's differentiated network quality and customer experience. By the end of 2025, our mobile base reached 103 million accesses, a year-over-year increase of 0.7%. Postpaid, including M2M and Dongles, remain the main growth engine, expanding 6.9% and surpassing 50 million customers for the first time. Adoption of 5G is accelerating rapidly. Our 5G customer base rose to 23.1 million users across 716 cities in Brazil. This pushed our 5G take-up ratio to 27.8%, an improvement of 8.6 percentage points in 1 year. This reflects not only the strength of our network, but also the value customers perceive in transitioning to newer technologies. Postpaid churn continued stable at 1%, while ARPU grew 5.8% year-over-year. Together, these indicators highlight the effectiveness of our retention initiatives as customers adopt higher value plans and demand more data. Overall, these results reinforced the strength of our mobile platform, a combination of superior network quality, disciplined commercial execution and a customer-centric approach that drives continued sustainable growth. On Slide 6, we dive deeper into the strength of our convergent proposition and how it's setting a new benchmark for quality and retention. As our fiber footprint expands, so does our capacity to attract new customers. Over the last year, we passed an additional 1.9 million homes, bringing the total to 31 million, while our take-up ratio improved to 25.2%. FTTH accesses maintained double-digit growth, increasing 12% year-over-year and reaching 7.8 million connections. This performance is once again propelled by Vivo Total, our flagship offer that combines the best mobile and fiber, which expanded 41% compared to last year in terms of subscribers. Today, 62.7% of our entire FTTH base is already converted to postpaid, out of which 43% through Vivo Total, reinforcing customers' clear preference for integrated solutions while also demonstrating the significant upside that we still have to further scale our convergent offer and improve customer loyalty across both postpaid and fiber services. In fact, fiber churn remains on a downward trend, reaching 1.4%, the lowest level in our history. This sustained improvement reflects both the quality of our network and the stickiness of Vivo Total's value proposition. Heading to Slide 7, we show how the evolution of our B2C segment is supported by the growing relevance of services that go beyond connectivity and positively impact our customers' lifetime value. In 2025, total B2C revenues reached BRL 44.8 billion, up 5% year-over-year. This performance reflects not only the solid resilience of our connectivity services, but also the strong momentum of our new businesses that grew 20.7% and now accounts for 3.3% of total revenues. We also saw consistent improvement in revenue per RGU that hit BRL 65.8. This increase is supported by our ongoing efforts to expand customer engagement, drive cross-selling and extract higher value from our existing base. Looking specifically at new businesses, we continue to see solid performance across all lines. Video and music OTTs remains the largest contributor, advancing 18.1% year-over-year. consumer electronics delivered another standout result, growing 36%, while the health and wellness category posted remarkable momentum with revenues rising close to 70% in the year. We are also strengthening the foundation for future expansion. Through Vivo Ventures, we approved an additional BRL 150 million for new investments with a particular focus on AI-driven initiatives, bringing the total investment capacity to BRL 470 million. And through our partnership with Perplexity, we are offering customers complementary 1-year subscription to Perplexity Pro, reinforcing our commitment to delivering differentiated digital experiences. All these developments underscore how Vivo was evolving into a broader digital platform where connectivity remains at the core but is increasingly complemented by diversified ecosystem of services designed to enhance our value proposition and improve monetization. Turning to next slide. We'll provide more details on Vivo's B2B strategy and how the ongoing shift in our revenue mix is quickly gaining traction. In 2025, B2B revenues amounted to BRL 13.5 billion, up 13.7% when compared to 2024. Digital B2B was once again the main growth engine, advancing 29.5% and now representing 8.8% of Vivo's revenues. Connectivity also maintained a healthy performance, rising 5.4% in the same period. Within digital B2B, all products continue to expand at a strong pace. Cloud revenues soared 37.8% followed by IoT and messaging at 25.9%. Digital Solutions at 22% and cybersecurity at 8.4% year-over-year. B2B continues to gain relevance within our revenue mix, increasing its shares by 140 basis points year-over-year. This strong performance in 2025 marked the segment's fastest annual expansion in recent years and reflects the accelerating demand from companies undergoing digital transformation. Altogether, these results underpin Vivo's strategic goal as the trusted partner for companies seeking to modernize their operation, scale cloud and IoT adoption and strengthen their digital capabilities. On Slide 9, we reinforce our sustainability remains a cornerstone of Vivo strategy, supported by solid advances across environmental, social and governance dimensions, which is validated by our strong performance in global rankings. According to Merco's corporate reputation ranking, Vivo placed in the top 10 companies across all sectors and achieved the best position among telcos. We also achieved the fifth best performance in the sector worldwide in S&P Global's Corporate Sustainability Assessment and earned a place on the CDP A-list for the sixth consecutive year. Additionally, we were recognized by Corporate Knights as the most sustainable company in Latin America on the list of the world's 100 most sustainable companies. On the environmental front, we participated in COP 30 as a supporter for the first Planetary Science division, an initiative that brought together leading scientists to advance discussions on climate resilience and the future of life on the planet. Regarding Funda o Telef nica Vivo, which reached over 2 million beneficiaries with BRL 47 million invested in initiatives focused on education, employability and digital inclusion. In governance, we expanded the scope of our Information Security Management certification under ISO 27001, strengthening the protection of data and systems that support our operation. I invite you to check out our 2025 ESG Highlights, which compile the year's key indicators and achievements and outline the strategic priority for our ESG agenda. Now David will give you more color on our financial performance for the quarter ending. Thank you.

