A.[Reserved.] B.Capitalization and Indebtedness Not applicable. C.Reasons for the Offer and Use of Proceeds Not applicable. D.Risk Factors This section is intended to be a summary of more detailed discussions contained elsewhere in this annual report. You should carefully read and consider the following risks, along with the other information included in this annual report. The risks described below are not the only ones we face. Additional risks that we do not presently consider material, or of which we are not currently aware, may also affect us. Our business, results of operations or financial condition could be impacted if any of these risks materialize and, as a result, the market price of our common shares and our ADSs could be affected. The risks described below are organized by risk category and these categories are not presented in order of importance. However, within each category, the risk factors are presented in descending order of importance, as determined by us as of the date of this annual report. We may change our vision about their relative importance at any time, especially if new internal or external events arise. Summary of Risk Factors Summary of Risks Relating to Financial Matters •The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, could adversely affect us and the trading price of our common shares and ADSs. •Political instability may materially adversely affect the Brazilian economy, our business, and the market price of our common shares and ADSs. •Inflation and government efforts to curb inflation may contribute to economic uncertainty in Brazil, adversely affecting our business and results of operations. •Political, economic and social developments and the perception of risk in other developed and emerging countries may adversely affect the Brazilian economy, our business, and the market price of Brazilian securities, including our common shares and ADSs. 1 Table of Contents •Any downgrading of Brazil’s credit rating could reduce the trading price of our common shares and ADSs. •Changes in taxes and other assessments or changes in the interpretation of tax laws or regulations may adversely affect us and our shareholders. •Fluctuations in exchange rates may adversely affect our ability to meet liabilities denominated or linked to foreign currencies or reduce our income in foreign currency, and may have a material adverse effect on the market value of our common shares and ADSs. •Geopolitical conflicts, instability and related sanctions may have a material adverse effect on the global and Brazilian economies as well as on us. •Potential global or national events related to health, including contagious disease outbreaks, epidemics or pandemics, may significantly affect our operations. •Some of our debt agreements may contain covenants, key performance indicators and targets; as such, any default or failure to reach such targets under such debt agreements may have a material adverse effect on our financial condition and cash flows. Summary of Risks Relating to Operational Matters •Information technology is key to our business and we could be subject to cybersecurity risks. •Companies operating in the telecommunication industry, including us, may be harmed by restrictions regarding the deployment and maintenance of network infrastructure. •Man-made or natural disasters, including extreme weather conditions due to climate change (high temperatures, floods, thunderstorms) or other unexpected events could adversely affect networks, systems, infrastructure and service continuity. •We are subject to environmental laws and regulations. Failure to comply with governmental laws and regulations could subject us to penalties that could have an adverse effect on our business and reputation. Summary of Risks Relating to Our Business and Industry •We are dependent on key personnel and the ability to hire and retain additional personnel. •We are subject to liabilities relating to third-party contractors, which may have a material adverse effect on our business and results of operations. •We make investments based on demand forecasts that may become inaccurate due to economic volatility and may result in revenues that are lower than expected. •Our current radio frequency licenses may not be renewed for additional periods. •Consolidation in the telecommunications market may increase competition in the near future and may change Brazilian market dynamics. •We face significant competition in the Brazilian market. •Extensive government regulation of the telecommunications industry may limit, in some cases, our flexibility in responding to market conditions, competition and changes in our cost structure or impact our fees. •Failure to comply with the conditions set forth in our Self-Composition Agreement may materially and adversely affect our results of operations. •We depend on key suppliers to obtain the necessary equipment and services for our business. 2 Table of Contents •Our operating results may be negatively affected by changes to the rules applicable to STFC and SMP authorizations. •ANATEL has the authority to issue new regulations affecting many of our areas of operations. •The industry in which we conduct our business is continually changing and evolving technologically, which demands adequate changes in the regulatory environment. •We are subject to certain risks related to conditions and obligations imposed by ANATEL for the use of the spectrum needed for the 4G and 5G services we offer. •Our sales could be suspended as a result of issues with the quality of our services. •We are subject to the risk of noncompliance with data privacy and protection laws, which may lead to sanctions, including financial penalties. •Our expansion into new business sectors may expose us to operational and regulatory risks. Summary of Risks Relating to Legal and Compliance Matters •We face risks associated with litigation. •We are exposed to risks in relation to compliance with anti-corruption laws and regulations and economic sanctions programs. •Internet regulation in Brazil is still limited and several legal issues related to the Internet are uncertain. Summary of Risks Relating to the Common Shares and the ADSs •Holders of our ADSs may face difficulties in serving process on or enforcing judgments against us and other persons. •Holders of our ADSs are not entitled to directly attend shareholders’ meetings and may only vote through the depositary. •Holders of our ADSs or common shares might be unable to exercise preemptive rights with respect to the common shares unless there is a current registration statement in effect which covers those rights or unless an exemption from registration applies. •An exchange of ADSs for common shares risks the loss of certain foreign currency remittance and Brazilian tax advantages. •Holders of our common shares will be subject to, and holders of our ADSs could be subject to, Brazilian income tax on capital gains from sales of common shares or ADSs. •Our controlling shareholder has power over the direction of our business. 