About Telefônica Brasil

TelefÔnica Brasil S.A. operates as a mobile telecommunications company in Brazil. The company’s Vivo brand, under which the company markets its mobile services, is among the most recognized brands in Brazil. The company offers its clients a complete portfolio of products, including mobile and fixed-line voice, mobile data, fixed broadband, ultra-fast broadband, or UBB (based on the company’s Fiber to the Home, or FTTH and Fiber to the Curb, or FTTC infrastructure), Pay TV, information technology and digital services (such as entertainment, cloud, security and financial services). The company also has one of the most extensive distribution networks in the sector, where the company’s clients can obtain certain services, such as purchasing credit for prepaid phones. Operations and Services The company’s operations consist of local and long distance fixed-line telephone services; mobile services, including value-added services; data services, including broadband services and mobile data services; Pay TV services mainly through IPTV; network services, including rental of facilities, as well as other services; wholesale services, including interconnection; digital services; services designed specifically for corporate customers; and the sale of wireless devices and accessories. Fixed Voice Services The company’s fixed-line services portfolio includes local, domestic long-distance and international long-distance calls provided both on the public and private regime. Local Service Fixed local services include activation, monthly subscription, public telephones and measured services. Measured services include all calls that originate and terminate within the same area code within the company’s concession region, which the company refers to as local calls. Intraregional, Interregional and International Long-Distance Services Intraregional long-distance services consist of all calls that originate in one local area or municipality and terminate in another local area or municipality within the company’s concession region. Interregional long-distance services consist of state-to-state calls within Brazil and international long-distance services consist of calls between a phone line in Brazil and a phone line outside Brazil. The company was the first telecommunications company to be granted the authorization to develop local, intraregional, interregional and international services throughout Brazil, including outside the company’s concession area. Mobile Services According to data regarding market share published by ANATEL in December 2022, the company is the leading provider of mobile telecommunications services in Brazil in terms of accesses. The company’s mobile portfolio includes voice and broadband internet access through 3G, 4G, 4.5G and 5G (the latter of which is in the process of implementation), as well as value-added services (such as Atma, VivaE, Vida V, Vivo HomeFix, Vivo BTFIT, Go Read, Ubook, Hube Jornais, NBA and NFL), prepaid plans with data sharing features, family plans, voice mail and voice mail speech-to-text translation, caller identification, voice minutes in unlimited bundles to mobile and fixed phones, ringtones, and innovative services such as multi-media backup, cloud-based services to save texts, entertainment and music apps, advertising platforms, among others. The company also offers wireless roaming services through agreements with local mobile service providers throughout Brazil and other countries, allowing the company’s subscribers to make and receive calls while outside of the company’s concession areas. The company provides reciprocal roaming rights to the customers of the mobile service providers with which the company have such agreements. Data Services The company provides fixed broadband through fiber (FTTH – fiber-to-the-home and FTTC – fiber-to-the-curb) and xDSL technologies, with speeds ranging from 1 Mbps to 1 Gbps. Through the GVT acquisition in 2015, the company was able to further expand its data services by providing high-speed broadband to high-income customers across the company’s target markets. GVT provided services that were complementary to the company’s own, with limited overlap with the services the company already provided. Such complementary services included fiber broadband to locations in the state of São Paulo (outside of the city of São Paulo, where the company already has a large presence) and nationwide. In 2022, the company covered 100% of the municipalities in the company’s concession area in the state of São Paulo and hundreds of others throughout Brazil, reaching more than 6.5 million fixed broadband customers in total, and the company expanded its national fiber network to reach approximately 28.6 million homes, of which 23.3 million alone consisted of FTTH technology. In mobile broadband, the company uses a variety of technologies to provide wireless internet services to the company’s customers. The company’s 3G network is available nationwide. In addition, the company offers HSPA+ technology, which is commercially known as 3G Plus. This technology allows customers with compatible terminals (including handsets) to reach up to three times the speed of traditional 3G. As of December 31, 2022, the company covered 4,895 municipalities with the company’s 3G network, reaching 97.1% of Brazil’s population. The company also offers 4G LTE technology, which, by the end of 2022, was available in 4,634 municipalities, reaching 95.5% of Brazil’s population, 4.5G LTE through carrier aggregation in 3,342 municipalities, reaching 87.2% of the Brazilian population, and also 5G