Oi S.A.

Thank you and good morning. Thank you everybody for participating in our call.

And as you know, we have postponed this call, so we could combine our first quarter 2020 results also with a summary of the JR plan amendments, which we just filed last night, paving the way we believe for new GCM and a new future vision for the company as we have been telling since we first announced our strategic transformation plan. We really believe that after announcing our transformation plan last year, the execution has been very solid.

And now what we're doing is we're taking a significant step towards moving the company to long-term sustainability with a bold proposal, which we are confident, which will be well received. So let's start by moving to page three, where we look at the first quarter results.

Once again, we believe we achieved solid results in line with the plan expectations. And I believe that the first highlights continue to be the fiber results.

At the beginning of April we reached 1 million FTTH customers reached in a milestone which advanced the customer base for fiber almost 900,000 subscribers during the year and we continue to maintain a very fast pace in homes connected and homes passed. Just in April, we achieve the 97,000 new homes FTTH homes connected.

This also led to continue the recovery in the fiber revenues looking towards the future in terms of compensating for the declining copper revenues and we will see that later on. Also on the postpaid, some highlights, we have maintained a very good results in the postpaid and with the 12% annual growth in postpaid revenues and a very good market performance.

And finally, in terms of our B2B and wholesale, we also continue the path that we announced in our plan. In particular in B2B one highlight is that our IT corporate revenues continue to go up.

I mean shifting in revenue profile, which have as said would happen. In terms of funding, we had already highlighted this in our last call, but it's always worth noting that the first quarter saw a significant improvement in cash position, given the funding initiatives that we have, not only in the asset sales, but also in closing a bridge loan at the beginning of the year.

And on the third bucket of efficiency and simplification, we also continue to generate significant savings and in line with a target for the year and this can be seen in 7% reduction in our OpEx year-over-year. Overall, this all led us to the last pillar, which are the strategic options.

Actually, this is where we advance the most during the quarter as we prepare the new vision for the future and as we have insane. Since last year, we paved the way for a new plan amendment which will be presented to a general creditors meeting at the beginning of the second half.

And this calls for everything we have been talking about in terms of a market process for selling operations, for doing a new vision for the company, for having a full regulatory campaigning blaze for resolving our copper issues and our concession issues and in reality for advancing the company towards where we believe it should be. So let's now take a deeper look at the operating results for the quarter before we actually talk about the plant.

Moving to page four, we can start with the fiber results. And the fiber result continues at the very strong face.

As we mentioned, we already achieved the 1 million homes passed and almost 6 million homes connected. Those are significant numbers.

And if we look at the results expected for the end of the year, we said, we would be in the range of 1.6 to 1.8 million homes connected. We believe it's possible to even surpass the 1.8 million getting closer towards the 2 million homes connected at the end of the year.

And all of that continues to happen with an ARPU, which is in line with our plan. We are setting our plan that we would have an ARPU of close to BRL85.

We have achieved the BRL84.5 in the first quarter 2020 and all of that has to be seen in the light of having new customers on Board, so with all of the impacts of our pro forma revenue, as we continue to connect a very high number of customers. Confirming our plan view, this also has improved significantly our fiber revenue numbers.

We are now over BRL200 million in fiber revenues and this is a 700% increase, obviously, following very closely the path of increasing dramatically the numbers of home homes connected. And when we look at the revenue breakdown for fiber, we see that even though we have an 8x increase in fiber revenues from first quarter last year.

There's still a big opportunity here to continue increasing those revenue numbers because our B2B component of this revenues are still very small. So we see that in addition to all of the residential revenues, we have a lot of our opportunities on the B2B revenues as well.

Those results, they actually confirm our view of resuming broadband competitiveness. And as we can see next, we see that everywhere we bring FTTH, the results improve very quickly and dramatically.

So on page five, you can see that not only our results in terms of homes passed and homes connected keep improving, but when we look at all of the new cohorts of fiber deployments, we see that the percentage penetration continues to improving the new cohorts in line with what we said would happen. So much so that in our plan, we said, that we would get to a 25% penetration rate by the end of three years.

And with our current plan, we are already getting to levels of 20% very soon after launch in a new given city. So what we believe we are solidly in line to achieve the 25% take up rates, which we said was a stable of our plan.

After that, what we saw is that, when we were first looking at our project, we started looking at the benchmarks for a fiber implementation. And in reality after the first quarter of this year, we believe that we have become the benchmark for homes connected per quarter.

As you can see, here, we are comparing our numbers both with the large U.S. players, as well as the largest local players for fiber connections and we are by far the operator with the largest number of homes connected in the first quarter, almost twice the number of the largest local player.

And the pace continues to pick up and we believe that even with all of the pandemic results, the fiber results haven't slowed down as we will see a little bit later on. Due to those results, we can see that in every city we enter, revenue continues to go up even with a sharp decline in fixed voice.

But we can see in the cities where we have FTTH, our broadband numbers in terms of revenue are already going up and obviously this continues to happen despite the sharp decline in fixed voice and also in copper broadband, which we believe will continue going down in line with the rate of decline of fixed voice. We recently launched in addition to our current stable 200 meg offer, we recently launched the new 400 megabits per second offered to keep leading and this keeps changing our revenue profile as we can see on the next page.

So on page six we can reflect the results in terms of revenues for the quarter, and as expected, and as I mentioned multiple times, we're still in the middle of a revenue shift. We can see that our copper revenues declined sharply and this is a result of a structural transformation of trends both for consumer and for technology.

And so we had a minus 27% -- almost 28% decline in copper revenue, as well as a 20% -- minus 23% decline in broadband revenue for copper, coupled with a slight decline in DTH revenues, even though it was less than market average And all of that starts to be compensated now by the sharp increase in FTTH revenues of plus 700%, as we have already mentioned. When we look at the total profile of our revenues then, we can see that, obviously, we are still impacted while we grow our FTTH base with a minus 12% overall residential revenue decline.

But, all in all, we see that our fiber revenues now start to be very significant and in line towards a bath of continuing to be able to replace our lost revenue using copper and eventually bring residential revenues back to growth. In the first quarter of ‘19, our fiber revenues represented a little bit over 1% of our total residential revenues.

In the first quarter of 2020, it already represents close to 12% of all of our residential revenues. So a very strong performance and fibers and we should remember that fiber is the core of our strategic plan moving forward.

So those are very encouraging numbers. But let's talk next about our mobile results in page seven.

So on page seven, we can see that the end of the first quarter started to show the first impacts in the mobile segment due to the COVID-19 pandemic, both in sales and in revenues, especially in prepaids, and we're going to talk specifically about those impacts a little bit later on down the presentation. But despite those initial effects at the end of the quarter, we believe we have very good results overall in mobile once again.

Starting with postpaid, we can see that we continue to have a significant increase of our customer base. We had a 20.6% increase in our postpaid customer base, getting very close to the 10 million subscribers.

And this came with a reduction in churn and this came obviously with a much better revenue mix in terms of post versus pre. Our customer revenues in postpaid continue to increase at a very fast pace over 12% increase in customer revenues from postpaid.

And this led to us gaining 2 percentage points in market share almost from first quarter ‘19 to first quarter ‘20. So a dramatic increase especially in a very competitive market where we continue to show signs of a very strong performance given our innovative efforts and our smart offers for postpaid.

On the prepaid, we know that the market continues to go down and in particular at the end of the quarter, and most likely, as you -- we will see in the second quarter, obviously, prepaid was hardly hit by the pandemic. But despite the prepaid market going down, we were one of the operators which had the less dramatic decline in prepaid and this led us not only to maintain our market share but to increase it slightly even in a scenario of a contraction in the prepaid market.

All-in-all, this led to our customer revenues being stable in terms of mobility and with our ARPU going up due to the postpaid performance. So let's look now at the next areas of focus, B2B and wholesale on page eight.

On page eight we can see both the results for corporate, as well as wholesale. And in one case, we already started to see the impact of voice already at the end of the quarter in the case of corporate, both in the large corporate, as well as in the small and medium enterprises.

We did see a very sharp impact in voice consumption and those obviously still represent a significant amount of our B2B revenues and does this lead to a minus 10% decline in B2B revenues overall. But when we decompose these revenues, we see that the impact was mostly restricted to voice, data remains stable, and on the other hand, we continue to see a sharp increase in IT revenues.

As you remember, we are repositioning our corporate offers with Oi Solutions, and the Oi Solutions approach focuses very deeply on IT revenue increase and the results are coming. We had a close to 40% increase in IT revenues in B2B and we believe this will help us not only to stabilize the B2B revenues, but eventually to bring them up as we continue to deregulate the data offers.

On the wholesale space, this quarter marked the return to growth for wholesale as expected as we started to work on our new offers on Fiber to the ISP, Fiber to the Tower and fiber to the City, in addition to launching our franchise project where we just started a pilot with the MOB Telecom for a franchise rollouts. All-in-all, our wholesale revenues grew close to 7%, marking the return to growth and the good path towards our wholesale strategy that we have highlighted in our plan last year.

So the plan results are in line operationally with what we expected on the business front. Obviously, with the small impact from COVID that we may expect to see in the second quarter as well in terms of corporate.

But, all-in-all, in line with the strategic direction we expect those businesses to be going. Now let's go to our cost efforts in the next page.

So on page nine, without getting to a lot of details, we can see that we have progress in the metrics in pretty much all of the areas where we expect to have cost reduction, sales and marketing, processes, business support, IT and network and operations. Some metrics are worth highlighting.

In particular, when we look at the simplification of our business, we see that we're almost 50% of the way towards advancing our customer base to flat rate plans. We have a 23 percentage points increase target for the end of the year and now we're halfway there in Q1, meaning that most likely we'll be able to achieve those metrics at the end of the year.

As well, when we look at the call volume in human customer service, we've pretty much already achieved in Q1 alone the results for the entire year. So we are 17% down in terms of call volume and human customer service.

Same thing happening in terms of the percentage of digital invoices in line with the plans for the year, which call for 14 percentage points increase and we continue to see improvements as well in terms of bad debt as percentage of revenues where we expect to reduce 2 percentage points, we're slightly ahead of the curve with 30% achievement in Q1. We're 90% of our achievement in terms of percentage of our agile IT projects.

We are 100%, meaning that we already achieved the entire results expected for the year in terms of repairs by FTTH customer base. Halfway there in terms of the impact of the use of our digital technician app in the first quarter alone and when we look at the second quarter, the results will probably be much better than that, given the sharp increase in usage in all of our self service applications.

