Oi S.A.

Thank you. Good morning, everybody.

Welcome to our Q3 call. And as usual, it's always good to have you with us and talk about the progress on the execution of our transformation plan.

Q3 2020, as you know, was the first full quarter underneath facts of the COVID-19 pandemic. So it's important to put that into context when looking at the results, but you also see that in our view, the company did a pretty good job in managing it.

And at the end of Q3, not only we were going to talk about the results, but also about a very significant event that happened to our transformation, which was the approval of aura judicial recovery plan amendments at Oi’s second general creditors meeting. This approval was already validated by the judicial recovery courts at the very beginning of Q4.

And this allows us to keep executing our transformation journey and its key movements. So let's first take a look at some of the highlights of the quarter, which as usual will be detailed in the upcoming charts.

Turning to page three. As we can see in Q3, despite the pandemic, the company continue to deliver we believe on both the operational and the transformational fronts.

And the approval of the plan amendment was an addition to that paving the way to the sustainability that's the plan looks for. Starting with the operational results on the top left corner, we can see that fiber had yet another stellar quarter.

We had 1.75 million FTTH customers reached with 7.9 million homes passed with fiber and this continues to maintain the very fast phase of deployment that we have been showing consistently for several last quarters. We have reached an average of almost 150k new customers per month on the quarter with an average of almost 400,000 new homes passed per month.

And this obviously puts the company on its track in terms of the strategy for fiber. Few on the operational fronts, talking about mobile in the left low corner, we can see that mobile despite the pandemic actually have a pretty good recovery.

And on a sequential basis, we had a 2.1% growth in postpaid and 8.2% growth in prepaid revenue despite the fact that overall there was a little impact on year-over-year growth for the mobile segments. The postpaid showed positive growth, the prepaid showed negative growth, but on average, the quarter showed very good recovery, considering the pandemic situation.

These all lets to very good results in revenue and we showed 3.5% of sequential revenue growth, which obviously is a very positive feeds considering the impact of the pandemic on mobile revenues. We can see that this happened with a very good contribution from pretty much all segments, but we would like to highlight the residential segments, which consistently had been a source of concern given the decline of copper revenues, but we can see that thanks to the very good performance of fiber, we are now on the positive routes on the residential segment as well.

All of that actually was complemented by a very good work on the cost site. We continue the progress of our simplification and efficiency efforts and all of that last almost 10% of OpEx reductions year-over-year, which led to a positive EBITDA growth year-over-year of 2.4%.

In terms of cash, obviously this is one of our key metrics and the cash management of the company actually did very well during the quarter and we ended Q3 with $5.7 billion in cash, that's missing some of the concerns in terms of the cash burn that had been shown in some of the previous quarters. And finally, on the transformational side, the GCM approval lets the unlocking of many of our M&A processes and we now have defined dates for the judicial processes that will conclude the operations for the sale of Towers, Data Centers, and our mobile operation.

On the Infrastructure Company side, we continue to have our M&A process firmly in course, and we would expect to actually have the per se results of that by the end of this year, beginning of next year. So next turning to page four, let's look at some of the details starting with fiber.

On fiber due to the scale and speed of our fiber deployments, we can once again condense for the overall broadband market leadership with a very strong competitive position. We always said that this was something that the company wanted to achieve by resuming its position on broadband due to the fiber operations and it's happening.

As we can see, we continue to outrun all of our large peers in terms of the fiber deployments. And if we look at what happened during the last 12 months, we have now surpassed the combination of our three largest competitors by almost 17%.

This consolidates our leads in the overall ultra-broadband markets for all technologies. And if we look at the net ads for ultra-broadband, which is above 34 meg on the third quarter, in the third quarter 2020, we can see that we beat the second player by almost 20%.

And if we look for the results in September, we can see that also we were the best performance in all of the broadband technologies and speeds for the first time in a very, very long time. Obviously, when we look at the scenario, the ISP has continued to do very well, but still like to put that into perspective in terms of the sheer number of customers that we have been adding on fiber on a monthly basis and obviously looking at our last results of Q3.

When we look at the top five ISP fiber customer base, we can see that the largest player has a little bit over 500,000 subscribers and the top three player is already on the range of slightly over 300,000 subscribers. Putting that into perspective, Oi during the added a top three ISP just by its fiber subscribers.

So we continue to be very competitive, not only against the large operators, but also competing with small players whenever we are present. All of that led to a market share increase in ultra-broadband.