Thank you, Christian, and good morning, everyone. On Slide 10, we provide an update on the evolution of our cost structure and highlight the strong EBITDA performance in the quarter. On the left side, you will see that total costs reached BRL 8.9 billion in the quarter. When excluding the effect from the concession migration, OpEx was flat with a year-over-year evolution of 0.4%. This reflects a balanced combination of commercial momentum and disciplined operational management. Cost of services and goods sold rose 9.7%, mainly driven by the higher contribution of B2B digital solutions, continued demand for music and video over the top as well as the share of handsets and electronics. Operating costs grew 4.4% year-over-year, led by a 6.4% evolution in personnel expenses, reflecting annual salary increase and a higher headcount in strategic areas such as digital tech. Meanwhile, our largest cost line, commercial and infrastructure declined by 2.6% due mainly to some onetime infrastructure expenses registered in the same quarter last year. The results in both years were positively impacted by the effects related to the migration of our fixed voice concession to the authorization model. In the fourth quarter last year, we recognized a reversal of provision for contingencies totaling BRL 386 million. In addition to asset sales amounting to BRL 206 million. In the fourth quarter this year, we recorded BRL 96 million in copper sales and BRL 6 million in real estate sales, adding up to BRL 102 million. Excluding all these effects in both periods, our EBITDA grew 17.7% year-over-year with a margin expansion of 380 basis points, reaching 42.3%, while reported EBITDA was up 8.1% with a margin of 42.9%. Moving to Slide 11, we present the evolution of our operating cash flow for the year. CapEx amounted to BRL 9.3 billion, a modest 1.1% raise year-over-year, while our CapEx to revenues ratio reduced to 15.6%. This reflects lower capital intensity and the continued prioritization of investment with the highest return. As a result, operating cash flow before leases reached BRL 15.6 billion, an increase of 13.4% compared to last year. After leases, operating cash flow rose 17.3%, totaling BRL 10.1 billion with margins expanding to 17%. This strong performance demonstrates our enhanced ability to convert EBITDA into cash, supported by disciplined CapEx allocation and softer lease cost evolution. Going forward, we remain focused on further optimizing our tower-related expenses and improving contract efficiency. The trajectory of our operating cash flow margins underscore the strength of our return profile. On Slide 12, we highlight how our disciplined financial management continues to translate into profitability and strong cash generation. Net income for 2025 reached BRL 6.2 billion, an 11.2% increase versus the previous year. This growth was well balanced throughout the year, reinforcing the consistency of our execution and resilience of our business model. Our net cash flow position also improved, ending the year at BRL 2.3 billion compared with BRL 1.4 billion in 2024. When considering IFRS 16, net debt stands at BRL 13.1 billion, equivalent to just 0.5x EBITDA, underlying the continued strength of our balance sheet. Free cash flow rose 11.4% to BRL 9.2 billion in 2025. This performance reflects both our disciplined CapEx allocation and the healthy fundamentals of our operations. As a result, our free cash flow yield reached 8.6% and free cash flow over revenues came in at a solid 15.4%. These results reaffirm our ability to improve profitability and cash generation while maintaining a very comfortable leverage profile. Lastly, on Slide 13, we highlight our continued commitment to shareholders' remuneration. In 2025, we distributed BRL 6.4 billion to shareholders, an increase of 9.1% compared to the previous year, driven by higher share buybacks and capital reduction. Notably, we once again delivered on our guidance for the period this time with a payout of 103.4% of our net income. Looking ahead to 2026, we have already announced the distribution of BRL 7 billion, including the BRL 4 billion from capital reduction to be paid in July, and the interest on capital of BRL 3 billion declared in 2025 to be paid in April this year. We also declared an additional interest on capital in February this year that will be paid before April 2027. Moreover, our Board of Directors approved a new share buyback program of up to BRL 1 billion to be executed until February 2027. To conclude, we reaffirm our commitment to distributing at least 100% of net income in 2026, maintaining a clear and disciplined capital allocation strategy focused on value creation for shareholders. Thank you. And now, we can move to the Q&A.