3 Table of Contents Risks Relating to Financial Matters The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, could adversely affect us and the trading price of our common shares and ADSs. The Brazilian federal government frequently exercises significant influence over the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other measures, changes in tax policies, wage and price controls, foreign exchange controls, currency devaluations, capital controls and limits on imports. Our financial condition, as well as our business and results of operations and the market price of our common shares and ADSs, may be adversely affected by changes in government policies, especially those related to our sector, such as changes in telephony fees and competitive conditions, as well as general economic factors, including: •exchange rates and currency fluctuations; •inflation; •energy policy; •interest rates and monetary policies; •liquidity of domestic capital and lending markets; •fiscal policies and changes in tax laws; •labor and social security policies, laws and regulations; •exchange controls and restrictions on remittances abroad (including with regards to the payment of dividends); and •other political, diplomatic, social and economic developments in or affecting Brazil. Uncertainty over whether the Brazilian federal government will implement changes to the policies, regulations or standards affecting these or other factors in the future may affect economic performance, which may have an adverse effect on us and the trading price of our common shares and ADSs. Past economic and political instability has led to a negative perception of the Brazilian economy and higher volatility in the Brazilian securities markets, which has adversely affected us and the trading price of our common shares and ADSs. These issues may be exacerbated by the upcoming Brazilian elections and the natural uncertainties as to what policies will be adopted by any new government. We cannot assure the maintenance of policies designed to promote macroeconomic stability, fiscal discipline and domestic and foreign investments, and failure to do so may adversely impact Brazil’s economy, the prices of securities issued by Brazilian issuers such as us and ultimately our business, financial condition and results of operations. Political instability may materially adversely affect the Brazilian economy, our business, and the market price of our common shares and ADSs. Brazil’s political environment has historically influenced and continues to influence the performance of Brazil’s economy, as well as investor and general public confidence, resulting in economic slowdowns and an increase in the volatility of securities issued by Brazilian companies. Governing bodies have the power to determine policies and issue government measures relating to the Brazilian economy and, as a result, affect the operations and financial performance of companies, including us. We cannot predict what policies will be established or whether such policies or changes in existing policies will have an adverse effect on the Brazilian economy or our business, results of operations, financial condition and the market price of our common shares and ADSs. 4 Table of Contents In addition, any changes in the relationship between the Brazilian government and the Brazilian Congress could result in a government impasse and/or political unrest, that could materially adversely affect our operations. Uncertainties about the implementation of changes in monetary, tax and social security laws and policies, may contribute to economic instability. These uncertainties and any new measures may increase volatility in the Brazilian securities market. Inflation and government efforts to curb inflation may contribute to economic uncertainty in Brazil, adversely affecting our business and results of operations. In the past, Brazil has recorded high inflation rates, which, combined with measures taken to fight inflation, has materially adversely affected the Brazilian economy. The COPOM often adjusts interest rates in Brazil in order to achieve the inflation targets established by the National Monetary Council (CMN). The measures taken to curb inflation, such as the increase of interest rates, as well as expectations of any future measures, may have adverse effects on the Brazilian economy, contributing to higher economic uncertainty, reduced economic growth and volatility in the Brazilian capital markets and may adversely affect our business and results of operations. Periods of higher inflation coupled with higher interest rates and other measures to combat inflation may lead to reduced demand for our products. Inflation is also likely to increase some of our costs and expenses, which we may not be able to fully pass on to customers and could adversely affect our operating margins and operating income. In addition, inflation affects our financial liquidity and financial capital resources primarily by exposing us to variations in our floating-rate loans. Rising interest rates may also impact the costs of our fundraising and indebtedness, increasing our financial expenses. Such an increase could adversely affect our ability to pay our obligations to the extent it reduces cash on hand. According to the IPCA index, Brazil’s inflation rates stood at 4.8%, 4.6% and 5.8% in the years ended on December 31, 2024, 2023, and 2022, respectively. In the year ended on December 31, 2025, inflation, as measured by the IPCA, stood at 4.3%, above the target of 3%. Inflation has been driven by factors such as exchange rate fluctuations, amid a tight labor market and solid domestic demand. These elements underscore the persistent challenges in managing price stability in the Brazilian economy. In response to inflationary pressures and macroeconomic volatility, the Central Bank of Brazil has historically implemented monetary policies characterized by elevated interest rates. The Central Bank of Brazil sets the SELIC rate, guiding the broader banking system based on its scenario for inflation, economic growth and other key indicators. In August 2023, the Central Bank started cutting the SELIC rate as a result of a slowdown in inflation and the SELIC rate was set to 10.50% as of May 2024. Nevertheless, renewed inflationary pressures prompted the Central Bank to reverse course and resume hiking rates in September 2024, with the SELIC rate reaching 15.00% by June 2025. In its January 2026 meeting statement, the COPOM indicated that it intends to initiate the loosening of its monetary policy stance in March 2026 if the expected scenario is confirmed, however highlighting that it will keep monetary policy at a contractionary level to ensure convergence to the inflation target. As of the date of this annual report, the SELIC rate stands at 15.00% per annum. Moreover, fixed broadband and mobile service providers, including us, use the IGP-DI to adjust their prices and television and cable service providers use the IGP-M. The IGP-DI and IGP-M are inflation indexes developed by the FGV, a private organization. Since 2006, telephone fees for fixed-line services have been indexed to the IST, as adjusted by a productivity factor, or X Factor, which is defined by ANATEL Resolution No. 507/2008. The IST is an index composed of other domestic price indexes (including the IPCA, IGP-DI and IGP-M, among others) that is intended to reflect the telecommunications industry’s operating costs. As a result, this index serves to reduce potential discrepancies between our industry’s revenue and costs, and thus reduce the apparent adverse effects of inflation on our operations. 