And so, all of our metrics, when we look at the details, continue to show good progress. Those progresses in the metrics actually show in our OpEx.

And on the next page, on page 10, we can see that all OpEx lines are down and this allows us to -- allow us to have a 7% decline in OpEx from Q1 ‘19. And with that, we went back to improving EBITDA margin again from last quarter with an EBITDA margin that is approaching 32%.

Of all of our OpEx efforts, it's important to see that we obviously know that our bad debt lines are something to be looked very carefully with all of the pandemic effects. But we believe that even with the impact of bad debt, we are able to contain it pretty well given our efforts on the very good and smart postpaid offers that we continue to maintain.

On the next page, let's look then at our CapEx results for the quarter. So on page 11, in line with the strategic plan that we have highlighted and in line with the big shift that we said we would do in CapEx, Q1 was no difference and in reality it accelerated this dramatic shift in CapEx deployments from just a year ago.

When we look at the results in the first quarter of ’19, we had only 33% of our CapEx applied to fiber and 30%, yes, almost a third of our CapEx applies to copper maintenance and copper CapEx deployments. At first quarter ‘20, we see a dramatic shift already, 60% of our CapEx wents to the deployment of fiber and only 15% to copper, so a 50% reduction of the percentage of copper CapEx.

Obviously, we believe that we still need to continue evolving this percentage, because even though 15% is a big reduction from last year, we know that this represents still almost BRL300 million in copper investments and most of them due to regulatory obligations that we expect to manage going forward with a smart approach, and obviously, this represents almost BRL1 billion per year, which we need to bring down and we are bringing down with our plan we announced last quarter, which we call the copper de-averaging. Finally, when we look at the CapEx and what it allows going forward specifically in terms of fiber, we see that we have increased our presence in terms of number of CDs at the end of the first quarter to 112.

We expect to enter close to another 20 CDs by the end of 2020. And in particular, what our CapEx in fiber has allowed us is to have a very fast reaction time, actually 20 days time to market to start an FTTH commercial activity in a non-planned CD were needed.

And we saw that in the city of Divinópolis in Minas Gerais where in under 20 days we were up and running with our commercial strategy to react to competitive actions. So, next, let's see, after all of the results in terms of our revenues, in terms of our costs, in terms of our CapEx, what the first quarter meant to cash.

Moving to page 12, we can see that in terms of cash, we have a much improved short-term position for the execution of our strategic plan. We ended the year with a cash position of BRL2.3 billion and after several events in Q1, we ended the quarter of -- with BRL6.3 billion in cash position, amounting in particular to two big cash inflows, one for a bridge loan of BRL2.5 billion approximately, and the other coming from the sale proceeds of Unitel, which allowed us to consider cash of $1 billion, out of which most of it was already received, $1 billion.

And all of that we continue to focus on the non-core sales asset – asset sales processes. And we will talk a little bit more about those in our GCM plans and the amendments we will talk about.

In terms of debts, two effects actually happened during the quarter, which led our net debts to BRL18.1 billion. The first one was obviously the assumption of the bridge loan of BRL2.5 billion and the second one was the FX variation due to all of the fluctuations of the dollar exchange rate in the middle of the pandemic up and down with an impact at the end of the quarter of BRL3.4 billion in terms of FX.

But for the short-term, even with these FXs, we have maintained the short-term hedge policy with all of the Unitel proceeds that cover us 99% of our short-term debt exposure. Next, let's talk about the pandemic effects and to begin with on page 13, we had to talk about what was our strategy to face the pandemic.

And as we highlighted last quarter, the very first measure we took were -- and the first priority we have to have was to protect our employees. And we did a number of things to protect our employees starting with a home office policy that sent close to 11,000 employees working remotely in the first two weeks of the pandemic effect in Brazil.

And obviously, in addition to that, we took a number of measures to protect our field personnel and our call center personnel. And just as an example, we had acquired over 400,000 face masks and 25,000 liters of alcohol gel.

To that, we have launched an app to monitor employee health. We do constant employee health surveys to monitor and measure everything that's happening with our team.

And so far the response has been very good. Obviously, we know that normality will take a while to return, but we have already developed a plan of return with several faces – phases.

And having in mind, in particular, the most vulnerable employees and been doing everything in our power to protect those. Next, obviously, we focused on our operation and on our customers.

And first, we looked at our operation. We took all of the measures.

It took to maintain our operations running smoothly. And now, after almost three months, we can state very firmly that we are operating 100% under normality.

And even with all of the traffic increases, our networks continue to perform extremely well. In reality when looking at the results, we see that, Oi was pretty much one of the only operators that didn't have any impacts in terms of operations, because we prepare for that.

On our customers, we did a number of things not only to reinforce our virtual offers for technical assistance, for self service, for getting in touch with customer service, but also in terms of offers for payment alternatives and for alleviating a little bit the impact, given all of the restrictions in terms of both mobility and reduction of income for everybody. As we mentioned at the beginning of the pandemics, we release the channels in our TV offers.

We increased the payment dates for postpaid. We included the different data bonus packages on our prepaid packages.

And as such, we believe we have alleviated a little bit the impacts to our customer base. And finally, society and government, we're also in the focus of our activities, especially by providing access and zero rating for a number of government initiatives.

In particular, the zero rating applies to the government's emergency social income distribution program, which has helped bring the funds to a big number of users with our mobile phones. And in addition to that, we have also took some steps to participate in corporate social responsibility efforts.

In particular with our participation in the ZAP do bem initiative, which is a social digital wallet that has brought funds to more than 8,000 families in the most vulnerable areas of Brazil. But after all of those actions, what were the impacts to our business as well given the pandemics, we can see that in page 14.

And first of all, we know that, obviously, the pandemics brought impacts to our business, in particular, on prepaids and collections. Looking at prepaids, we know that the top ups were impacted, but the impact was reduced after emergency relief funds were distributed by the government.

And we can see that in the profile of all of the weeks when we compare January with April and then what started happening after April. When we looked at the beginning of April, end of March, beginning of April, we can see an almost 20%, minus 18% top up results.

Those results continued negative in weeks two and three of minus 14% and minus 8%. But in week five, at the end of April, beginning of May, we saw a slight recovery on into the emergency relief funds of plus 2.5%.

All-in-all, we see that the top ups were impacted and prepaid was impacted, but during the month of April, and in particular, at the end of April, beginning of May, we started to see those results going back up again. In addition to that, we saw that the digital top ups increased dramatically compared to January almost 50%.

And the mix of top ups in digital channels also an up 31% -- went up to 31%, compared to a 17% in January, so significant impact of our digital offers and as we can say, a very quick digital transformation of our business. On postpaid, obviously, we did have the impact of gross ads with all of the closing of our stores and the restriction of commercial activity.

But in reality, this reduction in gross ads of minus 45%, which was not very different for the entire industry, as we already seen, it came with a reduction in churn as well. So our voluntary churn was reduced by pretty much the same amount minus 45.8%.

On B2B, as we have already mentioned, we faced an impact in the consumption of voice and we also faced an impact in terms of collections with late payments by some state governments and by some corporate customers. We believe that this is a temporary situation and that it should go back as situation starts to go back to normal in the second half.

But lastly, on fiber, even though in the middle of all of this crisis, our fiber continued to show stellar results. We continue to increase our gross ads in April, while we've reached 120,000 gross ads, our churn continues to go down and we continue to have a record month in terms of sales.

Obviously, this is an impact of the need for broadband during the middle of all of this crisis, but also we believe, because our fiber product starts to be well known, starts to be appreciated and starts to become a stable as pretty much one of the best if not the best broadband offer in Brazil. With all of that, and I already mentioned our network resilience, it's important to mention that even with the 40% increase in all of our traffic, our networks remained okay during this whole period.

And finally, in terms of collections coming from all of this, we can see that we did have some impact in collections in March, April, compared to what we were -- it was before minus 6% to minus 7%. But the beginning of May started to show some recovery of plus 3% to plus 4%.

So, yes, the impact was there, but we brace ourselves, we prepared our networks, we prepared our team, we digitalized and accelerated the number of digital initiatives in the business. And up to now, obviously, it's not without impact, but we managed to minimize pretty well the impacts of the pandemics in the business.

So next, let's look at the summary of the quarter before we move on to talk about the plan amendments and the GCM that we see coming. In summary, we believe we continue to execute on the plan, working on all of the multiple fronts of funding, operations and efficiency and simplification.

But when we look at the strategic plan pillars that we announced last year, we said, that we had three key pillars of funding, operations and simplification. But we also said, we have a fourth pillar, which were the strategic options.

In our last call, we said, that we were preparing to file an amendment for a new general creditors’ meeting expected to be held in 60 days. And actually, this is exactly what happened last night.

We filed our plan amendments for a GCM and this actually prepare us for long-term sustainability and we will talk then next about what does this mean for the company? What is the plan amendment that we just file?

What could we expect from the GCM? And more importantly, where do we believe this will take us long term?

So, moving on to talk about our plan amendment and our GCM, let's go to page 17, where we start to tell a story of how did we get here and where are we going. And in order to understand the plan that we just filed, we need to understand the journey that this company has taken since filing for judicial recovery back in 2016.

And obviously, it was not an easy journey, especially because prior to filing for the judicial recovery back in 2016, we knew that this company had multiple challenges. But in reality, after that, we see the transformation taking place in three phases.

And the first phase was exactly not only the filing of the judicial recovery, but the plan that came out of it and was approved at the beginning of 2018 and the beginning of the transformation. The second phase of the plan took place when we announced our strategic transformation plan in the middle of 2019 and continuing with the execution in 2020.

And the third phase is actually looking towards the future in completing all of the reconfiguration efforts and operations that we expect that we should take for us to maintain sustainability and look at value creation in the future with the consolidation of a new strategic model. So let's look in details with all of those phases and where do we believe they will lead us.

On page 18 starting with Phase 1. Well, Phase 1 was pretty much where we overcame important challenges in the context of the judicial recovery.

As you all remember, when the company filed in 2016, it was a very tough period of getting to an actual plan between 2016 and 2017. And the period was a period of enormous challenges for the company.

And the first one was survival. Being very direct, it was a matter of survival for the company, of short-term financial visibility, of operational continuity and this all required the governance change and a change in capital structure.

And this was addressed with the plan that was approved at the beginning of 2018. It was the possible plan by that time and the plan was executed, the issues were addressed, and this is what allowed the company to start building a vision for the future.

