Brisanet Participações S A : Dados Econômico-Financeiros

Individual and Consolidated Financial Statements

Brisanet Participações S.A.

December 31, 2023

with Independent Auditor's Report

MANAGEMENT REPORT - Fiscal year ended on 12/31/2023

Message from CEO

Our commitment to promoting high-performance connectivity spans decades, technologies, and generations. The substantial and growing results we have achieved over time validate the effort, strategic guidance, and synchronous work of all the people who form and sustain the Company's success.

Brisanet's strength in the telecommunications market has not only been consolidated but has grown in an effective and assured manner. Until then, focusing on fixed broadband, as we enter 2023, we introduced a new service to our catalog: mobile telephony (4G/5G), while maintaining the growth of fiber optic customers in a solid and profitable manner. During this period, we added more than 192 thousand customers to the base organically, surpassing all operators registered with Anatel in the Northeast region of Brazil. This ensured that we remain among the five largest companies in fixed broadband access in the country and in the leadership of the Northeast, with a total of 1,292,091 subscribers.

We ended the year offering FTTH (fiber to the customer's home) in 158 cities in the nine northeastern states, in addition to offering mobile service in more than 40 cities with mobile service, including everything from the capitals to municipalities with less than 10 thousand inhabitants, covering a population of 4 million people. In this way, we materialize our purpose of internalizing 5G. In 2024, we will be focused on further expanding the reach of the mobile service, with a forecast of reaching coverage of 14 million inhabitants in 300 cities in the Northeast.

The year 2023 also represented a considerable advance in the Company's financial performance. Adjusted EBITDA was R$591.6 million, growing 36% compared to the previous year, and net profit was 160% higher, reaching R$163.3 million in the year. This performance is the result of the growth of the fiber customer base and efforts to increase productivity and reduce costs, even in a year in which we began to sell new services, with the launch of mobile.

We present important progress in Corporate Governance. We held the 1st Brisanet Compliance Week and launched the Women's Channel, among other initiatives that contribute to a safer and more transparent corporate environment. Furthermore, we continue to contribute in a valuable way towards regional development through the creation of jobs. Currently, our workforce includes more than 8 thousand employees, local talents who perform essential skills for the company's success.

Within the scope of human and organizational development, the Company has also carried out important initiatives to train and qualify employees. Projects such as the Management Track, the Leadership Development Program (LDP), 5G Training and the Technical Improvement Tracks totaled more than 160 thousand hours of training carried out. These actions

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contribute, contributing significantly to the assertiveness of executing operations, from infrastructure implementation to after-sales service.

As we lead the process of digital inclusion and universalization of connectivity in the Northeast region, we also introduce sustainable initiatives into the business. In this sense, we initiated a change in our energy matrix, adding third-party solar energy in some consumer units. This measure resulted in the reduction of greenhouse gas emissions, thus contributing to the global energy transition towards a more sustainable planet.

We are confident that the Company's current business model is perfectly aligned with our commitment to innovation. Therefore, we remain firm in our mission to not only connect people, but to promote an increasingly inclusive and accessible future. To achieve this goal, we will continue to implement constant improvements internally, ensuring data security and enabling increasingly advanced products and solutions. We will honor every opportunity to consolidate the Brisanet brand, while promoting the technological, economic, and social development of the locations in which we are present.

We are confident that the Company's current business model perfectly aligns with its commitment to innovation. Therefore, we remain firm in our mission to not only connect people, but to provide an increasingly inclusive and accessible future. To this end, we will continue to implement constant improvements internally, ensuring data security and enabling increasingly advanced products and solutions. We will honor every opportunity to consolidate the Brisanet brand, while promoting the technological, economic, and social development of the locations in which we are present.

José Roberto Nogueira

CEO

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HIGHLIGHTS

Brisanet	2023		2022
Operating Highlights
Cities served		158		154
Access Ports - '000		4,670		4,231
HP added- '000		878		1,655
Total HP - '000		6,995		6,117
HC added- '000		192		257
Total HC - '000		1,292		1,100
Financial Highlights (BRL million)
Net revenue		1,227.9		985.2
Gross Margin (%)		46%		42%
Operating income		250.7		166.6
EBITDA		580.0		435.8
EBITDA Margin (%)		47%		44%
Adjusted EBITDA		591.6		435.8
Adjusted EBITDA Margin (%)		48%		44%
Net income (loss)		163.3		60.7
Net debt		745.7		743.8
Net debt/LTM EBITDA (x)		1.29x		1.70x
Reconciliation of EBITDA with Net Profit:
BRL million		2023	2022		2023 x 2022
Net Income		163.3	60.7	169.1%
(+) Income tax and social contrib.		5.4	44.9	-88.0%
(+) Net financial result		81.9	61.0	34.3%
(+) Depreciation and amortiz.		329.3	269.2	22.4%
EBITDA		580.0	435.8	33.1%
EBITDA margin (%)		47.2%	44.2%	3.0 p.p.
(+) FECOP (one-off)		11.5	0.0	0.0%
Adjusted EBITDA		591.6	435.8	35.8%
Adjusted EBITDA margin (%)		48.2%	44.2%	4.0 p.p.