5 Table of Contents Political, economic and social developments and the perception of risk in other developed and emerging countries may adversely affect the Brazilian economy, our business, and the market price of Brazilian securities, including our common shares and ADSs. The market for securities issued by Brazilian companies may be influenced, to varying degrees, by economic conditions in both developing and developed economies. The reaction of investors to developments in other countries may have an adverse impact on the market value of securities of Brazilian companies. The prices of shares traded on the B3, for example, have historically been sensitive to fluctuations in interest rates in the United States, as well as variations of the main U.S. stock exchanges. Additionally, crises in other emerging countries or the economic policies of other countries may reduce investor demand for securities of Brazilian companies, including our common shares and ADSs. Any of the foregoing developments may adversely affect the market value of our common shares and ADSs and hinder our ability to access the capital markets and finance our operations in the future on acceptable terms and costs, or at all. To the extent that economic problems in emerging market countries or elsewhere adversely affect Brazil, our business and the market value of our common shares and ADSs could be adversely affected. Furthermore, we cannot assure you that, in the event of adverse developments in emerging market economies, the international capital markets will remain open to Brazilian companies or that the resulting interest rates in such markets will be advantageous to us. Decreased foreign investment in Brazil may negatively affect growth and liquidity in the Brazilian economy, which in turn may have a negative impact on our business. Disruption or volatility in the global financial markets could further increase negative effects on the financial and economic environment in Brazil, which could have a material adverse effect on us. Moreover, in recent periods, the United States has announced and implemented tariff measures affecting imports into the United States, including the imposition of a broadly applicable additional tariff that began being collected in April 2025, and additional duties on certain Brazil-origin articles that were later modified or removed for certain products. We cannot assure you that further tariffs, export controls, sanctions, restrictions on technology or services, or other trade measures will not be adopted, expanded or re-imposed in the future. Increased tariffs and the potential for further trade restrictions may lead to a slowdown in global trade and economic activity, create supply chain disruptions and contribute to increased market volatility and uncertainty. For us, such developments could adversely affect our business and results of operations, including by: (i) adversely affecting the Brazilian economy (including through reduced export activity, currency volatility, inflation and interest rates), which may reduce demand for certain services, increase churn and bad debt expense and constrain consumer and enterprise spending; (ii) increasing the cost of, or disrupting the availability of, network equipment, devices, components, software and services that we procure directly or indirectly through global supply chains (including where suppliers pass through tariff- or compliance-related costs or face restrictions on technology transfers); (iii) increasing our capital expenditure requirements and operating costs, delaying network deployment and modernization, and requiring changes to procurement strategies, suppliers or contractual terms; and (iv) increasing volatility in the market price and liquidity of securities of Brazilian issuers, including our common shares and ADSs. Any downgrading of Brazil’s credit rating could reduce the trading price of our common shares and ADSs. We may be harmed by investors’ perceptions of risks related to Brazil’s sovereign debt credit rating. Brazil’s sovereign credit rating affects the cost and other terms upon which we are able to obtain funding. Rating agencies regularly evaluate Brazil and its sovereign ratings, which are based on a number of factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness metrics and the perspective of changes in any of these factors. 6 Table of Contents Brazil was downgraded to non-investment grade status by S&P in September 2015, by Fitch Ratings in December 2015, and by Moody’s in February 2016. Brazil was further downgraded by S&P in February 2016 and January 2018 and by Fitch in May 2016 and February 2018. As of the date of this annual report, Brazil’s sovereign rating is currently rated by the three major risk rating agencies as follows: BB by S&P and Fitch Ratings and Ba1 by Moody’s—ratings which remain below investment grade. Consequently, the prices of securities issued by Brazilian companies are negatively affected. A possible deceleration of growth rates of the Brazilian economy, among other factors, could lead to ratings downgrades. Any further downgrade of Brazil’s sovereign credit ratings could heighten investors’ perception of risk and, as a result, cause the market price of our common shares and ADSs to decline. Changes in taxes and other assessments or changes in the interpretation of tax laws or regulations may adversely affect us and our shareholders The legislatures and tax authorities in the tax jurisdictions in which we operate regularly enact reforms to the tax and other assessment regimes to which we and our customers are subject. Such reforms include changes in tax rates and, occasionally, enactment of temporary taxes. In addition, the interpretation of tax laws by courts and taxation authorities is constantly evolving. In Brazil, the tax system is highly complex and tax laws and regulations are commonly subject to controversial interpretation by tax authorities. In the event that tax authorities interpret tax laws in a manner that is inconsistent with our interpretations, we may be adversely affected. The effects of these changes and any other changes that result from the enactment of additional tax reforms or changes to the manner in which current tax laws are applied cannot be quantified and there can be no assurance that any such reforms or changes would not have an adverse effect upon our business. For more information, see “Item 4. Information on the Company—B. Business Overview—Significant changes in tax legislation.” Fluctuations in exchange rates may adversely affect our ability to meet liabilities denominated or linked to foreign currencies or reduce our income in foreign currency, and may have a material adverse effect on the market value of our common shares and ADSs. The Brazilian currency has been historically volatile and has been devalued frequently over the past three decades. Throughout this period, the Brazilian government has implemented various economic plans and used various exchange rate policies, including sudden devaluations, periodic mini-devaluations (during which the frequency of adjustments has ranged from daily to monthly), exchange controls, dual exchange rate markets and a floating exchange rate system. Although long-term depreciation of the real is generally linked to the rate of inflation in Brazil, depreciation of the real occurring over shorter periods has resulted in significant variations in the exchange rate between the real, the U.S. dollar and other currencies. The exchange rate between the U.S. dollar and the Brazilian real has experienced significant fluctuations in recent years. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$4.8413 per US$1.00 on December 31, 2023, which reflected a 7.4% appreciation in the real against the U.S. dollar during the year. