Earnings Call Transcript - VIV Q1 2025

Operator, Operator

Good morning, ladies and gentlemen, welcome to Vivo’s First Quarter 2025 Earnings Call. This conference is being recorded, and a replay will be available at the company’s website. The presentation will also be available for download. This call is also available in Portuguese. 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 will turn the conference over to Mr. João Pedro Soares Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you may begin your conference.

João Pedro Soares Carneiro, Investor Relations Director

Good morning, everyone, and welcome to Vivo’s first quarter 2025 earnings call. Christian Gebara, our CEO, will walk us through Vivo’s performance and connectivity and digital services as well as present our ESG highlights for the period. Then David Melcon, our CFO, will give more details on cost and CapEx, free cash flow generation, shareholder remuneration, and lastly, an update on our fixed voice migration process. With that, let me turn the call over to Chris.

Christian Gebara, CEO

Thank you, João. Good morning, everyone, and thank you for joining us today. The first quarter of 2025 was marked by growth both in operations and financially. Starting with our postpaid service, we reached over 67 million customers, achieving a yearly growth of 7.7%. In fiber, we continued the trend of double-digit growth, increasing our customer base by 12.9%. Our total revenues increased 6.2% with mobile service revenue growing 6.5% and fixed revenues expanding by 6.2%. This consistent evolution showcases the growing demand for our services. Profitability remains a key focus with EBITDA increasing by 8.1% during the period. Our operating cash flow reached BRL3.8 billion in the quarter, growing 12.7% year-over-year, accounting for almost 27% of our total revenues. Furthermore, our net income grew remarkably by 18.1% year-over-year, reaching BRL1.1 billion. We began 2025 with a solid distribution to shareholders, with payments already amounting to BRL2.6 billion, this commitment underscores our confidence in sustaining strong financial performance and meeting our guidance for the upcoming years. Moving to Slide 4, we display how our revenues are outpacing inflation, driven by double-digit growth of our flagship services. Our total revenues for the first quarter of 2025 reached BRL14.4 billion, with mobile service revenue being led by postpaid and fixed revenues by FTTH and B2B digital services. We highlight our postpaid and fiber revenues, these are the cornerstones of Vivo’s successful convergence story. Together, they represent 73% of our service revenues, with both growing above 10%. Additionally, our new businesses are consistently gaining share in our portfolio and significantly contributing to our growth. This underscores our strategy of moving away from being solidly a connectivity provider to a hub of innovative services. These solutions drive net additions and enhance our market positioning, assisting us in meeting the demands of our customers. On the next slide, we dive into the impact of our successful performance in mobile. Our total mobile access reached BRL102.4 million in the quarter with the hybrid plus pure postpaid access growing by 7.6% year-over-year to over 48 million customers. This growth features the success of our up-selling initiatives, which have effectively transitioned a significant number of customers from prepaid to hybrid and from hybrid to pure postpaid plans. Our 5G access has doubled since March 2024. This widespread adoption underscores our commitment to providing cutting-edge technology to our customers. Moreover, our postpaid churn has remained very low over the past year, reflecting our ability to retain high-value customers despite increasing prices. This reduced churn coupled with a steady increase in mobile ARPU highlights the positive financial impact of our strategic focus on postpaid services. Overall, our strategy of migrating customers to better plans is translating into customer loyalty and ensuring we remain at the forefront of the industry. On Slide 6, we provide our insights on the performance of our fiber operations and convergence with postpaid. We have categorized our FTTH line into three segments: Vivo Total customers, convergent customers not in Vivo Total plans, and stand-alone fiber customers. Vivo Total is ramping up its shares in our FTTH customer base, achieving a remarkable growth of 77.4% year-over-year. Meanwhile, the other two categories are migrating to our fully convergent plans, bolstering both our fiber and mobile businesses as the lifetime value of Vivo Total’s users is much higher than that of customers in stand-alone offers. Recently, we introduced new Vivo Total plans that include partnerships with leading OTT platforms, adding even more value for our subscribers. In terms of homes passed with FTTH, we expanded to almost 30 million homes while boosting the rate of net additions. This achievement is driven by the lowest FTTH churn rates we have ever seen and by our commitment to offering the best services on the market. Moving to the next slide, where we detail our B2C new businesses and the positive impact on average spend and lifetime value. Vivo’s 57.2 million digital customers generated over BRL43 billion in revenues in the last 12 months with an evolving monthly average of BRL62 per customer. Our new businesses segment has shown incredible performance across various industries, growing 18.6% year-over-year, reaching BRL1.7 billion and representing 3% of our total revenues. This growth confirms our commitment to diversifying our offerings and meeting the various needs of customers. Furthermore, we have made significant strides in the market of accessories for smartphones and other devices. In March 2025, Vivo acquired i2GO for up to BRL80 million, reinforcing our presence in this segment alongside OVVI. These efforts are part of our broader strategy to enhance customer lifetime value and ensure that our customers continue to benefit from our comprehensive and differentiated value proposition. Moving to Vivo’s B2B performance on Slide 8, we registered another double-digit growth, exemplifying how our focus of being a one-stop shop for businesses of all sizes is paying off, with BRL12.3 billion in revenues. B2B already represents 22% of our business. This outstanding performance is largely driven by our digital B2B segment that saw a yearly growth of 25.5% and now accounts for 7.7% of our revenues. Notably, the Cloud segment experienced a significant increase of 38% year-over-year as Vivo continues to prioritize the digitalization of customers. The success of Vivo Empresas highlights our position as the leading technological partner of Brazilian companies, serving 1.8 million B2B clients with over 5,000 sales representatives who market a replicable portfolio that spans from mobile and fixed connectivities to state-of-the-art digital solutions and equipment. Now let’s move to our ESG highlights for the period. I’m excited to share that Vivo continues to excel in sustainability and social responsibility. We were recognized as the leading Brazilian company in the Dow Jones Best-in-Class Index and placed 6th among the Telcos in the world. Additionally, we are prominently featured in B3’s Corporate Sustainability Index, highlighting our leadership among Brazilian companies in ESG practices as well as being part of CDP’s Climate A list highlighting our transparency and climate ambition. On the environmental front, our Futuro Vivo platform showcases our commitment to environmental protection with a special focus on the Amazon Rainforest. We also launched a campaign at Lollapalooza 2025 called Raízes Vivas, which provided immersive experiences on native Brazilian cultures as well as raised environmental awareness. In terms of diversity, our train new program has reached a new milestone with 56% of selected candidates being black employees and 11% having a disability. Vivo was also recognized as number one in ANATEL’s accessibility ranking for our efforts to support customers with disabilities. Lastly, I would like to invite you to check out our Investor Relations website for the main ESG highlights of 2024. With that, I hand the floor over to David to comment on our financial performance. Thank you.