OPERATIONAL PERFORMANCE

Brisanet ended 2023, with fixed broadband service through fiber optics in 158 cities, in the 9 states of the Northeast region, and mobile service coverage in more than 40 cities, covering a population of almost 4 million inhabitants mainly in the state of CE, but also in some cities in the state of RN.

The Company added 878 thousand HPs (households) and 192 thousand new customers in 2023, having ended the year with 1,292 thousand customers and showing greater growth than the sum of the 10 most relevant competitors in the same period.

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	Brisanet	2023	2022
	Operating Highlights
	Cities served	158	154
	Access Ports - '000	4,670	4,231
	HP added- '000	878	1,655
	Total HP - '000	6,995	6,117
	HC added- '000	192	257
	Total HC - '000	1,292	1,100

In 2024, the focus is to occupy the infrastructure that has been built over the last few years, expand, and maintain our FTTH customer base and implement the 4G/5G mobile network infrastructure.

Brisanet also operates through its franchisor, Agility Telecom. The brand is represented by 70 franchisees who operate in smaller cities or rural districts in the Northeast states - Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas - serving 183.1 thousand customers.

ECONOMIC-FINANCIAL PERFORMANCE

Net Revenue

In 2023, Brisanet presented consolidated net revenue of R$1,227.9 million, with growth of 24.6% compared to 2022. This growth is basically explained by the 17% growth in the customer base and the increase in revenue from B2B customers.

The Company offers a range of products and services, with fixed broadband being the main one, representing more than 92% of revenue.

Revenue from franchisees represented 2% of gross revenue.

Gross Margin

The Company presented a gross profit of R$570.3 million, with a margin on net revenue of 46% in 2023, compared to R$412.4 million and a margin of 42% in 2022. The growth of the customer base made dilution possible costs leading to an increase in margin. This profitability growth in fiber customers was partially mitigated by expenses related to the implementation of the mobile business.

Operational expenses

Operating expenses totaled R$319.7 million in 2023, compared to R$245.8 million in 2022.

Commercial expenses were R$176.9 million in 2023, compared to R$120.6 million in 2022, a growth of 30%, mainly related to the increase in personnel with the entry into the mobile segment and the increase in the provision for credit losses expected, which grew 116.7% related to the change in parameters aimed at covering in the short term 100% of receivables overdue for more than 181 days.

General and administrative expenses totaled R$115.5 million in 2023, a reduction of 3% when compared to those recorded in 2022.

EBITDA

Brisanet's EBITDA was R$580.0 million in 2023, growing 33.1% in relation to the EBITDA recorded in 2022. The greatest growth in relation to net revenue growth is due to the

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reduction in the pace of expansion, with the lower incidence of fixed expenses prior to the full occupation of new areas.

The EBITDA margin was 47.2% in 2023, 3 p.p. higher than the 44.2% recorded in 2022.

Adjusted EBITDA was R$591.6 million in 2023, with a margin of 48.2% and growth of 36% compared to 2022. The adjustment refers to R$11.5 million in tax expenses in the state of CE, relating to the period from 2019 to 2022, recognized in 3Q23.

Financial Result

The net financial result was negative R$81.9 million in 2023, 34.3% higher than the negative R$61.0 million recorded in 2022. Despite the gross debt having decreased by 6.7% and the debt indexes - CDI and IPCA - also having been lower in 2023, the Company's financial income was reduced by R$41 million, given the drop in the average cash invested, due to the repayment of some financing, and the drop in the reference interest rate for financial investments (CDI).

Net Profit

As a result, the Company presented a net profit in the 2023 fiscal year in the amount of R$163.3 million, when compared to a net profit of R$60.7 million in the 2022 fiscal year.

Indebtedness

Brisanet had gross debt of R$1,249.7 million on December 31, 2023, compared to R$1,338.9 million at the end of 2022. Gross debt is made up of loans and financing, debentures, lease obligations and derivative operations.

Considering cash at the end of 2023 of R$504.1 million, the Company's net debt totaled R$745.7 million, compared to R$743.8 million at the end of 2022.

The Company monitors the net debt/EBITDA indicator as a reference for its debt level. This is the same metric used for the financial limits imposed by debentures, where this indicator cannot be greater than 3.5x per year. In 2023, net debt/EBITDA was 1.29x.

Investments

In 2023, Brisanet invested, when measured by additions to fixed assets and intangible assets, the amount of R$464.1 million, compared to R$857.0 million in 2022.

