VIV - Earnings call transcript Q4 2020 | Telefônica Brasil S.A.

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Operator

Good morning, ladies and gentlemen. At this time, we would like to welcome everyone to the Telefónica Brasil Fourth Quarter of 2020 and 2020 Earnings Conference Call. Today with us representing the management of Telefónica Brasil, we have Mr. Christian Gebara, CEO of the company; Mr. David Melcon, CFO and Investor Relations Officer and Mr. Director. IR Plaster, Luis

on a being can with of website be a of that Litigation this will have proceeding, Securities Instructions] the me the under let www.telefonica.com.br/ir. presentation the internet XXXX. be mention call for facility that accessed statements replay Act website. simultaneous also [Operator slide Before are webcast forward-looking on There the made We Reforming at harbor the safe

on management statements available. information based and the and Forward-looking currently company’s beliefs are assumptions on

Forward-looking company’s conditions, future conditions statements of Investors cause factors general occur guarantees that performance. could They assumptions because other not involve from and that future. are results to not economic understand therefore, differ circumstances risks, should expressed statements. industry they events, results on forward-looking future in materially may such the uncertainties relate and depend or affect and to the those operating may in could also and

Plaster, to Now, I begin will Luis you Plaster, Brasil. your turn Director over conference. may the Mr. Telefónica Mr. of Investor conference Relations

Luis Plaster

Call on management move comment performance. Then will shareholder comment CapEx Melcon, to and XXXX. assets, and conclude, Good Conference the David on will to follows: call financial be our you give as Christian our morning, welcome Gebara, the XXXX our initiatives mobile remuneration an full Christian CFO, discuss ESG results. cost will Telefónica CEO, and operational acquisition will divided of and Q&A. our quarter Brasil’s of Oi’s overview To The our First, our you. year for fourth Thank and to and then

Chris. to hand it Now, over I

Christian Gebara

accelerated The you of of our would call. by to Thank sincerity giving transformation an the has you, confirm like thank XXXX. for our attending earnings Good Brazil’s which I Plaster. everyone, services. morning, start overview pandemic digital and

demand the connectivity. this challenging driven of delivered high-quality increased year, a Vivo reliable set our for by solid results, During and

year the We market at access. mobiles, never share closer customers with we been historic In so million XX.X%. of added Vivo’s ended purpose has of digitalizing to with bring four XX heights Our appropriate. million XXXX ending

speed revenues passed, X.X continue Our FTTH what more in full in did the by XXXX. is quarter. year-over-year million fiber we XX.X% than at XX.X increase deployment increased an double million HPs, of fourth reaching which home

later In our of despite the management points profitability temporary margin increased measures, billion. that to of presentation. EBITDA totaled and resilient growing we’ll confinement BRL effective terms and EBITDA year-over-year headwinds the the business cost due elaborate performance I in reaching The of percentage the X.X XX.X% our XX.X feel

able cash the ever billion, of interest allowed yield deliver All also highest factors higher is us rates. BRL X.X payout year, of Xx year-over-year. dividend XXX.X% to than the a with billion propose and are for level a of of free shareholder which our more We X.X a growing flow, than to X%, remuneration these BRL XX.X% local

More migration a of constant the also supported revenues of continued FTTH and level driven customer net growth X, to net see execution for strategy. recovery can due acceleration quarter-over-quarter Prepaid XXXX. Moving Postpaid throughout with quarter-over-quarter, to the outperform quarter-over-quarter, by grew of rose the revenues by X.X% additions base to X.X% you increasing key of our of segment Slide X.X% consistent revenues additions of higher continued was of top-ups. and recurrency revenues and speeds. robust that More the to

total We for X, noncore On two previous by performance positive the of like benefited revenues transformation and validates our continue compared our divided to the was improved into sales the the revenue businesses. This Friday. growing saw recover, categories: Slide quarter. commercial Black of our end-of-the-year which success activity core and Handset Vivo’s we Lastly, campaigns to XX% outlook future. profile,

decided potential explore digital substitution the for going of results mature of and mobile, to lives. ICT. based to [indiscernible] its XX.X% in DTH XX% like fixed core are commercialization that revenues fixed up noncore X.X% ADSL XX% is is on mobile. saw and relevance services The of and that legacy grew in speed the Vivo positive high cutting due core These technologies with an and Vivo’s Our position key mid-XXXX. voice digital best connectivity, fiber, which data today’s enabler consolidated no to the is made technology, technologies edge for selling FTTH to The customers’ dropped realities segments to in the our both services. businesses a increasing is handsets, and businesses digital represent and data we total & full in results FTTx, year-over-year, and migration include IPTV, mainly which mobile, longer consistent have We of and are represent revenues the we businesses, actively year-over-year mobile The back. foster performance are strategically no deprioritize. of back which

up be convey see the core we’ll base the of revenues additions which better on our accounts to grew can impact foresee. and the year-over-year showed of the company of that XX% focusing and management. As access The today that result, of mobile that the mobile a X.X% sales. revenues driven Slide increased volume X.X% the Prepaid future XX% ARPU handset presentations by business net was impressive despite revenues now you X, and and on, lives total we continued on related X.X% to improvement. from for postpaid On year-over-year services effort pandemic an and customer segment,

are off More are and data for and continue These to with combining we our execute a our co-branded forward. of More complete going portfolio actions We services. optimistic strategy paying digital

X. Slide to Turning

at and lowest highs, percentage at again December X.XX reduction market XXXX. historic leadership XX.X% in year-over-year of of remains years. reaffirmed Postpaid churn mobile and saw five our share level stands reaching points in people’s We also the