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$6.1923 per US$1.00 on December 31, 2024, which reflected a 27.9% depreciation in the real against the U.S. dollar during the year. The real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$5.5084 per US$1.00 on December 31, 2025, which reflected an 11% appreciation in the real against the U.S. dollar during the year, influenced in part by higher Brazilian interest rates relative to the U.S., attracting capital inflows, alongside improving global risk sentiment and solid commodity exports. As of February 23, 2026, the real/U.S. dollar exchange rate reported by the Brazilian Central Bank was R$5.17 per US$1.00. There can be no assurance that the real will not again depreciate against the U.S. dollar or other currencies in the future. 7 Table of Contents As of December 31, 2025, 99.8% of our total indebtedness, which includes current and non-current loans and financing, debentures, leases and other creditors of R$ 20.3 billion was denominated in Brazilian reais. In the year ended December 31, 2025, approximately 10.8% of our operating costs and expenses were payable or linked to payment by us in U.S. dollars or Euros. Additionally, in the same year, 99.7% of our revenue was generated in reais, except income derived from hedging transactions, international long-distance interconnection fees and services to customers outside of Brazil. To the extent that the value of the real decreases relative to the U.S. dollar or the Euro, our commitments payable or linked to payment by us in foreign currencies become more expensive. Although our accounts receivable denominated in foreign currencies would also appreciate, the net effect could adversely affect our revenue and expenses. In addition, the IST inflation index does not adequately reflect the true effect of exchange rate fluctuations. Thus, our revenue, when translated to U.S. dollars, does not adequately reflect the true effect of exchange rate fluctuations, which may affect our results of operations. We use derivative instruments to limit our exposure to exchange rate risk. Since September 1999, we have hedged all of our foreign currency-denominated bank debt using swaps and other derivative instruments. Since May 2010, the company began using net balance coverage, which is the hedging of net positions in foreign exchange exposures, or assets (issued invoices) minus liabilities (received invoices) for foreign exchange exposures, substantially reducing our risk to fluctuations in exchange rates. We could still continue to face exchange rate exposure with respect to our planned capital expenditures however, as a small part of our planned capital expenditures are denominated or indexed in foreign currencies (mostly U.S. dollars). We systematically monitor the amounts and time of exposure to exchange rate fluctuations and may hedge positions when deemed appropriate. In addition, in 2025, the Company also became exposed to exchange rate fluctuations and commodity price risk arising from the future revenue associated with copper sales expected through 2029, since both the international price of the metal and the foreign currency exchange rate may affect the amounts to be received. Adverse variations in these markets may reduce revenue in Brazilian reais and increase the volatility of our results. To mitigate these risks, we entered into hedge transactions, accounted for through hedge accounting, with financial derivatives designed to simultaneously protect our exposure to foreign exchange risk and to copper price fluctuations, with the objective of maintaining greater predictability in the project’s cash flows and minimizing the impacts of market volatility. These hedge transactions, accounted for through hedge accounting, are adjusted in line with the dynamics of projected sales and evolving market conditions, ensuring continuous alignment between the protection contracted and the Company’s actual exposure. For more information, please see “Note 32. Financial Instruments and Risk and Capital Management". Geopolitical conflicts, instability and related sanctions may have a material adverse effect on the global and Brazilian economies as well as on us. Geopolitical conflicts, instability and heightened tensions in various regions—including, for example, the war between Russia and Ukraine, conflicts in the Middle East, and heightened tensions in Latin America, including involving Venezuela—have provoked strong reactions from the United States, the UK, the EU and various other countries around the world. While the precise effect of these developments remains uncertain, they have already resulted in significant volatility in financial markets and an increase in energy and commodity prices globally. The potential consequences of these conflicts for us include, without limitation: •The U.S. dollar may appreciate sharply, which could increase the price of goods and services on which we depend for which we are required to pay in U.S. dollars, as well as increase the pressure on our margins and prices generally. •Inflation originating from these conflicts makes it more difficult for us to conduct our financial planning, and increases the capital needed to fund our activities and our credit risk exposure. Measures by the Brazilian government and the Central Bank to contain inflation, such as raising the basic interest rate, could materially impact the cost of debt and third-party capital for our financing and investing activities. 8 Table of Contents •A recession of the Brazilian and/or global economies as a result of the aforementioned developments could also have a material adverse effect on our business. While as of the date of this annual report there have not been any material impacts from these wars on our business, we are continuously monitoring the developments to assess any potential future impacts that may arise as a result of these conflicts. Nonetheless, the adverse effects—global or localized—of these conflicts, and their adverse effects on the wider global economy and market conditions could have a material adverse effect on our business, financial condition and results of operations. Potential global or national events related to health, including contagious disease outbreaks, epidemics or pandemics, may significantly affect our operations. Potential global or national events related to health, including contagious disease outbreaks, epidemics or pandemics, may significantly affect our operations. Such events may cause, among other things, supply chain delays due to issues with factories or logistics; impacts on employees or third-party contractors due to quarantine periods or infection; as well as effects on global economic growth and, therefore, the growth of the national economy, which could have a variety of adverse impacts on supply (paralysis of integrated production chains, freezing of productive resources) and demand (deterioration of confidence and expectations, negative effects on income and wealth) caused by a substantial deterioration in financial markets, unprecedented drops in commodity prices, strong slowdown in business activity or severe transportation restrictions. Some of our debt agreements may contain covenants, key performance indicators and targets; as such, any default or failure to reach such targets under such debt agreements may have a material adverse effect on our financial condition and cash flows. The agreements governing most of our outstanding loans and financing may contain certain standard restrictive covenants, including financial covenants. These agreements can provide an acceleration of the full balance of our obligations in the event of default. In general, such agreements are subject to the