The Company has a 'stock' of equipment and constructions to be activated in the coming months' worth R$459.0 million, recorded in 'fixed assets and imports in progress' (balance of R$199.7 million) and 'fixed assets in warehouse' (balance of R$259.3 million).

Of the R$553.1 million in fixed/intangible additions already in operation, R$38.6 million were maintenance capex, the remainder was applied to the Company's organic expansion, being R$300 million in FTTH, R$132 million in 5G and R$36 million in backbone.

Relationship with Independent Auditors

Ernst & Young Auditores Independentes S.S. is the company responsible for external audit services related to the examination of the financial statements of Brisanet Participações S.A. for the fiscal years 2023 and 2022. No additional services other than auditing were contracted, therefore the independence of the external auditor in examining the financial statements was preserved.

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Brisanet Participações S.A.

Individual and consolidated financial statements

December 31, 2023

Contents

Management Report	1
Independent auditor's report on individual and consolidated financial statements	6
Audited individual and consolidated financial statements
Statements of financial position	12
Statements of profit or loss	14
Statements of comprehensive income	15
Statements of changes in equity	15
Statements of cash flows	17
Statements of value added	19
Notes to individual and consolidated financial statements	20
Capital budget proposal for the fiscal year ending December 31, 2023	84
Officers' Representation	85
Opinion of the statutory audit committee (CAE)	87

A free translation from Portuguese into English of Independent Auditor's Report on Individual and Consolidated Financial Statements prepared in Brazilian currency in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS), issued by International Accounting Standards Board (IASB)

Independent auditor's report on individual and consolidated financial statements

To the

Shareholders, Board of Directors and Officers of

Brisanet Participações S.A.

Pereiro - CE

Opinion

We have audited the individual and consolidated financial statements of Brisanet Participações S.A. (the "Company"), identified as Individual and Consolidated, respectively, which comprise the statement of financial position as at December 31, 2023, and the statements of profit or loss, of comprehensive income, of changes in equity, and of cash flows for the year then ended, and notes to the financial statements, including material accounting policy information.

In our opinion, the accompanying financial statements present fairly, in all material respects, the individual and consolidated financial position of the Company as at December 31, 2023, and its individual and consolidated financial performance and cash flows for the year then ended in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

Basis for opinion

We conducted our audit in accordance with the Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of individual and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical principles set forth in the Code of Professional Ethics for Accountants and the professional standards issued by Brazil's National Association of State Boards of Accountancy (CFC), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Key audit matter

A key audit matter is one that, in our professional judgment, was of most significance in our audit of the financial statements of the current period. This matter was addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide an individual opinion on this matter. For the matter below, our description of how our audit addressed the matter, including any commentary on the findings or outcome of our procedures, is provided in that context.

We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the individual and consolidated financial statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial statements.

Revenue recognition

The Company's revenue recognition process considers certain calculations to measure unbilled revenues from services rendered. Any error in the calculations may have a material impact on the Company's individual and consolidated financial statements. For this reason, we consider the recognition of revenue from services provided to be significant for our audit. The revenues earned by the Company and its subsidiaries and their recognition criteria in the statements of profit or loss are disclosed in Explanatory Notes 3.a and 21.

How our audit addressed this matter

Our audit procedures included the following, among others: (i) understanding of the significant internal controls implemented by management regarding revenue recognition and measurement; (ii) documentary examination of billed revenue for a sample of transactions incurred; (iii) understanding of the criteria adopted by the Company's management to measure revenue incurred and not yet billed at the end of the year; (iv) examination of the calculation of the estimated unbilled service revenue; (v) testing of the reports extracted from the system used to calculate unbilled service revenue; and (vi) review of the disclosures made by the Company in the individual and consolidated financial statements.

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Based on the results of audit procedures performed on revenue recognition and measurement, which are consistent with the management's assessment, we consider the revenue recognition and measurement criteria to be acceptable, as well as the respective disclosures in Notes 3.a and 21, in the context of the financial statements taken as a whole.

Other matters

Statements of value added

The individual and consolidated statements of value added (SVA) for the year ended December 31, 2023, prepared under the responsibility of the Company's executive board, and presented as supplementary information for IFRS purposes, were submitted to audit procedures conducted jointly with the audit of the Company's individual and consolidated financial statements. To form our opinion, we evaluated if these statements are reconciled to the financial statements and accounting records, as applicable, and if their form and content comply with the criteria defined by Accounting Pronouncement NBC TG 09 - Statement of Value Added. In our opinion, these individual and consolidated statements of value added were prepared fairly, in all material respects, in accordance with the criteria defined in the abovementioned accounting pronouncement, and are consistent in relation to the individual and consolidated financial statements taken as a whole.

Other information accompanying the individual and consolidated financial statements and the auditor's report

The executive board is responsible for such other information, which comprises the Management Report.

Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of assurance conclusion thereon.

In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Management Report, we are required to report that fact. We have nothing to report in this regard.

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