Hi. Good morning, everyone, and welcome to NOS second quarter earnings conference call.

We'll follow the usual format, our CFO, Luís Nascimento, will give you a brief overview presentation, and we'll open for Q&A after that. Over to you, Luís.

Thank you, Pedro, and good morning to all and welcome to NOS second quarter conference call. We will begin, as usual, with the main highlights of this second quarter.

Revenues were broadly in line year-on-year, as solid growth from IT and B2B was offset by revenue declines in B2C and wholesale. EBITDA growth and margin expansion, supported by disciplined cost management and AI-driven efficiencies.

Finally, a healthy free cash flow, supported by sound operational performance and structurally lower CapEx, further boosted by positive non-recurring items in this quarter. As usual, a quick overview on our main KPIs.

In the second quarter, consolidated revenues were flat at €458 million, and EBITDA rose 1.5%. This solid EBITDA performance, along with a CapEx reduction of 8%, led to an improved EBITDAaL minus CapEx of €88.9 million, a growth of 15%.

Free cash flow, excluding non-recurring items, grew almost 9% to €63 million, and net income, excluding non-recurring items, increased 19% to €68 million, reflecting solid operational performance and our GenAI-driven efficiency program. Including non-recurring items, mainly the tower sale to Cellnex and higher litigation proceeds, total free cash flow increased by 120% to €83 million, and total net income grew 34% to €77.5 million.

We will discuss, as usual, each of these metrics in more detail throughout the presentation. NOS sustainability performance was, once again, recognized by independent institutions at global, European, and national level, reflecting the company's commitment to ESG.

As an example, NOS was classified, for the second consecutive year, as one of the world's most sustainable companies by TIME, the only Portuguese telecom operator in the ranking. Our Scale program continues to scale AI across NOS.

This quarter example with Smart Pairing and QPlanner, an AI-based customer-agent matching solution that optimizes, in real time, the match between incoming calls and customer support agents, increasing operational efficiency and effectiveness. Using a machine learning model that predicts the average handling time of each agent-customer pair, QPlanner recommends the best pairing, considering customer support agent expertise and expected availability.

QPlanner already optimizes more than 200,000 calls per month and has reduced average handling time by 35 seconds in customer service and by 10 seconds in technical support. On the operational performance side, more than 6.2 million households are now covered by NOS next-generation fixed network, with FTTH representing 92% of the households passed.

FTTH now covers 100% of Portuguese municipalities. During the quarter, NOS added 98,000 new homes to its next-generation fixed network and 136,000 new fiber homes, as the fiber rollout regained pace toward the end of the second quarter after a slower first quarter.

Despite a challenging competitive environment, second quarter delivered continued positive operational momentum, with a stronger contribution from mobile services. Total RGUs grew by 20,000 to almost 11 million, driven by a strong 29,000 increase in mobile RGUs, complementing by an 8,000 addition in fixed RGUs.

Versus the same period last year, net adds were more moderate, amid lower promotional activity and later availability of new fiber homes during the quarter, resulting in fewer fixed net adds. In fixed, unique fixed accesses increased by 2.3 thousand in the quarter, an increase of 29,000 in the last 12 months.

This represents a slowdown versus previous quarters, reflecting the lower promotional activity and later availability of new fiber homes mentioned earlier. Churn remained at low levels, reflecting the strength of NOS customer base and its competitive positioning.

New offers, WOO and naked broadband, continue controlled, but with some impact in the mix of new customers and therefore ARPU. In mobile, this was another solid quarter, with 28.6 net adds, with mobile RGUs increasing 206,000 year-on-year, reflecting the positive performance backed by postpaid resilience, despite the challenging competitive environment, particularly affecting the prepaid segment.

Postpaid increased by 72,000, an improvement versus the first quarter, reflecting continued value-added postpaid resilience, although still below second quarter '25, driven by fewer convergent mobile customers as result of smaller fixed net adds. Mobile prepaid declined by 44,000 RGUs, an improvement versus both the 65k decline in first quarter '26 and the 70,000 decline in second quarter '25, though still reflecting the ongoing push to convergence and competitive pressure in the low-cost segment.

In summary, a solid operational performance despite the competitive environment. Now moving to audiovisuals and cinema business.

Cinema tickets sales improved 1% quarter-on-quarter, but declined 1.7% year-on-year, impacted by a less favorable calendar, as second quarter '25 has benefited from the full Easter holiday period. NOS Audiovisuais distributed three of the top five movies by ticket sales sold in Portugal during the quarter.