XX.X% the important Prepaid main a net year-over-year of XXX,XXX relevance ICT driven additions to many the had portfolio our of across investments X.X% The additions, are that XX% left-hand is On they how we performance of these by a that X, pandemic. us adds. revamped FTTx also compound we have increase an postpaid of this bottom recent and annual revenue revenues. due XXX,XXX, quality in strong But opportunity segments. Slide picks is growth the On position improving. revenues fourth year-over-year. of in XX.X%, convinced during BXB of catalyst, capture net represent the the XX% show soon to the decreased quarter FTTH privileged connectivity we companies puts up. growth the grew breakdown were that business core impressive XXXX, we the past. delivering show In Vivo’s side line up quarter fixed which economy been another slide, all postponed as and indicates as our data increasingly of how FTTH X.X% & had the

As footprint, we FTTH and expand access revenues IPTV also our grow.

growth confirming During vessel. compound content the high-speed a appeal of the last platform XX% posted revenues of broadband two annual rate a years, IPTV and

to Moving X. Slide

improving our You the base. ramp-up and can see of quality access constantly of our customer fiber the

continue to customers, year-over-year. increase more a attract fiber which XX% in resulted of Our products FTTH access

saw demand higher also ARPU, substantial for XX% the mainly related to year-over-year, We FTTH speeds. a in increase

year. on FTTH with would quarter were customers. fiber than adds. speeds gross right-hand adds of More that of we side Moving net previous I bundled high-value Disney+. convergent like present $XXX,XXX continues Approximately together fourth accelerating. were sold Approximately On And profile XX% of also like more highlight deployment were XXX than XX% were with FTTH show the megabits. Netflix XX% to Slide our XX, IPTV. OTTs we the to and XX% totaled XXXX, in slide, last of X.Xx than quarter’s the higher acceleration the the of how

we fiber rate, have of achieved America, equivalent reinforcing offering home increase Brazil. Netherlands UK, best-in-class As during plan. our last home year-end, commitment two covered to XXXX passed, FTT has the a mentioned, confirming passed Australia. experience previously million to largest XX.X sum Latin across years, the cities, with By ended Germany, strategic cities footprint million and expected year-over-year. of the already in is XXX footprint fiber The Vivo of deployment which our launched an accuracy the in penetration the X.X our

We still XX connected growth that is market to XXXX. plan reach than we room home terms in more Brazil, points in fiber end the further by passed ahead for of share of million with homes see at least also six percentage and there second we But of lead in XX.X% FTTH, player. the

be that the we’ll neutral launching ways is an this initiative well. doing is independent fiber One progressing of by network. The

signing We million have advanced and FTTH X.X and carving entered future. is to four million reach home an Vivo near at target the and Telefónica in X.X anchor with home negotiations the a with in international years. tenant together Infra will least passed, the major the be expect out brownfield passed phase investor of

further are there as We will as you keep updated soon developments.

initial XX. Moving its to to illustrate share success like expanding KPIs Slide services. portfolio traditional that beyond telco would and some We people’s

digital our seen results. of One Vivo But we in our XXX% October, Money is have personal launch stages. Money, in its initiatives since early positive loan key is Vivo platform.

profile. months. contracts for month up X.Xx on customers focus digital but monthly Money ones, New its two quick credit increased Vivo and per mobile just for origination on X.Xx, in stepped a grew only and with simple high-quality also

demonstrate seeing customers attracting is our adoption that that Vivo Money higher chat. Vivo of We’re Meu

one-stop to value marketplace, development is had shop of our for the July for unique of connectivity quarter-over-quarter. of delivering X.Xx customers’ hub fourth BXB, an and set in quarter becoming XXXX. in process in increase strategy launched our solutions. Empresas Vivo We needs. digital a merchandise digital a gross is Another key our corporate was loja.vivo.com.br technology its a Vivo Lojo

year’s In in marketing to month and platform initiative, launched country making possible Vivo third grew our aimed segments proved have media contributed the expanding to Portal digital to the year-over-year. enterprises, conclude, campaigns. XX% this its which at and Our medium improved Ads, due Cyber remains to its August, them grow revenues BRL also Ads to saw XXX largest resilient and in per despite Cloud of Securities To respectively downturn we XXXX, coverage, preparing revenues economic we million Vivo self-service year-over-year portal XX% mobile a and channel of it with the are access reach increase and revenues. XX% Terra an for how small sales other XXX%,

Now I’d like to to CFO. over David, it our pass

David Melcon

and Good you, Christian. morning, thank everyone,

for through won services, will XX, of bid was of of XXXX, Oi’s leadership of overview in which additional strength quality December synergies. X.X Slide acquisition The [Technical present mobile and generation BRL to would billion. of billion, XX.X a on at like brief the I to one Difficulty] XX, set BRL contribute of auction the capture historic joint opportunity that Vivo’s the paid Moving asset. value the shareholders to we our This consolidate of

Operator

you Speakers, may proceed me. Excuse you. now. Thank

David Melcon

Okay. Thank you.