And by the way, we were the only company that actually continues to increase and push market share consistently quarter after quarter. So next turning to page five, let's look at how this performance was translated into revenues for fiber, fueled by continued efficiency and the rapidly expanding base, coupled with the introduction of new plans, our fiber revenues have grown almost five times year-over-year.

We can see that the number of homes passed has already reached a very large number of close to 8 million homes passed and we expect to close the year with around 9 million homes passes. In terms of homes connected, we are also already very busy, very close to 2 million subscribers at this point in Q4 and we closed Q3 with almost 1.8 million subscribers.

Looking at that we can highlight as well the take up rates during Q3, which was above 22%, getting very, very close to the 25% plan that we have for 2022. So we're really accelerating the take ups and solidly on track to executing up the plan that we said we would execute on the fiber deployments.

When we combine that with the new plans that were launched during the quarter, not only the 400 megabit per second plan, but also the 500 megabits per second plan, we can see that our base starts to shift slightly to higher speed plans. So during the Q3, we already had close to 5% of our fiber customer base moving to the higher end plans.

And this led also to an increase in our fiber ARPUs of over 3%. We are already reaching during Q3 an ARPU of close to R$90, R$88 to be more precise.

All of that, led to a very positive results in the revenue and we reached over $400 million in revenues and highlighting as well that B2B on small and medium and enterprises started to gain some traction and we have a firm and solid plan to continue expanding this expansion. All of that was actually instrumental to reach an inflection point in our residential revenues as we can see on the next slide.

On page six, we can see that as we said in our plan, fiber will be the way to replace the old legacy copper revenues and this is already happening. We see that fiber is poised to become the largest component of our residential revenues, helping the segment return to sequential growth for the first time in 11 quarters.

So it's a long time after this happened, but now that it happened it is consistently happening and we see a no return path for this inflection point. Starting with the net ads in terms of number of residential RGUs on the left hand side, we can see that in Q3, for the first time, we now have a positive net adds for residential RGUs.

When we look at the broadband customer mix, we can also see that we increased almost 2 points compared to the last quarter and almost 30 points compared to the third quarter of 2019 and we have fiber representing already virtually 40% of our customer base mix. In terms of revenues, we can also see that the revenue mix has been improving and fiber is already the number two components poised to become number one very soon, but we also can see that the fiber revenues have already surpassed all of the copper broadband revenues.

And it's very close to reaching the copper voice revenues. When we look at the declines in growth in all of the revenue components, obviously we continue to experience the decline in the legacy revenues at the clip of minus 31% on copper and minus 35% on copper voice and minus 35% on copper broadband and also with a slight – slightly less inclined curve on DTH of minus 14%, but the fiber revenues grew 491%.

And this led on the third quarter, the residential revenue to grow sequentially 2.7% to $1.625 billion. Obviously, this is very positive and it's all due to the acceleration of fiber that continues.

And as we can see, our annualized revenues at the end of Q3 for fiber alone are already almost R$1.7 billion. Obviously, this shows very good operational results they are coming and the fiber strategy is working.

On the next page, on page 7, we can also look at the details of mobile. And in mobile, as you know, we have the segment that was hardest hit from the pandemic, but we can see also that a recovery started to occur few in Q3.

Our mobile revenues, they resumed sequential growth in the quarter with great resiliency of post-paid results, both on the quarter-over-quarter and year-over-year metrics while prepaid obviously suffered a little bit more initially, but experienced the fast recovery from the early days of the pandemic. We continue to charge having mobile, not only on the results, but also on the innovation and we did our 5G pilot launch in Brazil.

On the revenues, we can see that we have 4.8% sequential revenue growth and this was due to a growth both in postpaid and prepaid. When we look at the details year-over-year, postpaid continue to show a very good performance of almost 4% and prepaid was hard hit of – with 9.6 negative growth, but again starting to show the signs of recovery and already growing sequentially.

On postpaid, it's also worth highlighting that our customer base grew almost 10% year-over-year. And on prepaid, we can see AV recovery in the top-ups.

The top-ups have gone down from first quarter 2020 to the second quarter 2020, but they started to go up again on the third quarter 2020, and we have a pretty good number considering the beginning of the year. Next, let's look at B2B and wholesale on page eight.

Both segments also fell the hit of a pandemic on traffic, but so we can see that B2B also starting to recovery from the early impact, especially on traffic showing sequential revenue growth, in particular with the help of IT services, while the wholesale revenues, they also improved the stability with their recovery of non-regulated revenues and as we showed good prospects with increased sales through ISP. On the B2B side, we can see that we had stability on the Corporate segment, and obviously growth on a sequential basis.