acceleration of maturity over: (i) the inclusion in the agreement of our shareholders, bylaws or articles of incorporation or of the companies that control us of conditions that lead to restrictions or loss of ability to pay financial obligations arising from these agreements; or (ii) liquidation, dissolution, insolvency, bankruptcy, judicial or extrajudicial recovery to any creditor or class of creditors. Failure to comply with or fulfill any of these restrictions, covenants, financial metrics or financial tests could result in a default under these agreements, which would have a material adverse effect on our financial condition. Risks Relating to Operational Matters Information technology is key to our business and we could be subject to cybersecurity risks. Information technology is essential for conducting our business and providing our services. Consequently, we are exposed to various operational risks related to cybersecurity, system reliability, and information protection. Despite ongoing efforts to modernize our technological infrastructure and replace legacy systems, we operate in an environment characterized by increasing digitization, interconnectivity, and technological complexity, which may amplify our exposure to cyber threats and operational failures. We may be subject to information security incidents arising from, among other factors, cyberattacks, unauthorized access, the introduction of malicious software, ransomware, system failures, human errors, misuse of credentials, or internal malicious acts. Such incidents can result in the loss, disclosure, corruption, or unavailability of information, including customer data, business partner information, and confidential corporate information, as well as the total or partial disruption of our operations and services. 9 Table of Contents Additionally, our operations rely, in various ways, on third parties, including suppliers, partners, and service providers, as well as cloud computing environments. Vulnerabilities, operational failures, or cybersecurity incidents involving these third parties, even if outside our direct control, can adversely affect our systems, processes, operations, and the continuity of our services. The telecommunications sector, in particular, is subject to an ever-evolving cybersecurity threat landscape, driven, among other factors, by increased digitization, growing dependence on computer networks and cloud services, as well as the use of advanced technologies that may increase the sophistication, scale, and frequency of attacks. The occurrence of significant cybersecurity incidents may result in severe adverse impacts, including, but not limited to, operational disruptions, financial losses, regulatory sanctions, legal obligations, litigation, reputational damage, customer loss, and negative effects on our financial results, cash flows, and competitive position. The management of cybersecurity risks is conducted continuously and is integrated into our corporate governance structure, with involvement from management. However, due to the nature of cyber threats, the complexity of our systems, reliance on third parties, and the ever-evolving nature of attack techniques, we cannot assure that such measures will be sufficient to fully prevent, detect, or mitigate all information security incidents or their impacts. Any significant failure in our controls or processes could adversely affect our operations, financial condition, and results. For more information, please see “Item 4. Company Information—B. Business Overview—Technology." Companies operating in the telecommunication industry, including us, may be harmed by restrictions regarding the deployment and maintenance of network infrastructure. Currently, hundreds of municipal laws in Brazil limit the installation of new antennas for mobile service. This scenario has been a barrier to the expansion of mobile networks. Those laws are meant to regulate issues related to zoning and the alleged effects of the radiation and radio frequencies of the antennas. Antenna installation is limited because of concerns that radio frequency emissions from base stations may cause health problems and other environmental impacts. These concerns could have an adverse effect on the wireless communications industry and, possibly, expose wireless providers, including us, to litigation. The regulations may hinder the expansion of our network should we encounter difficulties in proceeding with the deployment of infrastructure in locations most suitable for signal efficiency or, alternatively, in identifying new sites, which, in turn, may delay expansion and adversely affect the quality of our services. New laws and regulations may also create additional restrictions on our transmission infrastructure, which in turn, could have an adverse effect on our business. In this sense, a new regulation regarding the use of electricity poles infrastructure by telecommunication companies is expected to be published by ANATEL and ANEEL (the national Brazilian electricity regulatory agency) by the end of 2026. The new regulation can set forth changes in pricing and other conditions related to the access and maintenance of telecommunication equipment in light poles that may affect our ability to make use of such infrastructure, deemed vital to our current and future operations. Additionally, health concerns regarding the effects of radio frequency emissions may also discourage the use of mobile telephones and may result in the adoption of new measures by governments or any other regulatory interventions, any of which could materially and adversely affect our business, results of operations and financial condition. 10 Table of Contents Man-made or natural disasters, including extreme weather conditions due to climate change (high temperatures, floods, thunderstorms) or other unexpected events could adversely affect networks, systems, infrastructure and service continuity. Our operations may be suspended or interrupted for an indeterminate period in case of adverse events that are likely to damage our transmission bases. These events include natural disasters, storms, cyclones, climate change-related impacts, environmental events and man-made disasters, including fires, explosions, and geopolitical disruptions, as well as civil unrest or health crises (such as the COVID-19 pandemic), or any other unexpected events. Climate change represents systemic risks that, when realized, can result in socioeconomic, financial and environmental impacts potentially affecting the fulfillment of Telefônica Brasil’s business strategy and objectives. Climate change related risks can be categorized as physical risks (chronic and acute) and transition risks. Physical risks include, the increasing frequency of extreme weather events such as storms, cyclones, heatwaves, and wildfires, which can lead to significant damage to our infrastructure causing failures in our wired and mobile networks. Rising means temperatures could increase our operating costs due to greater refrigeration needs for network equipment. High temperatures can also affect the telecommunication equipment, causing failures, write-offs and early retirement, thereby increasing the risk of severe disruption; therefore, cooling is essential. Transition risks include an increased cost of energy (electricity operating expenses), which stands out for having the most substantial financial impact. This is largely due to our high consumption of electricity (an average of 1,800 GWh per year) and the significant dependence of the