The judiciary restructuring of debts and cash, brought the cash protection with a debt reduction of BRL35.5 billion in face value from almost BRL15 billion to -- close to BRL14 billion. It provided in the beginning of 2019 with -- to a BRL4 billion capital increase.

It brought the new governance to the company. It prepared the company to be able to sell its non-core assets.

And overall, it also brought operational stability and recovery with a gradual resumption of investments. If we recall, back in 2016, there were numerous challenges also in on the operational front and those two years actually stabilize the company, improve the operation -- the operations and allow the company to resume CapEx investments.

When we look at 2016, it was almost an all time low in terms of CapEx of BRL4.8 billion. It went up to BRL5.6 billion in 2017 and back to BRL6.1 billion in 2018.

So still short where we believe the company should be executing CapEx, but gradually resuming CapEx, which is obviously key towards the future. And in terms of EBITDA, obviously, the EBITDA had been falling for a long time, but between 2016 and 2018, this rate of decline of EBITDAA was alleviated a little bit, given all of the effects of the plan.

But after this plan was announced, are starting to be executed, with a lot of success, we should say, significant changes both in the technological and the consumer environment and a delay in updating the regulation led to the need to evolve the plan towards the real strategic transformation of the company. So the plan needed to be adjusted and this is what happened in Phase 2.

So moving towards page 19, we can see that, when we announced our plan in the middle of 2019, we had four key components to execute. And the first three dimensions of the plan were to be executed already in 2019 and 2020, which were assets sales, funding and cash to begin with, a strategic transition of the model and a simplification and operational efficiency of the company.

And this plan has objectives. First, look at medium- and long-term sustainability.

We should now be looking not only towards very short-term survival, but towards medium- and long-term sustainability. We also should be looking at short- and medium-term execution.

So what we should be doing next immediately to be able to allow the company to move forward. Obviously, we looked at funding and cash for investments in the transformation of our strategic model.

And we have been executing pretty well on all those fronts. So, just remembering what we did here in terms of asset sales, funding and cash, and we already talked about this numerous times, we had the Unitel sale with $1 billion in proceeds, out of which $920 million were already received.

So we now have only two remaining installments of $40 million to be received and they have been paid pretty much on time. We were able to secure a bridge loan at the very beginning of the year of BRL2.5 billion.

We continued with their real estate sale processes, which have already achieved the mark of BRL200 million, in particular with two large pieces of real estate in Rio de Janeiro [ph] and Santa Catarina. We were able to amass BRL3.1 billion in PIS/COFINS credit with an estimated realization of BRL100 million per month and this is continues to be in progress, this has already been taken on a monthly basis.

And we're able to bring in the Sistel proceeds of close to BRL670 million of surplus distribution, which has been paid in 36 installments of close to BRL20 million. So in terms of asset sales, obviously, we still have many things to do.

But we pretty much came in close to 80% of the way and this was a key to securing this short-term cash position that is allowing us to execute the plan. We said that we needed to do a strategic transition of the model and what does this strategic transition of the model mean?

It means that we had to look at each of our business components in a separated way. We first had to look at what would be the core components of the business towards the future and it all started with fiber.

Fiber is what will allow us to replace the entire copper revenue that's being lost. And so we did an enormous amount of effort and work and commercial and marketing and sales and operations initiatives to bring our fiber business up to speed.

When we announced our plan at the middle of 2019, we said that, we wanted to reach a 25% take up rate in three years and that we wanted to reach almost 2 million homes connected by the end of 2020 that we want to get too close to 4 million homes connected in the three years of the plan and numbers have seemed very ambitious. After all when we announced our plan, we had a very small amount of fiber customers and our plan was improving.

But the fast forward one year from that, we see that the execution has been there. We have made the transition.

We know that the core business of the company is working. The results have been stellar.

Our numbers continue to improve quarter after quarter after quarter, even in the middle of one of the biggest crisis that we have seen in the next 100 years and so we believe in the strategic transition of the model based on fiber, in particular, based on FTTH and residential broadband. But fiber also allows us to look at B2B and transformer B2B businesses from just being based on the old regulated copper products towards new products based on fiber, based on IT and this is what we did we -- when we announced our Oi Solutions.

By announcing Oi Solutions, we started to shift the profile in B2B sales. We started to build a future towards understanding what will be required by our B2B customers, both large and small, and we started to execute.

We looked at wholesale and we realize that our wholesale has to be increased. It has to be accelerated.

In the past, this company had a history of being a very important wholesale provider and still remains the largest and more important wholesale provider in the country. But we should accelerate the wholesale business because we should use our infrastructure as our key differential going forward.

And as we have stressed and highlighted multiple times, we do have the largest physical infrastructure in the country, in particular, with fiber, and all of this is happening. Together with those three components, we also said that, we would sustain the value of our mobile and we have sustained the value of our mobile.

Not only we have managed to achieve significant and impressive results in postpaid, but we have done that by maintaining the numbers in terms of revenues and increasing the profitability of the business and maintaining our position in terms of being a very credible player in mobile. And with that, we believe that in the last two years, we have actually increased dramatically the value of our mobile business.

And finally, we'll have to look at the areas where a reduction was coming, either because it was a structural trend or because it was something we had to do for our strategic plan going forward and our cash consumption and our economic value going forward. And those were on the DTH side, where we see that the trend was coming and we have to stop injecting cash in this business and convert all of the content efforts towards IPTV, which by the way is being done, and in particular, in copper.

We know that copper with fixed voice and copper broadband is going down. It will continue to go down.

But we have to replace all of that with the three key core components of our business and this is being done. So we believe we are well into the middle of the strategic transition of the model and it's working.

And finally on the front of simplification, operational efficiency. We talked about this numerous times and the results are coming.

As you see, there -- the OpEx numbers continue to be reduced on a quarterly basis and we are focusing not only on reducing OpEx on pretty much all of the operational fronts, but also in two key important steps for the company which are a new structure, a simplified structure for the company, given the core of our future. And also in a very, very targeted copper cost reduction project called the de-averaging project where we start to roll down and actually shutdown a number of copper operations that don't make sense anymore, consolidating users into stations and using alternative technologies to reduce our proper exposure.

And in reality, starting to look to a winding down the copper business, which we believe will no longer be here in a number of years to come. So, with all of that, with our execution actually going well, we could move to Phase 3 of the plan, which was the long-term vision for a new company and this has been exposed on page 20.

Phase 3, which starts today and actually goes well into 2021 is that, with the execution adjusted to the challenges, our transformation can continue toward the long-term vision. We know that the environment has changed dramatically.

So regulatory changes started to occur, but they're still in process. We've seen this acceleration of technological consumption trends, as we mentioned.

We know that the demand for high speed broadband continues to keep pace and we need massive investments in fiber and infrastructure, also in preparation for 5G is a very important infrastructure provider. And we know that COVID-19 has impacted the economic environment, but in reality, maybe with the potential opportunities in the recovery.

And in the middle of all of that we know as well that we need to optimize the company's financial model for the long-term. We have adjusted to the operational model pretty well, when we believe we have reached the execution, we’ll continue to execute on our operational model.

But we need to optimize the company's financial model for the long-term as well. With that, we believe that the long term strategic vision for the company brings a reconfiguration.

It brings a new business model, a new company model. It continues to be based on a new governance structure, it will bring the new financial structure and new operational structure.

And when we look at how to execute that. We focus on fiber.

We focus on the residential business, corporate govern and wholesale customers, and we introduce a structural separation model, which we'll talk in detail in just a couple of moments. We expect based on our plan to be able to consolidate our mobile operation with a potential sale of the mobile business.

We expect to evaluate partnerships for the evolution of TV and contents. And finally, we expect to get flexibility to execute the plan.

And with all of that, what is our vision and the next page you can see what is our vision strategy and execution components. And it all starts with the vision, which is to enable the creation of the largest telecom Infrastructure Company in the country.

At the same time, massifying a services operation that bring fiber optics, broadband, 5G and business services to the entire country. This vision is supported by three strategy pillars.

The first one is that we have to have long-term sustainability. And there's long term sustainability will come with a new company model, which has investment capacity, which has revenue generation potential and a long-term strategy.

Next, we have to look at how we're going to do that and this goes towards the structural separation of the Oi brand, with a first part focused on the customer experience with innovation, excellence of solution development and being the face to our customers and very focused on customer experience. And the second on an Infrastructure Company, where we have a neutral network, which is comprehensive, robust, granular, with better revenue predictability and better access to financial markets.

This is the area where we need to invest dramatically and by doing the separation we believe we will achieve that. All of that will have a lighter agile company focus on the future.

Will help us seek market leadership in all of the areas where we play. It will make sense for our customers, in particular, in terms of innovation.

It will provide focus and it will leverage and invest in the best network in Brazil. That we believe will have a company that generates value interests for pretty much all of our stakeholders.

And what is the company that will emerge out of this vision. On page 22, we can see that we have a configuration of the company after the structural separation where we have the main way with the Oi brands, with a retail and business clients, with a corporate and government clients, with a copper wholesale customers, with TV and content, with value added services, and still with a good amount of copper and fiber infrastructure.

This company controls two operations for field operations in Farhadi and customer care operations in BTCC, and has a company which is part of the group, which is the Infrastructure Company, where we have the transport network, the FTTH network and the entire wholesale business. This structural separation of the fiber infrastructure for a neutral network we believe will unlock a lot of value for us, for the markets and for society in general.

And how does it generate value? We can see on page 23 that the structural separation allows each company to focus the best on their core capabilities and core missions.

On the infrastructure side, we will have an FTTH network, which already has more than 6 million homes passed and it's fastly approaching 10 million homes passed, and that can look towards looking at more than 30 million homes passed in the future. We have a company with almost 400,000 kilometers of fiber, 43,000 kilometers of ducts, fiber to more than 2,300 CDs and a wholesale business which has a wide label FTTH, connectivity and transport for operators and ISP, and which will be a stable and enabling 5G in the country.

As we mentioned, the robust network structure, it will have better access to funding sources due to the independence predictability of revenues and greater exposure to other operators in the markets and it will allow us to infrastructure build out. On the client side, the old client co is focused, on why it should be focused on customers, with the Oi brands both for residential and business with Oi Solutions for corporate customers and still having a role in copper wholesale given that we will maintain all of the regulated businesses under the Oi client co.