David Melcon, CFO

Thank you, Christian, and good morning, everyone. Turning to Slide 10, we present the evolution of our costs. We began 2025 with costs growing less than inflation for the period, reinforcing our ability to maximize cost efficiencies. Our cost of services and goods sold increased by 4.8% year-over-year, where the cost of services grew 7.7% driven by the greater demand for our B2B services and the cost of goods sold remained almost flat as we are constantly improving the margin profile of the products we sell. Cost of operations grew 5% year-over-year with the evolution of all main lines under control. The Commercial & Infrastructure expenses returned to a normalized expansion level in the first quarter as expected. Additionally, the growth seen in personnel and G&A was completely offset by the decrease of 3.6% year-over-year in the provision for bad debt, thanks to improved collection processes and the essentiality of our service. Moreover, the Other Revenues and cost line registered an expense in the quarter, mainly driven by reduced sales of copper. Looking ahead, it’s important to mention that the sale of copper and real estate will gradually resume in the coming quarters, providing positive support to this line and to our result as a whole. Overall, our ability to maintain costs growing less than inflation led to an EBITDA margin expansion of 70 basis points. On Slide 11, we detail our increasing CapEx efficiency. In the first quarter this year, we observed a slight year-over-year decrease in investments with a significant reduction in CapEx over sales by 0.8 percentage points. We also present qualitative research on our investment allocation as most of our mobile CapEx was dedicated to expanding our 5G presence, which now covers 62% of the Brazilian population across 519 cities. On the other hand, over 90% of our fiber CapEx is focused on connecting homes, thus accelerating our network monetization. We emphasize that around 76% of our investments are specifically allocated to business growth as we have a wide range of opportunities to generate shareholder value. Thanks to our CapEx efficiency, our operating cash flow has shown impressive growth, increasing 12.7% year-over-year and 15.4% when excluding leasing effects. Margins are also showing a positive trend, up considerably in both metrics. This consistent focus on efficiency and strategic investments positions us well for continued financial health and operational success. Turning to Slide 12, we present our outstanding net income growth at low debt levels that protects us from high-interest rate scenarios. Starting on the left, net income for the quarter increased by 18% to BRL1.1 billion, benefited by our strong operating performance and optimized financial results. Our financial debt remains under control with a net cash position of BRL2.7 billion at the end of March. Considering leases, net debt amounts to BRL12.1 billion, equivalent to 0.5 times the EBITDA over the last 12 months. Our cash flow generation remains extremely robust despite a year-over-year decrease. This annual comparison was mostly impacted by a timing mismatch related to the payment of regulatory fees that the previous year were partially paid in April, and this year are fully paid in March. Our last 12 months free cash flow yield remained close to 10%. Our free cash flow accounted for 50% of the revenues recorded in the quarter. These results highlight our continued focus on maintaining a strong financial position while generating substantial cash, ensuring we have the flexibility to invest in high-return projects and provide attractive shareholder returns. Turning to Slide 13, we discussed how we are meeting our shareholder remuneration guidance of distributing no less than 100% of our net income in the coming years. By the end of April 2025, we had already paid out BRL2.6 billion to shareholders through interest on capital and share buybacks. Additionally, we are committed to distributing another BRL2 billion from the capital reduction approved in December last year, bringing our 2025 remuneration to BRL4.6 billion so far with more to come in the year. We also focus on increasing the liquidity of our stock. We are proud to announce that our stock is one of the top 50 most liquid shares in the Brazilian Stock Exchange raising 17 positions in the B3 Negotiability Index since March last year. This ensures trading and a strong market presence. Lastly, as part of our strategy to enhance liquidity, we successfully completed an operation of a reverse stock split followed by a forward