The Devil Wears Prada, Toy Story, and Scary Movie were the main movies. NOS consolidated revenues were therefore flat at €458 million in this second quarter, driven by a resilient 1% decline in Telco, by a minus 0.3 decrease in audiovisuals and cinema, and despite the strong 10.6% growth in IT.

The B2C segment declined 0.3 to €286 million, driven by competitive pressure and the growing share of WOO within NOS customer base, which offsets the price increase implemented in mid-February. B2B revenues grew 0.7% to €83 million, maintaining its growth path, but below the previous periods, reflecting a lower volume in the more volatile projects and resale activity line this quarter.

B2B recurring services continue to post positive growth, in line with previous quarters. Wholesale and other revenues declined 15% to €23.5 million, mainly driven by changes to one wholesale model, which no longer records revenue and costs, and by a reduction in mass calling services.

IT revenues grew a solid 10.6% to €49 million, mainly driven by a strong 19% increase in equipment and license sales, with IT services also growing 7%. The Audiovisuais and Cinema division reported a 0.3% revenue decline to €25.7 million, reflecting the softer cinema ticket sales discussed earlier and weaker quarter in cinema distribution.

NOS EBITDA grew 1.5% to €206 million, with a consolidated EBITDA margin of 44.9%, an improvement of 0.7 points year-on-year, reflecting solid operational performance and disciplined opex management across all business units. Telco EBITDA grew 0.8 to €188 million, with a margin expansion of 0.9 points, despite the decline of Telco revenues, and driven by the efficiencies that supported a 2.9% decline in Telco costs.

IT EBITDA increased 19% to €6.1 million, with margin improving 0.9, and Audiovisuais and Cinema EBITDA grew 4.7, with a margin improvement of 2.2 points. Therefore, consolidated EBITDAaL grew 2.4% year-on-year.

On CapEx side, NOS CapEx continues its structural declining trend. In this second quarter, total CapEx, excluding leasings, dropped 8.2% to €84 million.

Telco CapEx declined 7%, driven by an 11% reduction in technical CapEx, impacted by higher percentage of FTTH deployment rollout over third-parties networks, thereby reducing expansion CapEx. IT CapEx decreased 52% to €0.8 million, mainly explained by an investment in an IT platform in second quarter '25, and Audiovisuais and Cinema CapEx declined almost 11% to €3.7 million.

As result, improved operational performance and lower CapEx drove a 15% increase in EBITDAaL minus CapEx, reaching €89 million. Recurring net income grew 19% to €68 million, mainly driven by the positive EBITDA contribution of €3 million, a D&A reduction of 3.5, reflecting structurally lower CapEx, and a €1.4 million improvement in net financial expenses, benefiting from lower financial costs.

Additionally, we posted a €9.6 million positive impact from non-current costs in second quarter '25. These positive impacts were partially offset by a €7.8 million impact from higher taxes, driven by higher EBT versus the second quarter '25.

Non-recurring items increased €9.1 million, driven by tower sale to Cellnex and higher volume of litigation proceeds, resulting in a strong total net income increase of 34%. Recurring free cash flow grew almost 9% to €62.5 million.

Operating cash flow declined by €20.7 million year-on-year, as EBITDAaL minus CapEx growth of 11.5, but that was offset by negative working capital as result of normal fluctuations in payments to providers. Interest paid contributed positively by €3.3 million, and income taxes paid contributed a further positive €6.1 million to free cash flow.

Non-recurring items increased by €40 million to €20.8, mainly due to the tower sale in second quarter '26 and higher tax paid in second quarter '25, bringing total free cash flow to €83 million, an increase of 120%. At the close of the second quarter, NOS net financial debt increased to €1,078 million, essentially due to the dividend payment, partially compensated by Cellnex receivables.

Consequently, the financial leverage ratio increased to 1.6, but still well below our reference level of 2 times. Additionally, NOS average cost of debt declined marginally to 2.9, a 0.1% reduction year-on-year, driven by lower interest rate environment.

As of June 30, NOS held a total liquidity position of €222 million. With this, we conclude our presentation, and we are now ready to answer to your questions.

Thank you.

Hi, and thank you for taking my questions. Good morning.

I have two, please. Firstly, I was wondering if you could give us a little bit more color on what you're seeing in B2B.

I understand that part of the weakness this quarter is due to a tough comp with some equipment revenues, etc., but is there anything that you're seeing in terms of a step up in competitive intensity? Is there any one particular aggressor, just any specific trends that you're seeing that might threaten the structural growth outlook for B2B?

Any detail on that would be great, thank you. Then my second question, please, is actually on IT.

You've done quite well this quarter, and you've talked in the past about potential M&A in the IT space. Just wondering, is this still a capital allocation goal?

