Good morning, ladies and gentlemen. Welcome to Vivo's Second Quarter 2024 Earnings Call. This conference is being recorded, and the replay will be available at the company's website. The presentation will also be available for download. This call is also available in Portuguese. To access you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room after that select mute original audio. We would like to inform that all attendees will only be listening to the conference during the presentation, and then we will start the question-and-answer section when further instructions will be provided. Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections, and goals are the beliefs and assumptions of Vivo's Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events, and therefore, depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry, and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this conference, we have Mr. Christian Gebara, CEO of the company; Mr. David Melcon, CFO and Investor Relations Officer; and Mr. João Pedro Soares Carneiro, IR Director. Now I'll turn the conference over to Mr. João Pedro Soares Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you may begin your conference.

Good morning, everyone, and welcome to Vivo's second quarter 2024 earnings call. Today, our CEO, Christian Gebara will walk us through Vivo's performance in connectivity and digital services by business segment, B2C and B2B, as well as present our ESG advances. Then our CFO, David Melcon, will give more color on cost and CapEx management. Free cash flow generation, followed by an update on shareholder remuneration for 2024. With that, let me turn the call over to Christian.

Thank you, João. Good morning, everyone, and thank you all for joining us today. We had another solid performance in the second quarter of 2024 with our main indicators such as total revenue and EBITDA growing higher than last quarter and still well above inflation. Our customer base expanded in our main products, postpaid access were up 7.2% and homes connected with FTTH grew double digits once again by 12.7%. In addition, our total mobile access broke the 100-million mark reinforcing Vivo’s commitment with our purpose of digitalization to be closer. Total revenues increased by 7.4%, mainly driven by mobile service revenues that were up 8.8% this quarter. Our robust top-line performance flowed down to EBITDA, which expanded 7.3% year-over-year in the quarter. By combining a strong EBITDA with CapEx intensive reduction, operating cash flow totaled R$6.5 billion up to June, with margins reaching the mid-20s level, while free cash flow generation reached R$5.5 billion, representing more than 20% of the total revenues. Moreover, our net income expanded 8.2% year-over-year in the period, enhancing our profitability. These strong results reaffirm Vivo’s solid position to continue to deliver sustainable growth and returns while committing to maintain a high shareholder remuneration. On Slide 4, we can see in more detail our consistent revenue expansion. Mobile services revenues that represented 65% of total revenue in the quarter grew at a fast pace due to solid commercial operating performance. The 3.9% fixed revenue growth was the highest since 2015, driven by a sequential improvement in FTTH performance with a 17.1% expansion and by an enhanced performance of the B2B segment. In combination of our broad offering of digital services of our leadership in fiber connection for homes and businesses makes it clear that we are on the right path for providing our top-notch services. This solid performance derives from our best-in-class value proposition for both B2C and B2B customers, combining connectivity with the broadest portfolio of services beyond the core. In Q2 2024, B2B digital services summed with B2C new businesses represented 9.9% of Vivo's total revenues, up 1.2 percentage points year-over-year, confirming the trend so far of the escalating significance. Turning to Slide 5. We highlight the main levers of our ongoing growth in mobile, which basically consists of an outstanding combination of lower churn and higher ARPU. We now have 100.9 million mobile access, and the postpaid share in our customer mix continues to grow as this base expanded by an impressive 7.2% rate year-over-year, leading the segment to represent 63.4% of our total access by the end of June 2024. As Vivo is uniquely positioned to meet customers' ever-growing needs for connectivity, we see them staying longer and spending more with us, resulting, for example, in increased upselling activity both for prepaid to hybrid and from hybrid to pure postpaid. As such, our churn in postpaid remains under 1% mark, while we increased mobile ARPU by 6.3% year-over-year, reaching