Good afternoon, everyone. Thanks for joining and welcome to NOS fourth quarter and 2025 full year results conference call.

As usual, we will start with a brief presentation by our CFO, Luís Nascimento, and then we'll open for Q&A, and we have the executive team in the room for that as well. Luís, over to you.

Thank you, Pedro. Good afternoon to all and welcome to our conference call.

We will begin, as usual, with the main highlights of this fourth quarter. In the quarter, NOS maintained a positive operational momentum despite new competitive environment, leveraging 5G and nationwide fiber fixed infrastructure; also, a healthy cash flow generation driven by top-line growth, operational efficiencies across opex, and capex structural decline; and an attractive shareholder remuneration with a strong dividend yield while maintaining a robust financial position.

A quick overview of our main KPIs. During fourth quarter, consolidated revenues increased by 0.3% to 486 million, and EBITDA rose 4.4%.

This solid EBITDA performance, along with a capex reduction of 4%, led to improved EBITDA minus capex of almost 21%. Recurring free cash flow, excluding extraordinary effects, increased 132% to 71 million, and net income increased 58%, reflecting a solid operational performance and our strategic transformation program.

Our annual numbers also reflect a strong performance, which we will discuss in more detail later in this presentation. NOS has achieved upgraded classifications from both CDP and S&P Global Ratings, recognizing its significant ESG efforts.

The CDP score improved from B to A-, reflecting a leadership position in the fight against climate change, a distinction achieved by only 2% of the companies. Furthermore, NOS S&P Global score increased from 58 to 75, nearly doubling the sector average of 40.

As part of its dynamic strategy to create value, NOS is enhancing its customer value proposition through Combina, a new initiative in partnership with Galp and Continente. This program offers unique customer benefits, including up to a 10% discount at Continente and a 30 cents discount per liter on fuel at Galp.

These significant savings can partially or even fully offset a family annual telecom costs. With 150,000 customers in the first 2 months, Combina is a key component of NOS value proposition, translating into significant savings for our customers.

Our Scale program, with 140 AI use cases identified and already 40 implemented, is a key driver of our efficiency, contributing to a 2.3% reduction in fourth quarter opex. The personal productivity vertical, one of our seven Scale initiatives, is successfully massifying AI across NOS.

NOS GPT supports over 4,000 users with an impressive 40 daily adoption, and our fast-training program has already reached over 1.4 thousand employees. With Scale, we are effectively boosting efficiency throughout NOS.

On the operational performance side, this was another strong quarter of fiber to the home. More than 6.1 million households are now covered by NOS gigabit-fixed network, with fiber representing almost 90% of households passed.

This is a significant increase of 159,000 households quarter-on-quarter and almost 380 year-on-year. Despite the challenging competitive market, NOS delivered a strong fourth quarter with 2% increase to 10.9 million RGUs.

With 66,000 net adds, this quarter posted a good level of net adds despite natural fourth quarter seasonality. We achieved 7,000 net adds in unique fixed accesses in the quarter.

Despite the seasonal slowdown and intense competitive environment, these results are consistent with pre-Digi levels. Churn continue at low levels, and new offers, Woo and Noite broadband, continue control, but with some impact in the mix of new customers.

In mobile, with 62,000 net adds in the quarter, mobile RGUs increased 3.3% year-on-year, reflecting a strong performance, particularly in postpaid customers with higher ARPUs. Postpaid had 88,000 net additions, posting very strong results driven by Woo and by NOS competitiveness on convergence cross-sell.

Prepaid net additions declined 26,000 in the quarter, below fourth quarter '24, driven by the competitive pressure that impacts more on low-ARPU customers. In summary, a solid operational performance despite the competitive environment.

Now moving to audiovisuals and cinema business. The number of tickets sold declined 19% year-on-year, an improvement versus the -28% of third quarter, driven by a difficult October and November, but with a solid December with revenues flat year-on-year, supported on Zootopia 2, Avatar, and Now You See Me, all movies distributed by NOS Audiovisuais.

On the financial performance side, NOS consolidated revenues rose 0.3%, mostly affected by 8% decline in audiovisuals and cinema division that were offset by the resilient performance of the telecom segment and by the solid 4.4% growth of IT. Telco revenues were flat year-on-year, primarily due to the performance of the enterprise sector that posted a 1.3% increase driven by large company segment and wholesale.

