New YorkMarch 12th 2018

Vivo Investor DayDavid Melcon

Chief Financial Officer

Disclaimer

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 materiallyfrom 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

2

4.8% 5.7%7.4%

-3.5%

-7.3%-8.7%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

2015 2016 2017

A C C U M U L A T E D N E TR E V E N U E G R O W T H V S . 2 0 1 4

Vivo Competitors Average

Vivo has outperformed the market and grew consistently in revenues even during economic downturns…

36%

Vivo Competitors

+3.7 p.p. vs 2014

Competitors Avg.

+2.4%

-3.0%

NET REVENUE SHARE¹ 2017

CAGR 14-17

31 – Considers main competitors in the Brazilian telecom market

…with stronger EBITDA expansion due to an improved cost structure…

Competitors Avg.

+5.4%

+2.3%

RECURRING EBITDA SHARE¹ 2017

CAGR 14-17

4

1.8%

9.2%

17.2%

5.9%

-0.1%

7.1%

-2.0%

3.0%

8.0%

13.0%

18.0%

2015 2016 2017

A C C U M U L A T E D R E C U R R I N G E B I T D A G R O W T H V S . 2 0 1 4

Vivo Competitors Average

39%

Vivo Competitors

+2.1 p.p. vs 2014

1 – Considers main competitors in the Brazilian telecom market

18.8% 18.5%

20.9%

19.6%20.1%

2015 2016 2017

Vivo Vivo + Capex Synergies

R$8.3Bn R$8.0Bn R$8.0Bn

Fiber_18.4 million FTTx HPs_7.0 million FTTH HPs_64 IPTV cities

_Full Stack IT platform

IT

C A P E X ¹ / R E V E N U E S

4G_>2.6k cities_85% of

population covered

…sustaining solid investment over the years to create a unique combination of network, IT and service platforms…

19,7%

51- Capex ex-licenses

… while generating unrivaled Operating Cash Flow

Competitors Avg.

+17.5%

+4.2%

OPERATING CASH FLOW SHARE¹ 2017

CAGR 14-17

49%

Vivo Competitors

10.5%

13.3%

15.4%

5.4%6.9%

9.2%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

15.0%

2015 2016 2017

O P E R A T I N G C A S H F L O W ( E B I T D A – C A P E X ) M A R G I N

Vivo Competitors Average

61 – Considers main competitors in the Brazilian telecom market

In 2017, we presented real growth across all lines

2 0 1 7 N O M I N A L G R O W T H Y o Y %

Service Revenues¹ +3.6%

RecurringEBITDA

+7.3%

NetIncome

+12.8%

OperatingCash Flow

+17.8%

FreeCash Flow

+20.1%

>2.9% Inflation (IPCA)

̲ A new cycle of real growth across all lines

̲ Consecutive cost reduction in the last 8 quarters

̲ Recurrent operating costs reduced almost 3% in the last two years vs. accumulated inflation of more than 9%

71- Ex-regulatory effects. Note: All figures presented are recurring

When we compare ourselves with the main global telecom companies it’s clear that we still have room to improve…

20%

30%

40%

50%

0% 10% 20% 30%

Telecom companiesOpCF/Revenues

EBIT

DA

Mar

gin

2015

2017

8

More efficient companies_Customer centric_Integrated brand_Convergent portfolio_Digital mindset_Focused on simplification

4G penetration over our customer base

Pay TV penetration

_Less than half of our customers have 4G smartphones

_Large data monetization opportunity as 4G customers data consumption is substantially higher

_Robust demand for UBB while less than 10% of Brazilian municipalities have connections >10Mbps

_Vivo FTTH connections grew 45% YoY in 2017

_Vivo IPTV connections growing 51% YoY in 2017 in a low penetrated market with high potential for cross-selling

_New consumption patterns create space for disruptive video offers and interactive platforms (IPTV)

_Revamped B2B value proposition in order to capture the increasing demand for digital services

_Absolute leader in M2M with 41.4% market share, paving the way for the launch of mass-market IoT solutions

4G

TV B2B/DIGITAL

…in a market with ideal conditions for growth boosted by economic recovery

75mnMobilecustomers

83%smartphones

46%4G smartphones

28%

TotalPremises¹

46%BB Connections

7%UBB² connections

Brazilian broadband demographics

UBB

+1.8xCloud Revenues ■ 2016

■ 2017

Security Revenues

+2.1x

91- Potential market: ABC households + B2B. 2- UBB considers connections >34Mbps

DIGITALIZATION AND BIG DATA

Synergies run rate

SYNERGIES FROM GVT INTEGRATION…contributed to the reduction of recurring Opex for eight consecutive quarters, despite high inflation in the period