its highest level since 2019. Regarding our fiber operation, in June, we reached 27.3 million homes passed with Vivo's FTTH, up 10.7% year-over-year, getting closer to our target of covering 29 million premises by year-end. Even though our footprint expansion remains accelerated, we have been able to increase our homes connected at a faster clip, up 12.7% to 6.5 million users after adding 199,000 new access during the second quarter of 2024, making it our best quarter since 2022. Besides expanding our customer base growth, we are also accelerating our ARPU expansion. FTTH ARPU reached 90.9, growing 4% from last year's second quarter. In addition, our Total Convergent Offer, the combined fiber mobile in a single plan maintains its excellent performance. In June, we reached a total of 1.8 million fiber customers on Vivo Total, more than doubling the number of users year-over-year as 85% of our new fiber sales at our stores are being done through this plan. Vivo Total brings benefits to both our fiber business, as the FTTH churn is 1 percentage point lower than what we have on a stand-alone fiber, and to our mobile business, as we have seen migrations of hybrid customers to Vivo Total offers at 90% on an early basis. Thus, we are in a privileged position to reap the benefits of convergence as the only player that can offer a combined fiber mobile plan on a national basis. On Slide 7, we can see the steady evolution of our B2C revenues in the last 12 months that represented around 74% of Vivo's top line. B2C revenue grew almost double the inflation in the period because of our exceptional connectivity that is being complemented by the advancement of our new business portfolio. Revenues coming from these services summed up R$1.5 billion in the last 12 months, up 35% year-over-year and representing 2.8% of our total results. This quarter, we are including information on health and wellness vertical, represented by Vale Saúde Sempre and Atma, our meditation and mindfulness app. Over the last 12 months, health and wellness revenues amounted to R$37 million backed by a solid performance of Vale Saúde, which currently has 321,000 subscriptions with growing usage rates. We also continue to develop the existing vertical and as such, we just launched two new financial services products. Pix Parcelado, which allows our customers to make payments in installments using Pix and a secured credit product linked to the funds users can withdraw from their FGTS on an annual basis called Saque Aniversário. Moving to Slide 8, we detail the B2B performance with revenues up 7% year-over-year. The result was driven by the complete portfolio of digital services we offer to our clients that generated R$3.6 billion in revenues over the last 12 months, up 19% year-over-year to already represent 32% of our B2B business and almost 7% of Vivo's top line. In the second quarter of the year, we reinforced our leadership in B2B by constantly bringing innovation such as customized private network solutions for some of the most relevant companies in Brazil as well as being a strong provider of hybrid business solutions. To boost our portfolio and reinforce our team and operations in digital services, we acquired IPNET, a company that specialized in leading company cloud transformation by implementing solutions from Google, having generated R$218 million in revenues last year, up 35% year-over-year. Regarding the ESG agenda, we have some important messages to share with you with the purpose of developing an increase in more sustainable operation and we anticipate our net zero targets by five years. The company intends to reach zero net emissions by 2035, a challenge considering it’s unprecedented for large companies in the sector. As a contribution to the circular economy, Vivo plans to considerably increase the volume of accumulated electronic waste collected from consumers going forward, collecting an additional 225 tons by the end of 2025. To reinforce our diversity pillar, our target for 2025 is to have women occupying 40% of senior leadership roles and 45% in overall leadership. The company aims to reach 40% black leadership positions and 45% black people in the general workforce. In social, we had the 25th anniversary of Telefônica Vivo Foundation, always keeping its purpose of educating to transform, digitalizing to bring closer. We have our latest Volunteer Day mobilizing more than 10,000 employees and their families benefiting over 40,000 people. During the quarter, Telefônica Brasil received several resolutions related to ESG, of which we highlight the best in telecommunications technologies and media, a category in the 2024 ESG Awards by Exame Magazine. Now, Dave will comment on our financial performance.