[Operator Instructions] Our first question comes from Leonardo Olmos from UBS.

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, which -- what makes you pick more of one than another? For example, we noticed a small reduction, potential reduction buybacks, but a huge increase in capital reduction. Could that mean you are thinking about continuing on the path of increasing potentially leverage, changing the capital structure? And still on that topic, and the last part of my question, if you could discuss net income drivers for 2026. As we noted an increase in copper sales, maybe there's upside for consensus estimates. And since you guide dividends on the back of net income, we want to know that.

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. So this is something that we have done in the last 2 years, '24 and '25. And we always try to combine between the -- what you mentioned, capital reductions, interest on capital, also dividends and share buyback. If you look at our capital structure, we have more than BRL 60 billion capital. So we obtained 3 years ago authorization from ANATEL to distribute up to BRL 5 billion. This is something we have already done. We have already distributed BRL 3.5 billion. Now we don't need any more approval -- preapproval from ANATEL. So that's why now we have also approved that will be paid in this year for another BRL 4 billion. And the plan for 2026 is to combine and to continue. Today, we have also approved a share buyback program of BRL 1 billion that will give us flexibility to continue taking advantage of interest on capital. This is a situation unique in Brazil, together with also a capital reduction to maximize the value of shareholders. So for next year, we're expecting, of course, to deliver more than 100% of our net income. So regarding capital structure, it's something that we are always exploring potential opportunities. The leverage that we have today in Brazil is very linked to the high interest ratio that we have here in Brazil. And we expect that in the next future, the Selic will reduce. Today, it's at 15%. The market is expecting this to reduce in the next few years. So we could explore opportunities also to generate value and to maximize this opportunity. So I think this is -- this will have a very strong cash flow generation and net income for next year, which was also your second question. We are seeing a very stable. We have been growing almost every quarter, double digit. For the next year, we'll continue growing in EBITDA. We will also benefit from the reduction of the depreciation and amortization. Starting from the second quarter, we have included also on the financial statement. After July 2026, we will fully depreciate some of the legacy assets that we have in our balance sheet. And this will represent an improvement of BRL 300 million of profit before taxes, just coming out of this, plus potential benefit from interest reduction. So we are positive about the evolution of net income. Next year, we will bring additional shareholder remuneration.

Our next question comes from Marcelo Santos from JPMorgan.

