Investor RelationsTelefônica Brasil S.A.

July, 2017

RESULTS 2Q17

This presentation may contain forward-looking statements concerning future prospects and objectives regarding growth of the subscriber base, a breakdown of the various services to be offered and their respective results.

The exclusive purpose of such statements is to indicate how we intend to expand our business and they should therefore not be regarded as guarantees of future performance.

Our actual results may differ materially from those contained in such forward-looking statements, due to a variety of factors, including Brazilian political and economic factors, the development of competitive technologies, access to the capital required to achieve those results, and the emergence of strong competition in the markets in which we operate.

For a better understanding, we are presenting pro forma numbers combining Telefônica Brasil and GVT results for all financial and operational indicators for every period as of January, 2015.

DISCLAIMER

2

2Q17HIGHLIGHTS

ACCELERATING REVENUES ENHANCING PROFITABILITY IMPROVING DIFFERENTIATION

Non-voiceRevenues already

representing

66%of Service Revenues

(63% in 1Q17)

Confirming acceleration inMSR of approx.

5% yoy

for the 2nd

consecutive quarter

Double-digit

revenue growth

in Mobile Data &

Digital Services

+32% yoy and UBB

+20% yoy

33.0%Recurring EBITDA

Margin

(+1.6 p.p. yoy)

Recurring costs dropping for the

6th quarter in a row

-0.6% yoy

18.3%OpCF Margin

in 1H17

(+2.5 p.p. yoy)

3

Accelerated commercial

activity:

2.3x postpaid

net adds yoy

and record FTTHnet adds

+124k

Superior mobile network:

+657 new

cities with 4G coverage and

+60 cities

with 4G+

Expansion of UBB footprint:

+5 new cities

with FTTH in 2Q17

In 1H17, Free Cash Flow¹ reached R$2.6 billion, representing a growth of 53.4% yoy as a result of strict discipline on costs, optimized capital allocation, working capital and financial management

1- Free Cash Flow from business activity. Does not include the R$655.1 million payment in 1Q17 related to the clean-up of the 700MHz 4G spectrum acquired in 2014, the proceeds from the sale of towers received in 2Q16, in the amount of R$562.1 million, and expenses from the provision for organizational restructuring in 2Q16, in the amount of R$21.8 million.

4

Continued increase of service revenues and consistent EBITDA expansion leading to strong FCF evolution

KEY FINANCIALS

Total and Mobile Service Revenues YoY

1.6% 2.0% 2.3%2.6%5.0% 4.8%

55.7%63.3% 65.5%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2Q16 1Q17 2Q17

Total Service Revenues Mobile Service Revenues

Non-Voice % over Service Revenue

Recurring EBITDA YoY and EBITDA Margin

7.0% 7.3% 6.9%

31.4%33.2% 33.0%

22.0%

27.0%

32.0%

3.0%

5.0%

7.0%

9.0%

2Q16 1Q17 2Q17

Recurring EBITDA YoY Recurring EBITDA Margin

Capex R$ Bn and Capex/Sales

1.81.3

1.8

16.8%

12.5%

17.0%

0.0%

5.0%

10.0%

15.0%

0.0

0.5

1.0

1.5

2.0

2.5

2Q16 1Q17 2Q17

Capex ex-Licenses Capex/Sales

Free Cash Flow from Business Activity¹ R$ Bn

Capex

acceleration in

2Q in accordance

with investment

plan for 2017

1.72.6

0.8000

1.3000

1.8000

2.3000

2.8000

3.3000

3.8000

1H16 1H17

+53.4%

4

1- Does not include the R$655.1 million payment in 1Q17 related to the clean-up of the 700MHz 4G spectrum acquired in 2014, the proceeds from the sale of towers received in 2Q16, in the amount of R$562.1 million, and expenses from the provision for organizational restructuring in 2Q16, in the amount of R$21.8 million.