Thank you, Christian, and good morning everyone. First, on Slide 10, we can see our cost evolution. Our OpEx growth was driven mainly by our strong commercial performance, but also by some expected volatility in the other revenues and expenses cost line. The increase in cost of services and goods sold was driven by greater revenues from digital services and sales of consumer electronics, which has lower EBITDA margin, but demands no CapEx and helped us to reduce churn and extend our customers' lifetime value. The evolution of cost of operations was mainly related to the higher commercial activity seen in the period. But I would also like to highlight that during this year, we have had reduced sales of real estate and network assets as well as lower tax recoveries in comparison to the previous year, as a result of other revenues and expenses line shifted temporarily to the negative territory this year, impacting the year-over-year comparison. If we exclude this line from our OpEx, our EBITDA grows 10.6% year-over-year, leading to a margin of 40.8%. It's also important to highlight that during the second quarter, Vivo reached an agreement with Anatel and other parties to propose a migration to our Sao Paulo fixed voice concession to an authorization regime. This agreement, if approved by all the stakeholders involved, will enable us to dedicate investments to enhance the digitalization of Brazil through the most up-to-date technologies, while also bringing more efficiency to our operations. Turning to slide 11. CapEx totaled R$4.2 billion in the first semester, resulting in reduced capital intensity year-over-year. We continue to direct most of our CapEx to grow technologies, reinforcing our 4.5G coverage leadership, while accelerating investment in 5G that already covers 50% of the population. By combining our strong operational performance with efficient CapEx allocation, we recorded a robust operating cash flow of R$6.5 billion in the first half of the year, growing 9% year-over-year contributing to reach an all-time high operating cash flow margin of 24% in the last 12 months. When adding lease expenses, the performance is even better as we expanded 10.2% to reach R$4 billion in the first semester of the year. Moving to slide 12. Net income expanded 8.2% year-over-year in the first semester, reaching more than R$2 billion. If we consider just the second quarter of the year, we grew 8.9%. Vivo's cash position at the end of June this year surpassed financial debt by R$2.3 billion, even considering leases, leverage remained low at 0.5 times EBITDA. Free cash generation reached R$5.5 billion in the first half of the year, leading our free cash flow yield to reach double-digit levels over the last 12 months. Vivo's robust cash generation relative to its market value and revenue gives us important visibility to dedicate resources to growth, maintaining attractive shareholder returns. Now moving to the last slide where we update you on the path to comply with our shareholder remuneration guidance. So far, during this year, we paid out over R$4.1 billion to our shareholders, summing up the R$2.2 billion of interest on capital declared in 2023, the first installment of the capital reduction which amounts to R$1.5 billion and share buybacks that already surpassed R$400 million going towards the R$1 billion amount we have in the current program. This puts us well on track to deliver a payout of at least 100% of the net income for the year. In addition, during this year, we have already declared an extra R$1.5 billion of interest on capital based on the profit recorded so far this year. These initiatives reaffirm Vivo's unique position as one of the top Brazilian companies regarding growth, profitability and shareholder remuneration. Thank you. And now we can move to the Q&A.

We are going to start the question-and-answer section for investors and analysts. Our first question comes from Daniel Federle with Bradesco. You can open your microphone.

Good morning everyone. Thank you for taking my questions. My first question is about mobile plans. We've noticed that plan prices have been quite robust over the last few quarters. I'm curious to know what the main barriers are to raising prices even more significantly. Is it mainly the competitors' pricing or consumer budget constraints? For my second question, I want to understand how confident the company is that Vivo can become a significant player in digital services that could be a profitable business. While Vivo has clear competitive advantages in the traditional mobile telecom sector, the competitive edge in digital services is less clear. How confident are you about profitability in the future? Thank you.