Brazilian electricity matrix on hydroelectric power, where prolonged periods of drought can adversely impact energy prices. Although, the telecom sector is not heavily dependent on fossil fuels, it is highly dependent on electricity consumption for its networks, so an increase in electricity prices due to a shortage of natural resources could have a significant impact on our energy related operating expenses. If we are unable to mitigate or prevent any such damage in the event of a natural or man-made disaster and any other unexpected events, the suspension or interruption of our operations could have an adverse effect on the continuity of our operations, our financial results and compliance with applicable regulations. We are subject to environmental laws and regulations. Failure to comply with governmental laws and regulations could subject us to penalties that could have an adverse effect on our business and reputation. Our operations and properties are subject to a wide range of environmental laws and regulations governing, among other aspects, environmental licensing and certifications, protection of flora and fauna, air emissions, waste management and remediation of contaminated areas. Failure by us or our business partners to comply with current and future legal requirements, or to identify and manage new or existing environmental liabilities, could result in substantial costs, including investigation and remediation expenses, indemnification, compensation, conduct adjustments, fines, suspension of activities and other penalties, as well as investments required to upgrade our facilities or modify our processes. In addition, such failures could cause significant damages to the company’s reputation. The identification of presently unknown environmental issues, change in evaluation criteria by regulatory authorities, enactment of more restrictive laws and regulations or other unforeseen events may arise in the future and result in material environmental liabilities and related costs. The occurrence of any of these factors could have a material adverse effect on our business, results of operations, assets and financial condition. 11 Table of Contents Risks Relating to Our Business and Industry We are dependent on key personnel and the ability to hire and retain additional personnel. We believe that our success will depend on the continued services of our senior management team and other key personnel. Our management team is comprised of highly qualified professionals, with extensive experience in the telecommunications industry. The loss of the services of any of our senior management team or other key employees could adversely affect our business, financial condition and results of operations. We also depend on the ability of our senior management and key personnel to work effectively as a team. Our future success also depends on our ability to identify, attract, hire, train, retain and motivate highly skilled technical, managerial, sales and marketing personnel. Competition for such personnel is intense, and we cannot guarantee that we will successfully attract, assimilate or retain a sufficient number of qualified personnel. Failure to retain and attract the necessary technical, managerial, sales and marketing and administrative personnel could adversely affect our business, financial condition and results of operations. We are subject to liabilities relating to third-party contractors, which may have a material adverse effect on our business and results of operations. We are exposed to contingent liabilities resulting from our contracting structure, which includes third-party service providers. Such potential liabilities may involve labor claims by third-party providers that are treated as direct employees as well as joint liability claims relating to wage or overtime pay complaints and workplace injury claims. If a significant portion of these contingent liabilities is decided against us and for which we have not made adequate provisions, our financial condition and results of operation may be adversely affected. Furthermore, if the contracting of third-party services is considered to involve the main activities of the company, it may be characterized as direct employment, which would significantly increase our costs and, as a result, we may be subject to administrative proceedings by the relevant labor regulators and may be required to pay fines to the third-party service providers. We make investments based on demand forecasts that may become inaccurate due to economic volatility and may result in revenues that are lower than expected. We make certain investments, such as the procurement of materials and the development of physical sites, based on our forecasts of the amount of demand that customers will have for our services at a later date (generally several months later). However, any major changes in the Brazilian economic scenario may affect this demand and therefore our forecasts may turn out to be inaccurate. For example, economic crises may restrict credit to the population, and uncertainties related to employment may result in a delay in the decision to acquire new products or services (such as broadband or Pay TV). As a result, it is possible that we may make larger investments based on demand forecasts that were necessary given actual demand at the relevant time, which may directly affect our cash flow. Furthermore, improvements in economic conditions may have the opposite effect. For example, an increase in demand not accompanied by our investment in improved infrastructure may result in a possible loss of opportunity to increase our revenue or result in the degradation of the quality of our services. Our current radio frequency licenses may not be renewed for additional periods. Generally, current spectrum authorizations are valid for 15 years. Although the New General Telecommunications Law admits successive spectrum renewals, we cannot guarantee that our existing licenses will be renewed. According to the New General Telecommunications Law and Decree No. 10,402/2020, ANATEL must consider, in renewal processes, conditions such as efficient spectrum use, competitive aspects, public interest, and the completion of investment commitments. 12 Table of Contents In November 2020, ANATEL decided to renew our current authorizations for the use of radio frequencies in band A (850 MHz) on a primary basis until November 29, 2028. However, the specific conditions for renewal, including those related to economic valuation criteria and associated obligations, were challenged by the affected service providers, including us. Following ANATEL’s rejection of these complaints, the final determination regarding these specific conditions remains pending and will require a decision by the TCU. In April 2023, ANATEL determined that our authorizations in the 900 MHz band would not be extended—except in the state of Minas Gerais, as explained below—on the grounds that efficient use of this spectrum had not been properly demonstrated given the low capacity associated with this band (2.5 + 2.5 MHz), which imposes limitations on its effective use. However, the non-renewal of these 900 MHz licenses does not affect the services currently provided by the Company. Also in April 2023, ANATEL decided to renew our 1,800 MHz licenses until 2032. In August 2023, ANATEL further renewed our 900 MHz and 1,800 MHz licenses in part of the state of Minas Gerais (PGO sector 2) until 2032. It is worth noting that our licenses in the remaining parts of the state of Minas Gerais (PGO