XX. Slide with continue Let’s

XXXX. the key and the be are decision of overall by So end the milestones will process, that we transaction these of completed are the confident

side left-hand lower will value base. in represents the our offering regions Vivo the bottom utilization the on we where customers our with have see to the strengthen of we make market acquisition customer of slide, spectrum can of opportunity you and and for As we of network be through will able share, our use a frequencies, unique broaden that better will

the of synergies innovation solid movement as integrations, is of infrastructure for Additionally, further and OpEx corners investment Brazil’s mass a the not positive, enhanced to of of only and and but the CapEx acceleration customer with as XXXX. improvement case of acquisition all process. and will be track will such the Brazilian to record usage digitalization Vivo this a a GVT be in telco network previous advance industry in experience upgrade whole. society the There dedicated for given in certainly country by Furthermore,

by to Turning year-over-year saw effect X.X% by our the of improving to we reduction, inflation, decrease. discount in X.X% will temporary saw and even impressive and G&A driven excluding our expenses nominal as recurring more benefited cost to commitment sold, good measures initiatives were such Slide see terms. subsidiaries. personnel continuous an costs, digitalization by order our In payroll government contracted ongoing simplification costs XX, efforts. Commercial optimization X.X% we and structure, a

also rendered the service interconnection implemented have by due debt base, reflecting greater up-to-date center, digital customer decreasing we well advertising. maintain by X% across for our and as use positive of channels has payments Another commissioning, our that their been factor call dropped Provision expenses to for year-over-year, digital acceleration customers’ are the concern of Cost measure as billing bad that XX% the mobile valuable to the higher offering through the option and fees pay year-over-year base demand partnerships. customer impacted that the of like to comes growing services in installments. cost, regulatory decreased the

XX% are back our EBITDA our key fronts December, XXXX XX% drivers center the December use in totaled As digitalization a we point in with platforms billion sales our journey, a sales. our increase charges a XX margin XX% of of that and the in We was result, and almost customers. XX.X%. were Presently, e-billing new digital penetration now this a and simplification customers channels digital XXXX that offering year-over-year XX% increased and top-ups payments in support. we is WhatsApp seen caring quarter way figures support the of digital improved the acceptance except internally, made the cost On digital through XXXX, way of XX% BRL collections. like significant already from both XX%, the with contraction to enhanced The prepaid X.X we recurring artificial present started through Vivo, interact of room and and overall BXB costs our represent performing technical offices experience. year-over-year, our while by technical And reduce represent were serve Slide hit percentage growing call for advance also for Aura a digital selection there and is still XX, in In customers of made for fourth through digitalization of In customer solutions. from to post that our able platforms. intelligence sequential of BXC

On OpEx we billion. deliver XXXX, savings you the able the our since were see X.X to of can BRL right-hand of side that slide,

me more. XXXX to Our the reinforce million we billion. that XXXX. in of X.X even savings in from do OpEx XXX are target can sequentially BRL having But of that ended let we XXX again million reached XX% improved BRL confident XXXX our year We BRL

Moving XX. to Slide

the of we can allocation. On the see left-hand slide, side of smart our the CapEx performance

that CapEx to technologies regarding technologies share to our and team Growing the is network and XXX network in half even below the sharing for the of in decreased CapEx, total XX% decreased new invested semester other I single-grid expansion, XG that the And account already agreement EBITDA. would ratio general. model, coverage our investment. first each cities year CapEx in Regardless Our XX.X% more with focused we on XX,XXX divided the XXX In X.X cutting-edge year. relation operator. of details reduction more like reached in a into front, three points previous with and consolidation close products. percentage we a year-over-year, main CapEx in in on have we expect for FTTH also our to will of result covered, cities cities is

next carrying will potential be are to which X,XXX model of involved pilot in cities. out We extension able the a cities, front XX define of be then will completed The full during the I this to asset. an XXXX,

will is will sites. Lastly, network XG Through XG The ongoing OpEx we better off CapEx coverage, phase that each efficiency. alignment third half and swtich the which for the shutdown, additional capacity rollout operator and XG means of the expected network we sharing, and is have network quarter. have

our the optimization our to agreement the commitment about of quality enthusiastic and of investment. incorporate this are We future and

ADR’s of the while the unification Since the to of with classes. Turning a we you the slide. about of ticker rights. tag-along like buyback unchanged. a would greater towards the remains to step granting also all significant update give program. and governance, This level our report only market, happy next trading the year, Brazilian this conclusion November I’m share share XX voting represents tickers BX are in to an I shareholders

a million. we total value So million of acquired far, shares have XX X.X for BRL

place and January to continue active, program XXXX. We be will be the in until

X.X for BRL a a commitment and represents remuneration per of our gross BRL of shareholders, payout amount of are share. we which our to proposing X.X billion enforcing XXXX, Finally, a XXX%

The will to General will that moving free and billion This XXXX. generation. of result at impact ever. efficiency allocation two first this financial be paid to Board a to in combination Directors allowed consolidate is We second be business, by payment can will stands expanding the with core and been of cash of continue April positive to our a the on perspective. word with Slide by X.X X%, XX year July billion approvals our the Vivo’s invest cash what and flow, the local our October I the billion Shareholders’ BRL on XX, proposed see positive finally, low Christian. ended management yield the tranches, than on X.X Xx us of the level to remuneration This highest interest leverage, have in the Thank necessary you BRL Meeting look And X, the on to tranche XX. with amount BRL X.X divided you. a dividend consistently rate. of back leadership pass more now And future paid CapEx held Our on tranche be and be has

Christian Gebara

Thank the commitment to results you, ESG. to like would David. progress around on and To conclude today’s comment the presentation, of our some I

Vivo the electronic an XX% Regarding in disclosure submission first was its collected its XXXX, environmental initiatives, assessment to the and our in grade local X.X comparison recycle had project Vivo best list. of tons the carbon in included with waste in A to increase in XXXX. prestigious of