stock split on April 14 this year, doubling our share count and therefore positioning a share nominal price in a more attractive range. This will keep you updated on the final step of this operation. Moving on to the last slide of our presentation, we are excited to share the successful conclusion of our migration to the authorization regime of our fixed voice service in the state of Sao Paulo. This is a key moment for Vivo and the telecommunications sector in Brazil. On April 11, this year, Vivo and ANATEL signed a Single Term of Authorization, officially transitioning from concession regime to authorization. This milestone marks the beginning of a new era where we can fully leverage the benefit of this transformation. Financially, this transition unlocks significant value. We anticipate around BRL3 billion from the sale of copper based on current market prices, net of extraction costs. Additionally, we estimate to capture around BRL1.5 billion from the sale of a real estate asset net of demobilization costs. We also foresee the potential for recurring savings through cost efficiencies related to the reduction of maintenance and network expenses mainly due to the complete decommissioning of our copper network and real estate premises. These savings and benefits will be realized gradually, reaching their full potential by the end of 2028, positioning Vivo for sustained growth and increasing profitability. The next step of the transition involves migrating copper-based fixed voice services to advanced technology that is already underway. All in all, this achievement is evidence of our commitment to innovation and excellence, ensuring that we continue to provide unparalleled services to our customers across Brazil. Thank you. And now we can move to the Q&A.

Operator, Operator

Our first question comes from Bernardo Guttman with XP.

Bernardo Guttman, Analyst

Hi good morning everyone. Thanks for taking my questions. My first question is about the sustainability of margins. You had a solid margin increase this quarter. What are the key efficiency levers the company is working on to sustain or even expand margins? And my second question is on prepaid. We saw a significant drop this quarter, and it would be helpful to understand how much of that was driven by migration versus lower recharge volumes? What are the main reasons behind this weaker performance? Thank you.

Christian Gebara, CEO

Hello Bernardo, I will start with the prepaid. Yes, the main reason behind this is the migration from prepaid to hybrid plans, as you saw, we did it very aggressively. And so we reduced the prepaid customer base. And always, there is a negative ARPU impact on that because normally, we migrate customers with more spending power to postpaid plans, and so that’s impacting the revenues in the prepaid. But if you look at it in a combined way, the evolution is very positive. And also, if you see how much postpaid is already representing out of the BRL9.2 million that we presented this quarter as mobile service, we already have almost BRL8 billion in the postpaid revenues. So that’s the trend and the trend continues to migrate. I think we’ve been very successful doing so. And that’s the main reason behind the evolution of the prepaid revenues. And the EBITDA, as it was a very good quarter, as you just described, an increase of 8.1% in the absolute number of our EBITDA, reaching BRL5.7 billion. Here is, of course, there is the positive performance of our revenues. So we've been able to capture this revenue growth while reducing costs. The main reason is digitalization, both in customer care and back office tasks that we are incorporating a lot of technology in AI, for instance. We’ve also been very good in using our app, now that we reached 27 million users of our Vivo app that is driving not only customer care but also sales. A lot of sales and most of our migrations are done through the app. We’re also increasing the sale of fiber. And we are also, as we described here before, there are many OTTs that we sold, and most of them are sold also through the app. Digitalization is still an area where there’s room to grow. We believe there is a lot to still capture in our effort to reduce costs through digitalization while our revenues continue to grow. If you look also at the EBITDA, even operating cash flow, that's positive because the new business that represents more than 10% we are growing sometimes is lower margin with no CapEx expenditure. So we are very confident that we are following the right strategy to continue to increase everything above inflation.