technology, present in 27 municipalities, equivalent of 23.9% of the Brazilian population. In November 2021, ANATEL held the largest spectrum auction in its history, which included 4G and, for the first time, 5G blocks, with 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz lots. On that occasion, the company acquired 3.5 GHz and 26 GHz national licenses (100 MHz and 600 MHz bandwidths, respectively). The company also won regional 2.3 GHz licenses, with 50 MHz bandwidth in the southeast region of Brazil (except São Paulo state and PGO Sector 3) and 40 MHz bandwidth in São Paulo state and in the north and mid-west regions of Brazil (except PGO Sectors 22 and 25). The licenses ensure the company has the required spectrum to provide 5G services, and are valid for 20 years (renewable under the then-existing legal conditions at the expiration of this term). Pay TV Services The company began offering subscription-based television services, or Pay TV services, via DTH (‘direct to home,’ a special type of service that uses satellites for the direct distribution of television and audio signals to subscribers) on August 12, 2007. By the end of 2022, the company discontinued the DTH operations, disconnecting all customers. From 2023 onwards, the company will only provide Pay TV services by means of IPTV (a type of service that offers video broadcast through the IPs) technologies. As of December 31, 2022, the company had 1.0 million Pay TV customers, including 0.9 million IPTV customers. Network Services The company’s network management technology ensures comprehensive management and supervision of all the company’s network processes and network performance for the company’s clients. The company’s network management center monitors the critical network operational parameters of the countrywide transmission backbone, IP networks, mobile and fixed packet/circuit core networks, value-added services/multimedia platform and global services, radio access network, infrastructure and online services performance, as well as fixed access network across the country, broadband networks, network interconnection, portability and IPTV/DTH. The center is able to identify abnormalities in both the company’s network (fixed and mobile) and in third-party networks, including networks of other operators and other corporate clients, using failure, signaling, quality and service monitoring systems. The company’s network management center is integrated with maintenance and operations teams that maintain and operate mobile and fixed network elements, as well as infrastructure and transmission, in addition to the radio network elements and computing bases, service platforms and communications backbones. The company’s network provides for continuity of service to the company’s customers in the event of network interruptions. The company has developed contingency plans for potential catastrophes in the company’s switchboard centers, power supply interruptions and security breaches. The company continuously intends to consolidate its network and increase its offerings, to deliver the best possible service to the company’s customers and to meet their expectations. The company’s monitoring process has been supported by automated systems (Robotic Process Automation, or RPA) which increases the effectiveness of incident correlation, recovery and management. This advancement gives the company’s team more efficiency and speed in detecting and solving problems in the company’s networks. Some of the improvements the company has made in recent years include advancements in the migration of time-division multiplex switches to next-generation network switches, which offer new digital services to the company’s clients and reduce its maintenance costs, including improvements in levels of security, power supply, battery and air conditioning infrastructure. The most significant implementation of fixed network technology has been a project to exchange optical cabinets, used for offering voice and data services for Multi-Service Access Nodes, which allows the company to offer broadband service to many clients who did not previously have this service. In addition, the company is widely applying advanced virtualization solutions (net functions virtualization, or NFV) to support the next generation of mobile networks, known as fifth-generation or 5G, which is operating and prepared to address future market and customer expectations by providing massive device connectivity (through IoT technology), very low latency, and higher data transfer rates. Network and Facilities The company provides services referred to as industrial exploration of dedicated line (Exploração Industrial de Linha Dedicada, or EILD) pursuant to the company’s concession agreement and its authorization agreements. The EILD consists of the rental of dedicated circuits and clear channel protocols for the provision of services to third parties. In addition, the company is able to offer a complete portfolio of wholesale products, including L2L, IP, Ethernet and MPLS. All of these products are used to meet the demands of other network operators and regional internet providers. The circuits are requested with different service level agreements, and the company is required to provide the facilities with contingency routes, sites and equipment to improve the service against points of failure. The company’s network consists of an access layer that connects the company’s clients through its copper or optical networks, which are connected to voice and data centers. These centers are interconnected locally or remotely through transmission equipment