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?

Marcelo, I will take the questions. Christian here. So CapEx, we're not giving guidance. But as we said, now been stating in every call, we are working on CapEx optimization, when you consider CapEx over revenues. So as you could see, we came from 16.4% to 15.6% this year. That's a combination of all the work we are doing to be more effective in the deployment of our infrastructure. Added to that, our ability to sell more services with no CapEx. So we already reached more than 12% of revenues coming off services that now require CapEx. So that's why we have this strong evolution in operating cash flow. As we stated here now, we are increasing 13.4% year-over-year. And even when you consider operating cash flow after leases, this growth is even higher, 17.3%. So we will continue to deploy 5G. As I said, we are following our customers and the penetration of 5G is going up. So we are deploying 5G where our customers are. We've been deploying fiber and penetrating more our network. So we also saw the take-up ratio going up in the fiber business. So that's a good sign. Of course, it involves CapEx, but we are also saving in other lines. So the idea is this one, to continue to improve infrastructure keeping our leadership, but being better in the ratio CapEx over revenues. Going to competition. Can I go to the second one, Marcelo?

That's very clear. Thank you, Christian.

So competition. Here, we have different strategy for the different segments. We've been very strong in prepaid. Now it's still slightly negative, but when you compare what we had in last quarter, revenues this quarter is higher than the previous one. And also when you compare the year-over-year evolution, we also have a better performance this quarter than we had in previous ones. We are increasing price according to the type of segments. So we are planning March for postpaid and hybrid. For front book, we are expecting customer base price increase in April for both hybrid and postpaid. FTTH, we had a price increase in January. We have planned a new one for June. And Vivo Total, we are planning 100% customer base price increase in April. So following the inflation ratio, giving more data and more services and also playing convergence. So that's our strategy, and that's why we are positive about the evolution of our revenues going forward.

Okay. So the back book is on April, right, for postpaid and hybrid? Is that correct? Just to be sure.

Yes. Part of it is in April, the majority, and the rest is in August.

Our next question comes from Rogério Araújo from Bank of America.

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.

Please ask the two questions, Rogério. And then we'll answer both of them. What's the second one, please? Rogério, please ask the second question. I don't know if he is still in the line, so I don't know if we'll answer the question or we wait for him to come back.

He shows on the line. Rogério, can you please repeat the second question?

Okay. So we're going to answer only the first question, okay?

Okay. So Rogério, thank you for the question. The evolution of the lease depreciation and interest accrual remained consistent with previous periods. Even in both quarter and even the full year, EBITDA after leases has grown even more than EBITDA before leases. And regarding the payments, some volatility persists due to the ongoing renegotiation with the towers company that we do every quarter. And that's why you mentioned the principal and interest payments that we have this quarter amounted to BRL 1.2 billion, which is lower than the previous year, but also lower than the previous quarter that shows we are very optimistic about the potential trend of this line. To give you more light here, the current tenancy ratio that we have in Brazil is 1.4 that we discussed last quarter, which is significantly lower than other comparable countries. So we see a big opportunity to reduce the unitary costs of every tower to share more the towers and to fund the new deployment that we need to do here in Brazil to accelerate our revenues in 5G and also our coverage. So optimistic about the trend that we have started seeing this quarter. But even though we will need to continue renegotiating those contracts and this will be driving the potential acceleration of the reductions.

I would add, the operating cash flow after leases, no, margin. We went from 14.6% in 2023 to 15.5% in 2024 to 17% in 2025 -- sorry '24, 15.5% in '24, 17% in '25, aligned with what David just said. Also, we are going to capture the growth of our infrastructure. We're going to renegotiate our contracts, and we're going to still generate operating cash flow after leases that has a strong margin, as you could see the evolution over the last 3 or 4 years. I don't know if Rogério to have the second question?

Yes, sorry. My line actually was dropped here on, actually. You couldn't hear me on my second one. It's about the prepaid ARPU. It has reverted a negative trend versus the first 9 months of the year, also in line with our main peer in Brazil. So if you could please clarify what do you think were the main drivers for that and what you expect in the upcoming quarters?

