Good morning, everyone, and welcome to Vivo's fourth quarter and full year 2025 earnings call. Today, our CEO, Christian Gebara, will start by commenting on Vivo's performance in connectivity and digital services, as well as present our main ESG accomplishments for the year.

Then, David Melcon, our CFO, will walk us through Vivo's controlled cost and CapEx evolution, free cash flow generation, profitability, and shareholder distribution during 2025. With that, let me turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you for joining us today.

I'm pleased to share that Vivo's 2025 performance was remarkable. We grew above inflation in all key lines, driven by solid commercial momentum and our continuous focus on offering the best customer experience in Brazil.

Starting with mobile, the postpaid segment was a major highlight. Accesses expanded 6.5% year-over-year, reaching 70.8 million customers, now representing 69% of our mobile base.

In fiber, we closed 2025 with 7.8 million homes connected and a footprint that extended to 31 million homes. These advances, coupled with our commitment to quality and customer satisfaction, reinforced our leadership in the fiber market and allowed us to accelerate fiber-mobile convergence.

Turning to our financial performance, total revenues in the fourth quarter rose 7.1%, supported by balanced growth in both mobile and fixed services. Mobile service revenue progressed 7%, while fixed services improved 5.4%, reflecting the sustained contribution of fiber and corporate solutions.

EBITDA grew 8.1% versus fourth quarter 2024. Excluding the effects of the concession migration from both years, EBITDA advanced 17.7% year-over-year, reflecting the success of our day-to-day execution.

Operating cash flow also showed solid expansion, up 13.4% compared to 2024, representing 26.1% of our revenues. Net income grew at a double-digit rate in 2025, totaling R$ 7.2 billion for the year, while free cash flow increased by 11.4% to R$ 9.2 billion.

These strong results enabled us to fulfill our promise of paying shareholders at least 100% of our annual net income. In 2025, we paid out R$ 6.4 billion, reaching a payout ratio of 103.4%.

Next, on slide 4, we illustrate how the transformation of our top line continues to advance, driven by diversified revenue mix and the rising contribution of our new businesses. Total revenues in the quarter reached R$ 15.6 billion, supported mostly by postpaid and FTTH that grew 9% and 9.8%, respectively.

Notably, this quarter delivered the strongest growth in our handsets and electronics line in three years, up nearly 14% year-over-year, fueled by a broader portfolio, seasonal offers, and a robust demand for electronics. Our new businesses also presented another standout year.

Revenues increased 27% over the last 12 months and now account for 12.1% of total revenues, an expansion of 1.9 percentage points compared to the previous year. Both B2C and B2B solutions contributed meaningfully to this evolution, reflecting the success of our strategy to diversify our portfolio and scale digital services.

Moving to the next slide, we continue to see the solid momentum of our mobile business boosted by Vivo's differentiated network quality and customer experience. By the end of 2025, our mobile base reached 103 million accesses, a year-over-year increase of 0.7%.

Postpaid, including M2M and dongles, remained the main growth engine, expanding 6.9% and surpassing 50 million customers for the first time. Adoption of 5G is accelerating rapidly.

Our 5G customer base rose to 23.1 million users across 716 cities in Brazil. This pushed our 5G take-up ratio to 27.8%, an improvement of 8.6 percentage points in one year.

This reflects not only the strength of our network, but also the value customers perceive in transitioning to newer technologies. Postpaid churn continued stable at 1%, while ARPU grew 5.8% year-over-year.

Together, these indicators highlight the effectiveness of our retention initiatives as customers adopt higher-value plans and demand more data. Overall, these results reinforce the strength of our mobile platform, a combination of superior network quality, disciplined commercial execution, and a customer-centric approach that drives continued sustainable growth.

On slide 6, we dive deeper into the strength of our convergent proposition and how it's setting a new benchmark for quality and retention. As our fiber footprint expands, does our capacity to attract new customers.

Over the last year, we passed an additional 1.9 million homes, bringing the total to 31 million, while our take-up ratio improved to 25.2%. FTTH accesses maintained double-digit growth, increasing 12% year-over-year and reaching 7.8 million connections.