Okay. Daniel, that's Christian. I'll try to answer both questions. For the first one, I think we are beyond just a strategy that's based on price increase. We had some price increases driven by the inflation of the period. So we did that for part of our pure postpaid and hybrid in April. And the prepaid was last year when we increased in November, the price of the 15 days promotion that we have from R$15 to R$17. What we've been showing at the market, and I think we've been very successful, is the combination of services. So we are driving the market to convergence, the convergence of fiber plus hybrid or pure postpaid. The number of Vivo Total customers that we had one year ago was 0.9 million customers. Now we have 1.8 million customers. We drive not only the turndown of the postpaid that is below 1%. But also in the fiber, when you consider the customer that is in Vivo Total, the churn is 1 percentage point lower than when it's a stand-alone fiber. Moreover, when we talk about totalization, now in this case, I'm talking about a plan that is fixed in the mobile, but also being very successful, adding video OTTs to our offering. So we have 2.7 million subscriptions of Video OTTs and Music. Only to give you some examples, of the way that we are driving our customer base of around 16 million customers, to try to increase their lifetime value of more services and reducing, of course, churn and using all our platform and channels that we have, driving our acquisition cost to a very low level. So here, it's that combination of things that we are doing that has been a success story for Vivo, not just based on price increase. And talking about the new business, I think here, I don't know if you're focusing more on B2B and B2C, but I want to talk about both. Now if I add the Digital Service or B2B, with the new business that we call in B2C, we are talking about around 10% of our revenues coming from these businesses. So for me, it's already a success. It's a success stand-alone, but more importantly is the success of keeping customers loyal to Vivo. I think we have some advantage to start with. We have a customer base, talking about around 58 million customers in B2C, 1.7 million customers in B2B. Talking about the channels that we have, 1,800 stores in B2C, 5,000 sales reps in B2B. Vivo app, 33 million unique users, a brand building capability, and many other interaction points that we have, through call centers, technicians, and you can name it. Now, I don't think there is anyone so present, nationally speaking, with so many channels as Vivo. The results are the ones that we are giving. Now in the B2C, new businesses grew 35%, so we are opening up some of them, Fintech. We opened also the Video Music OTT that I mentioned to you before. We just started launching Health & Wellness that is small, but it shows the optimistic view that can grow much more. So these are some examples of the services that we are seeing and already representing 2.8% of our revenues, with no CapEx. These revenues bring not only loyalty, but they bring growth without consuming CapEx. In the B2B, I think it is already a very clear proven story of success. That's why we bought Vita some time ago. Now we bought IPNET. IPNET is bringing more than R$200 million in revenues in growth with 35% in the last year. It’s bringing to 180 people that will complement our team, very specialized in the sales of cloud and in this case, also expanding our portfolio more to Google, rather than just Amazon and Microsoft. I can give also other examples in all the other lines of our Digital Service or B2B. So it's a growth of 19%, representing double-digit growth for the last quarters. I think that's also a positive sign of a successful strategy. Just to summarize, I understand that this is the right path to follow. And that's what we're going to keep doing as Vivo.

Very clear. Thank you. Congratulations.

Thank you, Dan.

Our next question comes from Leonardo Olmos with UBS. You can open your microphone.

Hi, Can you hear me well?

Yes.

Yes.

Thank you for taking my question and congratulations. I have one question regarding net income. As mentioned previously, net income remains the primary reference for dividends. Could we discuss alternative non-operating factors that could impact net income? For instance, firstly, is there a potential profit from the sale of reversible assets, and could you quantify the value of those assets? Secondly, regarding the concession liability with ANATEL, if leaving the concession could lead to additional dividends, could you elaborate on that? And thirdly, can you provide insights on the tax recoverable? This quarter shows a slight decrease, though I know there have been several strong quarters. What are your expectations for this figure in the second half of 2024? Thank you.

Thank you for your question, Leo. First, concerning the transition from concession to authorization, we are not yet able to provide details about its impact as it needs to be finalized. We hope to share some figures possibly in the fourth quarter once it is approved. Looking ahead, we believe there are opportunities for additional businesses alongside our existing telecommunications services without capital expenditure. We anticipate EBITDA will continue to grow, which will be a positive development. Additionally, we hope to see a reduction in interest rates in the future, which could benefit our top line, especially regarding our main debt obligations. As for income tax, the rates we experienced in the first and second quarters remained consistent at about 27%, though they are higher than those in previous quarters and years. There may be some seasonal trends that could produce changes, possibly in the second half of the year, leading to a decrease in the income tax rate, which will also depend on the capital interest we declare. Regarding tax assets, we have two points to mention. The first is that there has been a positive effect on working capital, consistent with previous quarters, primarily due to the deferral of Fistel payments and some recovery of tax assets. In terms of other costs and revenues, these pertain to the recovery of asset taxes that have not yet been reflected in our balance sheet, a process we continually monitor. We anticipate maintaining the patterns observed in the past in the upcoming quarter. However, we cannot confirm specifics for the third or fourth quarter at this time. Nonetheless, we expect to see a steady progression in those areas.

Next question from Marcelo Santos with JPMorgan. You can open your microphone.