On the activities, we are focused on sales, marketing, customer care, innovation and future. And on infrastructure, we continue to have on the clients company, the IPTV and DTH networks, the copper, and backbone and backhaul components, which will be managed by the Infrastructure Company.

This company will have a service culture centered on customer experience, digital first, excellence on offer differentiation and we'll have a lot less need for CapEx investment, leveraging on the investment of a very comprehensive network of the Infrastructure Company. But when we look at this structural separation, maybe a lot of people are asking themselves, but is this new and good this regenerate value?

And our response to that is with benchmarks. And base 24, we can see that structural separation is not something new, is something that already happened in several countries in the world.

Structural separation and in summary, is the reorganization of the company in two independent and complimentary structures. One, focus on a neutral network and infrastructure, and the next focus on service of company focused on customers.

Each one will have a lot of focus on its own segment operating more efficiently, it will enable market expansion and growth, and we will enable in particular much more effective use of investments on both sides. We see that structural separation is a reality in different parts of the world and actually across the world, across the globe, we have a very, very successful examples of structural separation companies in the U.K., in Ireland, in France, in Spain, in Portugal, we have Czech Republic, we have Switzerland, Germany, Italy and in Australia.

So we have numerous examples and those examples actually generated very good results as we can see on page 25. When we bring structural separation, the structurally separated Infrastructure Company has the ability to attract more investors.

It has the ability to accelerate CapEx and network coverage. It has the ability to serve multiple carriers, so expanding its addressable markets.

And in particular on the client company, it has the ability to establish a lighter customer structure, which is customer centric and digital first. When we look at the shareholder value generational example of what this can generate, one of the examples actually look at the market caps pre-separation and post-separation.

And we can see that pre-separation, the entire company was worth CZK72 billions and when we look at several years later, the ServCo and NetCo each on their own has pretty much the same valuation of the entire company pre-separation, which means almost 100% increase in valuation and the return on invested capital all went up by almost 90% and this is because of focus and because of the better structure both in terms of operations, but as well as in terms of all of the financial metrics of each of the companies. In our case, where do we expect it can take us and we can look at that in page 26.

We expect that structural separation will allow for the acceleration of the fiber network deployment by Infra Co by a big amount, by a great amount. We had our plan, when we announced our strategic plan last year to cover 16 million homes passed in three years.

We actually believe that with structural separation, we can look towards covering more than 30 million homes passed by the end of 2024. This is twice the number of homes passed that we had in our previous plan.

It's a dramatic increase. Looking towards 2022, it means bringing the number up from 16 to 20, which is already a significant increase for first year of operation.

And when we look at the HPs, we believe that the homes passed which will already be built can be increased by 140%. So, as if we had already very positive results, but with the infrastructure separation, those numbers can go up significantly.

And when we look at the cash flow, obviously, this will require in the Infrastructure Company and increasing the CapEx investments, but this period of initial investments will have a much higher EBITDA flow coming after we get into a scale of the infrastructure and the FTTH deployments. And when we look at the structural separation, the EBITDA numbers normally are much, much higher than the EBITDA numbers of an integrated company.

And this will be followed by a higher return phase with reduced CapEx and increasing EBITDA as we continue to build and already achieve a very significant numbers of HPs, which will require us no longer a much accelerated investment in the future as we start to stabilize investment in homes passed. This will allow you for a new Oi and when we look at the numbers that we expect this can generate for us, the new Oi will grow faster in a sustainable way as we can see on page 27.

As we have in terms of some metrics for 2025, we expect that the Client Co will be able to have over 7 million homes connected. And the Infra Co over 30 million homes passed and over 10 million homes connected and this is obviously because the Infra Co will be providing homes passed and services not only to the Client Co, but to but to the entire market.

And as we can see, the entire fiber market continues to go up significantly with ISPs and obviously with large telcos as well. And we believe that the infrastructure will be able to serve all of those.

On the revenue front, we expect a 21% increase in the revenue metrics on the Client Co and over 23% on the Infra Co towards 2025. In terms of EBITDA margins, it will be two very different companies, but both with very healthy EBITDA margins for the CapEx investments they require.

On the Clients Co, we expect a higher than 20% EBITDA margin, remembering that this is an asset light company focused on services and clients. And on the Infra Co, a over 60% EBITDA margin.

Those 60% numbers are confirmed by pretty much all of our benchmarks. When we look at the benchmarks for infrastructure companies around the world, we see numbers that start in the mid-60s and go all the way up to the mid-70s.

So we believe we're being conservative here and looking towards a very doable operation in terms of our metrics. And finally, in terms of a fiber operating cash flow of EBITDA minus CapEx at 2025, we can see that the aggregated company here would be a dramatic improvement in terms of cash generation, with a combined metric of BRL4.5 billion of cash generated in terms of EBITDA.

When we do that, the new world will benefit all of its stakeholders as we can see on the next page. It would benefit customers, in all segments from a best quality of infrastructure, from an increasing geographic market served and a best experience in terms of having new services available.

The telecom sector will also be benefited and large and small operators will have access to the robust and capital infrastructure that we have in an isonomic way. And this will avoid redundancy of investments.

It doesn't makes sense to build two roads one by the sight of the next and we believe this is exactly the case in terms of fiber. And there is a single construction of fiber in the whole country will bring greater profitability for the Infrastructure Company, but will also bring best results for pretty much all of the operators.

For employees and suppliers, we believe employees and suppliers will have companies which are financially stronger, more focused on their specific areas of expertise and thus generating value for them. For creditors and shareholders, we believe we will -- with this we'll be able to have a sustainable company, a growing company, increasing the safety of pretty much everybody's investments and having more certainty for creditors and return to shareholders.

And for society as a whole, we believe that massifying infrastructure in the country will have gigantic and economic and social development impacts for digital inclusion, higher economic efficiency of investment in infrastructure and helping to bring everybody forward. But to pursue this, we know that the plan amendment and a new general creditors meeting is needed and that's exactly what we have done with our filing last night.

On page 29, we see that in order to implement this evolution of our business model, we need to amend our existing judicial reorganization plan and a new general creditors meeting will be necessary, which we expect will happen at the beginning of the second half. This GCM and this plan amendment will allow in particular the continuity of our plan execution, this in terms of looking for sustainability and value generation.

It will also bring execution flexibility in future options for the company. Our previous plan and as much as it was successful in allowing the company to move forward, it still lacks some flexibility towards going to our future options in particular in terms of asset sales and reorganization of our operations.

The plan and the amendments of the plan will also bring an anticipation of debt payments and this will reduce the risk for creditors, but in exchange will benefit the company with better payment conditions. We are proposing with these planned alternatives for various creditors, including small ones.

We believe we will optimize the capital structure of the company. We will reduce operational risks after all of the transactions are completed.

And those are pretty much the objectives of the amendments of the plan of the GCM approvals. On the next page, let's take a look at the key concept of the plan amendments, starting with the asset sales and the creation of what we call the isolated production units or the UPIs.

The plan calls for the creation of four UPIs, which are the isolated production units, which is an entity that exists in the Brazilian JR process. The first UPI is the Towers UPI and we're talking about close to 700 mobile towers and 225 indoor sites with passive infrastructure.

And this will generate revenue not only from us but from other operators. It's a pretty standard deal in the markets, and as we have announced already, this is part of our non-core asset sales.

We are setting a minimum price of BRL1 billion for 100% of the shares of this UPI and we will be selling this at the highest price. We have an M&A process that is being conducted by Oi.

We already have proposals in. We will continue to negotiate towards those proposals.

But the GCM and the creation of UPI is what will bring certainty to the process and security to the new investors in acquiring those UPIs. On the Data Center front, this is also an isolated production unit part of a non-core process.

We have five data centers. We have the revenue and contracts for the colocation and hosting businesses with B2B and with Oi.

And we have established a minimum sale price of BRL325 million for 100% of the shares. In reality, this already represents a binding proposal that we have, which will provide a right to match to the biggest binding proposal received, which was already received and close during the M&A process conducted by Oi.

So here we have a firm binding proposal that will be the base for the UPI auction that will take place in a stalking horse model that we have highlighted before. Next, the mobile assets.

Obviously we have been talking about the possibility of a mobile sale for a long time because in strategic terms we are the smallest player in the market, even though we are very efficient and have been having very good results. The UPI for mobile will include the complete mobile operation including all of the active network, clients and spectrum.

Elements of the active or passive transmission network are not included here and all of those will be in the Infra Co company. For the mobile assets, we are establishing a minimum price of BRL15 billion for 100% of the shares and the sale will be conducted at the highest price in a judicial auction or at our discretion for the second best bid if the risk of execution is lower with a maximum price difference of 5%, if there is greater legal certainty in terms of both regulatory, as well as competitive approvals to close this transaction.

Obviously, we will only sell this operation if it makes sense for us and we believe that the BRL16 billion minimum is a fair price given not only the amount of our assets, but a very good performance that our mobile business has been having recently, and obviously, all of the metrics and multiples that it can generate to a different company. And finally, the Infra Co, the Infra Co is a different type of UPI, because, obviously, it will still be an isolated company.

We will execute the structural separation that we just talked about, but the Infra Co will not be a full sale. We expect to sell between 25% to 51% of the economic capital of the Infra Co, representing 51% of the voting capital of the company and this will be towards the FTTH network plus a lot of infrastructure with IRUs, with OSA and Telemar backbone and backhaul transport networks, which will allow the Infra Co to serve not only FTTH networks and customers across the country, but wholesale customers with Oi, obviously, being its main customer for fiber broadband and Oi Solutions as well.

Obviously, as already expected and announced, the Infra Co will be a neutral network providing service to all players in the market. With a partial sale of the Infra Co Oi will still retain a very significant and relevant economic participation in the company with no less than 49% upon the sale.

And for the sale of the UPI Infra Co, we are still not establishing a minimum price, but a minimum secondary distribution for the company of BRL6.5 billion for Oi, followed by a primary of up to BRL5 billion in guarantee of dividends and other conditions for Oi. In addition to that, the conditions for the sale of the Infra Co will need to guarantee the execution of the investment plan with an equity support agreement or an investment agreement for the buyer.

With that, we believe that we will be able to have all of the flexibility required to move the company forward towards a new model. In terms of the terms for the current plan, page 31 shows some of the key concepts of the amendment proposal to JR Plan to creditors.