The B2C segment experienced a decline of 0.4% due to the increased competition impacting ARPU, despite the strong operational activity and solid equipment sales, still an improvement versus the decline of -1.1% in third quarter. Revenues in the B2B increased by 1.3% to 123 million, continuing the growth path from previous periods.

The slowdown in the overall revenue growth of the business results from a lower volume of projects and resale with lower margins. The new IT business showed a strong increase of 4.3%, mainly driven by a solid 9% growth in IT services and despite the 3% reduction in the volatile resale of equipment and licenses.

As previously explained, the audiovisual and cinema division reported a 8% decline driven by the 19% reduction in cinema attendance. NOS operational performance and solid results of NOS transformation program, supported on GenAI-driven efficiency program, continue to deliver strong 4.4% EBITDA increase, significantly above revenues, with a strong contribution from telco and IT, which recorded increases of 4.4% and 11%.

Audiovisuals and cinema division posted a 1% EBITDA increase despite the 8% decline in revenues. NOS capex continues the structural declining trend, and this quarter dropped 4% to 92 million, supported by a capex decline in all lines of businesses.

Telco capex declined 1.2%, driven by a 2.6% reduction in customer-related investments. Expansion capex had a small increase of 0.4% this quarter, mainly driven by fiber projects as we approach the end of NOS fiber deployment.

IT capex declined 34% to 1.9 million, explained by an exceptional customer-related investment during fourth quarter '24, and audiovisuals and cinema capex declined 24%, reflecting a return to a more normal spending levels in movies after the higher investment in 2024 caused by the Hollywood strikes and by a reduction in cinema capex. As result, improved operational performance and efficient capex management drove to a 20.6% increase in EBITDA minus capex.

Net income declined to 10.9% to 63.8 million, primarily due to a reduction of 31 million in extraordinary effects, mainly related to Anacom refund of activity fees in fourth quarter '24. However, excluding these items, net income rose 23.5 million, a 58% increase year-on-year.

It's a strong increase driven by a strong EBITDA growth, supported by a solid operational performance and by a proactive cost management, complemented by a 10 million contribution from tax reduction and by a 3.9 million in results from joint ventures. Free cash flow increased 155%, with a 2.8 million positive year-on-year impact from an extraordinary tax payment in 2024 related with Anacom refund of activity fees.

Without extraordinary items, recurring free cash flow increased 132%, driven by percent driven by 11.7 million from strong operational performance and lower investments, by a positive impact of 22 million in working capital, and by a reduction of 5.6 million of income tax paid. Now moving on to the final year key financial numbers.

Despite stronger competition, NOS demonstrated a resilient revenue performance in 2025 and strong opex and capex efficiencies leading to a solid EBITDA minus capex growth. Consolidated revenues increased by 1.6%, with telco growing 1.6% and IT 3.5%, offsetting a 2.6% decline in cinema and audiovisuals.

Consolidated EBITDA also grew by 4.3%, while EBITDA minus capex saw a significant 15% increase. NOS showed strong growth in net income and free cash flow in the final year '25, excluding extraordinary items.

Net income, after adjusting for these items, increased 29%, and free cash flow, excluding these items, also rose by 15%, indicating a solid underlying financial performance. At the close of the year, NOS debt decreased to 1 billion and 22 million, and the financial leverage ratio dropped to 1.5 times, well below the reference threshold of 2 times.

Additionally, NOS benefits from a lower average cost of debt, now 2.7%, representing a decrease of 0.8% year-on-year, reflecting lower interest rates. As end of December, the company held 342 million in cash and liquidity.

With all these elements in play, the board has approved a total dividend of 45 cents per share, composed of 35 cents ordinary and 10 cents extraordinary. This payment reaffirms our strong commitment to an attractive and sustainable shareholder remuneration.

With this, we conclude our presentation and we are now ready to answer to all your questions.

Hi there. I've got three questions.

First is around your Scale program. What headcount reductions could you deliver from this in '26 and in the mid-term?

Then where could most of these cuts come from within your business areas? Second is around the slightly slower business growth we've seen from lower volume of projects.

What's the reason behind this? Is the Q4 growth expected to continue into 2026?

Then last is just around your price rises in 2026. Could you remind us what you've done and then what the customer reaction has been so far relative to the price rises you did in previous years?

Thank you.

First, well, I didn't understand completely the questions, but if I understood, the first one is on Scale, and if we believe that we can continue to have this solid efficiencies for 2026. Yes, we do believe so.