47%57%

72%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2Q15 2Q16 2Q17

75%

Consistent growth of Postpaid Revenues over the last quarters

Net Mobile Service Revenue¹R$ Million

Data and Digital Services Revenue% over Mobile Service Revenue

Data contribution remains on the rise, leading to another quarter of resilient mobile service revenue growth

5

MOBILE REVENUES

10% 9% 8%10% 10%

2Q16 3Q16 4Q16 1Q17 2Q17

Postpaid Revenues³

YoY%

2,2131,672 1,540

3,400 4,259 4,500

327273 233

2Q16 1Q17 2Q17

Outgoing voice Data and Digital Services Incoming voice Column2

-30.4%

YoY

-28.8%

32.4%

Internet growing 44.1% YoY

4.8%²

5,984 6,208 6,272

Postpaid Revenues over Mobile Service Revenues

1- Simplified view, the chart’s breakdown does not disclose other services revenues. 2- When excluding effect of MTR cuts growth would be 7.0% YoY in 2Q17. 3- YoY evolution does not include wholesale, M2M and other services revenues.

Market share expansion combined with high-value customer mix sustained by strong commercial activity

6

Accelerating postpaid growth driving superior customer mix

Complete portfolio with strong adoption of high-value offersTotal Mobile: leading market share with solid trends

MOBILE ACCESSES

6.9% 6.8% 7.5% 8.2% 9.7%

43%44%

45% 46%47%

35.0%

37.0%

39.0%

41.0%

43.0%

45.0%

47.0%

2Q16 3Q16 4Q16 1Q17 2Q17

Postpaid YoY Growth Postpaid Mix

Mobile Market Share

+1.8 p.p.

28.9% 30.7%

2Q16 2Q17

42.3% market share in postpaid

• Leading postpaid share of

net adds in 2Q17: 59%

• Reducing postpaid churn

to 1.8% in 2Q17 (vs. 1.9% in

2Q16)

• Positive postpaid

portability every month

against all major players in

2017

+19%

2Q16 2Q17

of new

pure postpaid adds are Family Plans

60%

+31%

2Q16 2Q17

+20%

2Q16 2Q17

Prepaid to Hybrid Migrations

% of Prepaid Customers on Vivo Turbo Offers

Family Plan Accesses¹

yoy growthin hybrid customer base+17%

of customershave higher-value offers74%

1- Considers family plans and plans with paid additional lines.

4G: superior quality, increased coverage and stronger adoption contributing to higher ARPU

Higher 4G scale improving customer experience…

…through strong adoption and consumption…

…helping to support ARPU

7

+144%

2Q16 2Q17

4G Traffic

PB per quarter YoY

43%28%

57%72%

27.2 28.2

2Q16 2Q17

Total ARPUR$ per month

--32.3%

YoY

30.8%

+3.6%

Data

Voice

Strong 4G growth opportunity ahead

MOBILE ACCESSES

• 71.4% of the population covered by

4G

• through carrier aggregation

already being offered in all main

capitals of Brazil¹

• 4G speeds averaging >20Mbps²

100%customers

81%smartphones

37%4G smartphones

1- São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Brasília.2- Source: OpenSignal State of Mobile Networks: Brazil report.

YoY growth

of 4G handsets+99%

4G market share34.6%

• Reaching 69 FTTH cities in the country

• In Barra Mansa (RJ), we reached 40% penetration on our FTTH network in under30 days

2Q16 2Q17

+60.7%

Net Fixed Revenue | R$ Million

Improved fixed revenue trend as a result of double-digit growth in high-value fixed services

1- Includes voice, interconnection and other services.

2- Includes DTH and IPTV.

3- Corporate Data and IT.

Voice and Others¹ Pay TV² UBB xDSL Data and IT

2,157 2,009 2,002

482 479 472

570 647 685

398 417 412

610 574 592

4,216 4,126 4,163

2Q16 1Q17 2Q17

-7.2%

-1.9%

20.1%

3.5%

-2.8%

YoY

-1.3%

8

+32.8%

FTTH Revenue | R$ million

Clear uptake of FTTH and IPTV…

FIXED REVENUES

…with proven improvement as we expand our footprint

Fixed revenue

grows 0.2% YoY

when adjusting

for regulatory

effect

³

IPTV Revenue | R$ million

2Q16 2Q17

Record level of net adds in FTTH and IPTV driving ARPU improvement in broadband and pay TV