Starting with non-financial creditors, where we have both in labor, as well as a small business, Classes I and IV, a proposal of payments within 30 days or 90 days after approval of the GCM, limited to 50K per creditor in the case of labor, 35K per credit during case of the small business. This is an important proposal because it allows us to settle with a large number of creditors, and obviously, the creditors that needs the funds the most.

In terms of financial creditors, we have two key classes of financial creditors with changes. One is the secured creditors Class II.

And in the case of Class II, we expect that upon the sale of the mobile UPI we will have a prepayment of the entire secured creditor class or the prerogative of the creditor to remain with the position in the company using its existing credits for investments either in Oi Sa or in its associated company such as the Infra Co. On the banks and ECAs, we're proposing for early settlement of credits with a complete liquidation of the credits with a discount and payment in three installments.

This will be linked to asset sales and the plan will call for a mandatory repayment of the credits in the case we have a minimum volume of resources through the auctions and the execution of our plan. There will be different -- differentiated options for creditors who provide new credit lines to the company and all of this is explained in a lot more details in our plan amendment.

For additional creditors, in the case of Anatel, we expect to migrate Anatel to a new legal ruling for addressing credits by adhering to Law 13,988, which allows for bilateral negotiation of public credits between the public entity and the company. And we also expect to adhere to subsequent legal provisions that may be enacted in the future, allowing us to settle the credits for -- from Anatel and removing them from the RJ.

Obviously, this is contingent upon a successful negotiation with Anatel and the AGU. And in our case, the Anatel credits would remain as part of the plan as is.

In terms of contingencies, we also expect the payment of up to 3K with a waiver of any additional claims within 90 days. And finally, for suppliers, bondholders in the general offering of Class III, we are introducing a possibility of prepayment through the introduction of an optional mechanism of reverse auction to repurchase all of those credits with a discount.

In terms of the bridge operations, given that our plan will require probably between a -- 12 months give or take to execute -- 12 months and 18 months to execute. We're including a mechanism to allow for bridge operations both in terms of a bridge to partially anticipate the proceeds from the sale of the UPI -- the mobile assets UPI, as well as the flexibility for adding some leverage guaranteed by the shares of the new Infra Co UPI.

And finally, the last concept in the proposal is to bring the JR to closure upon closing the sale of the UPI for mobile or if we're able to do that before, if required by Oi confirmed by the judicial reorganization courts. So, all-in-all, we know that there's a lot to be done and the company has been working very diligently to having its grip on pretty much everything that is required to get there.

And we have a timeline of when to expect all of the things we described to happen in page 32. We start now in June with the filing of the judicial recovery plan amendments and we expect to hold our general creditors meeting in August.

We expect to conclude the Towers and Data Center auctions in October. We expect to have the auction of the mobile assets UPI by the fourth quarter together with the closing of the Towers and Data Centers.

Moving on to the first quarter of ‘21, where we would have the Infra Co UPI auction. Then on the third quarter of 2021 we would expect to close the Infra Co UPI process.

And finally, in the fourth quarter of ‘21, given the probable long times for regulatory and competitive approval processes, we expect to close the mobile asset UPI sale. Obviously, this is just an anticipated timeline.

It will depend a lot on all of the processes that take place. And obviously, between now when we filed our plan amendment proposal and the general creditors meeting, we will continue to discuss with a number of players and creditors and stakeholders towards not only explaining the plan, but being able to negotiate towards or what makes sense for the country, so in August we can have a successful general creditors meeting.

In conclusion, on page 33, we know that up to here we have been firmly stabilizing our operations, we have been redefining our strategic model and we were able to secure resources for a very strong acceleration of our fiber optics business and these shows in the results that we have been having. But what we are proposing is an ambitious model, not only to accelerate growth, but to enable the creation of the largest Infrastructure Company in Brazil in a sustainable way.

We believe that our customers will benefit from more quality and coverage. We believe that the neutral network carrier will efficiently accelerate fiber investment in the country for the entire sector.

And in particular, we believe that this model will allow us to conciliate strong growth in the financial sustainability that the company requires. In addition to the benefits for all of the customers in the industry, we believe this plan will generate value -- we will be finally able to generate value and trust for employees, creditors, shareholders, suppliers and for society in general.

And the last message we will like to leave with you before we go to the Q&A session is that, this management team and this Board of Directors, which looked at the company and started to charter a new path for it, always with the long-term sustainability and the long-term value generation in minds are extremely committed to executing this new strategic model with rigor, speed and whatever it takes to be able to bring the company to a new successful sustainable long-term position. So, all in all, we know that this is a lot of information.

We know that most likely there will be a lot of questions that will be answered as we move the process towards the GCM in August and some questions, which will be answered either after that as we execute our plan. But we believe we have a creditor -- credible plan.

We have a feasible plan. We have a plan that can generate value for us and return the company to a sustainable position and being the largest Infrastructure Company in Brazil.

With that, we conclude the first part of the presentation and we believe we can move to the Q&A session. Thank you.

The first question is regarding the UPI. So now that you have formatted the UPIs that you plan to potentially divest.

Could you provide some financial metrics or some a little bit more description, like, how much EBITDA is in UPI, especially on the Infrastructure Co, like, how much of the EBITDA stays in the Infrastructure Co, how much stays in the Client Co and also on the mobile company? That would be the first question any color in that sense?

The second question is regarding the governance of the Infrastructure Co, how would that work? How Oi guaranteed that its interest will be kept in mind when this company going to be run independently?

Thank you.

Thank you, Marcelo. On your two questions.

On the two UPIs, we obviously have worked with a great level of detail towards building the financial metrics for each of the UPIs. So let's start with the first two.

Obviously, in the case of Data Centers and Towers, those are pretty standard UPI financial metrics. And obviously, when we look at the market multiples in the past for those types of transactions, we know what to expect.

They are very standard. And as such, that's why we have set the minimum prices as we have based on the proposals that were already received and they are pretty much standard UPI metrics, which in reality for the company only mattered towards the cash that's going to be receiving, and obviously, the commitments that it has in the future.

We should advance that when we're looking at those two UPIS, this company has firmly looked at doing something, which probably was not done in many times in the past in sale processes, which is not to take a very expensive commitments towards the future just to increase the amount of cash that is brought in as part of the sale process. This is true for the Towers UPI where we are committing to market numbers for all of the rents for the towers, as well as to the Data Centres, where we're committing towards the usage that we know we will have and that's we know we will needs and no more than that.

So, with that, I believe that on the first two, it's a pretty standard financial equation, Marcelo. On the mobile units, obviously, on the mobile units, this is part of the process that we're conducting with the interested parties and all of the details will become public when they become public.

But when we look at the market multiples, we can look that, obviously, we know that Oi has internal multiples for EBITDA, which are lower than the market average. And this is because obviously we carry the entire weight of the company and the slightly smaller scale compared to the other players in the mobile sector.

But what we're doing with the UPI and this is important for everybody to understand is that, we're not selling the Oi module entity, we're selling the mobile operation and the mobile operation comes with pretty much a clean operation to whomever requires it. And this allows us to look at the market multiples in terms of EBITDA and in terms of potential revenue generation, which will be not only in line with market, but we believe better than markets.

And that's why we have sets the minimum prices we have, we believe that there is space to increase that, but obviously, we needed to set a price, a minimum price and this was based not only on our internal analysis, but also on feedback we received from the market analysis. And so, obviously, this will be taking some EBITDA out from the company and as we have not disclosed in detail the EBITDA per segment in the past, obviously, it's part of the confidential process that is taking place.

But we should expect this to resume EBITDA market levels for the UPI of mobile, which will allow us to get to the BRL15 billion. When we look at the numbers internally, obviously, if you just make a rough calculation, you can look at the volume of revenues or the mobile UPI.

And the mobile UPI represents sort of the close to BRL20 billion revenues we have, it represents close to BRL7 billion, BRL7.5 billion. And so it represents less than half the EBITDA of the company today, give or take, especially because, again, we're not talking about internally, the same level of EBITDA margins that our peers have.

Finally, let's go to the Infra Company and then we can talk about both the metrics, as well as the governance. On the Infra Company, we know that -- we shouldn't have an EBITDA, which is, obviously, higher than 60% and this is based not only on all of our internal planning, business planning, but also based on benchmarks.

Obviously, when we created this plan, we tried to be conservative to allow for some space for development of the plan going forward in terms of its implementation, but pretty much all of the benchmarks that we have looked at points to between 65% and 75% EBITDA for the Infrastructure Company. And this when we look at the split of how would we split the EBITDAs and revenues and all of the costs between the Client Co and the Infra Co, this pointed out to a Client Co with a 20% EBITDA and in cruise speed, in cruise mode, giving a 50% give or take EBITDA margin for the combined operation Infra Co plus Client Co.

Obviously, our plan details will be known with a lot more colour in terms of the numbers when they become public. But in terms of the metrics and the margins, we expect that on the Clients Co, the 20% EBITDA without the weight of the CapEx and with a much leaner, much lighter company, this will be able to compensate everything we must do initially on winding down the copper business and eventually it will bring us to this level of cash generation in four years to five years have close to BRL2 billion.

So it's a pretty healthy cash generation given that it doesn't require a lot of CapEx investments. On the governance of the Infrastructure Company, and again, Marcelo, sorry, to not give you a lot more details than the ones that we're able to disclose, but obviously, it will become known as we look in the detail of the UPI and the process becomes more public.

But then in terms of the governance of the Infrastructure Company, we have made a number of things, and obviously, there will still be a lot of discussion in this process, because we have just started the public process for calling investors and we provide an info pack for investors as of last week, and we have a number of investors analyzing the Infrastructure Company process. But in terms of governance, a few things we have provided for in the process are, the first one, we will retain a significant economic position in the company of no less than 49% of the economic value when we complete the process.

In addition to that, we will have some obligations to the new investors in terms of what are the minimum investment levels in terms of homes passed and homes connected that we expect, and obviously, this means that there will be already a plan in place towards where should this infrastructure be deployed in particular to cover the original plans we already have in the expanded plans that we now have, but also to allow the security for the Client Company to be able to base its FTTH high speed residential broadband plans on an infrastructure everybody knows is going to be there. Obviously, there will be room for a lot of additional investment, a lot of flexibility towards implementing new cities based on what is not mandatory, but there is a core level of mandatory investments that's a pretty much represents the bulk of the governance at the very beginning.

We obviously expect some natural provisions in some arrangements such as this, and having a Board -- appointing a Board member to the company. And also in terms of – at the very beginning particular participating in the management of the company because in reality, the management in particular, the operations and technology management will come from Oi.