BRL state and its of for social our for in also Notable XXX,XXX Vivo ongoing BRL also additional Last in winning CNN month, to response Amazonas. XX for investment diversity donations, Fundação million million an there BRL by BRL in education the in equipment In donated year was that inclusion Vivo invested Telefónica of in category. totaling to Awards benefited last recognized the was XXXX. pandemic, million also million through students Vivo XX.X social medical of As the an Fundação commitment and the teachers. actions, Telefônica, additional XX.X X.X purchase promoting diversity the

Sustainability were in we as that fact S&P’s Industry important Another is classified achievement Yearbook. the Mover

These main DSC Index obtained compliance XX,XXX Brazilian examples Carbon laws in Index, just conformity our and and can Sustainability maintained with regulations. a in Corporate a the be we certificates, seeks now program its like and of ESG our to the Vivo Thank society. are promoting how guaranteeing sustainable Vivo few Efficient you, protagonist Q&A. listing contributing and development Finally, our anticorruption indexes to to move

Operator

Our The [Operator Instructions] floor Mendes, for question Thank you. now from first is questions. open comes BBI. Fred Bradesco

Fred Mendes

morning have it the related in Hello, mean, ARPU. the questions like products everyone. is like a here. speed to growth. increase strong this first FTTH, two the the And higher good looks the again driving I I megabytes XXX one

clients the you then increase the And here? you strong do the first if clients topic, ARPU addition average that you or based from are BRL the adding if very the room to competition again, that’s a upgrade on we that So have? XX is you net here, have getting are from these that the if clients question in already an see which same above corporate

Christian Gebara

that’s Fred, Christian.

the question second are customers net new that about in. coming is of The it adds, most

network. So are adds most new enter customers. cities of existing we the from of or new net coming the that penetration Also

of most coming is new it from So customers.

– Regarding ARPU, stated, as so reasons. for you improving ARPU two is correctly

growing. more, high-speed selling mix of are We the XXX is

we So we our broadband see blended offer even for still room And with together are also, more. OTTs. growing

very in others going we’re started the near and to with add we So successful. Disney+ We added Netflix, future.

in So we be increase blending mix and follow content of or and is a the appropriate in with strategy. to that going that also speed fiber going XXX even our also high will forward future strategy considered is the improve are

continue ARPU positive this So may with trend.

Fred Mendes

just quick And follow-up. I if a may,

not can presentation, during process you about mentioned but on that the us more yet? a beginning carve-out bit the of briefly or the details little give You

Christian Gebara

Okay, Fred.

we the year XX.X – passed. home So ended million with as

out million, to carve XX.X X.X we’re out So million. of going this

a Brazil. We’re independent fiber and to new neutral by contribute with network, this it’s company going

a XXXX, the originated Vivo. going with presentation from by than also together company. vehicle is Telefónica HPs. million in with and contributed Telefónica million and we as Then So HPs a as we neutral organic have partner international is network. the to this brownfield an growth at that this we also more Infra, that’s said investor X.X% in And partner end that XX HPs this network end X.X million to The Vivo from is combine Group this objective of the in that a this contributing X.X

Fred Mendes

thank Very much. very clear. Christian, you

Christian Gebara

Thank you, Fred.

Operator

question next comes Olmos, Our from UBS. Leonardo

Leonardo Olmos

X.X. is on question the My quarter, and We over a XXX,XXX, noticed wide of with very range additions three everyone. in morning in [indiscernible] a mobile. good Hi, net million max subs

want strategy that And So in right your my quarter net understand fourth is, I how What now the question it? see XXXX? do to was in you additions XXXX?

Christian Gebara

Leonardo, that’s Christian.

economy beginning, April, was prepaid. we that telco then to the to seeing physical better and a in And will channels, the the after about In we our reopening and stated our we buy and to very stores malls are what after first opened the economy. and or about go also customers postpaid when of saw mood to technology talk we recovery. we of as occurs, months, a difficult I So a reopening offer and and we the the the stores to see services. talk postpaid, March services

capture the only I the drove also were you but see we in experience of in quality and So, think to adds and I net economy adds, superior gross reopening to of this positive decision not their and positive customer trend, able for churn. believe this very our that can a recovery reduced Vivo also some the customers the operator as select channels. that

churn the Our in lowest one years. the the five of postpaid ones last in was

in offer. and the hybrid our And postpaid. that’s think innovated been the innovating also, we’ve also in So We I positive. the in innovated

of emphasize an Here, a Selfie OTT on the data combination plan. is will with value-added services. I That

partnership we having strong data partnership partnership for of same for offer. with are That’s pandemic just new and Here this it as not secondary Spotify lastly, the football. and launched with service an partnerships driving we to partnerships. partnerships, with buying added for May, Netflix a Disney+, of in launch data music, concept with and content level after protagonism delivery, Happy have plus we only and the about with video, with And started for June, partnership in Premier

very able think also as again, that positive. being stands I out And we’re postpaid. to migrate So, to prepaid

more us the going hybrid, that’s also you and to cards for gives the very people deposit. also as with buying third for in new It was quarter. debt SIM is room We net strong and they prepaid, in recovered coverage stated, the mobility to positive migration the Our before. than they were that for we People It strong. of in last driving are stands and the in this put year also government aid, the was with the the is incentives people also prepaid capture. also benefited. quality, the place And consumption out. also government in able some case there was Again, that