This performance is once again propelled by Vivo Total, our flagship offer that combines the best mobile and fiber, which expanded 41% compared to last year in terms of subscribers. Today, 62.7% of our entire FTTH base is already converged with postpaid, out of which 43% through Vivo Total, reinforcing customers' clear preference for integrated solutions while also demonstrating the significant upside that still have to further scale our convergent offer and improve customer loyalty across both postpaid and fiber services.

In fact, fiber churn remains on a downward trend, reaching 1.4%, the lowest level in our history. This sustained improvement reflects both the quality of our network and the stickiness of Vivo Total's value proposition.

Heading to slide 7, we show how the evolution of our B2C segment is supported by the growing relevance of services that go beyond connectivity and positively impact our customers' lifetime value. In 2025, total B2C revenues reached R$ 44.8 billion, up 5% year-over-year.

This performance reflects not only the solid resilience of our connectivity services, but also the strong momentum of our new businesses that grew 20.7% and now account for 3.3% of total revenues. We also saw consistent improvement in revenue per RGU that hit R$ 65.8.

This increase is supported by our ongoing efforts to expand customer engagement, drive cross-selling, and extract higher value from our existing base. Looking specifically at new businesses, we continue to see solid performance across all lines.

Video and OTT and music OTTs remain the largest contributor, advancing 18.1% year-over-year. Consumer electronics delivered another standout result, growing 36%, while the health and wellness category posted remarkable momentum, with revenues rising close to 70% in the year.

We're also strengthening the foundation for future expansion. Through Vivo Ventures, we approved an additional R$ 150 million for new investments with a particular focus on AI-driven initiatives, bringing the total investment capacity to R$ 470 million.

Through our partnership with Perplexity, we are offering customers complimentary one-year subscription to Perplexity Pro, reinforcing our commitment to delivering differentiated digital experiences. All these developments underscore how Vivo is evolving into a broader digital platform, where connectivity remains at the core, but is increasingly complemented by diversified ecosystem of services designed to enhance our value proposition and improve monetization.

Turning to next slide, we provide more details on Vivo's B2B strategy and how the ongoing shift in our revenue mix is quickly gaining traction. In 2025, B2B revenues amounted to R$ 13.5 billion, up 13.7% when compared to 2024.

Digital B2B was once again the main growth engine, advancing 29.5% and now representing 8.8% of Vivo's revenues. Connectivity also maintained a healthy performance, rising 5.4% in the same period.

Within digital B2B, all products continue to expand at a strong pace. Cloud revenues soared 37.8%, followed by IoT and messaging at 25.9%, digital solutions at 22%, and cybersecurity at 8.4% year-over-year.

B2B continues to gain relevance within our revenue mix, increasing its share by 140 basis points year-over-year. The strong performance in 2025 marked the segment's fastest annual expansion in recent years and reflects the accelerating demand from companies undergoing digital transformation.

Altogether, these results underpin Vivo's strategic role as the trusted partner for companies seeking to modernize their operation, scale cloud and IoT adoption, and strengthen their digital capabilities. On slide 9, we reinforce our sustainability remains a cornerstone of Vivo's strategy, supported by solid advances across environmental, social, and governance dimensions, which is validated by our strong performance in global rankings.

According to Merco's Corporate Reputation Ranking, Vivo placed in the top 10 companies across all sectors and achieved the best position among telcos. We also achieved the fifth-best performance in the sector worldwide in S&P Global's Corporate Sustainability Assessment and earned a place on the CDP A List for the sixth consecutive year.

Additionally, we were recognized by Corporate Knights as the most sustainable company in Latin America on the list of the world's 100 most sustainable companies. On the environmental front, Vivo participated in COP30 as a supporter for the first Planetary Science Pavilion, an initiative that brought together leading scientists to advance discussions on climate resilience and the future of life on the planet.

Regarding Fundação Telefônica Vivo, it reached over 2 million beneficiaries, with R$ 47 million invested in initiatives focused on education, employability, and digital inclusion. In governance, we expanded the scope of our Information Security Management Certification under ISO 27001, strengthening the protection of data and systems that support our operation.