And on the small and medium customers, we reached again stability from the second to the third quarter ‘20, but we are also working on a recovery plan that will benefit from our FTTH deployments also for the segments. In terms of IT revenue evolution, the highlights is that we are already reaching almost $119 million in the quarter.

It's a 50% compound growth since the launch of which points to the correct direction of our strategy in terms of corporate revenues. And obviously having IT increased quarter after quarter as a percentage of our revenue mix.

On the wholesale front, we also had a growth considering the results from last year to this year. We faced some challenges during the beginning of the pandemic, but the numbers as a whole they stabilized.

And we can see that the unregulated revenue also started to increase again while the low speed legacy regulated revenue in particular due to the impact of traffic had a slight decline. But on the wholesale front, it's also worth highlighting that our net sales through ISPs have increased dramatically.

And when we look at their results compared with last year, it's almost a 400% increase showing that this is a very promising segment. That's we believe will be one of the basis of the growth and infrastructure for the future to come.

So moving on to page nine, let's look at our cost efforts. And here, the focus on simplification and efficiency continues to pay off leading to progress on digital transformation, further OpEX reductions, and a return to annual EBITDA growth.

On the OpEX side, as we already highlighted at the beginning of the presentation, we had an almost 10% reduction virtually in all cost components. And how did we do that?

We did that through a combination of several different initiatives starting with digital first. And in this case the pandemic actually helps to move things to digital faster both internally and externally.

And this leads to number such as 85% of reduction off the interaction story of our clients through digital channels are leading to a great reduction in terms of the human contact, which obviously is more costly components of customer here. We also had close to $140 million in savings with front-office and back-office optimization due to robotization and automation of processes, and our customer care operation continues to deliver very good results on cost reductions.

This was aided by innovative solutions, such as the increase of the use of our digital assistants and over artificial intelligence, and also a very good increase in the usage of a self-care solutions such as on the structure and processes front, we also have some very important progresses during the quarter. And in addition to that, right after the end of the quarter, we announced an incentive program for our workforce reduction.

That will least when annualized savings of over $200 million next year. On the operational front, we also focused heavily on efficiency in particular on the legacy costs, which lead to OpEx reduction by virtually shutting down all of the legacy portfolio sales, reducing the number of legacy stations and migrating whenever possible from copper networks to fiber.

All of that last to a growth in routine EBITDA of 2.4%, and it's important to notice that we also include a increase the EBITDA percentage. Next, talking about CapEx on page 10.

We can see that the CapEx strategy was a continuation of the things that have already started to occur since the launch of our strategic plan, and the allocation profile of the CapEx continues to evolve in full alignment with the company's fiber strategy, obviously increasing the allocation to FTTH and reducing significantly the investment in legacy. As we can see on the FTTH, compared to last year, we had a 20 points increase from third quarter ‘19 to third quarter ‘20 in the allocation to fiber.

And a 13% 13 points reduction on the legacy in particular the copper investments. Obviously, this is important align with our strategy to center the activities of the company around the core aspects of fiber, but despite the CapEx driven, our cash management was really tight as we can see on page 11.

On page 11, we demonstrate that we had a strong commitment to financial discipline, and this allow the company to control the cash consumption, obviously with the approval of the plan amendment, helping to ensure that the funding options necessary to deliver the execution of the transformation plan and now insights both with the execution of our M&A processes, but also with the reduction and deleveraging of the company considering not only the repayment of debts, but the restrictions part of it. On the cash flow side, we ended the quarter with a close to $5.7 billion in cash after having started it with just slightly over $6 billion.

So, in cash consumption overall of less than $400 million, and considering the investment period that the company is going through to fund our fiber expansion. This is a very positive result.

This was helped by the increasing routine EBITDA, and we also had one extraordinary fact in the quarter, which is the anticipation of the CECL payments, the surplus of CECL which helped us increase the cash bias slightly over $400 million. Obviously, we also continue to count on the non-core effect and given the approval of the GCN, the known Cory facts going forward will continue to occur through the sale of a - some of our core assets.

And now this helps the company to bring in close to $200 million during the quarter. On the debts, we see an increase to $21.2 billion of net debt.

And this was in effect primarily of the increases in interest FX variation and the fair value amortization increases due to the progression of the period of the debt. Obviously, we see all of that under the lights of the approval over judicial recovery amendment, and obviously, the sale of the UPI that will help us address a key concern of the company, which is the funding of not only the investments for the time to come, but also to the reduction of the debt, and all of the projects continue working very well when progressing very well, towers, data centers, mobile, the infrastructure company, and also the initial phases of our efforts on TV.