The governance details will be part of the agreement, will be part of the discussions with the new investors. But with that, we believe that we'll be able to specially look towards maintaining the level of operational excellence that we have been able to achieve thus far.

And then be able to look towards the success in terms of operations and technology going forward. On the sales front, obviously, this company will have a lot of independence.

So, obviously, we don't expect to control the sales of the Infrastructure Company, especially given that the Infrastructure Company will be selling to pretty much all of the operators and the telecommunications providers in the country. And so we'll have flexibility, it has discretion towards directing their sales efforts in the markets and this is what should happen in the case of a neutral Infrastructure Company.

So, all-in-all, very strong position in the economic position, very strong requirements in terms of the obligations for the investment plan, very strong saying in all of the technology and operations fronts and a lot of independence in terms of the sales and marketing efforts of the new company, okay?

Okay. Thanks a lot for the comprehensive answer.

Just a follow up or clarification on the margin. You said that the combined Infra Co and Client Co would have a 50% margin on -- I don't know if I am correct or…

It’s – yeah, it's between high 40%s and 50%, something like that.

Okay. Perfect.

Thanks a lot.

Okay. Thank you.

Hi, Rodrigo and team. Thank you very much for taking my questions.

So, one question that I have is on the Anatel, that we mentioned that you were looking forward to negotiating with Anatel based on the new legislation that was approved recently the 13,988. And my question, and there has been accounting for the net present value of Anatel debt for some time now for a much lower number, which is natural given the restructuring.

And my question is, do you have any expectations on how much renegotiating Anatel debt under the new legislation would change the net present value of what you have been accounting for as Anatel debt? So that's my first question.

And also related to Anatel if you don't mind also commenting, if it makes sense to instead of doing all the negotiations based on the legislation that was just approved, if it’s worth waiting for the new one, the PL-6229 that is being discussed in Congress that would give even better condition to negotiate with Anatel? Thank you.

Thank you, Carlos. Well, comprehensive answer here.

First, as you pointed out, we also -- we already have two parts -- two pieces of debt with Anatel. One of them which is part of the active debt and part of it, which is just administrative debt with Anatel.

The first one being the largest. The second one being slightly over half of it.

So when we look at the two trenches. On the first one, which is the depth that can already go towards adhering to 13,988, what we would have done is, we have done a comprehensive analysis of what would imply for us getting out of the RJ conditions and then applying the 13,988 conditions with 84 months and up to 50% discount on the total debt.

And given that this depth, Carlos, has a lot of interest and penalties applied, we will pretty much be using the entire discounts possibility of the 50%. So we know that the 50% allows us to significantly reduce the debt as well on this new 13,988 arrangement.

Obviously, when we compare that to the fair value of what's in the RJ today, there is a small difference, but we believe there is a small difference and this difference is worth it given the legal certainty and the end of the speech with Anatel will allow. And so we will be able to cut our debt in half and remembering that even when we cut our debt in half, after that we have to apply the 84 months and with the 84 months, we go to close to where we were in terms of fair value.

It's not exactly where we were, but it's close to where we were in fair value and so it's not to dramatically worse what we could get with maintaining the debt in the RJ. As far as adhering to the new regulations that may come out, especially PL-6229, what we're doing in terms of the negotiation, and our plan already allows for that and we obviously don't have anything in the law that would prevent this from happening.

It is possible to first adhere to 13,988 and then if a new regulation comes out, which would improve our conditions and our situations, we could migrate the existing negotiation to this new regulation that can be enacted in the future. This is part of a negotiating process.

But it's something that can be done, and obviously, this would allow to reduce the fair value a pretty much. As far as the second part of the debt, the debt that is still not -- it's not inscribed as active debt as just with Anatel per se.

We have the same approach. We could either, again, my greatest to the bilateral negotiation as soon as we inscribe it or in the case of the second port, there are additional options which the first tranche doesn't have, which is the first one to be able to work with Anatel with a new mechanism that the agency has been discussing, in particular, the obligation to do the Obliga 75 [ph] and this new legal feature for Anatel actually would allow us to significantly reduce the debts by converting it into obligations of CapEx, into obligations of coverage, into obligations of service, which would be much better than having to actually consider it as part of debt.

This would become pretty much investment obligations. And then compared to whatever value was considered in the RJ, this could be even much, much more positive than what we have in the RJ today.

So this is what we're doing. Remembering that after the PL-6229 is approved that when and if it is approved, we will be moving from a 50% discount and an 84% -- and an 84 month installment, sorry, to a 70% discounts and 120-month installments.

So it's a significant improvement that would be able to come even after our first negotiation took place and goes into effect.

Okay. Perfect.

Rodrigo, thank you very much.

Thank you.

Can I ask you one more question on, you mentioned in the plan that you hope to negotiate with the banks and the ECAs a discount up to 60% of the face value, which is a big discount? It goes in line with what you have been accounting for?

How confident are you that you can negotiate this type of discount when discussing during the creditors meeting with these group of creditors, please? Thank you.

Carlos, obviously, this is part of the whole proposal. It's not an easy discussion as we know.

But at the same time, what we have considered when doing this and this is -- those are the conversations that will have to take place between now and the GCM is that, first of all, we have to recognize the fair value of the debt. And the fair value of the debt is far from face value, given all the payment terms that we have.

And when negotiating we have to first start on the fair value of the debts, because obviously, by doing what we're doing in the GCM, we will be prepaying the entire debts. We will be eliminating the risk of pretty much 100% of the ECAs and the banks, and they would be monetizing 100% of the payments right now.

This will be obviously crystallizing the fair value for us, but it will be crystallizing the fair value for them as well getting completely out of the risk, right? And so that's the key assumption and the key approach when discussing this.

Obviously, it will have to be discussed. It will have to be negotiated, remembering that the plan has to be approved by everybody and we have several different classes.

We have several different Class III shareholders. It's not just to one specific type of creditor to approve the plan.

And as it was the case in the previous plan as well, there will be situations where you have some creditors voting for, some creditors voting against, what matters in the end is that, the majority of the class ends up approving the plan and that's what we're doing is, we're proposing something that we believe it's acquisitive to pretty much all of the creditors in the classes and that can be approved we believe after some negotiation.

Oh! Perfect.

Thank you. Very clear.

Thank you, Rodrigo. Thank you very much.

Thank you.

Hi, there. Two or three questions, please.

And one just to go back to the last question and the point of clarity on the bank and ECA debt. And if a 60% discount is voted through and formally accepted at the GCM, just to be clear, does that mean everybody then has to accept the 60% discount or could that be voted through but you could still opt to hold out somehow, just to clarify that point, please?

Next…

Thank you.

Yeah. Go ahead.

[Inaudible] Rodrigo.

Okay. Thank you, Soomit.

Yes. Obviously, the provisions for the plan called that there will be a general provision where the creditors that would have rights to cash sweep in the current plan would be the ones impacted by the prepayment, would be the one receiving this prepayment with a discount and they would have to take the prepayment with the discount.

Obviously, we are including also other options for creditors as we highlighted in the conditions. And in particular, one of the options is an option where if there is new credits brought to the company.

There would be part of the credit being protected at face value. So there are some options in the plan and obviously the details are in the plan and in the amendment that we filed.

But what we're proposing is exactly that. The cash sweep that would be applied in the future would be applied now, but it will be applied to repay, it will be our obligation to prepaid this with the call with the discounts to all the cash sweep creditors.

Okay. That's clear.

Thank you. And then just a couple more please.

And just looking at the split of the Infra Co and the Client Co, and you've not included backhaul in the Infra Co, which I guess, would be typically expected. And I was just curious as to, is it to do with the regulation of backhaul.

I just wondered why backhaul was not included in the Infra Co?

Yeah. Let's clarify that Soomit because, yes, backhaul is included in the Infra Co.

And the way we're including the backhaul and the backbone in the Infra Co is by having IRUs, which in Brazil are just right of use contracts with 100% of the infrastructure that remains in the Client Co, in Oi itself. And the way -- the reason why we're doing that is exactly why you have this described.

It's just because of legal certainty and being extremely conservative in the way we're approaching all of the assets. We know that new telecommunications law has already defined that none of the assets that are not used for the concession can be considered reversible and when there are assets that are used by both the concession and additional services, just a piece of the asset that it's used by the concession services should actually be considered reversible.

And in this sense, we would have 100% of the rights to drop down the assets of the Infra Co entirely, just remaining with a small percentage of the assets that are used by the concession. And just to give an idea out of our fiber backbone, less than 1% of our fiber backbone and haul is currently use for voice.

So it's just a matter of having a very conservative approach and instead of transferring and dropping down the assets per se to the Infra Co, we're transferring rights of use to the Infra Co, which will be pretty much managing the entire assets.

Okay. I didn't realize that.

Thank. It’s very clear.

Thank you. And just a final clarity as well please, if I can, just as regarding the monetizing of the Infra Co, talking about a secondary sale of BRL6.5 billion, when you talk about the 25% to 51%, that is the post-money ownership.

So that is the secondary sale then the primary raise, I guess, sort of diluting pro rata with the other kind of shareholders and then it's the final ownership is 25% to 51%, is that right?

Let me give Camille the chance to jump in and then I will talk about the structure in terms of the proceeds and what we expect out of the Infra Co, because again, we're in the middle of a competitive process for the Infra Co that we just started and such we obviously still needs to see what comes out of the market. But we have to define our basis based not only on benchmarks but our own internal valuations and then we created a mechanism to address that in terms of the primaries and secondaries.

Camille, can you just clarify for Soomit?

Sure. Thank you, Rodrigo.

So the mechanism for Infra Co, and as Rodrigo said, we just started our market sounding exercise. So we are waiting to get more inputs from the market to maybe add more details to the plan before the creditors meeting, but the mechanism that we have today is that the offer has to guarantee a minimum BRL6.5 billion to Oi in a secondary tranche.

Also, if you look in details in the plan, Infra Co is going to be born sort of with debt towards Oi mobile or Telemar due to unpaid dividends. So it's BRL6.5 billion plus BRL2.4 billion roughly of proceeds flowing to the Oi Group.

And also as Infra Co is born without any additional debt, we wanted to give potential buyers the flexibility to make their own assessments on the amount of primary proceeds that Infra Co needs to pursue its business plan. We have our own estimate that it could be up to BRL5 billion including the debt that needs to be repaid, but that could be conservative.