I invite you to check out our 2025 ESG Highlights, which compile the year key indicators and achievements, and outline the strategic priority for our ESG agenda. Now, David will give you more color on our financial performance for the quarter and year.

Thank you.

Thank you, Christian, and good morning, everyone. On slide 10, we provide an update on the evolution of our cost structure and highlight the strong EBITDA performance in the quarter.

On the left side, you will see that total cost reached R$ 8.9 billion in the quarter. When excluding the effect from the concession migration, OpEx was flat, with a year-over-year evolution of 0.4%.

This reflects a balanced combination of commercial momentum and disciplined operational management. Cost of services and goods sold rose 9.7%, mainly driven by the higher contribution of B2B digital solutions, continued demand for music and video over-the-top, as well as the share of handsets and electronics.

Operating cost grew 4.4% year-over-year, led by a 6.4% evolution in personnel expenses, reflecting annual salary increase and a higher headcount in strategic areas such as digital tech. Meanwhile, our largest cost line, commercial and infrastructure, declined by 2.6%, due mainly to some one-time infrastructure expenses registered in the same quarter last year.

The results in both years were positively impacted by the effects related to the migration of fixed voice concession to the authorization model. In the fourth quarter last year, we recognized a reversal of provision for contingencies totaling R$ 386 million, in addition to asset sales amounting to R$ 206 million.

In the fourth quarter this year, we recorded R$ 96 million in copper sales and R$ 6 million in real estate sales, adding up to R$ 102 million. Excluding all these effects in both periods, our EBITDA grew 17.7% year-over-year, with a margin expansion of 380 basis points, reaching 42.3%, while reported EBITDA was up 8.1%, with a margin of 42.9%.

Moving to slide 11, we present the evolution of our operating cash flow for the year. CapEx amounted to R$ 9.3 billion, a modest 1.1% raise year-over-year, while our CapEx-to-revenues ratio reduced to 15.6%.

This reflects lower capital intensity and the continued prioritization of investment with the highest return. As a result, operating cash flow before leases reached R$ 15.6 billion, an increase of 13.4% compared to last year.

After leases, operating cash flow rose 17.3%, totaling R$ 10.1 billion, with margins expanding to 17%. This strong performance demonstrates our enhanced ability to convert EBITDA into cash, supported by disciplined CapEx allocation and softer lease cost evolution.

Going forward, we remain focused on further optimizing our tower-related expenses and improving contract efficiency. The trajectory of our operating cash flow margins underscore the strength of our return profile.

On slide 12, we highlight how our disciplined financial management continues to translate into profitability and a strong cash generation. Net income for 2025 reached R$ 6.2 billion, an 11.2% increase versus the previous year.

This growth was well-balanced throughout the year, reinforcing the consistency of our execution and resilience of our business model. Our net cash flow position also improved, ending the year at R$ 2.3 billion compared with R$ 1.4 billion in 2024.

When considering IFRS 16, net debt stood at R$ 13.1 billion, equivalent to just 0.5 times EBITDA, underlying the continued strength of our balance sheet. Free cash flow rose 11.4% to R$ 9.2 billion in 2025.

This performance reflects both our disciplined CapEx allocation and the healthy fundamentals of our operations. As a result, our free cash flow yield reached 8.6%, and free cash flow over revenues came in at a solid 15.4%.

These results reaffirm our ability to improve profitability and cash generation while maintaining a very comfortable leverage profile. Lastly, on slide 13, we highlight our continued commitment to shareholders' remuneration.

In 2025, we distributed R$ 6.4 billion to shareholders, an increase of 9.1% compared to the previous year, driven by higher share buybacks and capital reduction. Notably, we once again delivered on our guidance for the period, this time with a payout of 103.4% of our net income.

Looking ahead to 2026, we have already announced the distribution of R$ 7 billion, including the R$ 4 billion from capital reduction to be paid in July and the interest on capital of R$ 3 billion declared in 2025 to be paid in April this year. We also declared an additional interest on capital in February this year that will be paid before April 2027.

Moreover, our board of directors approved a new share buyback program of up to R$ 1 billion to be executed until February 2027. To conclude, we reaffirm our commitment to distributing at least 100% of net income for 2026, maintaining a clear and disciplined capital allocation strategy focused on value creation for shareholders.

