Oi S.A.

Thank you. Good morning everybody and welcome to our second quarter 2020 call.

And as was the case in last quarter, during this quarter, we also will have two sections to our conference call. The first one will be about our results and the second quarter and the second will be an update to the plan amendment that we announced last quarter and now, after several interactions with creditors and stakeholders, we are now introducing a revised version of that plan amendment in anticipation of our GCM that will occur in early September.

On the results side, it’s important to highlight that even though we had impacts from the pandemic, in particular in the case of revenues, also, we were able to perform much better on OpEx and preserve the EBITDA margin. So, we have the impact of the pandemic felt, but our OpEx was controlled and in the end, we were able to stabilize the results of the company.

On the operational side though, we continue to move in the right direction as we will be able to see in a couple of ways. On the plan amendment, we have introduced several small changes after numerous interactions with creditors, investors and additional stakeholders including inputs that came from a mediation process conducted earlier this month.

In this plan amendment change, we addressed our DTH disinvestment that we are planning since the beginning of the plan. We have introduced a minimum price for our Infra Co.

We have introduced the Stalking Horse for Towers and we also have introduced several new options for creditors. With this, we believe we will bring a much more balanced amendment and we are ready for the GCM that will occur in September 8th.

So, let’s start with the highlights of the quarter in Page 3. As we can see, following the announcement of our long-term strategic plan amendment last quarter, in Q2, Oi continues to execute on all transformational fronts demonstrating the solidity of the proposal it has not only for the present execution, but also for the short, medium and long-term changes the company will go through.

Our strategic transformation plan is being successfully executed in pretty much all fronts. As we can see, starting with the FTTH project and the fiber operations, which are the core of our plan.

During last quarter, we were able to come to the number of 6.7 million homes passed, 1.3 million homes connected, and a decline of 4% in broadband service complaints, meaning that not only we are moving in the right direction and increasing dramatically the number of fiber consumers, but also, improving our quality in the process and reducing complaints highlighting the very quality of the operations in the fiber fronts. We are now becoming the growth leader in homes connected connecting more than the other three local operators combined and we foresee the strength to continue in the near future as we continue to execute our plan based on fiber.

On the operations front, the mobile business showed resilience even in the middle of the pandemic with our postpaid revenue growing 6.5% year-over-year. We obviously had impacts on prepaid as we will see a little bit later on, but we were able to stabilize revenues even in the middle of a very tough periods coming from the confinement due to the pandemic.

On the B2B, we were able to increase our IT revenues, which is 21% of our share of our total corporate revenues and this is helping substitute legacy revenues and position our B2B business for stabilization and growth. And we are also greatly reducing our focus on copper and DTH, which accelerates the cost savings that we said we would be looking for in terms of our legacy businesses.

And this will help us bring financial resources to continue investing very heavily on our FTTH projects. On the cost front, we continue to present the results of efficiency and simplification with a R$685 million in cost reduction in 2020 year-to-date, which represents in last quarter a 12% reduction in OpEx.

Several initiatives helped us do that including simplification, reorganization, digitalization, and the divestment of legacy businesses. With this, we are solidly on our path for the R$1billion estimated annualized impact in cost savings for 2020.

And finally, on the last leg of our strategic plan, we continue to move forward on our strategic options for the future. Our GCM is now scheduled to occur on September 8 and we have made progress in important areas on our plan amendment including the definition of the Stalking Horse for Towers.

We have received binding offers for mobile and we’ve started the structural separation – the preparation for a structural separation of our Infra Co and Client Co in progress with our Jupiter project. In short, we are following through on all our commitments and paving the way for sustainable change, not only for the present, but for the medium and the long-term, as well.

So now let’s look at the details and start by looking at fiber in the next page, Page 4. And as we have always said, our fiber infrastructure owes our key competitive advantage and this now starts to show very, very clearly.

When we said, we had a competitive advantage in fiber, this is due to our gigantic fiber infrastructure that covers all countries with close to 400,000 kilometers of fiber or almost 45,000 kilometers of ducts and over 2300 cities with fiber. When we look at the results of that, combined with the investments on the FTTH front and all of the commercial acceleration we had, we start to see that we had the highest growth among all FTTH broadband operators in the last quarter and we are able to achieve a number of net adds, which were more than all three operators combined in the last twelve months.

This is a significant progress, because, as we all know, fiber will be the future of broadband and will not only be the future of broadband for the short-term, but will be here for a long time to come. With this, we can see that we are lighting up the country, not only on the back haul and backbone as we already did before, but also on the residential side.

And this too small picture actually can show the difference of our fiber presence in terms of FTTH and one of our closest competitors in terms of fiber looking at the national presence and where we are. This result can also be seen in numbers and we can start to see that on the next page on Page 5.