As I said, Scale is a long project. We have 140 use cases.

We have implemented 25% to 30% of them. Yes, we do believe that we can have efficiencies for the next couple of years.

The third question was on price rises. What we did is this February, this past month, we raised prices by 2.34%, which is in line with the inflation 2025.

Until now, the customer reaction has been very positive in the sense that there was no reaction. Even when we compare to other price inflation increases in the past, we didn't have them last year, but in the past, we had less customers either calling us or complaining.

The reaction in that sense was good, mainly because the amount of the increase is not that significant. I'm not sure we understood the second question.

If I understood, it was about B2B resale?

Sorry, it was around the business growth. You mentioned the slower growth in Q4 was down to a lower volume of projects.

I was just wondering what the reason was behind this. Then is this Q4 growth the level you expect to continue into 2026, or should it accelerate from here?

This line of revenues from projects is very volatile. It has been always the case in the past.

Some quarters very strong, some quarters not that strong. We are always comparing to the same quarter previous year.

If you have a good quarter last year and not so good quarter this year, the difference is significant. There's no structural trend that you can take out of that.

Probably next quarter will be okay. There's always a lot of volatility around this kind of one-shot projects.

It's not like telecom revenues, which are basically monthly fees, which are recurrent and stable. These B2B projects, not so much.

Again, there's no particular trend or structural trend you can take out of these numbers.

Great, thank you.

Hello, good afternoon, and thank you for taking my questions. I just have two.

Firstly, some color on the competitive environment in B2C specifically would be fantastic. I've noticed that the ARPU in consumer seems to be a little bit better in Q4, just an idea of how you're thinking about incremental competition in Q4 and into Q1.

Then my second question is just on IT growth potential. You previously talked about potential for 5% to 10% three-year CAGR market growth with 5% to 10% in applications, tech consulting, cloud, etc., and then 10% to 15% in cybersecurity.

Could you give us an update on these trends? Is this still what you're expecting to see, and how are you seeing the markets develop?

Thank you.

Thank you very much. In terms of competitive environment, I don't think there's any significant update.

We have been living more or less the same competitive environment since November '24 for the reasons you all know. The dynamics hasn't been different throughout 2025.

Nothing really relevant change already this year in 2026. I would say that from that sense, of course, in a level of competition that is much more aggressive than we had before November '24, but since November '24, it has been the same.

We don't expect it to change going forward. It's a new reality.

We have been living under this reality with the strategy that we have communicated. With the main brand, NOS, with the premium service and with the discount brand, Woo, fighting the low end of the market.

We're happy with the results, and we don't see trends changing materially going forward. In terms of IT growth, yes, we're still kind of bullish around the IT business.

We believe we have tailwinds, and we will continue to grow in that business. The numbers you mentioned, 5% to 10%, is within also our estimate up until now.

When we look at 2025, we actually managed to be slightly above that, but we'll see going forward. We are still betting on a significant growth on that line of business.

Understood, thank you. Sorry, just a follow-up, maybe with a third question.

A potential upside from AI on capex has been a bit of a theme this quarter amongst other European telcos. Just you've talked a lot about kind of potential from AI, but just wondering specifically what you're seeing on capex.

What we're seeing is across different cost drivers. Some, from accounting point of view, are considered opex; others are considered capex.

What we see is the impact's very transversal, very across the many different functions, processes, areas. Yes, we see some impact there, but nevertheless, we were already planning beyond AI.

We are already planning a decrease in terms of capex in 2026 when compared to 2025. Of course, it helps to have that reduction with this help from AI, which makes us more productive and as such, taking more out of each euro that we invest.

Very clear. Thank you very much.

afternoon, everyone. I have three questions as well, please.

Perhaps following up on the question around pricing and you mentioned the mix. I think this year we didn't have a price increase, but the Q4 ARPU trend exited the year quite, quite well.

Is that perhaps upselling within the tiers, or is that just a better mix within your kind of premium brand and your challenger brand, given perhaps a more relaxed competitive dynamic in the market? Second question is around the operational efficiencies from Scale.

I guess a limited top-line growth through '25, but 4 percentage points expansion at the EBITDA level. Is that the right level we should think about in 2026, or should we see a pickup in those efficiencies?

Lastly, on the fiber rollout, can you remind us what your target coverage is? I think you said low 90s before, and should we be thinking that the remainder will be covered by alternative technologies such as satellite?

Thank you.