Thank you, and now we can move to the Q&A.

Hi, everyone. Good morning.

Congrats on the results. My question will be all centered on distributions.

A little bit long, but all centered on distributions. If you could first discuss the drivers for the mix in 2026 between buybacks, interest on capital, and capital reduction, what makes you pick more of one than another?

For example, we notice a potential reduction in buybacks, but a huge increase in capital reduction. Could that mean you are thinking about continuing on that path of increasing potentially leverage, changing the capital structure?

Still on that topic in the last part of my question, if you could discuss net income drivers for 2026 as we noticed an increase in copper sales. Maybe there's upside for consensus estimates.

Since you guide dividends on back of net income, we want to know that. Thank you.

Hi, Leonardo. Thank you for the question.

The first one, we have a commitment for the last two years to distribute at least 100% of our net income. This is something that we have done the last two years, '24 and '25, and we always try to combine between what you mentioned, capital reductions, interest on capital, also dividends, and share buyback.

If you look our capital structure, we have more than R$ 60 billion capital. We obtained three years ago authorization from Anatel to distribute up to R$ 5 billion, which is something that we have already done.

We have already distributed R$ 3.5 billion. Now, we don't need any more pre-approval from Anatel.

That's why now we have also approved that will be paid in this year for another R$ 4 billion. The plan for 2026 is to combine and to continue.

Today, we have also approved a share buyback program of R$ 1 billion that will give us flexibility to continue taking advantage of interest on capital, which is something unique in Brazil, together with also capital reduction to maximize the value of shareholders. For next year, we are expecting, of course, to deliver more than 100% of our net income.

Regarding the capital structure, it's something that we are always exploring potential opportunities. The leverage that we have today in Brazil is very linked to the high interest ratio that we have here in Brazil.

If we expect that in the next future, the Selic will reduce, today is at 15%, the market is expecting this to reduce in the next few years. We could explore opportunities also to generate value and to maximize this opportunity.

I think this is what we have, a very strong cash flow generation and net income for next year, which was also your second question. We have been growing almost every quarter double digit.

For the next year, we continue growing on EBITDA. We will also benefit from the reduction of the depreciation and amortization starting from the second quarter.

We have included also on the financial statements, after July 2026, we will fully depreciate some of the legacy assets that we have in our balance sheet, and this will represent an improvement of R$ 300 million of profit before taxes just coming out of this, plus potential benefit from interest reduction. We are positive about the evolution of net income next year, what will bring additional shareholder remuneration.

Very good, David. Thank you very much.

Thank you.

Thank you very much. Good morning, Christian, David, João.

Thanks for the opportunity for asking questions. I want to ask questions about two key topics.

The first one is CapEx. Maybe David, could you please discuss what are the puts and takes for the CapEx outlook in 2026?

The second question will be about competitive environment. How are you seeing it, especially on mobile, and what is the outlook for passing price increases this year?

Thank you very much.

Marcelo, I will take the questions. Christian here.

CapEx, as we are not giving guidance, but as we said and have been stating in every call, we are working on CapEx optimization when you consider CapEx over revenues. As you could see, we came from 16.4% to 15.6% this year.

That's a combination of all the work we are doing to be more effective in the deployment of our infrastructure, added to that our ability to sell more services with no CapEx. We already reached more than 12% of revenues coming of services that no require CapEx.

That's why we have this strong evolution in operating cash flow. As we stated here, now we are increasing 13.4% year-over-year, and even when we consider operating cash flow after leases, this growth is even higher, 17.3%.

We continue to deploy 5G. As I said, we are following our customers and the penetration of 5G is going up, we are deploying 5G where our customers are.

We've been deploying fiber and penetrating more our network, we also saw the take-up ratio going up in the fiber business, so that's a good sign. Of course, it involves CapEx, but we are also saving in other lines.

The idea is this one: to continue to improve infrastructure, keeping our leadership, but being better in the ratio CapEx over revenues. Going to competition, can I go to the second one, Marcelo?

It's all very clear. Thank you, Christian.