connected predominantly with fiber optics and occasionally through a microwave network, which together form a network layer that enables connectivity between the various platforms, as well as interconnection with other carriers. The company’s network strategy is based on the expansion of the fiber optic access network to allow greater coverage and broadband services for the company’s customers, as well as to develop an integrated multiservice network and multimedia applications. As a telecommunication service provider, the company does not manufacture equipment for the construction of the company’s networks and facilities. The company buys the equipment from qualified suppliers in Brazil and abroad and through such equipment, the company implements its networks and facilities through which the company supplies its services. Wholesale Services (including Interconnection) The company has continuously adapted and expanded the company’s network topology aiming to develop new business opportunities throughout Brazil by offering services to other telecommunications companies. As part of the company’s wholesale services, the company provides interconnection services to users of other network providers. The company earns revenue from any call that originates from another mobile or fixed-line service provider network connecting to one of the company’s customers. The company charges the service provider from whose network the call originates an interconnection fee for every minute that the company’s network is used in connection with the call. As of December 31, 2022, the company had 693 local and long-distance interconnection agreements with Telefonica Brasil (fixed and mobile operation) and 265 agreements for the provision of local and long-distance traffic. Digital Services (Including Value-Added Services) In 2022, the company reinforced its purpose of ‘digitalize to bring closer’ (digitalizar para aproximar). The company continued to improve the experience of its products and digital services, with even more precise offers and exclusive conditions for the company’s clients. According to Omdia, the company is the third Telecom company in the world in terms of the number of relevant partnerships in digital services. This shows the company’s commitment to improving the company’s value proposition, adding high quality services to the portfolio and creative collaborations with companies that are a reference in the digital and entertainment world. The value proposition of the traditional plans with digital services, such as Netflix, Amazon Prime, Globoplay, and several others in Vivo Selfie Plans, are great strengths. Selfie Plans include a subscription to one of the services, with an additional data package and many other benefits of the postpaid plans. The company has also implemented similar bundles in Fixed Broadband, delivering to the public the entertainment value proposition associated with the company’s fast connection in Fiber (FTTH). In this model, the company has launched options combining FTTH with Netflix, Disney, Amazon Prime and Globoplay. To the entry-level Post Paid plans, the company added two new products in 2022: Controle + Tidal, an opportunity to increase the perception of the value proposition with a relevant player in the music spectrum, and Controle + Dotz, a plan that allows clients to accumulate points and exchange for products, trips, and other benefits in a high-rated loyalty program in Brazil. In 2022, several stand-alone offers were also launched in the company’s portfolio, besides new strategic players, giving the company’s customers the choice to subscribe to these services by paying directly with Vivo’s bill: Globoplay + Canais Ao Vivo: Gives access to the best premium Pay TV channels, like Multishow, GNT, SporTV, GloboNews, and many others, besides movies, series, soap operas, and other on-demand content. Discovery+: One of the most important networks on the planet, offering more than 30 thousand episodes of new and very well-known shows. Vivo Play App: A new option for customers to access a vast entertainment content offer, live and on-demand, anytime, anywhere and on any device. The product works through an app, with traditional Pay TV channels and access to thousands of on-demand content, without the requirement of a Set-top box to be fully functional. There are two packages, ‘Initial,’ with 42 live channels, and ‘Extended,’ with 87 channels. During 2022, the company continued to develop and increase communication with its clients, with a distinguished strategy for each one of the company’s services, allied with specific promotions (price and period) that allows growth in sales throughout the year. The standalone products reached a +42% YoY customer base in 2022. Also, the Vivo App has one of the most important roles in the expansion and visibility of Digital Services. Vivo App is responsible for overall 62% of all the sales of the standalone offers of the most relevant players, like Amazon Prime, Disney+, Globoplay, Spotify, HBO Max, and others. With Vivo App, digital services gained more exposition with several new spaces to communicate the offers, with banners, recommended apps positions and premium positions to communicate special conditions. Besides all launches and achievements, the company also continued to increase the visibility and communication of exclusive promotional subscriptions through the company’s loyalty program, Vivo Valoriza. In this program, eligible Vivo customers can redeem special prices and conditions from several digital services. Financial Services Financial services are highly strategic for