Leonardo Olmos

mentioned You migration hybrids. postpaid from that to prepaid or

do own Looking you go? can prepaid considering to – at your think how long postpaid? had, hybrid the base, you prepaid recently many especially on how more that you new How migrate long can you can or clients

Christian Gebara

the bringing prepaid room cannot tell when we there’s keep how Leonardo, is you increasing base. Also in, for And migration. I customers for long. always

wants of putting plan. an are have plan I family a with going very attractive hybrid, to creating wise individual postpaid plan the that one very going in prepaid, a for together we going Selfie. needs, stands to to portfolio think from already coming to different is a Selfie lot effort family

our here, also – plan with card. use So very offer credit I is a personalized that think sort the plan have using we and people postpaid entry of

them our much it’s drive to offer think needs. people their best into best I So, ability that’s the for customers and more with get

very as is you of here, to high, know. postpaid. percentage to our our postpaid ability And Now our drive I customers prepaid is think

is coming postpaid much our why revenues from coming from than the prepaid. one So higher that’s

the to have So we that do ability that’s that.

– in added million but quarter. in million million XX XX access So prepaid, XX by last the in one postpaid this asked we today, have we access and was million

number continue mid-long-term a to postpaid, I we this keeping it’s growing once moving So number and this strategy. think the

Leonardo Olmos

All right. very Thank much. you

Christian Gebara

Thank you, Leonardo.

Operator

Marcelo from Please comes JPMorgan. Santos, question next Our proceed.

Marcelo Santos

on funding Money, you alternatives I So for explore good Do of what mean, could to are I anything color? and far consider Vivo kind they morning. this of like that how could but be And – is the losses more Vivo channels, give you studying? and using initiatives would you delinquency you logistics? grow? bit to little initiative? implemented bringing And interesting? color could I What fully more just What to basically, Marketplace. if ran while, Thank Money if put you’re more Slide has it questions. hurdles little Hi, kind about available digital would you to On taking running app? Any a XX, on like Marketplace, bit basically. you wonder Or for as a sellers? the all? So Vivo do as you are my you I incentives a share the a will the understand been main of are it be a how give technique? the the more data more that is some what on helpful? these some things Internet? are it very How you initiatives, through putting launching pilot work

Christian Gebara

So Marcelo, good question.

our big to brand. to customer and strength leverage data I start, the through strongly we or our in capillarity, ability of digital think believe online services our base, channel both capability and physical

a XX,XXX. entertainment, So another very ones. is a one, of financial this on we it’s That we’ve still with addressed to most it’s to the many was others example we we also. asked it started BRL customers. one, this working We in prepaid more it. is this for are customer presentation everyone. And for base, segmented XXX% sectors segmented haven’t is different needs in is and offering the been that accessories a long Vivo have one we is these cautious and postpaid that’s services health aligned And that target from way started to one, Money, we approach digital, hardware another we a verticals, the this so included in Vivo that We started money BRL of among time. the customers. hybrid and project we working is it credit. offering What X,XXX been education, conservative maybe lot want for there And customers, as you launched expand coming it’s and commercially are in loans with October several when different not

SMS, normally we’re attractive. loan. credit. we the that and customers rates the also push address marketing it over customer could it a of customers And then get also sometimes to want we click need in through that our to on be So The do the campaigns base, using

So customer are banks. or base. that credit we compare of not ourselves are with similar them Most loans companies to offering this

Some banks needs companies are customer addressing answering that, of others this but financial just that are the base. are

started with as is December. but had was – trying what partners what in funded it we us, Here, on multiplied and here we’re we’re by by FDIC more is grows. are going we show going add we to in had to What October X.X we

We are awareness service. being the – bit more getting opening up a of or little

a fee doing massive conservative and financial people have. been money, this or the piece on available putting one growing of start very using campaign, that That’s that. to we’ve cautious a only to not we all strategy service are what We onto market channels

going be and near we a today, digitally go to my aim be services and not Why about reached the if already consider customers, our executed most financial is the could they – to prepaid you Today, more in future. talking top-ups wallet. than that We’re of that digitally. top-up XX% more they our buy of not then

to the that money and use plan. they they money services. buy prepaid prepaid a that to could data the put today, same this it in only also use So buy app, other buy We foresee

we before. thought that initial top are that already the also as Wallet the There customer a is started wallet had up, a that I we for Vivo for from that’s So users mentioned base.

other many already something we there or that are So, insurances sell.

in another relevant you in role piece and the and business strategy a one larger the Money mention if to And have marketplace. services. financial slide, to only we in is Vivo that is want other a broader have that is a So

very sports a have marketplace technology the is selling from products be center up players. together an smartphone service. e-commerce close the adding to our selling in services that stores the to plus decided Telco that the open We is to only own core, our We’ve in that but mobile services, e-commerce store, we not have our other for and

Vivo, we why marketplace. that’s a call Loja So that’s it

you So blender. people, accessory, also you fridge, a can buy buy can can can you a you buy from can smartphone, buy buy a an but service also you a

much can we of with can different We You also further buy types believe strongly accessories. that. that go

mentioned normally also in big questions the a now how the we’re to some the These seven by that customer that base, multiplied the almost results strength going develop. and in we of the that third more the of in quarter data, bring customer are we capillarity, this fourth first we soon the for the why brand, have, as capabilities. to that’s And And and we by they number time more is so as few a examples leverage and address channel are quarter. third can multiplied is deal that our quarter – have seven only with

to I So your question, all if – Marcelo. know address

Marcelo Santos

Thank Thank much. you you. very Great.