All of that, will last to adapt - leads to adapt to prepayments and deleveraging of the company, both by repaying bridge loans and NDS, and by repaying local banks and ECAs already with the restructuring of 55% announced and approves that during the GCM. In addition to that, we also have added in the plan funding optionalities to do a funding transition during the spirit while we complete all of our operations by resorting to some pre-approved options in our plan to fund the transformation journey.

This has components such as a potential bridge from the UPI mobile sale in an amount of up to $5 billion to other lines of $2 billion each, and the flexibility for additional funds guaranteed by the structuring of the Infra Company model that we have put together, which will allow it if it's required to be really leveraged without any impact on plan. So next, in order to do all of that, how are we tracking our transformation plans?

And on page 12, you'll be able to verify that we are having that with a very structured and disciplined approach to ensure the successful transition of the model, the company is carrying now to an integrated execution of 15 transformation programs, covering virtually all of the aspects of the change that the company is going through, starting with all of the M&A processes, then looking at the creation of all of the structures that we will represent the future of the company in terms of the Infra Company and the transformation of the new Oi and the creation of our so-called client's company, all the way to the efforts of the support areas and looking at digital transformation, transforming our organization, and obviously that being very firmly and very strongly on the regulatory agenda. Finally, going through all of the costs and cash initiatives, such as a drastic cost out program in all areas of the company at de-averaging of our legacy costs, as we have announced this several times before, a very deep reviewing our procurement processes and our actions to allow for short-term financing during this transition.

All of that is obviously complimented by the very, very close follow-up off the business execution management with a TMO approach, which is the transformation management office approach. That's follows all of those initiatives with a great level of detail.

So as we can see, we have lots of work for 2021 and on slide number 13, we can see what is the expected timeline that points to a complete transition of the model by the end of 2021. As we have highlighted already during September, October, we had the approval of our plan amendment in our general creditors meeting, and the confirmation by the judicial courts offer the plan approval.

Now, during November, at the end of November, we expect to conclude the competitive bidding processes for both the UPI Towers and the UPI Data Center. In mid-December, we also had an announcement of the dates for the competitive bidding process for UPI mobile.

And then we expect the closing with caching of both towers and data centers. And starting next year, we will have the Infra Company and TV company, UPI auctions, and finally leading to the closing of the large processes during Q3 and Q4.

And all going according to plan, we already have a set dates for the end of the judicial recovery, which is by October 21. So looking at all of that, what to expect in terms of a, where are we going by the end of next year?

And on page 14, we can see that the company has - and is executing on a very clear vision. At the end of the transformation process, we will have two very strong pillars with clear and distinctive value propositions.

On one end, new Oi, which will be an integrated company with technology and digital services platforms that will help people in companies transform the lives and businesses. And we're calling this client's company, a digital experience company.

It's not only will be a customer centric company, but we will leverage on a very, very strong customer brands. And this can be shown in the launch of several new initiatives by this quarter and last quarter, such as the launch of the Oi place, marketplace for connectivity services and products by the launch of Oi experts, which is our service to all of our customer base, which is already gaining a lot of traction, but they continue the acceleration of Oi Play, which is our contents play in terms of aggregating streaming services.

By our points program, which has been completely renewed by the use of Joyce, by the user of our self-help care tools, and obviously by the launch of several new digital services to come. The possibilities are endless, and we can see that not only we will do that to the customer side, but also to the corporate side with the continued evolution of Oi Solutions.

On the other end, we'll have the Infra Company, which without any question will be the largest telecommunications infrastructure company in the country, massifying optical fiber enabling the very rapid expansion of broadband, not only for the new way, but also for the entire country, expanding and enabling the 5G services through the use of our very capital or fiber, and also enabling business services across the country. And we see that the infra company already has a mantra, which is one infrastructure, multiple networks, and all of the futures for the operators in the country.

So the largest neutral, natural player enabling all types of connectivity services based on our extensive fiber network. So in closing, on page 15, we can see that we continue to successfully stabilize and improve our operations.

We have already redefined our strategic model, and we are delivering a very strong acceleration of our fiber optics plan. The approval of our judicial recovery plan amendment in September was a firm validation of our ambitious model to accelerate growth.