So we wanted to give investors the chance to or the potential buyers to give a -- to make their own assessment on how much primary proceeds the company needs. That's why there's flexibility there.

We just want to make sure that whoever wins, let's say, this controlling stake in the UPI is bound to make the necessary investments into guarantee the business plan. We have flexibility to -- we are maintaining flexibility to keep between 75% and 49% of the economic stake of the – of Infra Co using ordinary and preferred shares.

And our idea is to be more specific on minimum prices as time goes by. But if you do the math there with a minimum 25% ownership zero primary and the BRL6.5 billion, you probably get close to where we expect to land on minimum service for Infra Co.

Hello. Good morning, everyone, and thanks for the call.

I have two questions here as well. I mean, the first one regarding the mobile operations now we disclosed the minimum BRL15 billion for this asset.

So just trying to understand here the rationale, if – previously I would believe there will be – to enter the creditholders meeting already, we perform an offer. But I guess, is the idea here is just to give a minimal value for this asset, so now you can call the meeting and you enter there – with or even or if the possibility of not having a formal offer in your hands, so just to understand here the rationale for providing the value and if the – if this meeting taking place in the next few months?

This will be my first one. And then my second one, in terms of CapEx, now is the Infra Co and everything.

How should we see the CapEx for 2022, especially once you stop investing so much in the FTTH, so I guess, the most of the CapEx would be related to the maintenance of the fiber. So just trying to understand where this CapEx would be looking in 2022?

Thank you.

Thank you, Fred. Well, the rationale for establishing a minimum price for mobile at this point is that, obviously, for creditors to prove a new amendment here.

They need to understand what sort of proceed -- the minimum proceeds would be expected from such a process. Because, obviously, we cannot put up a proposal to sell our mobile operations up for vote in a GCM as part of an amendment without actually telling for the minimum of how much we'll be selling it.

Otherwise, it will be impossible for creditors to do their own analysis to understand if it makes sense to vote for this proposal. So obviously, we have to do that.

We have to include a minimum price. Obviously, it would be ideal to have already a binding proposal before that, but we're in the middle of our process yet.

So we have to present a minimum price. Obviously, we base this minimum price based on our own internal analysis.

Our investment advisor analysis and we believe it's something that makes sense, if you compare it by multiple means, if you compare it by our own projections, if you compare it by market multiples, if you compare it by comparable transactions, if you compare it by a proxy of what kind of EBITDA generation potential this would have for additional company. So we believe it's a fair assessment of the minimum value and we have to provide it or else it would be impossible for creditors to analyze what would take place.

And obviously, providing a minimum value allows us for the chance to have this minimum value considered by all of the multiple players that are analyzing the asset at this point. And this is particularly true given that what we expected in terms of the minimum value is obviously after the minimum value to sell it based on the highest bidder.

But we included this feature in the amendment, which calls for the possibility for the company to select a different proposal, which is slightly smaller than the highest proposal if it's within a range of minus 5%, if this second proposal had more legal certainty in terms of regulatory approval. So it's just a feature Fred for the creditors to be able to understand and analyze, if they're able to consider that this is something, which would be worth for approving in terms of value received.

As far as – of your second question of the CapEx of Infra Co in 2022. We -- in our plan, we obviously had a plan that called for significant CapEx in FTTH deployment all the way up until the middle of 2022 get into 16 million homes passed.

When we look at the current plan for the Infra Co, we call for a plan that actually keeps up the pace and picks up the pace initially even in 2021 and keeps up the pace in 2022. And it keeps up the pace of close to BRL5 billion -- between BRL4 billion and BRL5 billion again in 2022 just for fiber, no other CapEx involved, just for fiber and infrastructure.

And obviously remember that there would still be an additional CapEx for pretty much all of the other operations that we would keep at the Client Co, but just on the Infra Co between BRL4 billion and BRL5 billion just for fiber and obviously all of that, if not all, the good portion of that directed to the infrastructure itself and obviously some IT CapEx included in there. But we will be able to maintain a significant base of CapEx, and obviously, this is the entire reason of the structural separation to be able to maintain such a high CapEx but with a much higher margin, and obviously, it's a different structure of company altogether.

Perfect, Rodrigo. Very clear.

Thank you.

Thank you

Hi. Thank you for the call, Rodrigo and Camille, and for the detailed presentation.

So I have two questions as well. Just to clarify on the Infra Co.

The Infra Co is going to consolidate 100% of the fiber unit revenue EBITDA, the CapEx and the leverage. So Oi is going to recognize it as a minority stake or is it going to be like a spin-off listed company?

How is going to be that structure in terms of the consolidating the economy of the assets? And the follow-up question is on the – is on – you mentioned that upon finding the mobile sale, you could reach to a potential bridge low and to get the proceeds before the closing.

What would be the capital allocation priority in that case, would it be to further invest in the fiber – in the Infra Co?

Thank you, Maria Tereza. In the case of the Infra Co, yes, it would be a company that is part of the Group and for all regulatory facts, it's call together [ph], right, it's a company which is part of the Group and that obviously still should be considered for regulatory purposes as part of the Group.

But in terms of control and consolidation, yes, it would be a minority stake, even though we would have, again, a lot of the governance features to be able to assure what we're doing and how we move forward with our plan until it takes place -- it takes off and is completely independent. And that would be minority stake receiving dividends and receiving, obviously, the proceeds of that.

And when we look at the consolidated numbers, it will not appear in consolidated results, but it would appear in consolidated financials, right? As far as the mobile sale with the bridge, what we would expect is actually to be able to do two things.

To be able to accelerate part of the investment in the Infra Co as well because we wants to keep the rhythm very fast and the CapEx at a very, very fast pace to continue passing the infrastructure increases we have for homes passed, homes connected. And also to address all of the other obligations of the company, if you remember, the company in the next year or so will still have a negative cash flow because it's still ramping up our fiber revenues and we have to cover this in the process of cash generation with the investments.

And obviously, the obligations of the plan, the repayment of creditors, the obligations of the company, we will require some cash money funding through the first part of the plan and this -- the idea is that part of that would come from the bridge of the mobile, so obviously to be completely eliminated when the mobile payments took place.

Perfect. Thank you very much, Rodrigo.

Thank you.

Hi, Rodrigo. Thanks for the call and congratulations on the operational results despite the turbulent times.

Hope everybody is safe there. I have two questions here.

The first is, with respect to the strategic OpEx reduction. How much of that is already concluded.

How much is that is really left and is any of that impact do you think in the near-term from COVID or any of the results expected in the next couple of quarters, right, where we see some of these issues coming through into the numbers? The second question is post-UPI conclusion, assuming that the plan is approved in time and the timelines followed.

What is the capital structure for the company look like post-payments, what's left in terms of debt and I think I’ll be asking a little bit of the other questions as well equity spin-out versus help consolidate the company security and its more about the debt profile of the company OpEx after completing the spin-out? Thank you.

Thank you, Guido. Well, on the OpEx reduction.

There's an interesting effect of the COVID pandemic. And you've probably heard it before and lots of people are saying that the COVID has been the greatest digital disrupter that companies have faced in the last 10 years, because in reality, it was an accelerator to many things that everybody wanted to do, but somehow we're not achieving.

And in reality, when we look at the impact in terms of cost for us, obviously, there are the direct costs of addressing the pandemics and we have invested significantly to address the cost of API's and the cost of selling the remote work operation. But compared to all of the positive cost impacts of just a digitalizing everything.

We believe that it actually helps in this regard because we increase the dramatically the number of operations that are done entirely digitally and reduce the cost of human customer care for instance and reduce the cost of calling technicians and talking to technicians in person and we increase the ability to sell digital invoices and we reduce the paper invoices and we increase the number of digital payments. We increase the number of digital top ups without expensive commissions.

And so there is a lot that was done, which we believe will be permanent we believe they won't come back in terms of cost reductions due to the COVID. Obviously, other than that, we continue with our reduction program as is.

We continue with our simplification efforts. We know that the company needs to be lighter.

We have done some measures already to transform our structure and to bring a lighter structure to the company. This will continue as we analyze the processes, we are doing a lot of effort into automation.

Automation alone, we believe that this year we'll be able to get as close to BRL100 million reduction in OpEx at the end of the year. We are continuing to look at reducing and simplifying our IT stack.

Just to give you an idea, in terms of a number of IT projects, we reduced a number of new IT projects from last year to this year by 75%, 7-5. And this was basically by first not doing any more complex things with the plans and including features and including many different IT changes by simplifying our portfolio.

As you saw in one of the metrics that we showed, we are moving towards a portfolio, which is pretty much flat rate based, removing complexity from that removes complexity from IT projects as well. And on the front of the new fiber solutions and the new fiber services, we are almost starting out a new IT stack from scratch to simplify and to reduce costs.

So we're reducing costs across the Board. And finally, there is one last aspect of cost reduction, which we emphasized in the last call when we now must emphasize it yet again.

And I believe that in the second half, we will already be able to show you operational results out of that is by reducing the copper costs. Both reducing the copper maintenance costs as well as reducing all of the CapEx costs associated with copper.

And this will be critically important for us, we believe that there is as we have already mentioned before in the range of BRL500 million to BRL1 billion a year in cost reduction just on the corporate side. So all of that goes unabated, we continue firm on our targets.

We believe we will reach our targets to the end of the year, remembering that our objective as we announced last year, will be to get to the end of next year with a BRL1 billion OpEx reduction in annualized term. So by the end of next year, BRL1 billion removed from OpEx on an annualized basis.

We believe this year we're going to be more than halfway there already. As far as the structure of the -- company financial structure of the company after the UPI conclusion, let me pass over to Camille.

Okay. Thank you, Rodrigo.

So if you apply the provisions of the – assuming [ph] that the plan is approved as we have presented it today. If you apply the provisions of the plan and assuming that we raise enough secondary proceeds, which in the case of the BRL15 billion for mobile and secondary of BRL6.5 billion is already pretty much enough.

If you look at our debt table and we have that in the, like, the full earnings release, MDS, which is our Class II creditor according to the plan, they would be prepaid, if they want. I mean they can opt to remain in the company in different positions.

But if they want we need to prepare them. So that would disappear local banks and ECAs would be subject to the prepayments discounts of 60%.

So we would pay them down. That would make the company remain today with the bonds, which in March amounted to BRL3.7 billion.

