Telefonica Brasil S.A. · BMFBOVESPA:VIVT3
Telefonica Brasil — Investor Presentation (December 2021)
36 slides from Telefonica Brasil's investor presentation, December 2021
Slide 1: Institutional Presentation
INSTITUTIONAL PRESENTATION Telefônica Brasil S.A. Investor Relations 1
Slide 2: Disclaimer
DISCLAIMER This presentation may contain forward-looking statements concerning prospects and objectives regarding growth of the subscriber base, a breakdown of the various services to be offered and their respective results Our actual results may differ materially from those contained in such forwar
Slide 3: Brazil is a vast and populous country with valuable opportunities
Brazil is a vast and populous country with valuable opportunities for the Telco and digital services industries Brazil in a nutshell Economic outlook Latin America’s largest economy1 ▪ Recovery of economic activity sustained by 12th largest economy in the world the accelerated vaccination process, r
Slide 4: Vivo is enhancing Brazil's digital life through high-speed connectivity
Vivo is enhancing Brazil’s digital life through highspeed connectivity and top-quality services 97 million accesses¹, the absolute market leader Top 9 brand in Brazil² (#1 Telco) More than 1,700 stores, comparable to the largest retailers in Brazil 19 million unique users³ on Vivo’s App 90 TB of dat
Slide 5: Evolving into a digital ecosystem beyond traditional telco
We are evolving into a digital ecosystem, providing services that go beyond traditional telco for B2C and B2B customers Financial Services Mobile Education Connectivity Health & Wellness Cloud Cybersecurity Big Data & IoT Fiber Tech Management Equipment Telco infrastructure Marketplace boosting digi
Slide 6: Fiber Connectivity
FIBER MOBILE DIGITAL FINANCIALS ESG CONNECTIVITY SERVICES
Slide 7: Brazil has low broadband penetration and fast fiber growth
Brazil has comparatively low broadband penetration, and the fast- pace of fiber growth confirms the appetite for quality connectivity Broadband Penetration in OECD Countries (%) Brazilian Broadband Market Breakdown Accesses/100 Households 119 104 104 103 99 +50 p.p. 98 96 93 92 91 72 63 62 54 40 Fib
Slide 8: Vivo is Brazil's leading fiber company, expanding fast
Vivo is Brazil’s leading fiber company, and it is expanding fast Homes Passed Fiber Accesses million million CAGR: CAGR: +27% +34% # of FTTH cities Take-up Rate Cost/HP (R$) Vivo’s fiber footprint is equivalent to the sum of FTTH Target of 30% FTTH¹ take-up in the following years as HPs in UK, Germa
Slide 9: Ambitious target of 29 million HPs by FY24
Ambitious target of 29 million HPs by FY24 to be fulfilled through organic expansion and alternative strategies that improve capex allocation Organic Expansion + other InfraCos 1 — Internet Service Provider. 2 — Click for more info about: FiBrasil and Partnerships + Terra Fibra. 9
Slide 10: Mobile Connectivity
FIBER MOBILE DIGITAL FINANCIALS ESG CONNECTIVITY SERVICES
Slide 11: Brazil is a highly connected, digital-savvy country
Brazil is a highly connected country with a digital-savvy population Smartphone Penetration (%) Daily time online via mobiles (hours) . 9481,6% 05:54 90. 77,9% 05:17 . 75 68,5% 05:02 71 . 63,8% 65 04:55 . 63,2% 04:52 63,1% . 45 04:39 . 58,6% 03:45 . 54,4% 03:39 51,4% . 03:13 31,8% . 03:10 2012 2013
Slide 12: Vivo is the mobile market leader with a growing customer base
Vivo is the mobile market leader with a growing customer base, offering the best connectivity allied with digital services to enhance lifetime value Market Mobile Accesses million Vivo’s Mobile Accesses Evolution million Growth of Accesses attests increasing demand of high- quality connectivity Digi
Slide 13: Acquisition of Oi's mobile assets
The acquisition of Oi's mobile assets will allow for an improvement of mobile network quality nationwide Amount to Spectrum Client Sites Milestones be paid Base Joint R$16.5bn 92MHz 36.2mn 14.7k Dec 20 Jan 21 Sep 21 Nov 21 Bid¹ Public Purchase Anatel CADE Auction of and Sale Oi’s Mobile Agreement Te
Slide 14: 5G will be a revolution
And while 3G and 4G are considered evolutions of the same technology, 5G will be a revolution, reaching 2.6 billion accesses worldwide by 2025¹ 5G Opportunity 5G Auction ▪ Biggest spectrum auction in eMBB²: OTTs, wearables and VR/AR³ gaming, music, e- Brazil’s history, with lots in 2.3GHz, shopping
Slide 15: Digital Services
FIBER MOBILE DIGITAL FINANCIALS ESG CONNECTIVITY SERVICES
Slide 16: Digitalization will be Brazil's main vector of transformation
Digitalization will be Brazil’s main vector of transformation as it will increase the penetration of essential services and goods Financial Services Education Credit card penetration (%) % of population above 25 years old College High School Primary School 83% 75% 68% 66% 21% 24% 34% 40% 30% 51% 44%
Slide 17: Vivo's financial initiatives promote economic inclusion
Vivo’s financial initiatives promote economic inclusion and serve as an enabler for other digital services, with significant cross-sell opportunities Personal loan service Extremely competitive Easy, 100% digital loans interest rates Available to postpaid and Up to R$50,000 and prepaid customers 36
Slide 18: Education: MoU with Ânima Educação
On the education front, Vivo signed an MoU with Ânima Educação to form a joint venture focused on Lifelong Learning to promote employability + Signing of an MoU to form a 50/50 Joint Venture, aiming to create digital courses focused on lifelong learning and employability Digital platform that will o
Slide 19: Vivo teams up with Teladoc