Competition. Here, we have different strategy for the different segments.

We've been very strong in prepaid. Still, it's slightly negative, but when you compare what we had in last quarter revenues, this quarter is higher than the previous one.

Also when you compare the year-over-year evolution, we also have a better performance this quarter that we had in previous ones. We are increasing price according to the type of segment, we are planning March for postpaid and hybrid for front book.

We are expecting customer base price increase in April for both hybrid and postpaid. FTTH, we had price increase in January.

We have planned a new one for June. Vivo Total, we are planning 100% customer base price increase in April.

Following the inflation ratio, giving more data and more services, and also playing convergence. That's our strategy, and that's why we are positive about the evolution of our revenues going forward.

The back book is on April, right, for postpaid and hybrid? Is that correct?

Just to be sure I understood.

Yes, part of it is in April, the majority,

and

the rest is in August.

Perfect. Thank you very much.

Thank you.

Hey, hi guys. Thanks very much for the opportunity, and congrats on the results.

I have a couple here. The first one, there was a reduction in the lease expenses.

If you could please provide some details on why and also expected trend. This is the first one.

Thank you.

Please ask the two questions, Rogério, and then we answer both of them. What's the second one, please?

Sure, thank you.

Rogério, please ask the second question. I don't know if he's still in the line, I don't know if we answer the question or wait for him to come back.

You're going to answer only the first question, okay? Okay.

Rogério, thank you for the question. The evolution of the lease depreciation and interest accrual remain consistent with previous periods.

Even in both quarter and even the full year, EBITDA after leases has grown even more than EBITDA before leases. Regarding the payments, some volatility persists due to the ongoing renegotiation with the tower companies that we do every quarter.

That's why you mentioned the principal and interest payments that we have this quarter amounted to R$ 1.2 billion, which is lower than the previous year, but also lower than the previous quarter. That shows we are very optimistic about the potential trend of this line.

To give you more light here, the current tenancy ratio that we have in Brazil is 1.4 that we discussed last quarter, which is significantly lower than other comparable countries. We see a big opportunity to reduce the unitary costs of every tower, to share more the towers, and to fund the new deployment that we need to do here in Brazil to accelerate our revenues in 5G and also our coverage.

Optimistic about the trend that we have start seeing this quarter, but even though we will need to continue renegotiating those contracts, and this would be driving the potential acceleration of the reductions.

I would add that operating cash flow after leases, no, margin, we went from 14.6% in 2023 to 15.5% in 2024 to 17% in 2025. Sorry, '24, 15.5% in '24 to 17% in '25, aligned with all that we just said, no?

We're going to capture the growth of our infrastructure, we're going to renegotiate our contracts, and we're going to still generate operating cash flow after leases that has this strong margin as you could see the evolution over the last three or four years. I don't know, Rogério, if you have the second question.

Sorry. My line actually was dropped here, you couldn't hear me.

On my second one is about the prepaid ARPU. It has reverted a negative trend versus the first nine months of the year, also in line with our main peer in Brazil.

If you could please clarify what you think were the main drivers for that and what to expect in the upcoming quarters. Thank you.

As I said, Rogério, prepaid is being performing better quarter over quarter, and of course, that's also our ability to motivate customers to top up and also to consume the money that they have in the balance. It's part of our strategic behavior of the company, also being very able to motivate customers to higher average tickets and also the ability for us to monetize the tickets they have topped up.

On the other hand, we continue very strong in migrating prepaid to hybrid. It's even quarter over quarter that is a positive evolution.

We are extremely pleased with the mobile service revenue evolution, 7% over the last quarter, growing 9% in postpaid, that's the combination of bringing new customer, but also migrating pre to hybrid or postpaid, and also the prepaid absolute number of revenues that went from the fourth quarter from the third quarter of 2025 of 1.364 to 1.394. Churn in the postpaid also in the lowest level.

That's the result of a very well-segmented and thoughtful strategy for different segment that we have here in the company.

Okay. Thank you.

If I may a follow-up, if is to could expect the prepaid ARPU to keep increasing year-over-year in upcoming quarters, if you have any color on that? No, Rogério.