Operator

Salaru, Our next question Susana Itaú. comes from

Susana Salaru

Hi, questions. good you Thank morning. for taking our

We have two.

first expanding question FTTH to The actually growth. very fast. is the It related is

what’s is have how if aggressive more you our question this forward? – to one want to pricing a you get FTTH. the strategy pricing place growth going targeted be at would our question able So maintain to for to That level be first of

you legal more much in mean, cost an the is cost. the half a understand asking is that believe of question second I How the prepaid costs top we because in prepaid. acute related the – exploration we the the you that’s acute believe top-up prepaid are can that recharge? of of terms to The

like to done – important attributed versus of was do two an dealers I’d now, this yes, expansion? to our charge there driver ensure you from be years that that margin for would believe percentage digitally know, is So non-digitally

Christian Gebara

understand what question? I So everyone the – cannot but what is second top-ups? Sara, didn’t repeat the can I you question? get the is question? prepaid, I The it. FTTH, answer the the

Susana Salaru

up My an Two the recharge, can we or recharge reach? believe years like because of use from we asking is percentage are question that the believe are but expand digitally We what digital. now, the XX% we that’s to important are XX%, today following of top margins. driver

actually, actually be better So are with accelerate you can it’s if actual managed and margin cost expansion? right that

Christian Gebara

in think new I channels there we’ve been channels. digital up. growing So, lot through And top-ups are digital always a coming

the be I limit. tell think difficult what And going cards. So to many getting more for also me it’s you credit to people are is

access So to card, has a he when the people digital have channels. more credit

the digital coming in help new penetration. have These We wallets wallets in, market. also the

and in going I’m them, buying not name naming channels. not So are solutions. if payment up market new the bringing online other, some to in digital there the brands see one but not used many naming And companies to you many, be up to that coming of are

adopted increase payment, an of an they All ways important digital have we When adopt increase of new them people. see channels. usage of been by – these we in the

Now a the and have an people peaks also people will facilitate people facilitates wallet. transfer to to to to money get money account, and this facilitate

see an our So wallet. Marcelo I that before for to why answered opportunity develop also we own us that’s

see believe, to number going higher. I we the So be here, that much is

the very I aligned the will the of appeals be in with market. think things two circulation

in are Some people will our of If bills will be that most over top-ups. over, be believe years. digital few channels they

the We’ve is year, growing the X.X new I we got room the almost are grow. first in are one largest million in said, to there we one fiber new In million we Last network as country. FTTH, constantly. So And got customers. homes. the

go We have an to cities. to ambitious more plan

overlaying is We opportunity. network convergence. played believe still of We some are can FTTC We our haven’t there when ADSL play and an convergence.

have mobile. in highest share market We the

We we the partnerships have FTTH to OTT with are bringing content strong – offer.

is OTT. believe is leader room opportunity as see doing I independent because the is we offer network we of low. call where the that’s what fiber Brazil this great we growth. why plus a more are fiber convergent penetration Vivo So, much foresee still And And ultra-broadband neutral mobile, we for as that there for in

a in unique are that. do We to position

Susana Salaru

Thank Very clear. you.

Operator

Thank you.

Street comes next question from New Datta, Our Research. Soomit

Soomit Datta

couple, Yes. if Hi okay. that’s a Thanks for questions, there. taking my

to with specifically a last as of of incremental all, if in would up CapEx we guess wondered you’re think specifically, look of your some could bit First bit Oi, from kind guidance giving peers, about sheet, Oi’s, on deal incorporating a the to the you you you as but of in And their on a the the of how guided you when step-up That’s a have were going maybe XXXX I color sort night kind above envisage we business a sort of sheet this please. of see anything add year would close? CapEx, basis? wondered if secondly, the whether question, first buying net you’re similar leverage balance dividend you’re getting I Telecom two-year stock. Oi’s. numbers paying of Where will? direction on Italia well, on not ahead of they balance And CapEx, to generous of back quite preparation the then I kind of income,

Christian Gebara

So question. thank you the This is Christian. for

as information not we more much Oi’s. said, are about you giving So

through additional bring that is we is that for and stake we’re called the and here that Brazil our CADE. to saw see to customer opportunity customers process people Anatel if the the antitrust base. And the in I with what What approved, cost. is going no is think deal by institution here you

be will existing network. these Now customers our served by

we under these coverage center you year, – to we in customers we structure structure, competitor, project here be our as If Brazil We different additional our are that our more that’s – give don’t areas in call areas for from have goes CapEx, for be in. stores take Also operation a would different And also not channels, don’t aligned CapEx no to customers with cost customers through. mainly superior asked. our quality you don’t and people’s some consider be may areas in of may able for see this treat incremental But if XG, [indiscernible] that it’s be market have with of robust care, our absorbed of our own where controlled. superior and we in enough be we lowest XG, a in this this very in strong bringing but only coverage, share robust numbers. our the have about CapEx guidance number will and these year. care customer these also with And will to additional going of digital case and address have

we in BRL billion. for years an we that that that additional CapEx the had with acceleration do of think ended we three year, said I past FTTH ago. we X Last

work to we’re was we to year back when unusual but to needed going the to because FTTH. So had going last come of and we levels were pandemic, that number accelerate the

Regarding I answer can dividend, David think you.

