Slide 1: Results 2Q12
Slide 2: Operating Performance, Financial Performance, Strategic Highlights
of Operating Performance. of Financial Performance. Strategic Highlights. Investor Relations 3 Telefonica Brasil S.A.
Slide 3: Operating Performance
Operating Performance
Slide 4: Highlights of the Quarter
F Highlights of the Quarter Improvement m Mobile Market Revenue m EBITDA Margin al Strategic Highlights Investor Relations Telefonica Brasil S.A. Delivering superior quality and improving fixed customer satisfaction after the rebranding Strengthening position in post paid with a rational and consist
Slide 5: Strengthening quality of the fixed operation after rebranding
PF We kept strengthening the quality of the fixed operation to support our improved perception after the rebranding Vivo became leader in fixed IDA and satisfaction of fixed services one month after the rebranding © janitt apritt juutt oct janit2 apritz © \ —Telefénica —Embratel —-GVT —oi -26% i i a
Slide 6: Growth in accesses remained strong during the quarter
Even in face of a more selective market approach, growth in accesses during the quarter remained strong —32— Fixed Broadband Mobile Postpaid =Pay TV 748 75,7 64,0 o i Additional Prepai : ; disconnections Mobile Prepaid 2a11 1012 2012 a 46) Mobile = Fixed’ 2a11 of 2012 ae ‘Includes fixed voice, fixed
Slide 7: Mobile: strengthened position in post paid while reducing acquisition cost
In the mobile business, Telef6nica Brazil strengthened its position in post paid while reducing cost of acquisition 2att 1012 2012 Prepaid « Postpaid Investor Relations Telefonica Brasil S.A.
Slide 8: Our plans and promotions keep delivering leading results
Our plans and promotions keep delivering leading results 2a11-3Q11 4Q11 112-2012 ‘A% prepaid customers - YoY —A% of recharge - YoY = Vivo Sempre driving high growth in recharges = Limited ARPU dilution due to our new offer and quality of customer base Investor Relations Telefonica Brasil S.A.
Slide 9: Fixed side: fiber adoption and corporate performance
In the fixed side fiber And corporate performance adoption is the highlight. is consistently improving. 146 14.6 145 11,1 10,9 10,8 2011 1012 2012 Fixed Accesses = Fixed Broadband 2Q11 2Q12 2Q11 2Q12 ebeseaenerete mreeenieneeeelnnnne Fixed Voice Fixed Broadband 47 5,0 2011 2012 Mobile 1Q11 2Q11 3011
Slide 10: Strong profitability driven by rational commercial approach
F Strong profitability in the quarter driven by rational commercial approach and early results of the integration. Net Operating Revenue 8,243.5 8,260.9 -0.2% Total Net Operating Service Revenue 8,075.0 7,999.0 1.0% Wireless Service Revenue 4,959.7 4,470.4 10.9% Wireline Service Revenue 3,115.3 3,52
Slide 11: Financial Performance
02 Financial Performance
Slide 12: Mobile net revenue maintained accelerated growth despite MTR reductions
Pr Mobile net revenue maintained accelerated growth even in the face of MTR reductions in the quarter 2Q11 1012 2012 2011 3Q11 4Q11 1012 2Q12 32.5% MME 33.5% MME 33.6% J 1S MTR impact ; ME comobile Service Rev/Total Revenue. C_) YoY growth excluding MTR impact Access and Usage Mi Network Usage Data
Slide 13: Data and VAS revenue main driver of revenue growth
Pr Data and VAS revenue continue to be the main driver of revenue growth and already accounts for around 27% of mobile net service revenue 2011 1Q12 2Q12 Investor Relations er Telefonica Brasil S.A. 26,8% 27,2% 26,2% 76: Z 25,0% 25:7% 22,5% 5 1011 2011 3Q11 4011 1012 2Q12 2011 3011 4011 1Q12 2012
Slide 14: Decrease in wireline revenues driven by non recurrent events
F Decrease in wireline revenues mainly driven by non recurrent events Corporate& SME Projects Fixed Q112 seasonality TVA Others Voice Q212 keg 1.922 1.839] (4.1%) 21pp) (22pp) (24 pp) (1.2 pp.) (11.7%) 2011 1012 2012 @ Voice* ™ Data and Pay TV Others 1 Includes voice, accesses and network usage Inve
Slide 15: Consolidated expenses decreased by 1% yoy
Consolidated expenses decreased by 1% yoy, affected by non-recurrent events and commercial rationality in the quarter R$ Million YoY 2.0% } {7.4% §-5.3%? {5.0% (324%! §-24.3%! fo (5.198) 11 186 (76) (19) (5.151) oa 8) ae a8. 22 (78) a 2Q11 Personnel Services Goods Sold Selling G&A Other 2012 Rendere
Slide 16: Sustaining consistent recurrent margin in a more competitive landscape
Sustaining consistent recurrent margin in a more competitive landscape R$ Million 2011 1Q12 2012 _ RecurrentEBITDA ™ Adjusted Margi * Sale of non strategic assets in the amount of R$181.6 million in the 2012; = Costs related to the rebranding in the amount of R$64.0 million in the quarter; = Reversa
Slide 17: 2Q12 EBIT reaches R$1.7 billion and net result of R$1.1 billion
2Q12 EBIT reaches R$1.7 billion and net result of R$1,1 billion R$ Million 2a 1Q12 2012 (63) Financial Investor Relations Telefonica Brasil S.A.