Are you still thinking about identifying potential targets? Your leverage is coming down quite quickly, and how you're thinking about capital allocation in relation to those comments would be great.

Thank you.

Thank you for questions. Starting with the B2B environment, as we have ups and downs in B2B that are related to specific projects or non-recurring revenues, projects and that are non-recurring, sometimes resale that is also non-recurring, high volume, low margin.

The explanation for this fluctuations in terms of the B2B top line are explained by that and not by any change in the competitive trends or the competitive environment. In that front, I would say that there are no news, and obviously it's a competitive environment, as always, but nothing really changed in the last few months or quarters.

In IT, we don't discard the opportunities in M&A, but to be completely clear, what we are looking for are potentially bolt-on acquisitions to complement the capabilities and the assets of Claranet. Nothing even remotely compared to the size of the acquisition we did with Claranet.

There's nothing in the horizon, but if there was, it would always be something very small at our scale, not really relevant without any material impact in terms of cash flow.

Thank you.

Hi, good morning. Thanks for taking my questions.

I have two. First one is on capital spending.

Figures were very very very nice over the first half, do you think that 350 million is a good reference for the year, and what kind of figures to expect for the coming years in terms of capital spending? Second question is related with your operating costs that were flat year-on-year on first half.

Do you think it's possible to continue to perform as was the first half in the second half, or taking in consideration base effect that you perform also very well over the second half of last year, we should expect some increase on cash costs? Thank you very much.

António, thank you for your questions. On the CapEx side, I understand your question.

350 is a good reference for the rest of the year. I understand of your question because the first half was on the 170 million, but as we know, there's some seasonality on CapEx, and the second half of the year usually it's higher.

For this year, 350 is the good reference. For the future, we continue to expect some CapEx decline, but we will not provide you some guidance now.

On the operating costs, what I can tell you is we are very happy with the performance that we had from our transformation program and our Scale program. If you look to our costs, it's true that they decline 1.2%, but that includes the IT that grew 9%.

If we look just to Telco, we decline 2.9% and flat year-on-year. The efficiencies continue to post very interesting results, and we are confident that that's the same for the future.

Good. Thank you very much.

Hello. Good morning.

Thank you for taking my question. My question is regarding the Telco segment.

In this segment, the EBITDA rose 2.8% in the first quarter and only 0.8% in the in Q2. I acknowledge that the B2B, which was discussed, had a weak quarter and could justify part of that.

However, it is also true that there were two positive factors benefiting Q2 versus Q1, which were the absence of storms that hurt Q1 and the full quarter the effect of the full for the full quarter of the price increases versus only half of the quarter in the in Q1. In order to assess the relative magnitude of each of those levers, the question would be, could you see negative could we see negative EBITDA growth in the second half of the year as it could seem that the impact of the impact from cost cutting could be losing momentum while competition remains strong?

Thank you for the question. I would say no, we don't expect negative EBITDA growth for the second half of the year.

First, on the revenue side, there were four main drivers of the performance of B2C. It's true that we had full impact of price increase, but we had already 50 almost 50 to 60% of that impact in the first quarter.

Then, cruising faded completely. Also, it was a stronger equipment sales in the quarter.

At the same time, we keep having the WOO brand impact on gross adds, which is very very stable at 12%, but month-on-month, it's increasing their weight in the customer base. That is pressuring ARPU.

If you look to the dynamics, what we see in the quarter is it's true that B2C declined a little, and also wholesale, and these two had higher impact in EBITDA than B2B. That's why you see that the increase in EBITDA is not as big as the last quarter, but nothing to concern.

Thank you very much. If I may just follow up a little bit on these very points.

When we look at the opex in the first quarter versus second quarter, obviously there is volatility between quarters and a little bit of seasonality eventually, but it seems like the opex remain completely stable at 205 million. Yet the B2B revenues were lower, and you mentioned that those revenues had a low margin, we could have expected, probably, lower opex overall because of those lower revenues in B2B.

What can you tell us in that context about the opex evolution, how fast it continues to decline or not, or what do you expect for the next two to three quarters?

The opex of the IT, it depends a lot on the revenues, there's not there where we see the efficiencies. The efficiencies are...

No, sorry. If I may, I was referring to Telco, eh?

Just to Telco. 205 million opex, yes.

Yes, absolutely. Always on Telco.

On Telco.

We will not provide guidance in that number, but we are seeing that we have efficiencies in the second half of the year. As I was telling you, our transformation programs still have many phases to begin.

Some will begin, some will end during the second half, we may have some fluctuations, but efficiencies are there.

That is very clear. Thank you very much.

Thanks very much for joining. Any questions, please feel free to reach out.

Until next time, take care. Bye-bye.