Hi, good morning. Thank you for taking my questions. I wanted to focus on broadband. So the first question would be, you had an increased pace of broadband. If you could deep dive a bit on that and maybe discuss, is it like more gross adds? Are you capturing more? Or is it like lower churn? So just trying to understand a bit better this evolution, which was interesting. And the second question also related to broadband is you had a pickup in the FTTH ARPU. So if you could discuss a bit the trends, is this a better behaved competitive environment? Or is it more internal, like your users upgrading more? So just wanted to get a bit more information on the ARPU as well. Thank you.

Thanks, Marcelo. This is Christian. Yes, I think what you see here is the result of a very well-established and executed strategy. So there are many reasons to show why we are performing well in FTTH. We reported revenues of R$1.8 billion in the quarter. In the FTTH homes passed, we grew 10.7%. We ended the quarter with 27.3 million homes passed and have grown connectivity of these customers using this network. So we went from 5.8% to 6.5%. The penetration is now 24%, that's 0.4 percentage points year-over-year. Again, I think Vivo stands out as having the best quality, best channel, and best customer experience. The possibility, as I told before, of combining more services to the same customer. If you look at FTTH sales that we have in our own stores, 85% are coming from Vivo Total, which increased from 0.9 million to 1.8 million customers. The market in the last quarters, even if net adds of the market were not that high, ours is the highest among the last six quarters. If I look at the second quarter 2023, our net adds was 158,000. The first quarter was 173,000; second quarter is 199,000. Here is the combination of adds, as you mentioned, and reduced churn. The churn for these customers, the 1.8 million that have Vivo Total is one percentage point lower than the churn of the stand-alone customers. I think we have many assets that differentiate our offer from others. That's why we are also able to have the ARPU increase because people are willing to have higher speeds and more services combined with fiber. I think that's a combination of many factors that drive our preference and drive also our ability to have more of the share of the wallet of the customer through more services, and in some places, we offer things that others cannot offer. I don't remember if the second question was related to other ARPU. I think the ARPU I just replied is that it's a result of a better customer experience and a better service, installation and maintenance. There is also the requirement for more speed for WiFi in the different rooms in the same home and also the ability to add to fiber, OTTs, and other services.

Thank you very much, Christian. Very clear.

Thank you, Marcelo.

Next question is from Bernardo Guttmann with XP. You can open your microphone.

Hi, good morning, everyone. Thanks for taking my question. Actually, I have two on my side. The first question is related to competition in the mobile segment. We have been monitoring the launch of new offerings from some regional players. Have you noticed any signs of rationality in these offers, anything that could be a concern for the current favorable dynamics? And my second question is regarding the migration process from concession to authorization, what are the economic benefits that we can expect in terms of the company's OpEx and CapEx run rate? And what's the expected time frame for regulatory approvals? If you can give us any color here, it would be great. Thanks.

So, Bernardo, we have a very competitive mobile market. We have competition in every place, not only from the main operator but also from regional players or MVNOs. What we're trying to convey is that our strategy is based more on customer focus and the ability to drive more services to the same customer. We have an average of 1.4 services per customer, which can be fiber and mobile, digital services, fiber and OTT video virtual services. Our focus is maximizing the relationship that we have with our customers, offering a value proposition that is unique nationally. That's been driving our net adds and revenue results in all segments. Moving to the second question, we have some milestones to get the migration approved. We are now waiting for the public prosecutor's office, and we will present the inform and go to the reputed minister. We will have thirty days plus thirty days to present to the plenary. Once it's approved there, we do need the approval of AGU, and then we are done. I don't have a specific date, but if everything goes as anticipated, we could reach an agreement in October. After that, there will be more clarity on the investments required in legacy technology and assets not needed anymore.

Very clear. Thank you, Christian.

Thank you, Bernardo.

Next question is from Vitor Tomita with Goldman Sachs. You can open your microphone.

Hello. Good morning, all, and thanks for taking our questions. First question from our side would be on prepaid. If you could give us an update on how you are seeing trends for ARPU and for recharges in prepaid specifically? And second question from our side. If you could give us an updated view on how you are thinking about M&A generally, both on the broadband side and on the B2B side? And on the B2B side, in particular, if you see room for further acquisitions similar to Vita IT and IPNET or more B2B companies you've had different profile from those two? Thank you.