Bernardo Guttman, Analyst

Very clear. Thank you, Christian.

Christian Gebara, CEO

Thank you.

Operator, Operator

Our next question comes from Marcelo Santos with JPMorgan.

Marcelo Santos, Analyst

Hi good morning, Christian and David, thanks for taking my questions. The first question is regarding, if you could provide a bit more color on your back book price increases this year, how did this compare to the last years, like, I don’t know, maybe timing, magnitude, percentage of the base effect. So that will be the first question, some more color on these price increases. And the second question is, if I could get your current stance on M&A. So we see that you have been – sorry, can you hear?

Christian Gebara, CEO

Yes.

Marcelo Santos, Analyst

The second question would be just the current stance on M&A. So you have been very active on smaller deals with digital services. Would something in the broadband area also be considered by Vivo? Thank you.

Christian Gebara, CEO

So Marcelo, there is a lot of – you asked about the back book and also just to remind everyone, in our front book, we made price adjustments in February 2025. So there was around 7.7% in postpaid and for brand, 7.3% in hybrid and 6.7% in Vivo Total. So that was the front. Going to the other one. Also, we started now the price adjustment in the back book in part of our existing customer base in April. So we did around 78% of our customer base of postpaid, a 5.7% increase. In hybrid, we did at 64% of our customer base, 7.2%. In fiber, we did a January average price adjustment of 4.5% to 14% of our customer base. We do more in June. And Vivo Total with the 2.9% of 100% of our customers in the first quarter of 2025. Compared to what we did last year, the percentage is smaller because the incremental that we had next year was a little bit higher, but that’s what we did. Some of it is not still captured because it was in April, and most of the postpaid and hybrid, and as part of the increase will also be done in August for the postpaid and hybrid that we didn’t do in April and also in June for fiber that we didn’t do in January. So that’s a summary. Yes, we are looking at both small M&As and digital services. As we just described, we bought IPNET, which was one in cloud for B2B. We bought i2GO in accessories for smartphones and other devices. Yes, we are always looking for consolidation in the fiber market. There are different types of companies, small, mid-sized ones. Some of them are very regional or local. Others have a national footprint. We need to focus on those where the overlap is not high, the quality of the network is what we want, and the price point is attractive for us. Now we’ve been saying that Homes Passed or average CapEx is BRL150 to BRL200 to connect is BRL800. So on the year, the deal is more in the CapEx of connecting customers. We’ve been doing that very effectively. We’re expanding our footprint in the last quarter around HPs now, Homes Passed more than 500,000, and we are connecting. We had the net adds of 211,000 fiber customers, continuing to be number one in strong leadership in market share of net adds and reducing churn. So again, we do believe that there is room for consolidation, but we haven’t found so far a target that would comply with all the criteria that I just described to you.

Marcelo Santos, Analyst

Right. Crystal clear. Thank you.

Christian Gebara, CEO

Thank you, Marcelo.

Operator, Operator

Our next question comes from Gustavo Farias with UBS.

Gustavo Farias, Analyst

Morning everyone. Thanks for taking my questions. I have two on my end. The first one about the concession migration. We didn’t see it happen in Q1, but given the migration underway, do you anticipate any pressure on margins or CapEx in the short-term as a consequence? And the second one, looking at cash flow. If you could bring more color on the dynamics of leases and working capital, we saw in Q1 and if that should normalize in the full year. Thank you.

Christian Gebara, CEO

So Gustavo, no, there is no pressure on the financial indicators that you just described for the migration of concession to authorization. Actually, we decided to give you more color on what we expect of the positive impact of the sale of copper and the sale of real estate. We estimated based on the quantity of copper that we have, the quality of the copper that we extract, and that’s why we gave this number of BRL3 billion starting this year, but with maybe the highlight of the impact will be 26%, 27%. The same goes for real estate; now we’re talking about different types of real estate we have. Depending on the migration, we have to make on the customers that still have copper to fiber. But anyway, there is a very positive impact, and these are all the numbers that we just presented, on the over net of all the costs involved in migrating, removing the equipment from real estate and also the distraction of the copper. So no other impact, as we just said before. Regarding free cash flow, Dave, you follow.