On Page 5, for the fiber operations, even with the full impact of the pandemic in Q2, our deployments continue to accelerate and now our projections for the end of the year already greatly exceed the expectations we have for 2020 at the beginning of the year. Starting with homes passed, we got to the number of 6.7 million homes passed in the second quarter.

This is 4.3 million more HPs built in just one year. With that, we continue very solidly on our path to achieve between 8.3 and 8.6 million homes passed by the end of 2020.

This is due to a very successful increase in our monthly average of homes passed built, which came from 267,000 in the second quarter 2019 to 365,000 in the second quarter 2020, almost a 37% increase. Obviously, with all of this commercial activity, those homes passed are translating into homes connected and our homes connected number has also increased quite dramatically from second quarter last year, coming from 237,000 to 1.3 million homes connected in the second quarter.

When we look at that and we make our projections for the end of 2020, we have already increased our projections for the end of 2020 to get between 1.8 million and 2 million homes passed, which would put us very, very close in terms of take up to the numbers we said we would be able to achieve in our plan by 2022. This is almost a one year-and-a-half advancement of our 25% take up rates projected for the middle of 2022.

And this shows to the strength of our fiber product to the strength of our commercial operations and to the quality of the fiber deployments we are making in FTTH. This comes with a very successful increase in terms of monthly average homes connected net adds, which reached 119,000 in the second quarter 2020.

This also comes with an increase in our fiber ARPUs, which are now absolutely in line with the plan at R$85 in a month. All of that combined, we were able to generate revenues of up to $168 million in the second quarter just coming from fiber, a 6.3 times increase, compared to last year and now, we have even more opportunities to not only continue this rhythm, but also bring the residential success to B2B.

B2B already showed an improvement in terms of small and medium enterprises on FTTH and represented revenue which is four times larger than the revenue in 2019, but we still have opportunities to increase this number even further. Our key objective with all of that is to replace legacy revenues and we believe we are advancing very steadily in this direction as we can see next.

On Page 6, we can see that even though our copper users continue to drop sharply with record sales and net adds of fiber, we are now resulting in a reversal of the historical residential RGU declining trends and this will position us very strongly in the ultra-broadband competitive scenario. In the last quarter, we launched our 400 megabits offer in FTTH, which was very successful and will have a very positive impact of increasing our ARPUs in the phase to come.

This contributed to our FTTH sales accelerating and breaking records. When we look at FTTH sales, we can see that we can ingenerate from a number of 160,000 approximately of FTTH sales to over 230,000 sales of FTTH in July.

This is in a period of just six months, a 46% increase. So it’s a very impressive effort that our sales teams have been making and achieving.

This is finally helping a reverse the declining trend of residential RGUs. If we look at just six months ago, we had a trend of declining RGUs in residential of more than 300,000 RGUs.

This has been gradually reduced all the way to July where we virtually sized the number of fiber net adds and legacy declines. And this certainly will position us for a very sharp recovery and for a future where the fiber will finally substitute all of the legacy revenues as it was the plan since the very beginning.

This came also as an improvement in the quality of our broadband customer base. Obviously, when you launch a new product, it’s expected that at the beginning of the project, there will be variations in terms for instance of the foray and the survivability of the early customers, but we have been improving that quite dramatically and we already saw from March to June, a significant decline in our FTTH customers the forays of minus 30 on the 30 to 60 and minus 20 on the 60 to 90.

All of that is making significant progress towards our overall ultra-broadband leadership. And here, we would like to call your attention to something which is not only that come based on our fiber performance with everybody else’s fiber performance, but we now start to compare our fiber performance where everybody else’s ultra-broadband performance in all technologies, cable included.

And as we can see, for the first time in June, we were the leaders in all technologies ultra-broadband net adds with the plus 4% compared to player two with 137.4,000 net adds in ultra-broadband technologies. This position us very solidly to the – leadership in all technologies for ultra-broadband net adds and not users in the futures.

Obviously, this will help us revert the trend in residential revenues as can be seen next. On Page 7, we can see that after a very long period of declines, the revenues from the residential segment reverted this trend in June driven by the very strong expansion of FTTH, even again as we have highlighted with the sharp declines in copper.

When we look at the left-hand of the page, we can see that our copper revenues continued to decline very fast with minus 31% on voice, minus 32% on copper broadband. And this is expected.

This is not a performance issue. This is a structural trend that we know we’re coming and that is why we have the plan focused very strongly on substituting this legacy revenue for the copper – for the fiber revenues we are now building up.

As we can see, our fiber revenues grew 550% from the second quarter 2019 to the second quarter 2020. And we got to a R$255 million of revenues in FTTH.