sector 3) had already been renewed by ANATEL in April 2020 and are set to expire in 2035. Furthermore, in April 2023, ANATEL decided to renew our current license authorizations for the use of 2,100 MHz radio frequencies until April 2038. As these were first-time renewal requests provided for in the contracts and bidding processes that originally granted these authorizations, TCU’s technical division did not identify evidence of non-rational or inappropriate use of these bands by the Company that would justify denying the extensions. However, they highlighted the need to adapt Article 31 of Resolution No. 757/2022 to align with the new proposed maximum validity terms. On February 3, 2025, Resolution No. 757/2022 was revoked by Resolution No. 773/2025, which approved new Regulation for Radio Frequencies Conditions of Use. On February 5, 2025, TCU approved the renewal of 2,100 MHz authorizations, as originally proposed by ANATEL. This approval was formalized through TCU Ruling No. 224/2025. If the licenses mentioned above are not renewed, we may be required to compete for new licenses in a spectrum auction. The loss or non-renewal of spectrum licenses could significantly impact the coverage of our mobile services, potentially rendering our services unavailable in certain regions. This would be particularly problematic in areas where we fail to renew or secure licenses for ongoing operations. Any of these circumstances could materially and adversely affect our business, financial condition, revenues, results of operations, and future prospects. Consolidation in the telecommunications market may increase competition in the near future and may change Brazilian market dynamics. Mergers and acquisitions may change market dynamics, create competitive pressures, force small competitors to find partners and impact our financial condition; and may require us to adjust our operations, marketing strategies (including promotions), and product portfolio. The entry of a new market participant with significant financial resources or potential changes in strategy by existing telecommunications service providers can change the competitive environment in the Brazilian market. We may be unable to keep pace with these changes, which could affect our ability to compete effectively and have a material adverse effect on our business, financial condition and results of operations. Additional joint ventures, mergers and acquisitions among telecommunications service providers are possible in the future. If such consolidation occurs, it may result in increased competition within our market. We may be unable to adequately respond to pricing pressures resulting from consolidation in our market, adversely affecting our business, financial condition and results of operations. We may also consider engaging in merger or acquisition activity in response to changes in the competitive environment, which could divert resources away from other aspects of our business. 13 Table of Contents We face significant competition in the Brazilian market. Telecommunications operators continued to focus on improving their base of accesses by attracting customers to higher-value products. On the mobile side of the business, market participants mostly sought to sell hybrid plans (planos controle) and pure postpaid plans to consumers to increase overall ARPUs and profitability. On the fixed-line side of the business, we have seen competition both from large and small players to capture customers for fiber connectivity or upgrades for higher internet speeds, mostly driven by increased demand and the increased supply of high-quality broadband given the expansion in the rollout of fiber optic networks. In addition, customers are demanding higher quality services and greater mobile data availability, which require higher investments in the development, modernization, expansion and continuous improvement of the quality of our services and the experience of our customers. As a result, we continue to face significant competition, mainly driven by the following factors: (1) commercial and pricing pressures from new portfolios launched by competitors; (2) increased 4G, 4.5G, 5G and fiber optic network coverage and improved service quality by our competitors; (3) low-cost alternative services, such as voice and text services provided over IPs, and IPTV/VoD services; and (4) favorable market conditions for MVNO operators, which may affect our competitive position in the market. We continuously monitor market conditions to anticipate future competitive challenges and opportunities and analyze how to address them. Nevertheless, our operational results, market position, competitiveness in the market and margins may be adversely affected if we are unable to keep the same pace as our competitors. Extensive government regulation of the telecommunications industry may limit, in some cases, our flexibility in responding to market conditions, competition and changes in our cost structure or impact our fees. Our business is subject to extensive regulation, including any regulatory changes that may occur during the terms of our authorizations to provide telecommunication services in Brazil. ANATEL, the Brazilian telecommunications industry regulator, regulates, among other things: •industry policies and regulations; •licensing (including licensing of spectrum and bidding processes); •fees and tariffs; •competition incentives and restrictions (including our ability to grow by acquiring other telecommunications businesses); •service, technical and quality standards; •consumer rights; •penalties and other sanctions; •interconnection and settlement arrangements; •cybersecurity; and •fraud prevention actions. 14 Table of Contents The Brazilian telecommunications regulatory framework is continuously evolving. The interpretation and enforcement of regulations, the assessment of compliance with regulations and the flexibility of regulatory authorities are all marked by uncertainty. We operate under authorizations from the Brazilian government, and our ability to maintain these authorizations is a precondition to our success. However, because of the changing nature of our regulatory framework, we cannot provide assurances that ANATEL will not adversely modify the terms of our authorizations and/or licenses. According to our operating authorizations and licenses, we must meet specific requirements and maintain minimum quality, coverage and service standards. Our failure to comply with such requirements may result in the imposition of fines, penalties and/or other regulatory responses, including the termination of our operating authorizations. Any partial or total termination of any of our operating authorizations and licenses would have a material adverse effect on our business, financial condition, revenues, results of operations and prospects. In recent years, ANATEL has been reviewing and introducing regulatory changes, especially regarding asymmetric competition measures and interconnection fees charged among local providers of telecommunications services. Asymmetric competition measures can include regulations intended to rebalance markets in which a market participant has distinct market power over other competitors. The adoption of disproportionately asymmetric measures could have a material adverse effect on our business, financial condition, revenues, results of operations and prospects. With respect to interconnection fees, these are part of our revenue and cost bases. Such fees are charged by telecommunications service providers to each