the company, as it reinforces its position as a digital service hub, offering the company’s customers far more than telecommunications services. Therefore, in October 2020, the company launched its personal credit service for the company’s customers, called Vivo Money. Vivo Money also has a device financing service, on a strategy to create synergy with the company’s core businesses. The company’s financial service portfolio goes beyond credit and consolidates solutions for its customers. Vivo Pay, the company’s digital bank account, is another important landmark for the company’s financial services strategy. Launched in 2021, Vivo Pay is the digital account free of charges and available to all the company’s customers. It supports financial inclusion in Brazil by offering, among other functionalities, a prepaid card free of charges for online shopping. Also, users can pay bills and transfer money to any bank account in Brazil through PIX, the Brazilian instant payment system, enabling instantaneous and cost-free money transfers and payments at any time or day of the week. In Vivo Pay, customers can also ask for Vivo Itaú Card – the credit card that Vivo has in partnership with Banco Itaú. In this new version, launched in 2022, it brings benefits such as 10% cashback for all Vivo purchases, in addition to offering up to 24 installments without interest in Vivo’s stores. Another feature included in Vivo Pay, is Vivo Seguro Celular – the mobile insurance product partnered with Zurich – is offered to every customer to protect their Smartphones, with a digital and seamless journey. Also with Zurich, new insurance plans were launched for protecting electronic devices like laptops, smartwatches and tablets – confirming the well-established partnership and the high potential for improving services to all the company’s customers. Corporate Innovation In 2022, the company continued to grow in the digitalization process and build new technological products and services. As the largest company in the sector in terms of client base, the innovation process and creating value through the company’s key assets becomes essential to stay in the top and seek new avenues of growth in an already consolidated and traditional market, such as telecommunication. Based on the company’s digital product knowledge and the company’s main assets, such as customer base, brand, billing capabilities, the company strategically selected some key segments of the Brazilian market to invest and create new businesses. As a robust company, the company has a competitive edge to reach specific audiences. In the health space, the company re-launched Vida V, a complete ecosystem spanning thousands of doctors, clinics and labs, creating an affordable alternative for health insurance. The business has presented important growth rates in the first 5 months and already has thousands of subscribers. In Education, the company created a joint-venture with one of the largest education company in Brazil: Ânima Educacional and launched VivaE. It is a 100% online course platform that prepares people for the job market and helps them to improve their lives. The APP and the contents were developed from scratch, in a personalized and exclusive way. The APP is available throughout Brazil and in 2023 the goal is to scale and get more clients. Smart Home: New positioning of the value proposition of services based on relevant pillars of the customer journey (Smart Home consultancy, installation, device configuration and specialized support) complementing ‘Tem Tudo Na Vivo’ positioning in the sale of smart devices. Service launch with an on-site technician for installation, configuration and creation of automation in the city of São Paulo capital and metropolitan region. Actions on the highly-rated TV Show ‘Pantanal’ and on Vivo channels boosted the growth of Vivo Guru with remote support service, ending the year at approximately 38 thousand customers. In the mindfulness vertical the key decision was to rebrand Vivo’s product to ‘Atma’ with the objective of positioning the brand more independently and reducing the barrier for customers from other Telcos. Aligned with the new brand, the company launched a new app, a better experience, and a different strategic position. This resulted in an average 15 p.p. increase in monthly active users (MAU). Also, during 2022 there were important strategic actions, such as adding new features and music, reinforcing the company’s value proposition, and contractual optimizations with the main stakeholders which helped improve the company’s profitability. Atma had its first big media appearance in the TV Show ‘Pantanal’, with product placement actions, TV and Spotify’s spots, digital media and communication with the company’s clients. All these actions allowed Atma to grow significantly in 2022, closing the year with over 1.5 million downloads, more than 300 thousand active users and excellent evaluations on the app stores (4.5 in Apple Store and 4.2 in Google Play). In addition to internal development and partnerships, the company continues to invest heavily in its processes, culture and search for good business with startups that can add value to the company’s ecosystem. In 2019, the company launched its corporate open innovation program, Vivo Discover, and continues to stimulate innovation through a mindset change of the employees and new business development. The main program that increases the company’s innovation culture, the Vivo Shaper, started in 2022 the fourth class with 30 executives end consultants that go through a six-month course on key methodologies and topics