David Melcon

is Yes. this David. Thank you, you. Thank Soomit,

the second question. cover me Let

income. added up XXX% distribute distributed to XXX policy our with on BRL year, in continue of net And of the had we sheet. the of balance this that, that we million So we reserves top

yield [indiscernible], So is the a shareholder we right – the remuneration. X%, That is dividend which up the attractive around was which ended it’s locally having around very Xx interest now.

we our a mobile cash business, strong of remuneration now strong having absorb we policy enjoying partially will be also to mobile year, the interest able could we expect have hope have final we’ll we we over the to here attractive end plus at last we are today will very rate in we be means low growth, XXX%, of sheet Brazil, we used Oi’s all to we expect still in are keep that the combination to investing shareholder year. year. this year, us, best have the generation are shown that that front such this interest million, then be to And that acquisition core very the that than free will few the have to have as that we and the assets combine more that spectrum have a suspecting, during by BRL that and considering in say we opportunities as of years, So flow leverage coming of we’ll And a maintaining a have Oi’s fund our I auction rate very, cash will that this to additional say, XG to mean, already balance of I X the happen and still spectrum there will – auction. these the payments again, company strong

Soomit Datta

That’s really helpful.

future for expectation or into what latest expectation very which for Just structuring cash timing? upfront what XG follow-up, coverage? quick is, the in your a wrapped the of is terms auction is And

Christian Gebara

investment. expect do auction it of President documentation of be need the of we of related they that have Anatel, July. defined. asked an need auction been has institution, this QX We I to the approved – for that XG, rules – this then required government stating the to was and The still for votes, are gap still by a the by The to some but the there Anatel to ruling There want do obligations June, review don’t the was end that about defined, the first There auction. the to be week. first vote regulatory investment official they date, may the

still some to relative we’re following charged. in to needs We the So also the going what’s by auction – to may news value the have of approved numbers waiting. be of days. These be

a to weeks take get need it’s we through that. to months. ready, that or prepared to the going process once few So we’re get And

the have So that for news wait press. in the move to the Anatel final don’t ones we meeting I And is process. in any a than more

Soomit Datta

Okay. you. Great. Thank

Operator

Teresa Azevedo, next Banco Santander. comes Our from question Maria

Maria Tereza Azevedo

thank Hi, you for the question.

on XG opportunities, side, also only softwarization, not on And all. or follow-up context, on would Just and that your you Are be the network question mobility wireless having plans? but Can more networks XG automation do you from also on on XG. cost? previous you do strategy optimize the any please expect to IOT? Or access? with early going fixed personal your a on you the see That in maintenance adoption cost BXB comment could on ARPU, focus that virtualization

Christian Gebara

Maria, XG. that difficult share us are for registered you we strategies the it that the It’s for to at described. most planning of is topics just

mobile XG. data, fiber There or usage usage usage apps not but with solutions use of the that with some that is there increase. of are can of XG may course, Of

And XG experience with well, that. other mean, also for latency better be be XG’s related many that. entertainment and the may speed – So helpful I will gaming and much the to that

been in number our LTE and industrial that clients a clients sure a I’m working big under or way whole do And BXC They to more connected some just planning network with way their many and better with able with business, business. Brazil mean being important that with Of be described, different in as structuring of but XG. here BXB are private also results. homes already we’ll success. doing others with of we the course, massive you we applications new great XG as foresee IoT with mainly,

for see difficult cities, to then in that So may from smart that right we’re have applications again, and that the consider seeing and other going you capture We we’re the countries. to still other in now. end, many time money that

our of FTTH. there our home that you’re XXXX and why here fiber in seeing Brazil other as solutions. complement in some strategy pass, this are sometimes focus we not we complement wireless, as FWA areas why with But not is million to homes footprint, may complement XG remote with is XX many Speaking end in with do

but In think may And be put for the in with cost So that we’re to We’ve in you many are side, XG. of place again infrastructure. I XG. some sharing is, open are of them. needs difficult team be in also automation more we’re been pioneering to there that all There doing and more open captured, to that it’s tell course, to you. sites do

XG, single in And be be team, we starting again, also XG. XG, are grade XG piloting to we’ll with the So opening that do XG. we’ll

Maria Tereza Azevedo

improve your on the just bit follow-up And Do about have are fiber and Do returns any can mid you process? you [indiscernible] cities CapEx? color as cities? the question. little you Perfect. for a thinking you a expect the share smaller in your And how additional can the reduce on franchisees fiber you the that well as

Christian Gebara

Fundação? in the You talking or about franchise Terra the

Maria Tereza Azevedo

actually. Both,

Christian Gebara

that not of number The in franchising passed million said. that smaller the we it’s franchising home very XX focused with Okay. The have I number of the on Terra cities. brand, is

franchise. model CapEx We The cities have with the for is XXX% The different. is franchisee. launched seven already

royalties has fee Vivo paid – paid that the royalties only from is revenue, of no CapEx. franchising have the is the the franchisee that from franchisee to we sorry, And So to Vivo. the

a focused in smaller very model, So it’s cities. different

the We have than it’s cities inhabitants of here with for appropriate franchising. less more that target XX,XXX

to regions different project, more. planning up we said, And of also had have So this opening I with continue in the the seven we country. and

of that’s strategy. So part the

in said, place CapEx, that the other have Tower. In I is Here, because Tower or model, with American CapEx the zero, it already it’s ours. Phoenix we not as

together customer the in There’s Part And we’re is model OpEx than the we between CapEx Capex, us to is reduces And talking there new similar more connect. it’s and partner not case, have the American our split to formula, XX to the OpEx a to put Phoenix lower that Capex. the an there’s pay speed. it combined also in or and [indiscernible] CapEx CapEx and home of partner, going this give Tower, where any FiBrasil, model related we customers. with So are of cities. about that a Vivo place already connect, the we Tower for and related connecting responsibility be going speed the also only OpEx

Buenos telecom. bought If of American a the Aires, case big you they in consider Tower

much of there, We our So have we can we faster. we already Capex, there. that leverage from the put part infrastructure and opportunity address we already this infrastructure

If our home there to passed, is get that already you we surpassed XXX. to consider aim XXX,XXX

So, fast moving with we very are very very fast, good doing results.