Regarding prepaid, the market is performing very well. We increased our offer by weekly offer to R$70. We are trying to bring more innovation to our prepaid segment. So we are bringing incentives of higher top-ups with some loyalty program linked to that. In the last quarter, we saw an increase in our revenues of R$4.9. So we experienced good growth above inflation. The churn is also very low. We are effectively migrating prepaid to hybrid successfully, and now we are migrating from hybrid to pure postpaid as well. We are also doing a hybrid plus content offering to enhance value. In terms of M&A, we are always looking at opportunities in broadband. So far, nothing new to share. We need to find the right pricing and quality in network and footprint. You understand we are expanding and have neutral networks available. We have room to be active in this field. For B2B, we are very happy with the acquisition of Vita and IPNET, both have a significant contribution. We are always analyzing other opportunities in B2B as well, whether it be through acquisitions, investments, or partnerships. We are optimistic about our growth potential.

Very clear, Christian. Thank you very much.

Thank you, Vitor.

Next question from Luca with Bank of America. You can open your microphone.

Hi. Good morning, everyone. I have two questions for you from my side. The first one regarding net adds on mobile. Vivo has been at a very solid pace for the past few quarters. But also when we look at the consolidated market, the market itself has been growing a lot for the past few quarters. So how can we think about that going forward? What have been the main drivers for that? And if that should continue or not? The second one on margins, EBITDA margins, how can we think about them going forward as well? Is there still room for expansion? Should we continue to see margins growing for as long as we have this solid top line growth? And how do you guys think about the margins in the long run? How high can they reach? So those would be my questions. Thank you.

Luca, this is Christian here. I can answer from Vivo's perspective. I think the market has started to see the opportunity of migrating prepaid to postpaid in a more positive way. In our case, for you to have an idea, if I look at the number of access, we went from 97.8 million to 100.9 million total mobile access. Prepaid went from 38.1% to 37%. The production in the prepaid access is 2.9%. On the other hand, in the postpaid segment, we came from 59.7% to 64%. It's a 7.2% growth. That is our ability to migrate customers from prepaid to postpaid and, of course, attract customers from others. But as you asked about the market as a whole, my answer would be the ability to migrate prepaid to postpaid that is driving net adds up for the market. If that was the question, I will hand it over to David for the EBITDA one.

Hi, Luca. Thank you for the question. Regarding the margin of the EBITDA, as you know, there are two elements. One is the line of other costs and revenues that this quarter was slightly worse than the one we had previously because there is some volatility. If we consider, if we exclude this line, we'll see an improvement in the EBITDA margin that will reach 40.8%. There will be almost one point improvement, even though the new revenues are coming with a lower EBITDA margin, but with no CapEx. We prefer to look at the margins at the operating cash flow level. As I said, those new businesses are coming with no CapEx. Here you can see that we are in a very good momentum now. We have an operating cash flow margin just in the quarter of almost 23% margin. If you look at the last six months, we are almost at 24%. In summary, we still have room to continue improving margins. We prefer to look at operating cash flow margin after leases rather than just EBITDA margins alone.

Okay. Very clear. Thank you for the answers.

Thank you.

Next question from Phani Kumar with HSBC. You can open your microphone.

Hello. Thanks for taking my questions. My first question is regarding your migration from concession to authorization. So once the migration is completed, do you see a need or an opportunity to invest more in the concession areas to invest more fiber in these areas and how would that impact the CapEx? My second question is how robust is your guidance in terms of shareholder remuneration considering that you're looking at several M&As and probably the concession to authorization migration? Thank you.

I don't know if I got the second question. What is the second question?

Okay. The second question is how robust is your guidance. Does it consider the concession to authorization migration already? Or if the concession to authorization migration goes ahead, does it pose a risk to the guidance for dividends?