about the innovation process, startups culture, and how to develop a new business with the startups for revenue generation. In April 2022, the company launched a new CVC (Corporate Venture Capital) fund, Vivo Ventures, with the objective to invest in startups in verticals, such as Smart Home, Marketplace, Health, Finance and Education, which are key to positioning the company’s company as a digital hub. Corporate Services The company offers its corporate clients comprehensive telecommunications solutions and IT support designed to address specific needs and requirements of companies operating in all types of industries (retail, manufacturing, services, financial institutions, government, etc.). The company’s clients are assisted by its highly qualified professionals who are capable of meeting the specific needs of each company with voice, data, broadband and computer services solutions, including hardware and software (for example, anti-virus software). The company works to consistently achieve greater quality and efficiency in the company’s services and increase the company’s level of competitiveness in the market. Sale of Devices and Accessories The company sells 5G NR, LTE and WCDMA devices, such as smartphones, broadband USB modems and devices that are certified to be compatible with the company’s network and service, including eSIM devices. The company also sells a high range of connected and non-connected gadgets offering its customers quality and technological products. The company has special offers on smartphones, USB modems and other data devices for customers of bundled packages. The company’s device suppliers are Samsung, Apple, Motorola, Usina de Vendas (Oppo), Positivo (Infinix), Multi (Nokia and Multi), ZTE and Flex (WNC and Blucastle); and the company’s gadgets suppliers are Samsung, Apple, Harman (JBL), Lenovo, Allied (Google, Logitech Xbox and TPLink), Timbro (Amazon), Customic, Alfacomex (Geonav), Positivo, Intelbras, Multi (DJI and Multi), DPC (Motorola), Tellescom (Askey) and Coravin. By the end of the year, the company launched its own accessories brand, Ovvi, focused on design and quality, trying to add even more market value. Markets of Operation The company’s concession agreement allows the company to operate in the state of São Paulo, except for a small region that is still subject to an earlier concession. In addition, the company offers fixed telephone, data and Pay TV services throughout Brazil pursuant to licenses and authorization. The company operates mobile voice and broadband services throughout Brazil, under the mobile service (SMP) authorization. The company also offers a variety of value-added services, some of them through commercial partnerships. Marketing and Sales The company’s commercial distribution network (marketed under the Vivo brand), as of December 31, 2022, consisted of 246 own sales outlets throughout Brazil. In addition, the company has approximately 1,541 sales outlets run by authorized dealers (including exclusive dealers and retail channels), maintaining a solid capillarity strategy that contributed to the company’s leadership position in the Brazilian telecommunications market. As of December 31, 2022, the company had approximately 322,326 points of sale where prepaid mobile service customers could purchase credits using the Distribution or Online channels. Prepaid phones can be credited remotely or by purchasing cards containing credits. Credits may also be purchased through credit and debit cards, call centers, Vivo PDV (M2M using a cell phone for transferring the credit), personal recharge (using the phone itself to recharge credits), as well as certain certified internet websites. The company brings its solutions to its customers through the following physical sales channels: Vivo Stores: The company continues to focus on the transformation of the traditional PoS (Point of Sale) into the PDX (Point of Experience), reaching eight iconic stores, two Stores-in-Store and 409 Plus Stores (a concept created to serve small and medium cities) as of December 31, 2022. By advancing on infrastructure, systems, customer service, micromanagement and capillarity improvements the company continues to provide an efficient, profitable and enchanting service. Even after the easing of the restrictions of the pandemic in 2022, the company maintained its Vivo em Casa program, a tool where anyone can contact the company’s store´s sales force, strengthening the digitalization of the company’s stores. Exclusive Dealers: This channel is made up of companies selected and certified to provide the company’s complete product portfolio. These dealers make up an extensive distribution network across the country. Although the channel offers the entire product portfolio, its focus is on postpaid and Fiber products. The company is also constantly updating and improving these stores to provide a better customer shopping experience, to ensure a consistent experience as in the company’s flagship stores. In 2022, these resellers increased the company’s store reach by more than 60 points of sale, which meant the company were present in Brazil through 1,541 stores as of December 31, 2022. Retail Channel: The company’s retail channel sells postpaid and prepaid products and recharge services that are marketed by the company’s partners’ own sales teams. This channel maintains a strong partnership relationship with retailers through the company’s sales incentive program (tying compensation to sale performance). In 2022, despite challenging market circumstances, the company sustained a relevant volume in prepaid products, maintaining