If we will enable the creation of the largest infrastructure company in Brazil, and we will bring back Oi to the long-term sustainability, that we all have been looking for. The structural separation model we will allow for considering both strong growth and financial stability, both for the infrastructure company and for Oi SA.

And the plan amendment also allows for a significant injection of resources into the company, through the sale of the UPI, healthy, secure, both investments for the long run and a critical reduction in our company debt. And the transformation will be relentlessly pursued through the integrated execution programs that we showed you, and that we are executing on a daily basis.

And having said that, we highlight once again, that this management team and the Board of Directors continue fully committed to executing this new strategic model with rigor and speed. And not only we have this commitment, but we also have our full confidence on the successful execution of our plan.

So in general, those were the highlights we would like to present for Q3. And we believe that we will move on now to the Q&A section.

Hi, good morning everyone and thanks for the call. I have two questions here.

I mean first one, I wanted better performance of FTTH, which were the second largest competitor really strong that the main competitive advantage that you are seeing right now. And is there any specific region where you are performing better.

I think the main goal was to understand how sustainable these let's say 150,000 homes for next three months following week, we can see that. And if there is room for growth improvement, this is the first one.

And then the second one on the same line you already reached that they could play for something like 22%. I guess the targets for the new to term is 25%.

So I just wondering if there's room to revise these long-term targets to be conservative despite. Thank you.

Thank you Fred for the questions, and while starting with the first one. We obviously have been having a very strong performance.

And we believe that this is across the board Fred is not the specific in one region or another, it's in the entire country. And obviously what we have been doing is we have been doing a deep that is based on a very, very fine grain approach and a selection of targets that we have done a while ago, obviously this points to a large demand base potential that we have seen in the entire country.

As we have highlighted a few times before we believe that this overall number of viable homes were abroad, the numbers for fiber broadband in Brazil is above 30 million. It's actually closer to 40 million.

And that's the reason why we have in our plan amendment increased our targets for the infrastructure company to cover over 30 million homes. And so you can say that we're just starting because in reality we are few less than one-third of the way.

And when we look at how can we do that? What is the main competitive advantage?

Well, the product to begin with is a very good competitive advantage. I mean, we're competing with an existing customer base where people don't have fiber yet, that is based on FTTC or is based on NACOA.

And it's unquestionable when you look at the quality difference in terms of stability, in terms of performance that we have a superior product. Obviously, when we compete with local ISPs.

When we compete with fiber directly, we can also point out our main competitive advantage being in the very strong performance of our overall core network. Remember that the fiber product is not only what goes into the customer home, but it's also how this whole traffic is managed and carried out in the core backbone and the core backhoes.

Obviously, we believe on the strongest backbone and back haul infrastructure in the entire country. And we don't have many of the limitations in terms of a traffic capacity that many or even most of those local players have.

And this has allowed us to maintain a very consistent performance even during a time of great stress through a network traffic with increases close to 40%, 50%. So it's a combination of a competitive advantages on the technical side, but then I can still points to a yes to additional components.

And we highlighted those before already. One of them is the, a very strong sales channel that the company developed.

Oi was the only company to actually develop sales channels across the country in the entire country. As you know, is the only company that covers almost virtually all of the country's municipalities, and even though, this is not being used that to sell copper anymore.

And now we highlighted that obviously the knowledge of the local channels, and the knowledge of how to work in the entire country has helped us tremendously. And finally, I cannot go without mentioning the deployment machine that we have.

We do have a deployment machine is based on a very steep learning curve that was done since the beginning of the project. And that also relies on a company that we control it's relies on saying.

Hi, just so we control our fuel team. We control the quality of our fuel team.

We control the speed of our fuel team. We can very rapidly redeploy a few teams to do work whenever is needed in productive for us, and as such, it's really a very good combination of a lot of factors.

There is no single silver bullet here in terms of competitive advantage. And we believe that this is good because in reality, it makes our road to not super easy to replicate.

It's not just throwing money around. It's actually a combination of a lot of things that have developed over time.

In terms of the take-up rates, just going back to what I pointed out in the response to your first question. Obviously, we had planned when we launched the plan back in the middle of 2019.

We had planned for a reaching 25% take-up by 2022. So three years after the launch of the plan.

And we'll certainly get there a way sooner. And when we redone the plan with the plan amendments, and the separation - the structural separation with the increase in investments on the infrastructure company.

We saw that, yes, this number can be increased. It can be increased 40 Infrastructure Company, and by the same token, it can be increased at Oi.