On the guidance we have, it doesn't change with the immigration. Is that 100% or more of our net income? That remains the same. Regarding the first question, if I understand it well, once we migrate, we're going to need to keep some cities in the state where we need to keep the fixed telephony service. It's a small amount of cities that we need to keep until 2028 because these cities or these locations, they don't have any other voice alternative that we could fulfill with a mobile solution or we need to keep the fixed telephony solution that we have today. Apart from that, all the rest, the vast majority of the state, we have our freedom to do whatever we want. Of course, our fiber strategy is based in other elements, not only just the migration. If you look at our network today, with 27 million homes passed, an important part of this network is in the state of São Paulo, and that is based on the replacement of copper by fiber. We're going to continue to do that, or we're going to do so using any other network that we have there. It doesn't change anything with the migration. The migration only obliges us to keep few locations where we need to keep until 2028. I don't know if that was the question, but that's the way we're going to pursue.

Sure. I think that was pretty clear. Thank you.

Next question from Carlos de Legarreta with Itau BBA. You can open your microphone.

Hi, good morning. Thank you for taking the questions. Just two brief ones on my side. The first one is, can you remind us of the exposure to FX depreciation? I assume most comes from the handset costs, but I'd like to have some color on that, please? And the second one, more than a question, I'd like to hear more color about the financial services that you provide. I know in the Investor Day, you talked about requesting a license. So, I'm just wondering what other services can you offer? What's the opportunity that you're identifying? Thank you.

Hi, Carlos, I will take the first question. Regarding the exposure that we have to FX, they are mainly to part 1 had to do with the handsets. We have some protections in terms of our global contracts or being part of the Telefônica Group. In the case that this should be an increase in prices due to FX, we will pass it on to consumers as we believe that is standard practice. About the rest of our operations in Sumaré, I would say around 20% of our CapEx is somehow linked to FX. As I said, we have some protections, so it doesn’t mean that we have an impact immediately. It will be a limited impact mid-term. Now regarding the financial services, we just presented that everything related to financial services, B2C, is growing revenues, R$450 million in the last 12 months. It's a growth compared to the last 12 months to Q2 2023 of 27%. We have different products, the main one called Vivo Pay personal loan is available to Vivo customers and allows them to hire credit that runs from R$500 to R$50,000. It's 100% digital; they go through the app and can request that. Our ability to understand customers' profiles allows us to have a very contextualized offer, minimizing risks and increasing accuracy when offering the right product to the right customers. In the second quarter, we reached R$446 million, lending to our customer base. We're talking about 60,000 customers that already accessed our loan platform, and that's an increase in the volume. If I compare the R$446 million to a year before, it's a 62% year-over-year increase. We still have a lot to grow. That's why we are launching new services. We launched FGTS birthday, which allows customers to anticipate their funds. We also introduced Pix payable installments. We have insurance for smartphones and are expanding to life insurance and other categories. We have around 450,000 customers with smartphone insurance, and we aim to grow our offerings further.

Thank you for the color. Appreciate it.

Thank you, Carlos.

Next question from Gabriel Vaz de Lima with Morgan Stanley. You can open your microphone.

Hi, guys. Thank you very much for taking my question. Just one on my side. Anything relevant that we should keep our eyes on in the third quarter? Any relevant trends that we should be looking at in fixed and mobile? Anything you can share would be very helpful. Thank you.

Gabriel, we've been showing quarter-over-quarter, a positive trend in every line, and that responds to the strategy, which has been communicated to you in the last years. So we're going to keep driving the company in the same way, driving connectivity, mobile and fixed, driving totalization of our customer base through a variety of products and services, expanding our new business in digital portfolio, being more efficient in the way we relate to customers, and bringing our OpEx through digitalization while being rational in CapEx, maintaining a decreasing trend for CapEx over revenue while also keeping the remuneration as we said before, at 100% or more of our net income.

The question-and-answer section is over. We would like to hand the floor back to Mr. Christian Gebara for the company's final remarks.

Once again, thank you all for participating and for the great questions. We are all here available for any further questions that you may have. It's a very positive and strong quarter that we are very satisfied to bring you the results that we're expecting, giving all colors and all the detail of our strategy going forward. Again, looking forward to meeting you soon and, of course, waiting for the next quarter meeting in the coming months. But before that, the whole team here is available for any specific questions that you may have. Thank you again for participating.

Vivo's conference is now closed. We thank you for your participation and wish you a nice day.