a substantial part of the company’s capillarity through commercial and operational efficiency actions. Distribution Channel: The broadest and most complex sales channel across the company’s markets, this channel allows the company’s prepaid customers to purchase data and voice credits. In order to be as close as possible to potential and existing customers, this channel comprises authorized agents, lottery stores, post offices, bank branches and small retailers, such as pharmacies, newspaper stands, bookstores, stationery shops, bakeries, gas stations, bars and restaurants. The channel is responsible for the majority of the company’s prepaid sales (90%) and mobile recharges (65%). In 2022, the company consolidated the prepaid market share leadership, which was achieved in the previous year with a 35% share, even after Oi´s mobile operation was split between Vivo, Claro and Tim. The company grew its position in micromanagement, including specific sales force payments with granularity at the POS level. Door-to-door Sales: This channel continues to be strengthened with the growth of the Fiber network across the country, expanding the sales force, focusing on quality and now seeking to total the company’s customers. It is the company’s main fiber sales channel, representing almost 31% of all fiber sales in the B2C segment. The fiber market requires important local knowledge for greater sales penetration and that is why a hunter channel, such as door-to-door sales is so important for this segment. Outbound Telesales: Characterized by the lack of geographical limitations, the company’s outbound telesales channel can reach existing and potential customers across the whole country, offering the company’s full product portfolio, from prepaid to postpaid products, as well as fixed voice, broadband and TV bundles, this channel has focused on increasing the client base by identifying new clients and offering suitable plans to the company’s existing clients according to their consumption profile. This channel contributed to more than 200,000 unit sales per month. Technology Voice and Data Networks To offer a greater variety of integrated services, the company incorporated several new technologies into its voice and data networks. In 2022, the company has already consolidated its network virtualization program towards cloudification, having some data centers installed and operating. This allows the company to fully offer services based on new technologies, such as 5G, which network functions are cloud-native. In 2022, the company launched its first 5G standalone network offering 5G services for its clients. For mobile voice services, the company is moving forward to its digitalization process using VoLTE (Voice LTE) and investing more and more in such technology, which has a lot of benefits when compared with voice in 3G/2G networks, such as voice in HD, fast call setup, multi-device services, etc. At the same time, the company has already concluded its planning in order to offer VoNR (Voice over 5GSA) in the short-term. For the company’s fixed-line voice network, the company offers VoFTTH (Voice over FTTH) services, SIP trunking and SIP interconnections; and has been increasing its network by launching in new cities while working on energy efficiency, site demobilization, voice digitization plans, and synergies between fixed-line and mobile networks, among other initiatives. To support VoIP growth, the company is in the process of consolidating and growing its Unified IMS core, deploying some Session Border Controllers (SBC) on the company’s access edge and peering edge. For the company’s data core, the company launched 5G Standalone and non-standalone architecture, continue to expand the company’s mobile network geographically, including 5G architecture, by expanding to new locations through additional points-of-presence and offering the best experience for the company’s customers. Expanding Private Networks (LTE private) and data services IoT (LTE-M and Nb-IoT). As more services migrate to IP, the company’s IP backbone has become a strategic asset to support customer demands and increase revenues. The migration of sensitive and demanding services, such as voice and television to IP has also increased the demand for higher quality broadband networks and is further bolstered by products, such as cloud services and VoD. At the same time, the expansion of fiber optics to customer homes and the launch of the company’s 5G services (carrier aggregation) increases bandwidth demands over networks. In projects related to the Local Area Network (LAN), the company provides local connectivity to all platforms and servers that provide fixed or mobile telecommunications services in Telecom Data Centers. The local network works as access to all data network services connecting them to the IP backbone. The company continues to evolve the standard Ethernet local area network (LAN) framework to the TRILL protocol (RFC 6326). The use of this protocol makes it possible to increase the resilience of the environment, allowing for a considerable reduction in failures that may sometimes affect the service provided to the end customer. The company is also implementing the concept of decentralization in Data Centers Telecom with Top of Rack (TOR) and End-of-Row (EOR) switches, allowing cost savings with structured cabling, reducing energy, space and cooling. To keep up with the growth of the network, in 2022 the company increased the capacity of the sites, providing more port capacity in nine existing sites and implementing one new site. The company also continued to structure its