With all of that, we can see that, in June, we finally were able to revert the trend and the revenues we lost in legacy which was minus 12 was compensated – fully compensated by the revenues we added in FTTH which was plus 14 and this is a significant step for the company, because for the first time, even with our fiber base, we were not as we wanted to be, because it will still grow significantly. We are now compensating the declines in copper revenues.

With all of that, we can see that our fiber revenues already generate more than R$1 billion of annualized revenue in June. If we just annualize the fiber revenues in June, we would get to R$1.1 billion of revenue.

And obviously, this is the long-term trend of the company. So, while fiber has had a stellar performance during Q2, unfortunately as it was the case with the whole market, mobile was impacted by the pandemic and we can see this in the next page on Page 8 and talking about mobile revenues, we can see that the pandemic did have an impact in revenues, in particular in the prepaid segment, even amongst some signs of gradual recovery that we can be seen more recently.

Starting with postpaid, postpaid was a little bit of a bright spot in terms of the numbers, because of the growth in customer revenues of 6.5%. When we look at net adds, following the trend of the entire market, for the first time in long sequence, there was a very small negative number of net adds in the second quarter given the impacts of the pandemic and on the reversion of some postpaid customers to prepaid.

But, as we can see as well in the bottom part of the chart, there was some recent softening of the confinement that lead to some improvement in net adds. Again, so the sharp declines that we’ve seen in net adds in April were slightly reversed even though there is few negative in May and June.

And there was also a small recovery in customer revenues in the monthly comparison starting with the declines that we’ve seen from March to May and now starting to soften up the curve again in June. On prepaid, we did have a significant impact as the whole markets in terms of revenues and we’ve seen a 17.7% decline from the second quarter last year or almost R$140 million decline in revenues, given the impacts of the pandemic.

Again, when we look at the more recent trends on an intra-month comparison, we can see that the sharp increase in the decline on prepaid revenue occurred from March to April and now from April to June, we already recovered some of that and expect this impact for the remainder of the year to be soften a while. With all of that, we can see that our mobility revenues did suffered during the quarter with minus 5.2%.

But, again, with the bright spots that we did have a good increase of 6.5% on our postpaid revenues. So, we can expect some gradual recovery through the end of the year, but we do have some gaps left by Q2, which will be hard to recover.

So, in the next slide, let’s talk about our performance in B2B and wholesale. On Slide 9, starting with B2B, we can see that, again we did feel the impacts of the pandemic on both corporate voice and data revenues.

But this was partially compensated by the growth in IT revenues. We see that the reduction in voice and data traffic was very important in particular for the voice traffic, given the effects of our Home Office changes.

And on the other hand, we can see that IT revenues grew significantly, 53% growth given the Home Office program, the acceleration of IT revenues and additional products we introduced during the quarter. On the wholesale, we did see the same impacts coming from regulated revenue, in particular, EILD and wholesale voice termination rates which are the ones more impacted by traditional revenues impacted by the pandemic.

On the bright spots, we did see, during the quarter, a significant improvement in net sales compared to, not only last quarter, but last year. And this number was quite sharp achieving a 136% growth in increase of net sales during the quarter, which may help us soften again the impacts for the remainder of the year.

With this impact on revenues as we can see, very bright spots on fiber, reduction on residential copper, impact on mobile and some impact on B2B and wholesale. Obviously, the cost continues to be a big focus for us and as we can see in the next slide on Slide 10, the trends of solid cost reductions continued in Q2.

This was driven by the focus on efficiencies, simplification and digital transformation. And with that, we also stabilized our sequential EBITDA.

When we look at the OpEx drop, even with all of the revenue drop which were at the range of minus 10%, we are able to reduce our OpEx even further with minus 12.5% with reductions pretty much across the board. The reductions came in third-party services, in rent and insurance, in network maintenance, and in digital transformation.

Two things we would like to highlight here are, one, the digital transformation efforts, that’s probably one of the main drivers of our cost discipline for the future. Some of the numbers highlighted here indicate that as we can see in the 85% share of digital channels in all interactions with customers in June, with a 36% year-over-year increase in the use of our Virtual Technician App, of minus 26% call center calls in a year-over-year comparison, and the increase of the use of our Artificial Intelligence agent JOICE.

There was a second highlight we would like to make here, which is on the network maintenance front, we had even a sharper reduction compared to the overall OpEx reduction of close to 15% drop. This already starts to show the impacts of what we call our de-averaging strategy to migrate customers from copper to fiber and to decommission legacy networks.

This, without a question will be a very important part of our cost reduction efforts for the future and we started to execute as can be seen for the numbers in the second quarter 2020. With that, the results on our routine EBITDA was that even though there was a reduction compared to last year, this reduction was smaller than the reduction in revenues and it was pretty much a stabilization compared to a sequential basis.