Thank you very much for your questions. I would tend not to read too much from the ARPU in Q4.

There are some specific effects, namely, for example, premium TV channels that had a good quarter, which helps ARPU. I don't think you can read from those numbers any significant change in terms of the mix between the main brand, the premium brand, and the low-end brand.

I don't think you can have that reading from the quarter numbers. Obviously, the low-end brand, Woo, keeps growing, keeps increasing its weight on the overall customer base of NOS.

That is something that we expect to continue throughout 2026. You cannot read too much from those ARPU numbers from Q4.

As I mentioned, this is very seasonal, and specific impacts, namely from the premium TV channels. In terms of Scale, actually, what you asked would imply some kind of guidance that we tend not to give.

What we can say is that we expect Scale to continue to contribute to cost optimization. That much is true, but in terms of numbers, I would rather not give any specific guidance, even though, obviously, we have our own budget and our own estimate.

In terms of fiber rollout, we estimate our present coverage in terms of households passed close to 94%, and that is as high as we will go on a standalone basis. We expect the remaining of the market, 100%, to be actually also covered with fiber, but from this project, the state project that has as an objective to cover the white areas with fiber.

One can expect once this project is implemented, and it should be pretty soon, or at least start pretty soon, 100% of the country would have fiber, which means that alternative technologies are not necessary, and we don't see any space for those alternative technologies in a country that has 100% fiber coverage.

That's very helpful. Thank you.

Just to follow up on the fiber point, given the extensive fiber network, have there been any developments on the wholesale front, off-renting out the network and maximizing that utilization? Thank you.

Can you repeat your question? I'm not sure that I

understood

the meaning of wholesale.

Sure, of course. It was just any wholesale discussions on the fixed network, please.

Wholesale discussion in the sense that we should open the network? The answer is no, not at all.

We have no plans to give access to our network in the coming future.

That's very clear. Thank you.

thank you, good afternoon. Thank you for the questions.

First one is related with your Scale program. I know that you don't like to provide a guidance.

Nevertheless, it seems fair to assume that opex will continue to perform below the top line, seems fair to assume it. I don't know if you want to comment on this.

Second question, apparently there were some comments on the press this morning that you could acquire some company on the IT space. I don't know if you want to comment on this.

Yes, sure. The question was around our plans for the IT business unit, if we had plans to expand, to grow.

The answer was, first of all, we want to grow organically. We already mentioned the targets in terms of growth, organic growth, but also we said that we are open, and actually actively looking, to also grow from acquisitions.

It's not obvious. We don't have any specific target at this time, but we are open to the possibility of growing also through acquisitions.

In terms of the opex numbers and the impact of Scale on the opex, what I think we can say without giving too much guidance is that we expect margin expansion.

Thank you very much.

Yes, thank you for taking my two questions. The first one is on the Combina program that you have presented as well.

I would like to understand which is the kind of impact that you are expecting in your churn rate at the end, given the discounts that you are offering, be it let's say just trying to understand which could be the savings either on the SAC or in the customer retention cost that is going to be at some extent funded by the Combina program. The second question is quite simple.

Just would like to understand if you are expecting any kind of financial impact from the floods and from the meteorological issues that we saw in this first quarter when you will report in the first quarter in May. Thank you.

Thank you very much, Fernando. In terms of Combina, I think it's fair to say it's still early days.

The main objective for us is churn reduction, to be completely transparent. That is the main objective.

Nevertheless, we announced 150,000 Combina clients, I think last week,

in the first two months.

In the first two months, 150,000. We have 1.5 million customers, it's still limited in terms of the customers that have joined the program.

Without any number or quantification, because it's still too early, the objective is clearly to reduce churn, given one more reason to customers to stay with NOS because the benefits from this program are actually quite significant. In terms of the storms, it was hard.

We still have some residual customers without service on fiber. In mobile, it's back working again.

We have some negative impact, but it's quite limited. We have the negative impact in terms of revenues because we have to credit the customers that were without service, but we're talking a limited region of the country and a few days, nothing very significant.

We have some costs associated to rebuild what was destroyed. Again, some of the major investments associated with that rebuild is not on us, namely towers, namely poles, which suffered a lot.

This is not on us. Again, we're not expecting a big impact in terms of financial cost.

In terms of service, it was a big impact, as but in terms of financial impact, not that significant.

Many thanks for the visibility. Thank you.

Thanks very much for joining again, and any questions, reach out, take care, bye.