1- FTTC (Fiber to the Cabinet) includes Cable accesses. 9

FIXED ACCESSES

BroadbandAccesses and ARPU

Pay TVAccesses and ARPU

BB Accesses | Thousand

44% 41%

45% 44%

10% 15%

7,248 7,435

2Q16 2Q17

-5%

0%

45%

3%

YoY

xDSL

FTTC¹

FTTH

TOTAL

Pay TV Accesses | Thousand

DTH

IPTV

TOTAL

-15%

65%

-6%

YoY

61 71

124

4Q16 1Q17 2Q17

FTTH Accesses | Thousand Net Adds

25

29

42

4Q16 1Q17 2Q17

IPTV Accesses | Thousand Net Adds TV ARPU | R$ per month

90.6 95.1

2Q16 2Q17

BB ARPU | R$ per month

44.6 49.5

2Q16 2Q17

+10.9% +4.9%

89% 80%

11%20%

1,761 1,647

2Q16 2Q17

4G+ and FTTH rollout

Number of new 4G cities

3.1

8.014.8%

1H17 Capex plan for 2017-19

Capex allocation

Capex | R$ Billion and % over Net Revenues

The Company continues to focus investments on accelerated 4G deployment and FTTH so as to guarantee superior network quality

Sustained Capex execution to reach guidance for 2017

Optimized Capex allocation focused on growth

10

CAPEX

Capex execution in

line with guidance

for the year, with

expected acceleration

in 2H17

(annual average)

+106%

FTTX IPTV

+284% +39%

4G

+90%

Solid acceleration in 4G and FTTH expansion

+290

+304

+657

198 226516

820

1,477

2Q16 3Q16 4Q16 1Q17 2Q17

New cities inthe quarter

Existingcities

48%% population

covered 49% 60% 65% 71%

• Launch of in 60 cities, with speeds

twice as fast as traditional 4G

• 5 new FTTH cities in the year2Q16 2Q172Q16 2Q172Q16 2Q17

Solid and consistent cost contention across the board during the quarter

2Q17 COST EVOLUTION BREAKDOWN | R$(40) MILLION ΔYOY

5.8%

-0.9%

0.6%

2Q16 1Q17 2Q17

Personnel Costs YoY

-2.1%

-4.9% -5.0%

2Q16 1Q17 2Q17

-5.0%

4.0% 5.3%

2Q16 1Q17 2Q17

2.0% 2.2% 2.2%

2Q16 1Q17 2Q17

• 12.8% of total Opex• Savings from rightsizings in the last

years

• 39.9% of total Opex• Interconnection tariff reductions• Synergies in TV content and efficiency

in network costs

• 27.7% of total Opex• Expenses related to increased

commercial activity

• 5.2% of total Opex• Credit and collection actions continue

to maintain bad debt stable sequentially

11

COSTS AND MARGINS

Cost of Services Rendered YoY

Commercial Expenses¹ YoY

Bad Debt / Gross Revenue Ratio

1- Excluding bad debt.

-1.8% -1.9% -1.8%-1.1%

-0.6%

31.4% 31.9%

33.8% 33.2% 33.0%

2Q16 3Q16 4Q16 1Q17 2Q17

Recurrent Costs Recurrent EBITDA Margin

MAIN HIGHLIGHTS

-2.4% recurringcosts vs. 2Q15 (GVT’s acquisition)

+12.1% IPCAin the period

Accumulated free cash flow impact from operational synergiessince 2Q15 amounts to more than R$3 billion

12

SYNERGIES

1- Trending NPV of synergies points to a total of R$25 bn. 2- Cash Flow Synergies accumulated since 2Q15.3- Does not include tax and financial cash flow synergies.