The non-qualified facility another BRL0.5 billion. There's a general offer which the company has the call option from the original plan the call option to acquire 15% today, face value is BRL5.6 billion, but fair value because of the call option is BRL0.7 billion.

And then there's the bridge loan that we raised in January, that the company has always mentioned that its intention to that that was always a bridge to a longer term debt. So we intend to refinance that as soon as we believe that the market conditions are appropriate.

In the worst case scenario that we are – that we don't refinance, that would be also payable upon the sale of mobile and that would disappear. So just to summarize we remain with BRL8.7 billion of the bonds, working with a March 31st numbers, another BRL0.5 billion of the non-qualified, then there's the general offer of BRL5.6 billion, but that – because of the 15% call option that's BRL0.7 billion.

And then the debentures it depends if we prepay them or if we refinance them, if we don't refinance them that would put us with slightly above BRL10 billion equivalent of that. If we refinance then that would drive us to BRL13 billion, BRL14 billion.

Understood. That's very clear.

Thank you. And I guess in terms of the next quarter, given COVID, given the shutdown of the shopping centers across Brazil potentially in form of layoff type programs.

Any specific impacts on personnel line or rent expenses that you guys foresee as being relevant, diverting from what you guys originally planned on the strategic expense reduction? Thanks.

We do expect some simplification there, but it's not due to the stores. In the case of the stores, what we did was to use some of the opportunities we had with the government programs to maintain support during the closures.

And obviously, we also use the things such as pay time off and other alternatives. But at the same time, what we did was we got a significant portion of our store personnel and started having them work remotely.

And you may ask, how is this possible if the stores closed, but we started the program called Vend and Casas sale from home. And obviously we're trying to use the team as best as possible.

We should see some simplification, but it's not based on just the stores, it's based on pretty much the overall infrastructure of the company when – bringing it simpler and obviously having a leaner structure in particular in the copper front. This is pretty much where we'll see most of the simplification taking place.

Perfect. Thanks very much team.

Hello. Good morning, everyone.

Thank you for taking my questions. The first one related to the mobile business.

I'd like to understand if you – if there's any scenario that the company might accept bids below the BRL15 billion and which would be the income taxes that the company would incur in the case of a sale at BRL15 billion? And a second question related to the Infra Co, right?

I'd like to understand how much of the value is coming from existing contracts like services provided -- already provided to the Client Co to the Oi Mobile business or existing contracts in general. And how much of the value is coming from new contracts that you're expecting to gain -- to get in the future?

Thank you.

Thank you, Daniel. Well, on the mobile side, obviously, we use a minimum price, because we believe that this is what the company is worth and where we should be going with the proposals that we expect to receive.

And obviously, this is the scenario that has been planned. We have even included this feature for the price difference I mentioned before, but we believe that's where we're going end up.

There will always be the creditor’s discussion, when and if any additional scenario should be considered. We don't believe this would be the case.

But there are features in the plan to consider that with creditors. So it's not up to the company.

The company has set a minimum price and cannot go below this minimum price that it has set. In addition to that on your income tax question, we obviously know that this would generate some taxable gains.

But you have to remember that the company has a significant tax loss carry forward right now in its overall structure from both Telemar and Oi S.A. And what we would be doing is exactly to use those results to be able to compensate for part of that.

We wouldn't expect any significant impact coming from -- tax impacts due to the mobile sale. As far as the Infra Co, well, to begin with, we have to remember that Infra Co when it's born, it already has a significant part of the business that is already from the – what we call wholesale business already up and running.

It's not something that has been created from scratch. It's something that it has been there for a while.

It has been operating. Oi has always been the largest wholesale operator in the market and we believe that we would only be increasing this with the focus from the Infra Co.

When we look at all of the wholesale revenues, we're talking about a close to BRL2 billion business already today. So it's not something that gets started and just has to start using Oi as a main customer.

Obviously, Oi in terms of the residential broadband would be the main customer initially, would be the main customer for a while to come, because we want to be as the largest broadband player in Brazil. And with that, obviously, would -- we would be the largest customer from the Infrastructure Company and we believe we have all that it takes to be able to achieve as we mentioned in the plan, close to 7 -- even more than 7 million homes passed generating, if just to make the very rough calculations with even an increase in ARPU, we will have just from the residential business on the Oi side a revenue on the Client Co of between BRL7 billion and BRL10 billion.

Obviously, part of this goes back to the Infrastructure Company to compensate for the homes connected, homes passed. But when we look at the plan, we do have obviously a significant part coming from the other players in the market as well.

We have included in our plan, as you saw from the presentation, close to 30% of this business coming from other players and this would make up the entire picture for the company looking forward. But the good thing about that, Daniel, is that no matter how you split the broadband revenues in the company, if Oi grows more than everybody else, obviously, Infra Co would still be receiving Oi’s revenues and everybody else's revenues.

But if there's additional players that grow more than Oi, the value could be skewed slightly more towards the other players and not towards Oi. But in any case, we believe that given the significant amount of fiber that it has, given that it's a non-replicable, given that it doesn't make sense for players to build the two fiber infrastructure one alongside the other.

We believe that the Infrastructure Company has a pretty much a set market for itself all the way into the future. When we look at the existing revenue and we combine that with the revenue from other companies, other operators coming, even in the short-term.

I would say that in the short-term, probably the other companies will have even a bigger weight on the Infrastructure revenues than Oi, because we're still ramping up or FTTH revenue. So in 2021, we would expect close to BRL3 billion coming from other players, because it's BRL2 billion of wholesale, which already exists and then there's still another component coming from other players.

So, all-in-all, we do have a significant business with other players. We would increase this business by adding our very significant growth on FTTH.

And at the same time, we would expect the FTTH to pick up for the other players as well.

Thank you, Rodrigo. And a third question if I may, if I may.

Do you expect the Client Co to born as a cash flow positive or a cash flow negative company?

The Client Co, no, the Client Co will be born pretty much as a cash flow positive company. Yeah, it will require – we still have a year of transition, remember that all the way up until we end all of the operations we expect.

We're talking about pretty much a year and a half of transition of the conclusion of all of the operations we expect to the end of 2021. And then after that the Client Co becomes very asset light and very CapEx light.

And so it starts to be a cash positive company. Obviously in order to achieve that we need to reduce the burnout in copper and that's exactly what we're focusing on right now.

Because out of the things that remain on Oi, which Client Co is Oi, right? It's not that there's a separate Client Co.

Client Co and Oi one and the same. It's just a one entity which is Oi S.A.

And obviously, as part of that, we can measure EBITDA minus CapEx and that is positive and this is because we have been spinning off all of the significant CapEx investments to Infra Co. And at the same time ramping down significantly the consumption of cash coming from the copper CapEx.

Okay. Thank you very much.

Thank you

Hi. Good morning all.

Thank you for taking our question. We have two questions here, first on Infra Co.

If you could break, I think, how we break that towards rollout, if the CapEx deployment, of course, once you already have the contract – the demand from the customer side all you deploy the CapEx ahead of the demand. And then have to check how it’s going to be demand free, just to check how it’s going to be the balance between CapEx expenditures and revenue generation that’s the reason for the question.

That would be our first question? And then second one regarding the approval in the creditor holders, you mentioned that [inaudible] you mentioned that all clients need to approve it or all debt holders within all classes need to approve the proposal, if you could clarify that?

Thank you.

Sure. Well, Susana, on the CapEx rollout for the Infrastructure Company.

If you recall, I mentioned that, the company is born with an investment plan already defined or at least a good portion of an investment plan already defined and that will have to be part of the investment commitments that the new investor will actually bring to the company and adopt and accept when getting into the company. And by that, we do have a rollout which is defined, especially to cover our original plan.

So when looking at covering the original plan from Oi, this is a plan that will be entirely covered by the investment commitments that need to be addressed by the new investors. In addition to that, we do have a model and we'll be discussing the details of this model with the potential investors and there are many.

But we're talking about the mix of charging between HPs and HCs. Obviously, the focus are the HCs.

But we also have a mix component based on the HPs. And there will be a way of working with potential [Technical Difficulty] where there are some investments in the HPs which are covered by guaranteed take up rates and take or pay from the clients and there is a part, which is obviously investment from the Infra Co.

And then on the HC obviously, it's just a firm commitment from clients in connecting homes. So it’s a mix of both.

But at the same time the company starts is born with a plan, which is well defined and that has a significant HP deployment plan already. As far as the approval from creditors, Susana, it's the same rules of the previous GCM, meaning that the condition for approving the GCM is that you need to have approval in every single class.

And in a given class, you need to have approval from the majority of the class and that's it. I mean, it's not that you need to have all creditors [Technical Difficulty].

Yeah. Very Clear, Rodrigo.

Thank you very much. And if I may just one last question regarding the DTH, we are assuming that it will remain under the Client Co, is that correct?

Yeah. DTH yes, the TV service remains under Oi the Client Co.

But as we mentioned in the presentation what we're doing with DTH is we’re looking towards alternatives of pretty much converting most of what we can into IPTV, and at the same time, looking towards potential partnerships to avoid the costs from DTH from escalating in the future, if there is a sharp reduction in customer base. So we're doing the two things at the same time.

We're migrating customers away from DTH to IPTV and we're working in -- towards partnerships that would allow us to maintain a healthy DTH business in the future.

Perfect. Thank you very much.

Very clear.

Thank you.

Thank you. Well, thank you, everybody from listening through a very long presentation today and we really appreciate that.

We know that in addition to the first quarter results, we had to provide a lot of information on our plan and on our amendment proposal for the GCM. We know some of the concepts are new for us and are elaborated, but we know that we are very confident in what we are presenting.

We know that we believe in the execution of the company. We know that what we have shown in the last 12 months as far as execution of the core business of the company, gives us the rights to actually design such a plan for the future.

And we know that all of the proposals that we have made, even though they will need to be discussed and they will need to be further understood, we believe that they are the right thing for the company to do and it's the right thing for all creditors as well to approve, because this is what's going to bring the company forward and it's going to sustain and generate value for pretty much everybody. So we're confident in the implementation, we believe that the company will continue to execute, will continue to maintain its focus on the operational day-by-day.

But in addition to that, I will now embark into this last step of our transformation journey, which we will see a much improved company in 18 months. We hope with a very sustainable and value generating future ahead of us.

So thank you for staying with us. Obviously, we will be talking a lot more about the plan and about the developments of the GCM in the months to come and we expect to talk with you very soon again about the results of that.

Thank you very much.