What we expect is revenue to continue to growth the way it's growing. We're not giving guidance for ARPU per segment.

No worries. Thanks so much.

Have a good one.

Hi, everyone. Thanks for taking my questions.

The first question is on the total net adds and the market share in mobile. If we exclude dongles and M2M, your number of subscribers has been coming down.

Any reason for that? Your market share is down 1 percentage point from last year.

What is driving this trend? The second thing is that if you look at your B2B strategy, it has been growing really well.

What are the further steps to maintain this growth in Brazil, and how is the penetration coming in the SME segment? Thank you.

Phani, I don't see mobile market share changing. That's very stable.

There are some corrections maybe in prepaid. Some companies disconnect later than we do, we're very confident about our performance in market share and actually in our performance in revenue growth.

Also we measure our good performance in ability to increase net adds, and fourth quarter 2025 was a record number, 930,000. That's a combination of bringing in more customer, but also reducing postpaid churn from 1.3% in the fourth quarter 2021 to the 1% that we be keeping at this level for the last four years.

That's what important for us, and mobile ARPU is also going up. If you compare what we had in the fourth quarter and what we had in the fourth quarter 2005 sorry, '24 and '25, there was an improvement of 5.8%.

We're not following this small variation in market share. The important thing is to keep attracting customers, retaining customers, and growing revenues.

Regarding B2B, that's a very strong quarter, as I said. We had in the year B2B, as I don't know if you are more interested in the digital service, R$ 5.3 billion revenues.

It's a 29.5% year-over-year increase. It's already, you know what's digital service, 8.8% of the total revenues from Vivo and is 39.1% of the B2B revenues of Vivo.

It's getting very fundamental for our strategy going forward. Penetration is growing in all segments.

SMEs is where we have more challenge to penetrate more the digital services, but at the same time, we are growing a lot connectivity in this segment. We have a variety of products we offer to this segment, coming from rental of notebooks up to cyber solutions.

That's part of our strategy, and we're growing in all segments with more acceleration in the top, but at the same time, the volume that we have in the SMEs, we are very, very, very happy with the results that we have in also in this segment, with a combination of connectivity plus digital service, as I described before.

Okay. Thanks.

Maybe on the connectivity part, right? You have grown 5% year-on-year, what is driving the growth in the connectivity part?

The digital solutions was more understandable, but what is driving this growth in the connectivity part?

SMEs, but also advanced data solutions for top-to-corporate customers, going up in the pyramid. We also have other connectivity solutions up to very dedicated links.

We've been growing in all lines. I think we gave some color.

Fiber, of course, it's B2C, B2B, but when we said that we are growing 9.8%, that also includes our great performance in SMEs, and when you grow 10.2% of data ICT digital services is also including corporate data solutions. It's in both.

Okay. Thanks, everyone.

Hi, everyone. Thanks for the opportunity.

I have two questions here. The first one, can you please provide us an update as how you perceive the competitive environment in the fiber industry, and also refresh us how you see any potential M&A in this industry?

The second one, could you please share your thoughts on how you see profitability expansion going forward? Are there any specific areas of the business in which you see some potential for further efficiencies, and how should we balance future efficiencies with the expansion of B2B?

Thank you.

Sorry, the second question is related to cost in B2B or cost in general?

Cost in general and how you balance this with the B2B expansion as it has a lower margin. Thank you.

B2B doesn't have a lower margin, but we we can address this. Let's go to the first one.

Maria Clara, the market is still very fragmented. You see the performance of the fiber business in in Vivo.

We went from 18.8% market share in the end of 2024 to 19.3% market share in the end of 2025, 0.5% increase in market share. Our net adds for the whole year was 834,000 customers.

If you look other competitors, some of the leading ones had very strong negative net adds for the year. It's still very competitive environment with too much fragmentation in our opinion.

If you compare, for instance, we are the leading company in fiber in Brazil, we have 19.3%. When I see the leading company in Spain has 34% of market share, when I see the leading player in France has like 39%, if I go to Japan, the leading company has 57%.

I think there is room for for for consolidation. I don't see any any rational reason to have so many players competing in same geographies.

