Vivo Continues To Benefit From Industry Consolidation and Steady Network Investment

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. Recent consolidation has made the wireless industry much more attractive, but the market still faces several challenges, including a legacy of low wireless pricing and a fragmented fixed-line industry, coupled with economic and political instability. We expect Vivo’s performance will continue to improve over the next couple of years and that a solid balance sheet should enable it to ride out any bumps along the way.