Listen, Rogério. Prepaid has been performing better quarter-over-quarter. Of course, that's also our ability to motivate customers to top up and also to consume the money that they have in the balance. So it's part of our strategic behavior of the company, also being very able to motivate customers to higher average tickets and also the ability for us to monetize the tickets they have top up. On the other hand, we continue very strong in migrating prepaid to hybrid. So it's even quarter-over-quarter that there is a positive evolution. And so we are extremely pleased with the mobile service revenue evolution, 7% over the last quarter, growing 9% in postpaid. That's a combination of bringing new customers, but also migrating pre to hybrid or postpaid. And also the prepaid absolute number of revenues that went from the fourth quarter -- from the third quarter of '25 of 1.364 to 1.394. So -- and churn in the postpaid also in the lowest level. So that's the result of a very well segmented and thoughtful strategy for different segments that we have here in the company.

Okay. I may have a follow-up. If you could expect the prepaid ARPU to keep increasing year-over-year in upcoming quarters, if you have any color on that?

Rogério, what we expect is revenue to continue to grow the way it's growing. We don't expect -- we're not giving guidance per ARPU per segment.

Our next question comes from Phani Kanumuri from HSBC.

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?

I don't see mobile market share changing. That's very stable. There are some corrections, maybe in prepaid. Some companies disconnect like later than we do. So we are very confident about our performance in market share, and actually in our performance in revenue growth. And also, we had -- we measure our good performance in ability to increase net adds and fourth quarter 2025 was a record number, 930,000. That's a combination of bringing in more customers, but also reducing postpaid churn from 1.3% in the fourth quarter of 2021 to the 1% that we'll be keeping at this level for the last 4 years. So that's important for us. And mobile ARPU is also going up if you compare it to what we had in the fourth quarter and what we had in the fourth quarter 2025, sorry '24 and '25, there was an improvement of 5.8%. So we are not following like a small variation in market share. Important thing is to keep attracting customers, retaining customers and growing revenues. Regarding B2B, that's a very strong quarter, as I said. We had in the year B2B as, I don't know if you're more interested in the digital service, at BRL 5.3 billion revenues, it's a 29.5% year-over-year increase. It's already know what's digital service, 8.8% of the total revenues from Vivo and is 39.1% of the B2B revenues of Vivo. So it's getting very fundamental for our strategy going forward. Penetration is growing in all segments. SMEs is where we have more challenges to penetrate more the digital services. But at the same time, we are growing a lot connectivity in the segment. We have a variety of products being offered to this segment coming from location like renting -- rental of notebooks up to cyber solutions. So that's part of our strategy. We're growing in all segments with more acceleration in the top. But at the same time, the volume that we have in the SMEs, we are very, very, very happy with the results that we are having also in these segments with a combination of connectivity plus digital services, I described it before.

Okay, yes. So maybe on the connectivity part, right? So you've grown like 5% year-on-year. So what is driving the growth in the connectivity part? The digital solutions was more understandable, but what is driving this growth in the connectivity part?

SMEs, but also in advanced data solutions for top to corporate customers, now, to going up in the pyramid. We also have other connectivity solutions up to very dedicated links. So we've been growing in all lines. Now I think we gave some color. Fiber, of course, it's B2C, B2B. But when we said that we are growing 9.8%, that also includes our great performance in SMEs. And when we grow 10.2% of Data, ICT, digital services, it's also including corporate data solutions. So it's in both.

Our next question comes from Maria Clara Infantozzi from Ita BBA.

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?

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

Costs in general and how you balance this with the B2B expansion as it has a lower margin?