We have 31 million home passed, we aim to have more. We see addressable 60 million, but we don't we don't see ourselves reaching this number, but we could reach something more closer to 45.

We could do that building ourselves, or we could that consolidating. Consolidating is still a question mark.

We have to find the right target with the right pricing, we have the right network not overlapping too much with ours, with the good quality. I see that's clearly we require more consolidation in this market because it's not doesn't seem to be sustainable for most of the players who presented negative net adds over the last year.

Regarding costs, I think we've been showing a good, very good number in cost of operations. The evolution was 4.4%.

That includes all the personal growth that we had, like because we want to to be more digital in some areas, we want to expand our penetration in some commercial areas. Even increasing 6.4% in personnel, we were able to just increase 4.4% in the cost of operations because we're we are bringing more efficiency in different areas, especially in our customer care that the app and other initiatives that we are deploying now, even using AI, is helping us to reduce other commercial and customer care costs.

The combination of both is that presented this 4.4% that is below, very well below what we presented in revenue growth. In the cost of service and cost of goods sold, both of them are very related to our sell sale of services.

Most of that, like I can give examples of video OTTs that I that I said before, or goods sold that is related to everything that we've been performing so well, that also presented our strong growth in this quarter in handsets and consumer electronics in general. Going forward, we're going to still focus in digitalization, and now with AI, we are very positive of bringing great results in cost efficiency.

B2B, sorry, and B2B you you stated. No, B2B, depending on the product, we're having very, very positive margins.

As I showed, we are growing 5.4% in connectivity. Connectivity in B2B represented in the year R$ 8.2 billion.

That has a very good and positive margin. Digital B2B, it depends.

We have also grown strong market in some of the in some of the services. When we say when we sell cloud, yes, it's the the margin is not that high, but when I have managed services over cloud, the margin is much, much better.

The same I can tell about cyber and even IoT. Also very confident on our ability to grow.

All these services, some of them even having lower margin, they are very positive in operating cash flow since they don't require CapEx. Again, we should look at the the the bottom of the results where operating cash flow and free cash flow, operating cash flow after leases or free cash flow, we presented a very strong positive trend.

Great. Thank you for your answers.

Hi, good morning, everyone. Thank you very much for taking my question.

Congrats on the strong results. I just want to hear your thoughts on how important is for a telco to have a convergence operation at the moment in Brazil.

We see Vivo focusing on the Vivo Total. It seems to be a big success.

How important is this for the whole strategy? Second, if you could just provide a little bit more information about your expectation for AI as a source of savings for costs in the upcoming years.

Thank you very much.

Oh Daniel, thank you for your initial comments. I cannot answer for all the other operators because I think we have different strategies.

I can answer about convergence for Vivo. Convergence has always been our focus, and if you look the numbers that we have today, we have 7.8 million FTTH customers, 62.7% are convergent.

Out of the 7.8%, in Vivo Total, we have 43.2%. There is still this number between the 43% and the 62% that are convergent, but are not in Vivo Total, and we are working to drive them to Vivo Total.

Why? Because I think when you are Vivo Total, I think switching costs for customers is even higher, and we also have the ability to have a closer relationship with these customers and monetize even better, selling also the digital service.

When you see the numbers that we presented of the new ventures in B2C, you see our ability to cross-sell not only mobile and fixed, but also the ability to sell video OTTs, to sell health services, and also to sell smartphones plus consumer electronics, only to give you some examples. Our churn ratio is also proving that is the right decision.

FTTH churn is 1.4%. If I look years ago, it was 1.6%, 1.8%.

When I compare the churn rate of fiber customers that are in Vivo Total is 1 percentage point lower than those that are independent fiber customers. For us, it makes a lot of sense.

Also, even having records addition of new customers in mobile, our churn is also in the lowest level of 1%. Our strategy continue to be the one who can have the customer with more services with Vivo.

That's why we also be presenting this number that we call services that we have for RGU. We get a customer and we try to add all the revenues that we have in B2C divide by the number of customers of RGU, and we see also a positive trend there.

That's convergence, but is also added to that the ability to sell the new businesses. That's the strategy that Vivo is following.