…are a catalyst to accelerate the transformation of the Company, control costs and improve capital allocation

Prof

itab

ility

2015 2016 2017 2018 2019 2020

Looking forward, we should continue to expand margins and cash flow by leveraging on new waves of efficiency

10

We have successfully integrated GVT and executed sizeablesynergy initiatives in the last two and a half years…

Integrated customer base with single brand

Network unification

Organizational restructurings

Improved TV content cost structure

Call center and field services optimization

Improved Capex allocation

11

…with expected full run rate in 2019, exceeding the NPV guidance of the Best Case scenario of R$22 billion

2015 2016 2017 2018 2019

Cash Flow Achievement Target Vivo Day 2016

S Y N E R G I E S R U N R A T E E V O L U T I O N ¹ ( R $ B n )

80%of Run Rate

75%of Run Rate

is DirectCash Flow

Full Run Rate

_80% of run rate already achieved

_Full run rate now expected for 2019 (vs. 2020 announced during the last Investor Day)

_Vast majority of initiatives already secured

R$ Bn Total

Best Case 22

Already Secured 19

% Secured 85%

Natural build-up of customer base and efficiency initiatives should continue to improve synergy evolution, leading us to exceed the Best Case scenario

3.13.0

2.4

1.4

0.6

121- Does not include tax synergies. Note: Trending NPV of R$25 billion

Proportion of annual Opex with potential to be impacted by digitalization initiatives

At least R$1.2bn of annual gross Opex Savings by 2020 arising

from digitalization

Digitalization and efficiency as main levers for margin growth

1/3

In addition to the digitalization initiatives, we also have significant simplification opportunities, which will further improve our savings potential

13

On top of that, we also have significant opportunities in digitalization and efficiency

In the digital space, we already achieved promising results and have ambitious targets for the future

2020Fronts 2017KPIs

Enhanced customer care

experience

Fostering sales and top-ups

through digital channels

19% >30%_% of digital top-ups

14 million ~45 million_Unique users of Meu Vivo

-15% YoY -30% vs 2017_Call center calls

_Online FTTH B2C sales 24% >50%

_Online hybrid plan activations x5

14

More efficient and friendly payments &

collection

Robust IT and improved

technical support

_Digital credit scoring ~55% >65%

_Penetration of e-billing 43% >80%

_Collections through digital channels ~50% >75%

_IT legacy systems (B2C customers in Full Stack) 90%

15

2020Fronts 2017KPIs

In the digital space, we already achieved promising results and have ambitious targets for the future

_Incidents solved remotely ~50% >70%

We have been developing projects that will guarantee a more efficient, leaner structure benefiting EBITDA and Cash Flow

• Portfolio simplification: 84% reduction of our mobile plansand further rationalization

• Consolidation of IT platforms, data centers and applications

• Continuous zero-waste approach to all processes and initiatives

• Switch-off of legacy technologies (2G, copper)

• Network virtualization reducing core network, generating savings

• Automatize network operation

• 60% of energy coming from renewable sources by 2020(vs. 26% in 2017)

• Leveraging on distributed generation to optimize cost structure

• Optimization of occupancy rate of buildings to create a leaner real estate structure and unlock opportunities

• Lower handset and equipment costs due to Telefónica’sglobal scale

• Reduced unitary cost of fiber deployment based on Spain’s experience

• Improved access to content and innovations

• Use of Big Data and AI (Aura) to differentiate our offer and improve customer experience

Simplification and G&A efficiencies Network modernization

Optimization of energy costs and facilities Leveraging on the Group’s capabilities

16

New Capex Guidance for the 2018-2020 Period

Up to

R$24 billionRecurring Capex focused on 4G, Fiber expansion and IT transformation

And to support our leading stance, we will invest accordingly in the next three-year period to further improve quality, customer experience and accelerate revenue growth…

17

Non-recurring Capex envelope does not change long-term

downward trend in Capex/Sales

R$2.5 billionIncremental, non-recurring Capex for

the execution of the Fiber AccelerationProject (2018-2020) aiming to speed

up our already successful expansion of FTTH

_60% on Network Expansion

_40% on Installation and CPEs (variable to access growth)

_Leveraging on the Telefónica Group’s global scale and expertise and synergies on existing infrastructure

_Cities with >50k inhabitants

_Cherry-picking of high-potential homes

_Additional 3.0 million FTTH HPs

_Threshold of IRR >17%

_>R$1bn in additional UBB revenues in 2020

_90% of incremental revenues coming from new fixed customers

_Increased Capex efficiency and smart allocation

_Maintaining solid capital structure and flexibility

_Self-funding contribution

…with an envelope of R$2.5bn (2018-20) for a Fiber Acceleration Project, which will be cash flow accretive from year 3