Slide 18: Higher capex execution focused on network expansion, integration and quality
F Higher capex execution in the quarter focused on network expansion, integration and quality R$ Million 2011 1Q12 Short Term mL 2011 2012 i ok = 2.658 ; Licenses ii —"% Capex*iNet Operating Revenues i i Investor Relations Telefonica Brasil S.A.
Slide 19: Strategic Highlights
Strategic Highlights 0 3 ~ “X{) |
Slide 20: Market context: key trends affecting the Brazilian market
Market context: Our view on key trends affecting the Brazilian market Key trends observed in the market... . +. confirm our long-term strategy = Increasingly demanding customers, both in residential and corporate = Customized care and customer- centric offers and servicing models Intensification of
Slide 21: Five pillars guiding our strategy
F With quality and customer satisfaction as our focus, we rely on 5 pillars to guide our strategy To provide an unique and integrated VIVO experience to each Unmatched quality and customer satisfaction Investor Relations Telefonica Brasil S.A.
Slide 22: 1. Unique and integrated VIVO experience to each customer
F 1. To provide a unique and integrated VIVO experience to each customer Highlights = Relationship program (launched in June/12) Vivo Valoriza: our = Segment customer per total value (e.g., fixed+ new loyalty program mobile+ data+ tv) = Improved satisfaction index Key objectives “(= Offer a unique =
Slide 23: 2. Strengthen our convergent infrastructure focusing on quality
F 2. To strengthen our convergent infrastructure focusing on quality = 3G +HSPA+ (absolute leader in national coverage) = Guaranteed evolution in 4G (20+20Mz national spectrum) Superior = FTTH coupled with IPTV/OTT technology = Strong national backbone = Solid backhaul Strong network to = Only opera
Slide 24: 3. Continue fostering profitable growth
F 3. To continue fostering profitable growth Keep momentum in mobile growth Protect our value in fixed services Consolidate leadership in Corporate Investor Relations 234 Telefonica Brasil S.A.
Slide 25: 3. Keep momentum in mobile growth
F 3. To continue fostering profitable growth Keep momentum in mobile growth differentiation for ae © International roaming offers Increasing postpaid with , enhanced offers Postpaid market share | Vivo Smartphone |! = @ Tlimitado 36,1% 36,6% Internet Movel | | Vivo Vocé Tlimitado Q211 Q2 12 To be un
Slide 26: 3. Protect our value in fixed services
F 3. To continue fostering profitable growth Protect our value in fixed services Improving quality and eee satisfaction with fixed = ? Cross-selling services ~~ promotions leveraging on community and Leader cane quality in Fixed IDAt avi = 2/3 of fiber net adds in Q212 coming from copper Driving Fib
Slide 27: 3. Consolidate leadership in Corporate
F 3. To continue fostering profitable growth Consolidate leadership in Corporate partnerships with key market players to-Talk new adds in (e.g., Office 365) Q2 2012 Vivo Cloud Plus (hosting): 3x year-over-year enhanced competitiveness for large growth in M2M new corporate and growing penetration on
Slide 28: 4. Drive innovation and capture new opportunities
4. To drive innovation and capture new opportunities We leverage on our ability to build and grow partnerships M2M oo * M2M solutions for the corporate customers like o tracking, telemetry and security a 41% >. Financial Services = Co-branded Card Vivo, Prepaid cards,M-Wallet, ge NEC Pilot, Insuranc
Slide 29: 5. Transform our operational model
F 5. To transform our operational model Optimize customer management Drive network efficiency = Self care = Tower sharing = Own stores productivity = Backbone and backhaul sharing = Stringent disconnection partnerships policy = Continuous analysis of other network sharing models, e.g., 4G, RAN shari
Slide 30: Update on integration progress
F Update on integration progress = Vivo Valoriza = Unified billing = Brand unification = Integrated CRM = Convergent network = Competitive IPTV offer = Increasing customer satisfaction = Expansion of FWT outside SP = 4G acquisition e driving force behind our in mobile and fiber as our o! Investor Re
Slide 31: Disclaimer
| Disclaimer Investor Relations This presentation may contain forward-looking statements concerning future prospects and objectives regarding growth of the subscriber base, a breakdown of the various services to be offered and their respective results. The exclusive purpose of such statements is to
Slide 32: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELEFÔNICA BRASIL S.A. Date: July 25, 2012 By: /s/ Carlos Raimar Schoeninger Name: Carlos Raimar Schoeni