So, we reached a R$1.464 billion in IFRS16 EBITDA for the second quarter 2020. On the CapEx side, on Slide 11, we can see that we have been consistently changing the CapEx mix as we said we would, and we continue to allocate massive investments to fiber and FTTH, which is the future of the company.

And this also allow for greater network resilience during the whole pandemic. On the CapEx front, we can see that compared to the first quarter 2020, we have an additional four percentage points increase on the fiber investments as a percentage of the total, while we were able to contain the investments in the legacy businesses such as copper from 15% to 11%.

Compared to a year ago, those changes are indeed very dramatic with 64% versus 36% and 11% versus 28% on the two ends of the scale. This brought our CapEx mix in the first half of 2020 to 70% focused on expansion in new businesses and then 14% based on legacy.

Obviously, this is the direction we need to go, even though we must continue to invest very, very solidly on the fiber bringing our overall CapEx to skew the level around R$7 billion or slightly above R$7 billion a year. On the network resilience side, as a note, it’s important to note is that, even though we had a significant increase in the data traffic consumption in our network since the beginning of the confinement, close to a third of network increase in traffic, we were one of the only operators to register a drop in the number of complaints in broadband service, even in the middle of the pandemic with all the increase in usage and this is a comparison to the second half 2019.

So, this is a big step for us, not only showing that our strategy is focused on the right direction, but also that we are being able to do this and reduce our legacy exposure, while at the same time, keeping focused on the customer quality, efficiency and attention to our infrastructure. Next, let’s talk a little bit about cash.

So, on Page 12, we can see that despite all of the challenges, the company has successfully controlled its cash consumption during the second quarter to secure the execution of its transformation plan. On the cash flow front, we can see that we had a cash consumption of R$237 million, a lot less that would be expected in terms of runrate while the recovery is going through and this was allowed, not only by the cost containments and the maintenance of the routine EBITDA, but also by the final installments received from the Unitel sale which now is finally received in full.

With that, we closed the quarter with a R$6 billion in cash in June 20. Under that side, we did feel the impact of the FX and the interest accruals and we had our gross debt increase to R$26 billion and our net debt increased to R$20 billion.

We can see that most of that was due to the FX variation. With that, it’s important also to highlight that our gross debt profile continues to be a longer term debt profile and we maintain a short-term hedge policy which we are able to protect our cash and our FX exposure in particular during the 2020 which is a year where obviously there were significantly impacts and nonetheless.

With that, we can see that, we continue to execute well on the operational fronts. We continue to execute well on the cost fronts.

We continue to execute well on the strategic fronts, but we still need to address our financial situation and our debt. And this is exactly the reason why we have a proposed plan amendment and we are now perfecting this plan amendment with additional changes in preparation for our GCM on September 8th.And this is the update that we start to provide next.

So, moving on to the second part of our presentation, let’s talk about the changes we proposed to the amendment and which will now be the version that will be voted for the GCM in September 8th. We would like to highlight on Page 14, just the initial changes to the plan and we start at looking at the UPIs or the isolated production units that we highlighted will be a key feature of the plan to allow the company the flexibility to perform the sale of some of its assets to bring cash, not only for reducing debt, but also to increase investments in the core businesses of the company.

So, when we look at the UPIs, let’s highlight the several different things that we introduced in this revised version of the amendment. Starting with the Towers, we have finally been able to close on a Stalking Horse position after a binding offer that was received by Highline of Brazil and with that, we included in the plan, the Stalking Horse condition with the right to match to highlight increasing the number to R$1.07 billion for a 100% of the shares.

The introduction of Highline as the Stalking Horse was already provided for in the revised version of the amendment that was filed last night and now we have certainty of closure on the UPI Towers. On the UPI datacenters that we have highlighted in the last announcement, no changes were brought to the table, but we already had certainty again with the binding offer received and which was given the right to match as the Stalking Horse to Piemont Holding.

And so, for the two key pieces of the non-core assets we have deal certainty and we have Stalking Horses included in our plan, both for the Towers and for the datacenters. Moving on to the UPI Mobile.

On the mobile front, we had some news and obviously we have reflected those news as part of the amendment and the primary news is that, as we have been highlighting and communicating publicly, we have received binding offers to the UPI Mobile, all above the minimum price of R$15 billion we set in the first version of the amendment for 100% of the shares. And with that, we were able to include in the plan the condition to define a Stalking Horse until the GCM giving a Right to Top to the offer with the better conditions for the company.

Given the UPI Mobile, it’s important to highlight that, after the receipt of binding proposals during the last couple of months, we have been discussing and negotiating with the proponents of those binding proposals and at the current moment, we are in an exclusivity agreement to discuss with one of the bidders, which is the consortium of the three other mobile operators in Brazil who understand if we will be able to secure adequate terms and conditions for the company to be able to grant the Stalking Horse for this proposal. This exclusivity period has been renewed once and we are now in the middle of the second term of this exclusivity period, and discussing on the UPI Mobile conditions for us to again bring as a much deal certainty as possible to the GCM.