So we're looking at the number, which has already hired in this, and I would say that it can approach the 30% take-up rates. And when we look at the numbers for both companies, the 30% take-up rates actually leads to a plan a few years down the road, the only infrastructure company to have at least the 10 million homes connected as part of explant.

And obviously we believe that the vast majority over 70% of those will come from Oi itself. But we can also benefit especially in the areas where Oi directly does not operate from the growth in ISPs, as you saw, we highlighted in one of the charts that our sales to ISPs have increased tremendously, and we could benefit not only from providing back on and back haul, but also by doing partnerships with them, and selling the complete FTTH approach including the home connected

Thank you.

Thank you, Fred.

Hi, good morning thanks for my questions. The first would be on the fiber optical, you saw a good improvement.

This you see further improvements as you continue to migrate clients to faster speeds, and also continued to add more products to RGUs per subscriber. And linked the first question is regarding DTH, which saw sequential growth.

So I kept wondering when you’re adding these fiber clients, are you initially adding them with DTH? And if that’s the case is there a room for to migrating to IPTV later and boosting up the ARPU?

And that's my question. Thank you very much.

Thank you, Marcello. On the fiber ARPU, yes, we obviously believe that there is space to grow and this is a combination of - obviously having a stable customer base that keeps increasing.

And if you recall, we have been publishing the fiber AARP and mentioning that while we continue growing at the very fast speeds, the fiber ARPU also will be increasing just by the sheer effect of the increase in the customer base. And the fact that as we add another 100,000 and 150,000 subs a month, this will be added over a base that is getting a bigger every day.

So the impacts of dilution will already play a part in increasing ARPU and a stabilizing ARPU around the higher numbers. But obviously when we look at the speeds, we show that not only we have reached an interesting number already with the product for 400 megabits per second that was launched not too long ago.

We have now launched the 400 megabits per second We obviously believe that we would continue increasing our launch in higher speeds, and this will help us move the base to a higher quality base in particular those users that were still looking for reasons to switch, and when we move to higher speeds, one thing is, hey, should I just transition my 120 megabits internet for 200 megabit internet. In our view, the answer is obviously yes, because it's such a much better quality that the switch is worth it.

But when you start launching the 400 to 500 and up, then the switch becomes more attractive and more clear, and this brings a customer base, a piece of the customer base, which is naturally a higher paying customer base. So, yes, we do see room to improve.

In terms of additional products, we have started expanding the Oi play approach show the streaming services. Obviously, IPTV will play a part in that and it will continue to grow.

But I’d like to highlight that in the future and so – this is part of the whole strategy of the client company and the focus – the centrality on customers and the focus on customer experience, we believe that we can add additional components of ARPU, which are not necessarily telecom services. Just to give you an idea, we have launched our Oi expert service and the Oi experts actually provides a number of services to the home in terms of helping configure and run and troubleshoot issues with the home connection.

And as you know, in many cases, the issues are actually due to customer devices. We are looking at not only expanding our technology to be able to detect that automatically, but also to offer services to help consumers in their own homes.

And this has already gained a significant traction. We are also launching other services in terms of offers for the home, the Oi plays – will play a part in that.

We are carefully curating products that can be offered to complement our fiber services. And obviously, we see room to improve.

In terms of DTH, no, we have not used the strategy of actually going in first with DTH and then migrating to IPTV, the DTH strategy started on its own. And it helped that obviously with our local presence and pretty much all of the country and a good sales channel approach, we were able to expand DTH in particular, in areas where there's no other option in terms of TV services, no fiber and not even cable.

So I would say that it's a service that is slightly more resilient than the segment as a whole, but when we look forward without a question, the structural trends, not only in Brazil, but globally, is that the DTH TV is probably coming down. In our case what we did to sustain this positive performance was that we closed very good partnerships with installers, and we obviously also closed a very good partnerships with companies that are helping us work on the electronics on the set-top boxes.

And this has been proving very helpful in maintaining our customer base and even increasing revenues slightly in some cases. So the market again is migrating to OTT.

We'll see that this migration will be negative in the long run to DTH, but it will be positive to Oi Fiber and to streaming and Oi Play. And so, it's a very good performance, but we see there's a – as a natural component of the strategy, and also a little bit of the situation as you saw TV had a slight to less negative time given the pandemic because the consumption of content increased during this last periods.

But we see with the structural long-term with a slightly – still decline on the overall numbers, but that's it in terms of DTH.

Thank you very much thanks.

Thank you, Maria. Well in terms of the fiber ARPU, I believe that I touched on many of the points to your question on when talking about the sustainability of the increase given not only the move to higher speeds, but to additional services.