Maria Tereza Azevedo

in branch And Perfect. the fiber a box, is spin-off also right?

Christian Gebara

the fiber – is What spin-off is what?

Maria Tereza Azevedo

CapEx drive Is your on in it sheet? impacts advanced stages, and could also balance a lower

Christian Gebara

responsibility Part Yes. model we of tenant. stage. same I American that It is of advanced partner. of said be we’re that very will in or be In less Tower. of CapEx part a And Brazil. more Brazil, responsibility the the And the is case the going anchor the are with to ATC of CapEx the is developing the

neutral for an still equipment. penetrate related usage that [indiscernible]. the CapEx to to CPO, network this So OpEx the the premises we’re customers’ we going the we pay And of have

Maria Tereza Azevedo

you very Thank Perfect. much, Christian.

Christian Gebara

Maria. you, Thank

Operator

Alejandro Our Gallostra, next question comes BBVA. from

Alejandro Gallostra

Thank taking morning much you very good question. This for my everyone. Alejandro. Hi, is

mentioned the in from most customers. the call the come subscribers new of FTTH You at new that of beginning

still connections in of net additions from of pace regions other the However, entering these with you FTTH. number though the benefit outpacing from is new even technologies FTTH,

do is, And – to increase the are are what that or think What migrating what technologies – companies. these this you initiatives other do taking the is you other you do customers? from of – So you think my why retention stage? rate are think do what you question not why to of customers offering

Christian Gebara

same. your are correct the Thank as the question FTTH well. No, of said. areas are the to Okay. you, are – the is customers new bringing The that I is Most for we not here issue restate customers. Alejandro, not question. I what

an have on that Sometimes, if I concentration of I’m cities last only the in another coming copper, No, from used to different no I that only any copper the doing new have state of the few have where Paulo, ADSL, no in of if we I’m city. I where cities Or is overlaying Most FTTC, network. there players, São is Then to I I new a have cities. is that exclusive overlay entered FTTC. other year, have network, then Paulo. from our bought don’t we São place we have GDT

or So the losing I’m I’m markets where enter not overlaying, When stated, the these the as customers I necessarily myself. entering, are correctly where when I am losing customer, same. markets you to I’m

and easier, to places, they there or with already migrate not much service But of FTTH the these from So that have operator. They are they customers minority percentage to is migrate they some because that the customer FTTC are yet the ADSL, I’m in it’s from put FTTH network people the cities and in and connect. FTTH. some there same

The with winning customers, and customer FTTC. broadband, FTTC same this will where to not back he ADSL with to fiber us in and this X customer another I higher may and impossible customer of willing speeds a that cannot XXX this been to But DSL, that retain customer, I to There retain. captured their local someone or of but speed customer who customer face is this customer. little I’m the the an find a bit provider this certainly it’s to places a this migrate be they is megabit ADSL megabit, were was with ADSL competition we pay offer offering happened I’ve to XXX customer now alternative or trying technology. more, if used out that my new there. in So

So it’s Alejandro. mixture of different a scenarios,

of retain. network, that can deploying I’m deploying So thing the not they a easy the say are Where migrate, higher because a so Even I alternative and in fiber speed where I’m the if customer network. put winner. the to number. I lose trying customer. migrating much is speed, customer is only they an to and get not normally, with I normally the I’m answering higher is another The technology we’re have But capturing the because with

mobile upload customer. good local this back not a And different with good as fiber fiber those to download. buy fiber, offer capture when speed, I this who in blended, able So for also I customer offer play technology the because future, offer provider, And plus for is offer and convergence, want I’m even FTTH. IPTV. as I win a I in It I ATT IPTV but to it’s I

Alejandro Gallostra

Okay. Great. only And you how to it do take still cover will think with you you regions FTTC? with those cover FTTH, would long

Christian Gebara

overly mean, the I for attractive. I all interesting think areas are it’s that me financially that

as the just going value regions. we in migrate offer in – see And And regions, taken these So decisions on neighborhoods, some doesn’t to continue may in the of deploying mean to in And not some that agree FTTC to migrate. we it it’s of I’m XXX%. were past. some FTTC overlay I may

on we but I of as a believe can that So don’t capture. the strategy, our it’s we number – part will value it give you depend

Alejandro Gallostra

for the Okay. you very Thank much explanation.

Christian Gebara

Okay, Alejandro. Thank you.

Operator

time, the any question-and-answer This the turn this Gebara Christian to floor to remarks. back At I for session. like closing would concludes Mr.

Christian Gebara

our you joining for call So thank today. all

IR that be first to I soon access in in team. If you please you as our hope questions, results have know, of quarter our will any see April. release you additional you XXXX

you much. thank So so

Operator

today’s This XXXX Telefónica conference call. Brasil concludes XQ Thank you. Results

time. disconnect may day. a Have great lines You your at this

Telefônica Brasil (VIV) 25 Feb 212020 Q4 Earnings call transcript