CDN (Content Delivery Network) to improve the customer experience with the company’s services, using the cache solution to reduce bandwidth consumption on the IP backbone, storing content locally from partners, such as Google, Netflix, Akamai, Facebook, Globo and Tik Tok. This allows the company to optimize network resources and improve service quality. For this network structure, the company uses stand-alone switches. In 2022, the company increased capacity on nine existing sites due to increased data traffic. In a structure of stand-alone switches similar to Caches, the company implemented these switches to meet the demand for DNS servers in five sites. Network Security The governance, risk management and compliance of the company’s network is aligned with the group’s business and is based on the CIS Controls framework, which its structurization project has begun in 2022 towards its consolidation. The company also continued to work in 2022 to detect threats and protect the company’s network with new technologies, such as Security Analytics tool, Threat Intelligence and Firewall API tools; and increasing the number of team members with high-level skills against a variety of attacks, thus, reducing the risk of compromising the company’s services. In addition, to identify the company’s vulnerabilities before an attacker, the company performs cyber war games and tabletop simulations with the company’s blue, purple and red teams to increase its cyber resilience and defensive skills. The game simulates a cyberattack, in which the red team is responsible for finding breaches in the company’s systems; the blue team, for protecting them, while the purple team sets the rules and environmental conditions for the game. TV Services The company offers IPTV services through the company’s FTTH network using an open platform, which was created to revolutionize the way the company delivers IPTV services. The company’s open platform consists of Pay TV with video broadcasting offered through an IP. The company’s several global partners have developed modules in partnership with the company to connect to its existing global video platform. The company’s local team customized the middleware for set-top-box to create a standardized version that brings better time-to-market for new developments and product releases, as well as future convergence between IPTV and OTT platforms. Several components were integrated to create a new ecosystem for IPTV, such as instant channel change, retransmission, and applications to provide a better user experience. Additional services, such as pay-per-view and VoD are also available. The company delivered IPTV service to over 350 cities throughout Brazil as of December 31, 2022. The company has created additional points-of-presence, increased the offering of local channels, and increased the quality of IPTV services delivered to remote locations. The company has continued to expand the list of third-party integrations, offering the company’s customers a smooth experience with streaming services, such as Netflix, Amazon Prime Video, YouTube, YouTube Kids, Disney+, and Star+. In addition, in 2022, the company launched an IPTV service based on OTT streaming, which includes up to 87 linear channels and access to its VoD catalog. The company’s IPTV interface was further redesigned to improve customer experience, as more channels are offered to customers and the company’s CDN platform growth ensures the company’s ability to offer additional VoD titles and OTT services. In the company’s development plan, the company expects to upgrade to the most advanced technology available, with a focus on integrating the company’s services with the Internet and increasing the number of multimedia transmission services, with an emphasis on FTTH (GPON), NGN, DWDM, ROADM and IPTV. In 2022, the company terminated its DTH operation, shutting down the last transponders the company had with satellite service providers. The company has promoted an extensive communication plan throughout the year, offering customers the choice to migrate to the company’s IPTV service or the OTT, depending on technical availability at each location. It was an important milestone in the company’s evolution roadmap, allowing the company to focus exclusively on the evolution of the company’s IP-based TV portfolio. 5G Acquisition In December 2021, the company acquired through auction, the following radio frequency sub-bands: 2.300 MHz to 2.390 MHz, 3.300 MHz to 3.700 MHz and 24.3 GHz to 27.5 GHz, which in turn will allow the company to increase the capacity of its network in denser urban areas. With the acquisition of these frequencies, the company guarantees 5G services provision, reducing significantly latency, enabling greater connectivity and higher download and upload speeds (10x faster than 4G network). These 5G features have enabled the development and improvement of services, such as IoT, games, autonomous vehicles, virtual reality (VR), industry automation and agribusiness. Acquisition of Part of OI UPI Mobile Assets The company acquired part of OI’s UPI mobile assets, with approximately 12.5 million customers, 43MHz spectrum in 1.800 MHz, 2.100 MHz e 900 MHz frequencies, with Nationwide coverage, contracts for the use of 2,700 sites of mobile access, in Southeast (state of São Paulo), South (Paraná), Northeast (Pernambuco, Alagoas, Paraíba, Rio Grande do Norte, Ceará and Piauí) and North (Maranhão) regions, reinforcing the capacity and capillarity of the company’s network. Mobile Coverage In 2022, the company continued to expand the capacity and coverage of the company’s