Telefônica Brasil S A : Corporate Presentation | Nov-20

Corporate Presentation

Telefônica Brasil S.A. Investor Relations

N o v e m b e r , 2 0 2 0

Vivo is the market leader in Brazil and has the best assets to capture growth opportunities and generate even higher returns

	▪ Perspectives of economic recovery after Covid-19 shock
Outlook	▪ Regulatory framework modernization through Law 13.879
▪	Telecom Market: significant opportunities in fiber, mobile, and

digital services

	▪ 60% of fixed revenues are composed of growing businesses
Growth	▪ Fiber deployment continues at full speed
▪	80% of MSR from postpaid customers, with leadership reaffirmed

▪ Multiple initiatives in the digital space

Resilient revenue base with

positive outlook for the

future

Efficiency and

Returns

• Digitalization and simplification driving resilient EBITDA
• Smart capex allocation improving returns
• Strong FCF generation, even with solid investments, supporting higher shareholder remuneration

Strong FCF and Net

Income evolution

	▪ One of the top 10 companies in the new S&P/B3 Brasil ESG Index
ESG	▪ Conversion of Preferred Shares into Common Shares underway¹
▪	Winner of UNESCO's Hamdan Prize for teacher effectiveness

▪ Recognition of Vivo as one of 150 best places to work in 2020²

Consistent focus on ESG

1 - Unification of share classes approved by the Extraordinary Shareholder Meeting and Special General Meeting of Preferred Shareholder. 2 - According to Great Place to Work®

2

Economic recovery and positive evolution of the regulatory framework will enable Vivo

to unlock significant value

OUTLOOK

Key economic drivers

• Economic activity recovers as a result of the flexibilization of isolation measures, along with the government's financial aid
• Record low interest rates with inflation forecasts below target
• Economic reforms are underway to address fiscal risks

Outlook1 of economic recovery after Covid-19 shock

	19A	20E	21E	22E	23E
GDP Growth %	1.1%	-4.8%	3.4%	2.5%	2.5%
CPI %, EoP	4.3%	3.0%	3.1%	3.5%	3.3%
Exch. rate R$/US$	4.0	5.4	5.2	4.9	4.9

Positive evolution of the sector's regulation

• New law 13.879 will allow fixed voice concessionaires to migrate to an authorization framework, incentivizing investments in modern technologies
• Companies will be able to significantly reduce their legacy spend and focus their capital on up-to-date, future-proofsolutions
• Law 13.879 is also important for the mobile business, as it permits the automatic renewal of spectrum
• The 5G spectrum auction is likely to focus on coverage obligations and expected to take place by the end of 1H21

1 - Source: Banco Central's Focus Bulletin - October 23, 2020.

3

The market is witnessing positive trends across key segments, in which Vivo is the leading operator in Brazil

OUTLOOK

Key market trends

1	Accelerated FTTH expansion
UBB will maintain a double-digit growth in the coming
years, driven by low penetration (31%)1
2	Market consolidation
Improving competitive scenario, capital intensive market
	and fragmented FBB players
3	Preparation for 5G
5G DSS already launched in some cities. Kick-off of the
	5G era in Brazil with the spectrum auction in 2021
4	Focus on new revenue streams
Aiming to play a role in Digital Services, telcos will
	expand their reach
5	IoT massification
IoT will gain traction in Brazil, mainly in fleet
	management, agro, smart building and smart cities

Key metrics

Vivo Accesses Market Share

September/2020

Mobile	Broadband	Pay TV
33.6%	18.6%	8.4%
76.7 mn accesses	6.4 mn accesses	1.3 mn accesses
Postpaid	FTTH	IPTV
38.3%	21.0%	80.2%
44.0 mn accesses	3.1 mn accesses	0.9 mn accesses

1 - Penetration over ABC households and B2B.

4