David Melcon, CFO

Yes. Hi, Gustavo. Regarding the question on free cash flow. Over the last few years, we have consistently shown a very strong cash flow. However, if we look across quarters, there is always some rationality. This quarter, we have a strong free cash flow margin of almost 15%, but the working capital is mainly impacted by some delay in the phasing of payments that have to do with regulatory taxes that the previous year were partly paid in April. This year, we paid in March. That is something that should be compensated in the coming quarters. Regarding the evolution of the leases, the first comment I want to make is if you look at EBITDA and EBITDA after leases, you see both are growing very strongly, 8.1% both. However, when you look at the payments, there is always some volatility, and we are negotiating with the tower companies for better conditions, and sometimes that requires some cash payments. So it’s difficult to analyze the effect on one quarter for the last 12 months. However, in this particular quarter, if you look at the total amount we pay in terms of principal and interest, we paid BRL1.249 billion that even though it’s higher than the previous year, this number is lower than the last two quarters. This gives you an idea of the trends that we might be able to achieve for the coming quarters. Lastly, we have some specific initiatives in place to reduce the costs related to tower leases, which should benefit future trends.

Gustavo Farias, Analyst

Very clear. Thank you very much.

David Melcon, CFO

Thank you.

Christian Gebara, CEO

Thank you.

Operator, Operator

Our next question comes from Lucca Brendim with Bank of America.

Lucca Brendim, Analyst

Hi, good morning, everyone. Thank you for taking my questions. I have two on my side. The first one is a follow-up on Bernardo’s question about what happened to prepaid in the first quarter. I wanted to understand is what do you expect for prepaid going forward? Are you guys seeing any space for price hikes in prepaid? Or is it still difficult? And in terms of revenues, what can we expect? Is this the level of decline we should expect for the remainder of the year? Should we see an improvement? How are you looking at this? The second question is regarding broadband; how are you seeing pricing dynamics? We continue to see other competitors also having some trouble increasing offers in the front book. How do you think this should go forward? Do you see also for price hikes in the front book for broadband? Thank you.

Christian Gebara, CEO

So with prepaid, we believe it’s going to keep trending, it's not going to worsen. There’s always the opportunity for pricing as we have been doing in hybrid and postpaid, but I cannot tell you about any decision that we may take commercially. So we’re going to continue working very hard on migrating customers, the best customers, to hybrids. We’ve been doing that in a very good way. So we need to continue with the same strategy and always trying to offer new services even for prepaid. We’re expanding entertainment, health, and financial services like insurance. We are also working a lot on the CRM of prepaid to be able to capture more value out of not only the traditional core but also by expanding the sale of digital services to this customer base. What we are seeing is that we are gradually increasing customers who are recharging with us, so we can offer more and more benefits as well to keep loyalty. We are doing many benefits with Vale Bonus, for example, distributing points to customers who have a higher top-up with us and remain recurring. We remain with the same recurrence. So that’s part of the strategy. I cannot share much more about our commercial decisions for the future. But again, migration will be the driver for us to keep customers engaged. The second question was about pricing dynamics for broadband. We have a slightly different strategy from our competitors. As I said, in January this year, we applied price adjustments for 4.5% to 14% of our customer base, and we may increase the second round in June. We are very focused on convergence. We are also selling with higher speeds now; we are launching higher speed offerings. We’re expanding also Wi-Fi with more devices with Wi-Fi 6 as a differentiation of our offering. Therefore, it’s difficult for me to answer in one line what’s going to be our strategy as it is a very segmented strategy based on the best experience of Wi-Fi and also on convergence. We’ve been very positive at achieving that, and our revenues in fiber already represent almost BRL2 billion and are growing over 10%, which is the same growth we have in postpaid. So the combination of the two is what drives our revenues up, and we will continue being very segmented and precise in the price increases, always benefiting customers who have more services with Vivo.

Lucca Brendim, Analyst

Very clear. Thank you.

Christian Gebara, CEO

Thank you. Also, the front book has prices increased, so that’s also important to highlight.

Operator, Operator

Our next question comes from Vitor Tomita with Goldman Sachs.