mobile networks to absorb continuous growth in voice and data traffic. As of December 31, 2022, the company’s mobile network covered 5,034 municipalities in Brazil using different technologies, such as 5G, LTE Advanced Pro, LTE, WCDMA and GSM/EDGE digital technologies, or 90.4% of the total municipalities in Brazil and 97.8% of the Brazilian population. The company has the biggest LTE Advanced Pro (commercially known as 4.5G) coverage in Brazil (with 3,342 municipalities and 82% population covered). In the same period, the company has covered all 27 state capitals of Brazil with 5G SA and NSA; these cities together represent 24% of the Brazilian population. Following the schedule of the GAISPI executive committee, from Jun 2022 to October 2022, Vivo activated the 5G network over the TDD 3500MHz spectrum in all 27 capitals of Brazil, where the clients with suitable terminals are already using this new mobile network, enjoying its benefits as Enhanced Mobile Broadband services. Since 2015, the company began to develop network sharing in 4G 2,600 MHz coverage with Oi and TIM. As of December 31, 2022, after the sale of Oi and project review, the company covered 126 Brazilian municipalities using shared radio base stations and 223 municipalities using TIM´s network through RAN sharing. In 2017, the company also began to develop 3G network sharing with Claro and, as of December 31, 2022, the company covered 235 Brazilian cities using shared radio base stations and 139 cities using Claro’s network through RAN Sharing. In 2018, the company further began to develop 3G network sharing with TIM, and, as of December 31, 2022, the company covered 17 Brazilian cities with shared radio base stations and 27 cities using TIM’s network through RAN sharing. In 2019, the company began to develop network sharing in 4G 700 MHz with TIM (as a proof of concept), and, as of December 31, 2022, the company covered 10 Brazilian cities with shared radio base stations and 9 cities using TIM’s infrastructure through RAN sharing. In 2019, the company entered into a network sharing agreement with TIM for 2G, 3G and 4G technologies, which sought to expand the company’s network and create synergies. As of December 31, 2022, the company covered 363 Brazilian cities with shared 3G/4G radio base stations and 350 cities using TIM’s infrastructure through RAN sharing. Also in 2022, 3G/4G Single Grid was deployed in the urban area of 50 cities by Vivo and 53 cities by TIM. RAN network sharing allows the company to fulfill the ANATEL obligations that were imposed on the company as part of its spectrum acquisitions. Operating Agreements Interconnection Agreements The terms of the company’s interconnection agreements include provisions with respect to the number of connection and signaling points. The company has adequate interconnection agreements with fixed-line operators necessary to provide the company’s services and that the company has all the necessary interconnection agreements with long-distance carriers. Roaming Agreements The company provides international GSM roaming in over 200 destinations worldwide by means of over 500 roaming agreements with local service providers. The company has a roaming agreement with MTN Irancell. Network Sharing Agreement In December 2019, the company and TIM had entered into two network sharing agreements regarding electronic equipment and mobile sites on 2G, 3G and 4G networks, in order to decommission outdated technology; 4G coverage expansion; and gain spectrum and cost-efficiency. Both agreements were approved by ANATEL and CADE. In December 2020, the company and Claro S.A entered into a network sharing agreement in which the parties had agreed to share 81 of the company’s mobile sites with Claro. The agreement was approved by ANATEL and CADE. Competition The company’s main competitors in fixed telecommunications services are Claro (which includes its Claro and Embratel services) and Oi, which is stronger in the fixed-line services outside the state of São Paulo. Regulation of the Brazilian Telecommunications Industry The company’s business, including the services the company provides and the rates the company charges, is materially affected by comprehensive regulation under the General Telecommunications Law and various administrative rules thereunder. The company operates under authorization agreements for voice, mobile, data and Pay TV services in all Brazilian states, except for voice services in São Paulo state, where the company operates under a concession agreement that enables the company to provide specified services and subjects the company to certain obligations, according to the PGMU and the RCON. The company and the other concessionaires are subject to the General Universal Service Targets Plan (Plano Geral de Metas de Universalização – PGMU), which requires that concessionaires undertake certain network expansion activities with respect to fixed- line services. The company’s multimedia services include broadband in several technologies, including fiber UBB services. The company is authorized to provide Pay TV Services (Serviço de Acesso Condicionado), or SeAC, throughout Brazil by means of different technologies (Fiber, DTH and coaxial). Research and Development In 2022, the company invested R$59.4 million in development and innovation. History The company was founded in 1998. It was incorporated in 1998 as a corporation (sociedade anÔnima) organized under the laws of the Federative Republic of Brazil. The company was formerly known as Telecomunicações de São Paulo S.A. – TELESP and changed its name to TelefÔnica Brasil S.A. in 2011.