On the UPI Infra Co, we have also moved forward with our competitive process. We’ve finalized the first phase of our competitive process by accepting non-binding proposals for many different players.

And after that, with a wide demand for the asset in the preliminary phase of the process, we have decided to set a minimum price of R$20 billion for the firm value, which was a middle point between the 25.5% and 51% economic value participation that we have highlighted would be our goal in the first version of the plan amendment. This allows and ensures for a very competitive process in the second phase that we expect to conclude after the GCM and will allow us to extract that the most possible value from our investments in the UPI Infra Co and the sale of the control of the UPI Infra Co as has been highlighted.

It’s also important to mention that, for the UPI Infra Co, we continue to maintain the conditions of a minimum secondary commitment of R$6.5 billion, a primary commitment of up to R$5 billion to guarantee not only the payment of R$2.4 billion in debt with Oi by Infra Co and also the execution of the CapEx plan that we are bringing to the table. With this, we have managed to advance significantly in our view of the certainty of the ability to bring the Infra Co to fruition and to have a very solid plan moving forward to execute the structural separation we have communicated to the market in the first version of the plan amendment.

And finally, on the UPI front, we are introducing yet an additional UPI which will help us address something which we already highlighted very clearly in the beginning of our transformation plan, which is deemphasizing the DTH infrastructure and the DTH business which we know is a declining business that in the future will probably only represent cost for the company, instead of representing revenue growth which was the original reason why the business was created in the first place. With that, we have created a UPI that we are calling TV Co and this UPI TV Co brings the DTH infrastructure and equipment, customer and some adjacent obligations to DTH and IPTV services.

In particular, the assumption of a 100% of the payment commitments for the use of the satellite capacity until 2027, the way we are going to structure this UPI TV Co is that, there will be a sale of 100% of the shares of this UPI TV Co for a minimum price of R$20 million, but with the – and by our value actually falling on the assumption of payment commitments for the use of satellite capacity. And this will exempt us from this annual cost, which would represent a significant cost for the several years to come.

In addition to that, we will preserve our upside on the revenue share on IPTV by keeping all of the IPTV infrastructure with us and by defining a 50% revenue share with Oi on IPTV revenues on constant revenues provided by TV Co to our customers in the provision of IPTV services to our fiber customers. So with that, we close and conclude the structuring of all of the UPIs we were going to bring to vote on our GCM with the very significant progress on the UPI Towers, on the UPI datacenters, with a lot closer to the certainty on the UPI Mobile, with a much better evaluation of where we are in the UPI Infra Co, and with a structuring of a reduction of our DTH operations with the UPI TV Co.

Coming for to the second part of our adjustments to the plan, we can move on to Page 15 where we talk about the amendment proposal to the GCM plan in terms of the updates to creditor payments. And here, we would like to highlight as well several small adjustments we made to perfect the plan.

Starting with the non-financial creditors, there was an introduction of increasing the linear payments of the small and medium businesses on Class IV to – up to a R$150K, which will help us eliminate a bigger part of the Class IV during the GCM. On financial creditors, we introduced some perfections to the secured creditors Class II or the credit that now belongs to B&DS with a much firmer tie between the sale of the Mobile UPI through the payment of B&DS completely liquidating this credit and again, making sure that we fulfill with all of our obligations to the only guaranteed creditor we have which is B&DS.

On Class III for banks and ECAs, we have introduced a new option in addition to the one that was already there with a 60% discount and this new options are an improvement in the differentiated option for creditors who provide a new credit line and as we will see in a second, and also an introduction of a possibility of reducing the prepayment discount for 60% to 55% to creditors who offer banks guarantees at the maximum value of their restructured credit in the ratio of 1 to 1. Under the JR plan, we have a condition that we will reduce our current total exposure in guarantees to be able to assume this new guarantees that would then by its turn allow any provider of this new guarantees that reduce their prepayment discount from 60% to 55%.

On additional creditors, one very important development that we have was with Anatel, and we have now included in the plan that we will be paying our Anatel credit under the Law 13,088/20 which actually brings not only more legal certainty for the company, but brings actually positive conditions for us to eliminate the discussion with Anatel which was in the court since the first plan and to bring this to something which is legally recognized by the agency and allow us to move forward without any further questioning. This was already allowed by the former plan and is now being solidified as an option here in the plan amendment.