Maintain strong shareholder remuneration benefiting from growth profile

18

INVESTMENT CORRELATED TO REVENUE GENERATION

FUNDINGCLEAR GUIDELINES AND OBJECTIVES

Investing in higher return growth projects while reducing investments in legacy

_Cost of FTTH deployment32% lower vs. 2015

_Cost of 4G expansionoptimized with 700MHz roll-out

Lower unitary cost of growth technologies

2 0 1 6 - 2 0 1 8

4G +44%

FTTH +174%

IPTV +108%

IT +8%

3G -27%

Copper -38%

DTH -53%

Additionally, the Fiber Acceleration Project Capex will be fully directed to growth in FTTH

Spectrum and larger technological cycles in mobile are behind us

_Vivo already has a superior spectrum portfolio in Brazil

_Optimization with 1.8GHz refarming and 700MHz roll-out

19

2/3 of R$24bn Capex plan

oriented for growth

2 0 1 6 - 2 0 1 8

Total Capex is clearly focused on capturing growth opportunities

…

As a result, Vivo’s ROCE should expand at a premium to the expected risk-free rate

8%10%

13.75%

7.00%6.75%

8.00% 8.00%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2016 2017 2018 2019 2020

Vivo ROCE Risk-Free Rate

RETURN ON CAPITAL EMPLOYED¹ EVOLUTION ABOVE RISK-FREE RATE

201- ROCE ex-goodwill

21

A strong financial discipline guarantees solid conversion of Operating Cash Flow into Free Cash Flow…

4.4 5.7 6.7

3.9 4.8 5.7

88.0% 84.4% 86.1%

2015 2016 2017

OpCF FCF from Business Activities Cash Conversion

1- FCF after taxes and interest

FCF +21.5%OpCF +22.9%C A G R 1 5 - 1 7

CONVERSION OF OpCF TO FCF¹ (R$ Bn)

+ 17. 6 %

…allowing Vivo to sustain a solid capital structureand boost shareholder remuneration…

_Rating Ba1, Negative Outlook_One notch above sovereign rating

_Rating brAAA, Stable Outlook_One notch above sovereign rating

Net Debt/EBITDA YE2017

0.26x

4.6

4.1

3.3

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00

2018

2017

2016

LOW LEVERAGERESULTING IN STRONG RATINGS

IMPROVED PROFITABILITY AS A FOUNDATION OF OUR SOLID SHAREHOLDER REMUNERATION

Payment of Dividends¹ (R$ Bn)

C A G R 16 - 1 8

R$20.5 billion distributed as dividends¹ since 2013

221- Includes Interest on Capital

…supporting our unique position as a value and growth player

EBITDA CAGR 2018-2020¹

Div

iden

d Yi

eld¹

0%>6

%

>10%0%

Utilities

Retail & Consumer Goods

Oil and Gas

Construction & Real Estate

Metal and Mining

Telecom²

Agribusiness

V I V O V S . L I S T E D C O M P A N I E S ( B R A Z I L )

1- Source: Bloomberg. 2- Ex-Vivo.231- Source: Bloomberg. 2- Ex-Vivo

_Acceleration of Total Revenues

_Sustaining solid Mobile Service Revenue growth

_Resuming Fixed Revenue growth

_>R$1bn in additional UBB Fixed Revenues in 2020 from the Fiber Project, further improving evolution

_Sustainable margin increase, maintaining the current pace of EBITDA growth

_Annual gross Opex savings of >R$1.2bn from digitalization by 2020

_2018-20 Capex: up to R$24bn + R$2.5bn envelope for the Fiber Acceleration Project

_OpCF margin, excluding the Fiber Project, consistently above 20% as of 2020

_At least +2 p.p. already in 2018 (vs. 2017)

_Continuous ROCE expansion

_Strong FCF and Net Income evolution with double-digit growth in 2018 (vs 2017)

_R$4.6bn to be paid as dividends¹ in 2018 (+13% YoY)

_Unmatched shareholder remuneration

Absolute leader in REVENUESin the Brazilian telco space

(70% share of incremental revenues in the last 3 years)

The most efficient Company with the largest OpCF in the

sector

(+5.0 p.p. in OpCF margin since 2015)

Second to none SHAREHOLDER REMUNERATION

in the industry(Dividend Yield ~6% in 2017)

Past execution positions Vivo with a strong present and a brilliant vision for the future

TODAY TOMORROW (2018-20)

241- Includes Interest on Capital. 2- Based on gross dividends of R$2.82 per preferred share declared during 2017. Note: Trends excluding eventual non-recurring items.

For further information:Investor Relations

+55 11 3430.3687

ir.br@telefonica.com

www.telefonica.com.br/ir