Vivo teams up with Teladoc, one of the largest telemedicine companies in the world, as another step towards building a health and wellness hub Not exclusive to Vivo Customers, focused on the population without private health plans Another step towards building a health and wellness hub around Vivo I
Slide 20: Hub for customers' digital lives: e-commerce and smart homes
Vivo is using its unique position to become a hub for our customers’ digital lives, leveraging its e-commerce and smart homes solutions… Marketplace: any technologic and home office needs Increase of customer preference by offering a wide range of goods, from cellphones and gadgets to home appliance
Slide 21: Curator and aggregator of over-the-top services
…and serving as a curator and aggregator of multiple over-the-top services Distribution of OTTs services through Vivo's invoice Vivo Play App as the digital platform to integrate multiple content features c.30% of gross additions in fiber with OTTs 21
Slide 22: B2B digital services will have an expressive evolution
B2B Digital services will have an expressive evolution in the following years and Brazil has still much space to capture that opportunity Brazilian Cloud Market Revenues IT + Software Expenses/employee (USD) R$ billion CAGR: +16% Brazilian IoT Market Revenues R$ billion CAGR: +22% Source: GlobalData
Slide 23: Digital B2B
Digital B2B revenues totaled ≈R$ 1.9 billion in LTM ended in 3Q21, growing 35% YoY Digital B2B Double-digit growth, already representing 20% of B2B revs and 4% of total revenues Beyond connectivity, Vivo offers B2B services such as Cloud, IoT + Big Data, Cybersecurity e Sale and leasing of equipment
Slide 24: Financials
FIBER MOBILE DIGITAL FINANCIALS ESG CONNECTIVITY SERVICES
Slide 25: Strong free cash flow generation and best-in-class margins
Strong Free Cash Flow generation while best-in-class margins, supporting Vivo’s sound financial position Ratings Profitability Cash Position AAA(bra) % R$ billion Ba1 28% FCF/Sales Net Cash (Debt)² brAAA Capex/Sales 25% 22% 20% 20% 18% 17% 20% 7,1 3,0 2018 2019 2020¹ YTD 3Q21 -2,2 -1,1 R$ billion FC
Slide 26: Benchmark in shareholder remuneration and share buybacks
Vivo is one of Brazil’s benchmarks regarding shareholder remuneration, enhanced recently by share buybacks Shareholder Remuneration Share Buybacks Dividend and IoC (R$ billion) Share Buyback (R$ billion) ▪ Acceleration of Buyback Program to increase shareholder returns 7.0 00 ▪ More than 11 million
Slide 27: VIVT3 performing in line with the IBOV index
VIVT3 is performing in line with the IBOV index, receiving pressure more recently due to macro trends, but offset by positive sector outlook Stock performance¹ Sell-side Recommendations – Dec/21: basis 100 = Jan/2018 VIVT3 dividend adjusted VIVT3 ex-dividends IBOV CDI Rate Target Price VIVT3: R$57.6
Slide 28: Potential upsides from fiscal and regulatory decisions
We have potential upsides regarding fiscal and regulatory decisions that could impact results and operations ICMS Tax reduction Concession Arbitrage Concession Migration ▪ In November 2021, the Supreme ▪ Rebalancing of concession ▪ Possibility of Concessionaries to Court ruled that Telco services co
Slide 29: ESG
FIBER MOBILE DIGITAL FINANCIALS ESG CONNECTIVITY SERVICES 29
Slide 30: ESG is one of Vivo's strategic pillars
ESG is one of Vivo’s strategic pillars as we aim to expand and share the value we create through our Responsible Business Plan Responsible Business Plan • More than 60 indicators with targets Customer Experience Stimulate responsible consumption monitored by the Quality and Sustainability Committee
Slide 31: Projects on green energy, social reach and governance
Accordingly, Vivo focuses on projects that will expand our green energy supply, extend our social reach and strengthen our governance Environment Social Governance • 100% Carbon Neutral since 2019 • More than 2 million people benefited • 20% of executive variable compensation through education proje
Slide 32: Investor Relations
For further information: Investor Relations w w w. t e l e f o n i c a . c o m . b r / i r i r. b r @ t e l e f o n i c a . c o m +55 11 3430.3687 32
Slide 33: FiBrasil: neutral fiber network operational since 3Q21
back to slide FiBrasil: neutral fiber network is operational since 3Q21, accelerating fiber deployment and reducing time-to-market Coverage Initiating with 1.6 million HPs in 34 cities outside the state + + of São Paulo CDPQ is a Canadian long-term institutional investor, Plan to reach 2.1 million H
Slide 34: Alternative models to accelerate fiber expansion
back to slide Alternative models to accelerate fiber expansion with less capex and reduced time to market Partnerships Franchising ▪ Partner builds and operates Homes Passed ▪ Franchisee builds and operates the network Leveraging on (HP) infrastructure and manages the customer relationship, selling
Slide 35: Launch of Vivo Pay and expansion of Vivo Money
back to slide Launch of Vivo Pay and expansion of vivo money generate more benefits and enhance lifetime value Vivo’s free digital account Credit origination R$ million Cash transfers to other 2.0x Personal loan service, Virtual Prepaid Card banks via PIX initially focused on postpaid for online sho
Slide 36: Joint venture between Vivo and Ânima Educação
back to slide Joint-venture between vivo and anima educação to create a business platform focused on lifelong learning and employability Education initiative Signing of an MoU¹ aiming to create a 50/50 Joint-Venture that will + offer digital courses, focused on Client acquisition Educational Content
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