In addition to that, we have included yet another clause, which will allow us, if any more beneficial conditions are published, compared to Law 13,988, we will be able to adhere to that and that’s what we have been negotiating. In addition to including the terms in our new plan amendment, we have also filed and petitioned for the inclusion of our credits under Law 13,988, both with the agency and with AGU and we have now started the negotiations to initiate the transaction of those credits under the new law.

On Class III, we have also included some changes to our reverse auction mechanist and not only we have reflected the mechanist who allow the company to have the maximum benefits of conducting those reverse auctions by focusing on the lowest value and NPV for the company in terms of reducing as most as best as possible the values coming from the auction, but also have introduced some conditions to give bondholders and suppliers and all of the Class III the ability to participate in the auction with some certainty. And finally, as we have highlighted as an additional options to banks and ECAs on Class III, or strategic creditors, we have perfected the options open new long term credit lines up to R$3 billion for all unsecured creditors allowing counterparts of payment of the structured credits under JR plan at the ratio of 1 to 2 in the event that Oi effectively uses this credit line offer and to maintain the original JR plan conditions to 2.5 times the new credit line offer by perfecting their existing credits and not applying the 60% prepayment discounts.

This is interesting because it brings new credit for the company and it also helps us some of the financial creditors who have better conditions for the payments of their existing credits compared to the 60% discount option that was introduced in the first version of the amendment. Finally, on the Bridge Operations, with the goal of financing the transition of our plan during the whole operational restructuring that we will conduct from here until the end of next year, we have introduced the possibility of partially anticipating the proceeds from the sale of the UPI Mobile assets up to a value of R$5 billion, and introduced some additional conditions for flexibility for the leverage – the additional leverage guaranteed by the shares of Infra Co to have a continuity of our Infra Co investments, even before the Infra Co transaction clears which is expected for next year.

And the last condition we actually updated in our plan amendment was for the JR closure and with the current amendment, we are introducing a condition which states that the JR will be concluded by May 30, 2022, or in any other date in case there is a force majeure issue that is identified and approved by the JR court. With this, what happens next?

So now on Page 16, we can see what is the expected timeline for the plan amendment and the GCM and all of the operations that we expect will happen after that and starting with the June 20 introduction of our first proposed amendment, now, we are filing the adjustments to the proposed amendment in September. On 8th of September we will the GCM.

We expect the Towers and Datacenter UPI auctions to occur in October or November 20. On December, we expect to conduct the Mobile assets UPI and to close the Towers and Datacenters.

Then, in first quarter 2021, we expect to have the auction for UPI Infra Co and the UPI TV Co. We expect to close the UPI Infra Co in the third quarter 2021 and to close the UPI Mobile assets and the UPI TV Co in the fourth quarter of 2021.

With that, by the end of 2021, the company again will be a completely reconfigured company, way more sustainable, looking forward and focusing on its core infrastructure investments and its core abilities to serve the market and we would be looking to an end of the JR in May 2022. In conclusion, as we can see already from all of the conclusions we brought when we introduced the first version of our plan amendment, we continue to stabilize our operations.

We continue to execute on our strategic model and we continue to accelerate on our fiber optics business. This continues to be an ambitious model to accelerate growth.

And again, we are looking at creating the largest infrastructure company in Brazil, but not only that, but to create the company in the case of Oi, which will fight for leadership in pretty much all of the segments in which it operates. This will benefit customers.

This will benefit the markets and this will benefit pretty much all of the stakeholders of the company. We trust that this new amendment will be understood.

It has been extensively discussed with many stakeholders and we trust that it represents a fair representation of how the company could go forward in the vast interest of pretty much all of its stakeholders, creditors and society and customers and shareholders. And this management team and the Board of the Directors continue to be very committed to executing this new strategic model.

We know that there will be a number of additional questions. We are prepared to answer them, but we also feel extremely confident that we are turning the base and really embarking on a journey that will allow us to have by the end of next year, a completely transformed company, which is, at the same time a very successful and very sustainable company for the long run.

So this, in summary, is what we would like to introduce today, both talking about our results for the second quarter, as well as our plan amendment changes in anticipation of the coming GCM. And now we would be ready to take on the investors’ questions.

Thank you.

Hello. Good morning everyone.

[Technical difficulty] In addition to the dividends that will flow from Infra Co to Oi. And so that’s the first question.

And the second one if I may, on Anatel, my understanding is that the decision to remove Anatel from the restructuring plan, and negotiated under the new legislation, is already this is coming from the negotiations between the company and Anatel which means that Anatel will be okay with the plan that is been proposed to the amendment to the parameters being proposed. Is that a fair assessment, please?

Thank you.

Thank you, Fred. Well, on your first question, on the minimum price, let’s remember, the minimum price that we set is R$20 billion EV, enterprise value and obviously any debt will be discounted from that upon closing, right?

So, it’s a R$20 billion EV, not the R$20 billion equity. So the 2.5 will be included in that.