Guaranteed NPV Cash Flow Synergies

5.9 5.0

4.13.6

6.67.0

5.5

1.7

22

17

Best Case Integration Plan¹ Already Captured

FINANCIAL AND TAX

CAPEX

OPEX

REVENUES

NPV | R$ Billion % of capturedvalue over

85%

90%

106%

32%

79%

Best

CaseRevenues 186

2Q17 2Q17Accumulated²

Opex

EBITDA

Capex

Direct CF

Indirect CF

Impact on OpCF³

181

367

8

375

78

453

735

1,039

1,774

(69)

1,705

1,341

3,046

R$ Million

Almost 80% of Best Case NPV already guaranteed

13

Optimized customer care processes through digitalization improving customer experience and increasing efficiency

EFFICIENCY COMMITMENT

E2E e-billing and e-collections: incentivizing e-billing adoption and

accelerating digital collection interactions

e-billing penetration YoY

+12 p.p.

Increased adoption of digitalization as a cost efficiency lever

e-commerce: promoting sales of products and services through digital

channels

Virtual Recharges¹ YoY • 27% of premium products

sales made through digital

channels

• Virtual recharges cost

40% less than in physical

channels

e-care: increasing number of unique users accessing our e-care channels

Digital channels unique users YoY

+34%• 11% YoY reduction

of calls that require

human assistance

• e-billing costs less

than 5% the cost of paper

billing

• >70% of postpaid adds in own

stores adopt digital bills

1- June/17 YoY growth of financial volume of virtual recharges.

Jun/16 Jun/17

Jun/16 Jun/17

+28%

Jun/16 Jun/17

2Q17 Net Income | R$ Million and % yoy

REPORTED | R$ Million

∆ YoY

%79.6%-13.7%6.9%¹ 24.8%²

MAIN VARIATION DRIVERS

TAXES

Explained by lower level of Interest on Capital distributed in

2Q17

FINANCIAL RESULT

Positively impacted by lower interest rates and lower average

indebtedness in the period

NON-RECURRING ITEMS

2Q16 negatively impacted by the provision for organizational restructuring,

in the net amount of R$67 million

1- Refers to Recurrent EBITDA evolution reported. For purposes of this build-up, variation excludes net effects of non-recurrent items.2- Net income increased 13.9% when compared to 2Q16 recurring figure.

0.2%

Double-digit expansion in 2Q17 driven by EBITDA growth and improved financial managementNET INCOME

14

700 766 873

67261 (4) 42 (193)

2Q16 Non-Recurring Items 2Q16 exc. Non-Recurring Items

EBITDA exc. Non-Recurring Items

D&A Financial Result Taxes 2Q17

9.2 10.4

Dec/16 Jun/17

4.1 2.9

0.29 0.21

Dec/16 Jun/17

Improving capital efficiency driving strong cash flow generation in all lines

Free Cash Flow¹ generation with improvements across the board

Improving further financial structure through strong cash generation

Gross Debt | R$ Billion

+13.0%

YTD

-29.3%

YTD

Net Debt Net Debt / EBITDA

Net Debt | R$ Billion

15

1- FCF does not include dividends, IOC and withholding tax.

2- Based on 2016 net profit.

3- Gross amounts per ON: R$0.87 on Aug 22 and R$1.40 on Dec 13.

FREE CASH FLOW

1H16 1H17R$ MillionYoYR$ Million

EBITDA

(CAPEX)

(Working

Capital)

(Interest and

Income Taxes)

FCF from

Business

Activity+918

+466

+116

-24

+360

2,636

(605)

(654)

(3,146)

7,042

1,718

(966)

(630)

(3,262)

6,577

Payment of R$4.1 bn in dividends/IOC already

declared²:

Shareholder remuneration in 2017 Payment Date Gross Amount Amount per share (PN³)

R$1,568 mn

R$2,518 mn

R$0.96

R$1.54

Aug 22, 2017

Dec 13, 2017

R$2.50R$4,086 mnTotal

Another quarter of consistent combination of growth and profitability

2Q17HIGHLIGHTS

Confirming revenue growth

accelerationdriven by outstanding

performance in postpaid and UBB

16

Sustained margin improvement and

cash flow generation

Enhancing network

differentiationin 4G and FTTH

FOR FURTHER INFORMATION:INVESTOR RELATIONS

+55 11 3430.3687

ir.br@telefonica.com

www.telefonica.com.br/ir