But in terms of pricing power and inflation, which was the second component of your question, we obviously believe that there's always a fine balance between applying all of the adjustments according to inflation versus maintaining the growth. So, obviously, this is carefully analyzed on a strategic basis every single month.

But just comparing a fiber and a fixed broadband in general to the dynamics that we saw in the past in mobile, we're obviously talking about two very, very different scenarios. On a fiber and on a fixed in general, the switching is obviously a lot more complex.

So it's not as easy to just go into a store and change a SIM card. We're talking about the installation.

We're talking about the customer drop. We're talking about CapEx investment.

We're talking about a more difficult process for the consumer, but also in particular, a lot more costly efforts by the parts of the competitor when having to switch an existing customer. And this by its turn naturally put some barriers into how aggressive pricing can be.

It's obviously a one thing to say, hey, I have a plane flying here in the case of mobile and the seats are empty. So let's just make sure that the next ticket is a cheaper ticket, so we can feel the plane.

This is not the case in fixed broadband in, because in fixed broadband, you still have to actually add another seat to the plane and you have to go and add the O&T, which is the customer device. You have to build the customer drop.

So it’s not as easy to go to pricing war so to speak on fiber. And obviously this helps not only protects a little bit the pricing and the overall market, but it avoids pricing wars and it helps to pass through some of the inflation.

So, obviously, this is a market that is still growing. We believe that there's still a lot to be done in terms of pricing models, but we see less subjects to all of the - very sharp fluctuations that occurred naturally in mobile.

So it's a more productive pricing environment. On the CapEx front, yes, we do have – every year we do have a greater allocation of CapEx to fiber as a whole.

And in our case, we do have a higher number of CapEx going next year to the infrastructure company set up. Just let's remember that when we talk about the infrastructure company, we don't expect to have this closed by the beginning of the year.

It's obviously at the end of the year. But what we have been doing internally, we are already separating the operations and we have different entities, actually receiving the investments and the infrastructure company entity is already separate from the rest and we're already allocating CapEx with.

And this is just the natural progression from the CapEx allocation model that we showed. So when we look at the over $7 billion of CapEx give or take that we have been talking about, every year we're increasing the percentage of a fiber and next year we'll be no difference.

Let's remember that all going well. And the competitive process for the mobile sale at the end of the year.

Next year, we'll have a different year in mobile. We're also obviously going to invest in mobile because we needs to keep up our speed and performance and now we're going to do that.

But in reality, we don't need to be concerned with actually investing for the super long-term if the operation is closed, and this will allow us to optimize that moving a greater part of the CapEx to fiber. And the idea is on the infrastructure company to find this as much as possible off of this CapEx already with the structure of the infrastructure company itself.

There are several models that allows us to do that even with the guarantees of the shares of the infrastructure company itself, even before we close a deal of a selling the controlling stake, and as such we obviously have it already blends for the infrastructure company next year, it's also important to highlight yet another thing terms of CapEx, which is what we're doing is not only increasing CapEx. We're also increasing the efficiency of this CapEx, compared to when we started the project back in ’19.

We have already a significantly reduced our unitary prices on installation on the ONC, on the fiber itself. And this has been helping us to accelerate the CapEx the fiber deployment without proportionately accelerating CapEx.

So this is very important the unitary CapEx numbers are showing very positive results. Obviously, we gained scale, we gain an importance scale, not only in the overall deployments, but also with sheer base that we have.

And this has helped us to be a lot more efficient in procurements. So we do have that a well-planned, and we believe that probably, I'll say a number here close to 70%, if not more, we will also be - we already be in the infrastructure company next year in terms of CapEx.

Perfect. Thank you very much Rodrigo.

If I may just make a very last question. Can you just comment on the strategy for 5G in terms of the spectrum auction?

Thank you.

Sure. As you saw, there were some very recent news regarding the 5G model.

We are well busy online we had. There was a manifestation from Monticello yesterday, and we believe that the 5G approach towards is actually very clear.

We do have a view that while we do not close the transaction, so until the moment we close the mobile transaction, our mobile operation will be an independent operation. And as such, we obviously will consider the participation on the 5G.

We do have our plans in terms of what to do with this spectrum should that transaction close? Let's just remember that, on the 5G front, obviously 5G - especially on the 3.5 gigahertz spectrum is used certainly for mobile services, but there is a very good potential as well especially if you consider that some specific regions in the country.