Vitor Tomita, Analyst

Hello, good morning all and thanks for taking our questions. Two from our side. The first one is on the migration. Now that you are starting to migrate concession customers to newer technology, can you share any initial view on how well that is being received initially and how it is to migrate? What is the base at which you are planning to go over these migrations? The second question would be a bit of a follow-up on the fiber point. Besides the pricing point, do you see any updates on your growth strategy for the fiber segment in terms of potential expansion of Homes Passed? Do you still see much room to expand coverage either organically or by M&A as you discussed in another question? Thank you.

Christian Gebara, CEO

So Vitor, it’s been very successful; we are piloting a lot of migrations, and it’s been very successful. As I said before, we have 1.2 million customers in copper that are basically using voice; the ones still in xDSL is a very small part, talking about 155,000 customers. So the ones that are with voice, when we have fiber, we’ve been working in a very industrialized model to migrate customers with minimal hassle from copper to fiber. So very positive that we can do that fast; it’s doing very well, and we may provide more results in the next quarters. Thus, we are highlighting the impact in 2026 and 2027 because of our ability to migrate customers and liberate copper and the real estate that is assigned to provide these services. Regarding expansion of our fiber network, we continue at a very accelerated pace. We had 26.8% at the end of the first quarter; now we have 29.6 million Homes Passed. Last quarter, which represented results, we built 500,000. We continue to penetrate our network and have accelerated net adds in the first quarter compared to the same quarter of last year. We are continuing to build, but we are attentive to M&A opportunities. It is not easy to find what we are looking for, so while we don’t find we build, but at the moment we are continuing to build.

Vitor Tomita, Analyst

Very clear. Thank you very much.

Operator, Operator

Our next question comes from Phani Kanumuri with HSBC.

Phani Kanumuri, Analyst

Hello, can you hear me?

Christian Gebara, CEO

Yes, Phani. Please go ahead.

Phani Kanumuri, Analyst

Yes. Thanks everyone for taking my question. The first question is regarding competition in mobile. Are you seeing some kind of increased competition from regional operators or new sale at least on a regional basis? My second question is regarding the use of cash that you have from the sale of copper and real estate: what are the planned usages that you have for the cash that you’ll get over the next three years? Thank you.

Christian Gebara, CEO

So Phani, mobile is always very competitive. But I think as we highlighted, we’ve been growing very positively in additions of postpaid. In the number of access of 5G, we also gave a good number that we are also increasing. If you look, for instance, postpaid access compared to last year, we grew 7.6%. In M2M and Dongles, we grew at 8%. We have a reduction in prepaid, of course, because that’s due to the migration. No ARPU also is increasing by 3.5%. And the postpaid churn is again at the level of 1%. Our ability to migrate customers from prepaid to hybrid and from hybrid to postpaid continues to be very positive and accelerated. The customers we migrated a year ago increased by 18.3%. Yes, it’s very competitive, but again, I think we have the right strategy very well segmented with all the portfolio that can give customers a selection based not only in mobile; it's merged with fixed, digital services, and also with the quality and customer experience that we provide at all points of interaction with our customers. That’s what I would answer about mobile. Regarding the second question, yes, we will continue to remunerate our shareholders a minimum of 100% of net income. Last year was above 1.05%, and this year, we will follow with the guidance of a minimum of 100%. Net income increased already by 18%, we made many payments of interest this year and already also with share buybacks. We have already announced other interest on capital for next year. Just this year in 2025, we already paid shareholders BRL2.6 million, BRL2.2 million in outstanding capital declared in 2024, that we paid in April. And we have 226 of share buybacks. In July, we will pay BRL2 million of capital reduction, and we have already declared, as I said, BRL500 million that we will pay before April 2026. That’s what we will do with the proceeds. We also want to have the flexibility, as I said before, to continue to be active in M&A in digital services and, if we find something that complies with our criteria, in fiber assets.

Phani Kanumuri, Analyst

Thank you. Very clear.

Operator, Operator

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.

Christian Gebara, CEO

Thank you again for everyone participating in our call. As you could see, very strong results in line with our strategy of growing the new technologies, highlighting that more than 70% of our service revenues are related to mobile and fiber, both growing above 10%. Digital services in general, both B2C and B2B, are also showing more than 10% growth along with double-digit growth. Again, as we described here in the concession with good returns on the sale of copper and real estate for the next quarter. If you have any additional doubts, please reach us, and our investor relations team is also at our disposal. Thank you, and talk to you soon.

Operator, Operator

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