Okay. B2B doesn't have a lower margin, but we can address this. Let's go to the first one. So Maria Clara, the market is still very fragmented. If you see the performance of the fiber business in Vivo, we went from 18.8% market share at the end of 2024 to 19.3% market share in the end of 2025. So 0.5% increase in market share. Our net adds for the whole year was 834,000 customers. If you look other competitors, some of the leading ones had very strong negative net adds for the year. So it's still a very competitive environment with too much fragmentation in our opinion. If you compare, for instance, we are the leading company in fiber in Brazil. We have 19.3%. When I see the leading company in Spain has 34% of market share. When I see the leading player in France has like 39%. If I go to Japan, the leading company has 57%. So I think there is room for consolidation. I don't see any rational reason to have so many players competing in same geographies. So we have 31 million home passed. We aim to have more. We see addressable 60 million, but we don't see ourselves reaching this number, but we could reach something more closer to 45 million. We could do that building ourselves or we do have consolidating. Consolidating is still a question mark. We have to find the right target with the right pricing, we have the right network not overlapping too much with ours with the good quality. But I see that clearly, we require more consolidation in this market because it's not -- doesn't seem to be sustainable for most of the players who presented negative net adds over the last year. Regarding costs, I think we've been showing a good, very good number in cost of operations. The evolution was 4.4%. That includes all the personnel growth that we had, like because we want to be more digital in some areas. We want to expand our penetration in some commercial areas. So even increasing 6.4% in personnel, we were able to just increase 4.4% in the cost of operations because we are bringing more efficiency in different areas, especially in our customer care that the app and other initiatives that we are deploying now. Even using AI is helping us to reduce other commercial and customer care costs. So the combination of both that presented this 4.4% that is below, very well below what we presented in revenue growth. In the cost of service and cost of goods sold, both of them are very related to our sale of services. Most of this, like I can give examples of video OTTs that I said before, or goods sold that is related to everything that we've been performing so well that also presented our strong growth in this quarter in handsets and consumer electronics in general. Going forward, we're going to still focus in digitalization. And now with AI, we are very positive of bringing great results in cost efficiency. Sorry, in B2B, you stated. Now B2B, depending on the product, we have very, very positive margins. As I showed, we are growing 5.4% in connectivity. Connectivity B2B represented in the year, BRL 8.2 billion. That has a very good and positive margin. And digital B2B, it depends. We have also gone through markets in some of the services. When we say -- when we sell cloud, yes, the margin is not that high. But when I have managed services over cloud, the margin is much, much better. And the same I can tell about cyber and even IoT. So also very confident on our ability to grow. And all these services, some of them even having lower margin, they are very positive operating cash flow since they don't require CapEx. So again, we should look at the bottom of the results where operating cash flow and free cash flow, operating cash flow after leases or free cash flow, we presented a very strong positive trend.

Our next question comes from Daniel Federle from Bradesco BBI.

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.