To use that spectrum, to provide FWA service, Fixed Wireless Access Service. In particular, in the areas where the density to provide a full fiber coverage on the retail front is still not there.

So there are areas where we do have fiber coming up to the CDs, but it would be less effective or less with slightly less turns. So not the returns would not be less slightly positive returns in terms of actually deploying fiber all the way to the end.

So the 5G is an option for us, fixed wireless access, and we believe that we should be able to look at the auction and make our decision whether to participate and how to participate having this into consideration. We also believe that obviously looking at 5G, there is a second component, not only in the spectrum itself, but we believe that it's positive to have the 5G auction resolved in terms of its model in terms of its definition of timeline, which is the use of fiber itself.

So the speed up of the 5G deployment will help us accelerate the wholesale services on the infrastructure company. We believe that there is absolutely no way in which 5g can be deployed all over the country without using significant amounts of the infrastructure company fiber services.

So, all-in-all, this is the approach, but obviously the news - the very recent news of the model of the auction are just under review right now as we speak.

Perfect. Thank you very much.

And congratulations again.

Thank you.

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

I have a couple please. One is, can you give us an update on negotiation move those credits new legislation is the same line of discussion.

There is another piece of legislation, which is now in the sentence and the questions here is what are benefits of this new legislation to Oi? And the second question, I don't make them together.

The second question is really to Oi mobile, what is the brokerage cost in ’20. If so the textbooks that are just going to be innovative, but it's would be fully compensated by the accumulated losses of 2020, please.

Thank you.

Okay, thank you, Carlos. So, on your first question there on a foul credits.

Well advanced into the process as you recall on not only favorably recognize that the proposal, which was already formally submitted to the AGU, so much so that they voted in favor of our restructuring plan, the amendment of the restructuring plan. And obviously, we are now just on the final phases of having that settled about closing the transaction.

The expectation is that we'll be able to sign this transaction with the AGU very, very soon. And then it moves on to the final signature of the Ministry of Communications.

We have already discussed this both with the AGU and with Anatel and with the minister itself - the ministry itself. And we believe that there will be no issues and that the transaction should be signed this year.

About the 6229, as you know, this is in the agenda for voting in the upcoming weeks. There was the definition of a new reporter.

The reporter mentioned that, yes, there are some things that need to be reviewed Rodrigo Pacheco, but in reality as everybody believes that this is an important project especially for this year, given that the pandemic has brought unfortunately an increase in the number of companies that have filed for a judicial recovery. So there is, we believe, political will to have the project approved.

It will be a beneficial project for the country and it should be approved we believe still this year. If not, now in November, what we believe that before the break at the end of the year, this project should be approved.

Obviously, the project is positive because in particular for our case, the project brings the possibility of migrating our existing transaction that is being discussed and signed with the AGU and Anatel to more favorable conditions. If you recall, our Anatel credits have been taken out of the plan and into Law 13,988 with a 50% discounts and 84 months.

And this new condition under Law 6229 when approved and our transaction already allows us to actually move to this more favorable condition if approved. We would be able to actually increase the haircuts to 70%, the overall discount on the debt to 70%, an increase the terms of payments to 120 months from the 84.

Orderly, there will be a positive things in terms of - additional positive things in terms of the 6229, and the 6229 will help all companies actually to avoid the - almost absurd situation where a company ended judicial recovery is actually paying taxes on capital gains, which doesn't make any sense if obviously there is some tax credits to be used. We believe that those two will be very favorable.

And as far as your last question, remember that we need to close the transaction, but obviously our projections show that when we look at just the isolated effects of our operations as we have been today, we have ample space to accommodate for some of the gains. So, unfortunately, the tax credits, in terms of a tax loss carry forward for us is enough in the separate companies, the separate entities to accommodate and compensate for the transactions that we expect in the short-term.

Thank you very much, Rodrigo.

Thank you.

Yes, quick questions please. Thank you.

First of all, just…

Soomit? I guess, Soomit, has dropped from the connection.

Thank you. So, well, we'll make sure to take Soomit's question later on and we'll follow up with him, so questions don't go unanswered.

But, overall, thank you guys for another call. We continue again as we highlighted firmly committed to making this plan work.

We have the full management team and the full board really committed to it. We believe that the results have been good.

We believe that there's still a ton of work to do, but given what we were able to do over the last 18 months in terms of delivering on the plan, we believe this will continue to be the case next year as we prepare for the final phases of our restructuring. And so, thank you for participating with us in the call.

We hope to talk to you soon in our next earnings call at the beginning of next year. Thank you and have a great day.