I cannot answer for others, but I think for us, that's the right one and the one that we're going to still continue to put all our effort. Then only to complement the Vivo Total, 84% of the sales that we have of fiber in our stores get out of store with 84% in Vivo Total, it makes a lot of sense.

Gross ARPU of Vivo Total in the fourth quarter was R$ 230. That's also a great measure to follow.

The average in a Vivo Total, we have one fiber connection and 1.7 postpaid connection, that also makes sense to see it that way. It's proving that customer wants to be loyal to Vivo in all the accesses.

We used to have very well-deployed AI here before the GenAI. WhatsApp was already driven by AI at Vivo and was a very important channel.

We had 4 4 million customers interacting with us per month in WhatsApp using AI. Now, with GenAI, I think the possibilities are even higher.

We are using that to optimize internal processes. For instance, when we need to go to a B2B public licitation, there was this big complexity to understand what was required by the operator in some of these auctions.

We now have AI to understand it much closer to what we have here as inventory, and then we have a response that is much faster and our ability to participate in many more licitations that we used to do before. We're also using AI as copilot to all our call center agents and store agents.

Now, we are piloting AI agents to answer directly to customers. That's a very important project that we're going to start having the first results in May this year that we're doing with partners.

Also, we are doing many other things in network optimization. It's a variety of actions that we're taking here to implement AI as core for our business.

Again, answering to the first question that I had before, I think from Maria Clara, in efficiency, we also believe AI will bring a lot of efficiency for us as well.

Hi, everyone. Thanks for taking my questions.

The first one, maybe a double-click on a previous question about M&A. We've been exploring M&A in fiber in also our recent notes, and V.tal obviously stands out, particularly now without Oi as a shareholder.

My question is, would you consider a large M&A to strengthen your fiber footprint? The second question, we've seen stronger portability figures for Claro in the fourth quarter, mostly impacting TIM and likely related to Nucel.

My question is, how are you perceiving this competition driver in mobile, and if this by anyhow changes your commercial strategy?

Hi, Gustavo. Thanks for the question.

No, it doesn't change our strategy. We have competition, and it's a very competitive market, and I cannot point out a specific player and the evolution of portability due to this player.

No, I think that's the market that we face. I think there is a lot of variation of portability month over month.

What is important that we keep growing net adds and we keep ARPU going up, because also getting more customers with ARPU decreasing is not the strategy that we are following. If you look, we had 4.4% increase in postpaid net adds if I compare the year-over-year quarter, and also we have a 5.8 ARPU evolution if I compare again the year-over-year ARPU, keeping churn level at 1%.

We're not going to get into this war if someone is trying to put a service in a lower value or try to use our service to acquire other services in different sectors. No, we shouldn't get to that, because we here preserving the quality and experience that we offer to our customers.

Positive evolution of net adds, positive evolution of ARPU, and extremely positive evolution of our churn. Again, we're going to face competition of different types, and that's normal.

It's a very competitive market, and telecommunications has always been very competitive in Brazil. Can I go to the other one, M&A?

Yes, thanks. Of course.

Yes. M&A is what I said.

Again, Oi is still has a stake at V.tal. They are in the process, but they still have a stake.

I think the market is very fragmented, as I said before. I think there is room for consolidation, but in our case, is not the size.

None of the players is large enough not to allow us to integrate, because as I said, I have 19.3%, the next one has 8.2%, and I think adding the second, the third, we're still going to be below what you see as market leader in markets like Spain, France, Korea, or Japan. It's more of the quality of this network, the quality of the customer base, the overlap with our network, and the price.

We have the ability to deploy network, and as I said before, much more of the CapEx is related to connecting the customer than passing the fiber, but we don't want to be passing fiber where we see so many players. That's why we are open for analyzing a target.

Far, we haven't be able to get to an agreement or getting to the real interest in any of the target that we see in the market. Let's wait, Gustavo, but the trend seems positive for consolidation.

Thank you very much.

Okay. Thank you everyone for participating for so many questions.

As I stated in the beginning, we are extremely pleased to share such a strong set of results in all dimensions of our company. Again, we are always here at disposal to answer any additional question that you may have.

Thank you so much for your participation.