Daniel, thank you for your initial comments. I cannot answer for all the other operators because I think we have different strategies. I can answer about convergence for Vivo. Convergence has always been our focus. And if you look at the numbers that we have today, we have 7.8 million FTTH customers, 62.7% are convergent. Out of the 7.8% in Vivo Total, we have 43.2%. So there is still this number between the 43% and the 62% that are convergent but are not in Vivo Total, and we are working to drive them to Vivo Total. Why? Because I think when you are Vivo Total, I think switching cost for customers is even high -- higher sorry, and we also have the ability to have a closer relationship with these customers and monetize even better, selling also the digital service. When you see the number that we presented of the new ventures in B2C, you see our ability to cross-sell not only mobile and fixed, but also the ability to sell video OTTs, to sell health services and also to sell smartphones plus consumer electronics, only to give you some examples. Our churn ratio is also proving that is the right decision. FTTH churn is 1.4%. If I look years ago, it was 1.6%, 1.8%. When I compare the churn rate of fiber customers that are in Vivo Total, it's 1 percentage point lower to those that are independent fiber customers. So for us, it makes a lot of sense. And also even having record addition of new customers in mobile, our churn is also in the lowest level of 1%. So our strategy continue to be the one who can have the customer with more services with people. That's why we'll also be presenting this number that we call services for RGU. So we get a customer, and we try to add all the revenues that we have in B2C, divided by the number of customers of RGU, and we see also a positive trend there. That's convergence, but it's also added to that the ability to sell the new businesses. So that's the strategy that Vivo is following. So I cannot answer for others, but I think for us, that's the right one and the one that we are going to still continue to put all our efforts. And then wanted to complement the Vivo Total, 84% of the sales that we have of fiber in our stores get out of store with 84% in Vivo Total. So it makes a lot of sense. And gross ARPU of Vivo Total in the fourth quarter was BRL 230. So that's also a great measure to follow. And the average in Vivo Total, we have one fiber connection and 1.7 postpaid connection. That also makes sense to see it that way. So it's proving the customer wants to be loyal to Vivo in all the access. AI, we are in the -- we used to have very well deployed AI here before the Gen AI. So WhatsApp was already driven by AI Vivo and was one of very important channel. We had 4 million customers interacting with us per month in WhatsApp using AI. Now with Gen AI, I think the possibilities are even higher. We are using that to optimize internal processes. For instance, when we need to go to a B2B public visitation, there was like this deep complexity to understand what was required by the operator in some of these auctions. We now have AI to understand it much closer to what we have here as inventory, and then we have a response that is much faster and our ability to participate in many more visitation than we used to do before. We're also using AI as copilot to all our call center agents and store agents. And now we are piloting AI agents to answer directly to customers. So that's a very important project that we're going to start having the first results in May this year that we are doing with partners. And also, we are doing many other things in network optimization. So it's a variety of actions that we are taking here to implement AI as core for our business. And again, answering to the second -- the first question that I had before, I think from Maria Clara, in efficiency, we also believe AI will bring a lot of efficiency for us as well.

Our next question comes from Gustavo Farias from UBS.

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?

Gustavo, thanks for the question. No, it doesn't change our strategy. We have competition, and it's a very competitive marketing -- market, sorry. And I cannot point out a specific player and the evolution of portability due to this player. Now I think that's the market that we face. I think there is a lot of variation of portability month-over-month. What is important that we keep growing net adds, and we keep ARPU going up because also getting more customers with ARPU decreasing is not the strategy that we are following. So if you look, we had 4.4% increase in postpaid net adds if I compare the year-over-year quarter. And also, we have a 5.8% ARPU evolution if I compare again the year-over-year ARPU, keeping churn level at 1%. So we're not going to get into this war if someone is trying to put the service in a lower value or try to use our service to acquire other services in different sectors. No, we shouldn't get to that because we are here, preserving the quality and the experience that we offer to our customers. So a positive evolution of net adds, positive evolution of ARPU and extremely positive evolution of our churn. And again, we're going to face competition of different types. And that's normal. It's a very competitive market, and telecommunications has always been very competitive in Brazil. Going to the question of -- can I go to the other one, M&A?

Yes, of course.

Yes. M&A is what I said, again, Oi's still has a stake at Vita. They are in the process, but they still have a stake. I think the market is very fragmented, as I said before, I think there is room for consolidation. But in our case, it's not the size. None of the players is large enough not to allow us to integrate because, as I said, they have 19.3%. The next one has 8.2%. And I think adding the second, the third, we're still going to be below what we see as market leader in markets like Spain, France, Korea or Japan. It's more of the quality of this network, the quality of the customer base, the overlap with our network and the price. We have the ability to deploy network. And as I said before, much more of the CapEx is related to connecting the customer than passing the fiber. But we don't want to be passing fiber where we see so many players. So that's why we are open for analyzing targets. So far, we haven't been able to get to an agreement or getting to the real interest in any of the targets that we see in the market. So let's wait, Gustavo, but the trend seems positive for consolidation.

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.

Okay. Thank you, everyone, for participating, and for so many questions. As I stated in the beginning, we're extremely pleased to share such a strong set of results in all dimensions of our company. And again, we are always here at disposal to answer any additional questions that you may have. Thank you so much for your participation.

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