But obviously again, this is just the middle of the range and as we have seen from the competitive process, we believe that there is a potential to grow significantly on that. On the Anatel decision, we have been discussing and negotiating this with Anatel for a while, because we know that this would bring not only due certainty, but it will bring conditions for the company which are like similar to the ones that we currently have in the JR.

And as such, obviously, we believe that this was a way that is worth pursuing. We started our discussions with Anatel remembering that it’s a discussion both with Anatel but primarily with the AGU, because the credits are being handled by the AGU at this point, and the Law 13,988, which was put in effect as of a few months ago, actually is conducted by the AGU – the negotiations are conducted by the AGU.

And obviously, when we looked at that, we not only included the terms in our plan and that the old plan allows us to do that, because, there was a clause in the old plan which allowed us to adhere to any new mingle rule that help us transact the regulatory agency credit and that’s exactly what we are doing. So, we are using a former provision of the plan to actually bring legal certainty to the regulatory agency credit and we have filed a petition to transact those credits.

This petition is now with the AGU. It’s being analyzed.

We have provided all of the documents and all of the numbers and all of the information that is required to actually move forward with the transaction. You know that those transactions take some time to be reviewed and to be approved and to be formalized.

But we are confident that this will move forward, because we are pretty much adhering to all of the legal conditions of the new law. And as, as you mentioned would provide a favorable scenario.

We understand that in the previous plan or in the original plan, what happened was that there was a big questioning from Anatel, and the AGU about the legality of including the credits and the plan. After that, this was – this does and ruled by different courts in favor of the legality of having those credits include in the plan.

But as we are looking for due certainty and plan certainty here regarding those credits, we opted to use Law 13,988 to remove them from the current plan as it was already profitable. We have to remember by doing that, we pretty much would be removing the key obstacle which is the questioning of the legality of having the credit and our plan.

Obviously, as you saw, Anatel has issued some statements about exactly this consideration. It has not advanced its voting position and obviously now this is up to Anatel to discuss internally after all of the changes of the amendment that we have now introduced and made public.

And also, after the petition that we already made public, that we are starting the process to transact the credit. And finally, it’s very important to highlight that we also have the ability with future who eventually adhere to any more advantageous option that comes out in terms of those credits – after the credits have been transacted and this has been a key discussion that we have been having both with Anatel and the BGS.

Okay?

Okay, Rodrigo. Thank you.

Very clear. Thanks a lot.

Thank you.

Hi everyone. Thank you for the question.

And, first of all, congratulations for the incredible execution, I believe coming in. My first question here is on the CapEX, especially the CapEx for 2021.

Can you clarify a bit how will it be funded? Is it going to be under Infra Co or on the remaining Oi Co?

Or do you have a minimum commitment in terms of how many homes passed with fiber you have stability versus Infra Co, because the deal is only going to be closed in the end of next year, right?

Thank you, Maria Tereza. And, yes, I mean, you are right in the sense that we will continue to maintain our rhythm of CapEx investment, in particular for the HBs and HCs, which is obviously at the core of the plan.

But let’s remember, and you pointed out correctly that we would expect the Infra Co transaction to actually close only at the end of the year and while doing that, we have – in our plan we have anticipated several options to actually fund this continued investments in addition to obviously the generation of all of the current cost reductions that we are addressing. We have anticipated two additional options to allow us to do that.

And one of them would come from a bridge of the mobile transaction that we have just highlighted in our plan change amendment. And also, coming from - a secure bridge coming from the Infra Co transaction.

So, we expect to already separate the investments from Infra Co in a separate entity, we are starting to do that. And this separate entity obviously will be responsible for the HB’s and HC’s investments under still the same company, still the same group.

So, before the closing of the transaction, but already with the possibility of leveraging this operation, separately from the entire company and this, with the guarantee that we can maintain our rhythm for 2021 until the transaction closes. And that any player would only migrate if we have a certainty that after the migration, there is a path to sustainability.

So, no – there is still no visibility of when this is going to be completely solved. But we are doing everything in our control, under our control to be able to reduce at least a significant portion of the cost.

In our expectations, given the discussions that Anatel has put forward, we believe that until the end of the year, we would have a much clearer path in terms of timeline and also in terms of what will be the obligations that we will survive. But they are absolutely aware that this is a critical part of the regulation change after the approval of a PLC last year and they are executing on it with all of the dual process internally to the agency.

Perfect. Thank you very much, Rodrigo.

Hi. Good morning.

Thanks for taking the question. It would be on the UPI TV Co.

I just wanted to understand better how the sale of this asset will be back your strategy? For example, when offering IPTV services and the bundling that you do at the Client Co, and also what costs would go with the UPI TV Co?

What costs would remain, obviously related to IPTV presenters syndicates are going in for with the sale. But just wanted to understand better how things will shape after, if this UPI TV Co is sold.

And the second question would be related to, how much EBITDA should go with the sale of the Towers, datacenters and mobile, I don’t know if you can speak of all of this. But if you could give some help on some of this will be very useful.

Thank you.

Thank you, Marcelo. On UPI TV Co, as you correctly pointed out, the key intention, the primary intention of the UPI Tv Co is to divest from the DTH business.

We have said at the very beginning of our plan that it didn’t make sense for us to continuing that same DTH for the long-term given that, one, we do not have the scale. And two, we believe that there was a declining trend overall for the market in terms of DTH.

So, the DTH would only make a sense for a player if it has a significant scale that allows the player to not only breakeven, but to continue obtaining returns even in the middle of a significant decline for customers. And this is exactly what we have been done.

The focus of the UPI TV Co is DTH. As for IPTV, there is two parts to – there are two parts to the answer to your question.

The first one is, we will keep all of the IPTV infrastructure. So, we will keep the IPTV platforms.

We will keep the IPTV set-top-boxes. We will keep installing and deploying the IPTV to fiber customers’ houses.

And obviously this is an important component of our fiber business and our residential broadband business, because it allows us to be more competitive. It allows us more options to customers and it allows us to penetrate on higher income consumers for the residential broadband product.

In addition to that, what we do is, we combine with the sale of TV Co, we enter into an agreement to purchase content from this new TV Co player which we will consolidate the DTH business and by doing that, we expect to continue with an attractive price for content which will be offered to our consumers. And so, it’s a hybrid operation where DTH goes entirely and TV Co actually stays and IPTV – sorry – platform stays with us, but with the content been acquired at a much larger-scale cost.

And this is in essence, a little bit of the path to go forward, because it will reduce a significant cost that would be coming to the company in the coming years and we maintain our differential with the content offerings to our fiber consumers. In addition to that, it’s important to highlight as well, that we keep all of the OTT operations.

So, Oi Play, which is our OTT offering that does not depend on any linear TV platform. It remains at Oi and it’s something that we will continue to be expended.

So, we still remain with the future options for content as part of our offering. So, we believe we achieved a very interesting proposition here, because in the end, we reduced our costs.

We maintain our offers. We maintain our bundles.

And we start to focus, as well on growing the OTT and growing something that will be, in our opinion, the future of content linear programming. On your second question about the EBITDA for datacenters and for Towers.

In terms of datacenters, it’s not super significant. We are talking about a R$50 million EBITDA.

And obviously, this will be more than compensated by what comes in. And if we just consider datacenters and Towers, it will be around R$150 million EBITDA, all combined.

As for Mobile, obviously, Mobile is a different story, because it’s one thing to consider, what is the EBITDA that stays within the perimeter without all of the associated costs. But the other thing is, what would be this EBITDA inside the company.

So, it’s kind of also having two different metrics here. One is, what is the EBITDA that we sell and the second is, what is the EBITDA that goes out, because obviously, this EBITDA in the perimeter that we are selling is a higher EBITDA, it’s an EBITDA that approximates R$3 billion.

And which allows the market multiples which are significant and we have discussed it. But, we have to remember that this internally for the company was associated with a lot of indirect costs.

So, the EBITDA inside the company was a lot smaller than that. Obviously, as part of the operation, we have a plan to optimize the cost associated with Mobile.

And so, in essence, when we look at the EBITDA that goes out, it will obviously be significant below this number. I would say, we have not been disclosing this number in detail.

But it’s internally for the company, suffice to say that our EBITDA was in the range of mid-20s to lower 20s.

Perfect. And, just a follow-up on the first question.

So, the users of IPTV and the company that’s determining the offer, what’s being offered would be Oi. So, you own the users and this IPTV Co in relation to the – sorry – the TV Co, in relation to the IPTV, they will only be kind of wholesaler of content to you.

So you will continue to have the full ownership contact with the user that would be – being done by you?

The users will be users of the TV Co and we will be offering co-billing as part of our platform and our bundles. And obviously, we will be also remunerated by having the IPTV platform.

We will manage the IPTV platform and the IPTV set-top-boxes and controlling the customer experience to our fiber consumers.

Very clear, all the answers. Thank you very much.

Thank you.

Okay. So, thank you again, everybody for this additional call for the second quarter and then for also the changes to the plan amendment before our GCM.

We, again, are very confident in the GCM results that are to come next month. We are very confident in the future of the company.

We are very confident in the execution that we have been demonstrating to the markets. And after all of that, we look at obviously, a significant path forward to having a sustainable company in the long run.

So, thank you very much. And hopefully, we will talk soon either after the GCM or in the next quarter results.