other in order to allow interconnected use of each other’s networks. To the extent that changes to the rules governing interconnection fees reduce the amount of fees we can receive, or our ability to collect such fees, our businesses, financial conditions, revenues, results of operations and prospects could be materially adversely affected. Therefore, our business, results of operations, revenues and financial conditions could be negatively affected by the actions of the Brazilian authorities, including, in particular, the following: •the introduction of new or stricter operational and/or service requirements; •the granting of operating authorizations in our areas; •limitations on interconnection fees that we may charge from other telecommunications service providers; •imposition of significant fines or penalties regarding failures to comply with regulatory obligations; and •antitrust limitations imposed by ANATEL and CADE. Failure to comply with the conditions set forth in our Self-Composition Agreement may materially and adversely affect our results of operations Telefónica Brasil currently offers telecommunications services throughout the national territory, including local, international and long-distance STFC, personal mobile service (SMP), multimedia communication broadband services (including the provision of fixed broadband connection) and pay television services, all under the private regime. 15 Table of Contents On December 16, 2024, Telefônica Brasil, ANATEL, the TCU and the Brazilian Ministry of Communications signed an agreement on the terms and conditions for the adaptation of our STFC concession contracts to an authorization instrument (the “Self-Composition Agreement”). The Self-Composition Agreement includes several key conditions that we are required to comply with: (i) Telefônica Brasil is required to make specific investments on terms established under the Self-Composition Agreement; (ii) Telefônica Brasil must maintain the provision of fixed-line telephone services in certain locations without adequate competition, within the concession area until December 31, 2028; (iii) all pending administrative and judicial proceedings related to our concession pending before ANATEL or any courts must be settled, and Telefônica Brasil must withdraw any cases filed against ANATEL; and (iv) Telefônica Brasil must commit to fulfilling public interest pledges for up to 10 years as part of the transition process. On April 11, 2025, Telefônica Brasil signed the unified authorization term with ANATEL that compiled all previous licenses into a single title, thereby finalizing the transaction to the authorization regime. If we are unable to satisfy the conditions of the Self-Composition Agreement on a timely basis, or at all, ANATEL may, as set forth in the agreement’s terms and conditions, apply fines and/or enforce guarantees related to the investments undertaken by Telefônica Brasil. We depend on key suppliers to obtain the necessary equipment and services for our business. We depend on certain key suppliers of equipment and services, especially telecommunications network equipment and handsets, for the execution and development of our business. These suppliers may delay delivery, alter prices and limit supply as a result of problems related to their own businesses, over which we have no control. If these suppliers are not able to deliver equipment and services regularly, we may face problems with the continuity of our business activities, which may have an adverse effect on our business and results of operations. Our results of operations may be negatively affected by changes to the rules applicable to STFC and SMP authorizations. We receive payments for the interconnection of calls in our fixed-line and mobile networks. Interconnection fees were set by ANATEL in March 2023 for both STFC and SMP networks. See “Item 4. Information on the Company—B. Business Overview—Rates, Taxes and Billing—Interconnection fees.” However, we cannot assure that new mobile service plans will not be suspended by ANATEL, that current fixed-line or mobile interconnection fees remain the same, or that future negotiations on fixed-line or mobile interconnection rates will result in favorable terms or rates. If current fixed-line or mobile interconnection fees are canceled, or if fixed-line or mobile interconnection fees in the future are changed, our business, financial condition, revenues, results of operations and prospects may be adversely affected. ANATEL has the authority to issue new regulations affecting many of our areas of operations. ANATEL has the authority to issue new regulations affecting many of our areas of operations. Such new regulations could have an adverse effect on our operating results because: (1) ANATEL could significantly reduce the interconnection fees we are able to charge, thereby reducing our revenues (see “—Our results of operations may be negatively affected by changes to STFC or SMP rules”); (2) ANATEL may allow more favorable conditions for economic groups without significant market power; (3) the granting of new licenses may increase competition in our area from other operators, which could adversely affect our prices and/or market share, thereby reducing our revenues; (4) ANATEL may require that revenue received for the usage of the SMP network must be included in the calculation of renewing licenses costs; and (5) ANATEL’s general plan of updating the regulations targets several areas of vital importance for our business (including both our fixed-line telephony and mobile businesses), which may cause either an increase in operating costs, an increase in competitive pressure, or a decrease in our revenues, among other adverse effects. For a detailed description of the regulations issued by ANATEL and their impact on our business, see “Item 4. Information on the Company—B. Business Overview—Regulation of the Brazilian Telecommunications Industry.” 16 Table of Contents The industry in which we conduct our business is continually changing and evolving technologically, which demands adequate changes in the regulatory environment. The telecommunications industry is subject to rapid and significant technological changes. Our future success depends on our ability to anticipate and adapt in a timely manner to technological changes. We expect that new products and technologies will emerge and that existing products and technologies will be further developed. The advent of new products and technologies could have a variety of consequences. These new products and technologies may reduce the price of our services by providing lower-cost alternatives and the creation of new digital services, such as the example of over-the-top (OTT) service providers that provide voice and messaging services over IP. Also, new products and technologies may become superior to, and render obsolete, the products and services we offer and the technologies we use, thus requiring our constant investment in new technology and innovation. Such new technologies will demand changes in the regulatory environment, challenging both governmental agencies and telecommunication companies. Companies that provide OTT services, which have characteristics similar to telecommunications services, are currently not subject to the same rules as the telecommunications operators. This gap can bring additional challenges to the telecommunications industry, as current developments in the regulatory framework for OTTs are inconsistent and still unclear. We are subject to certain risks related to conditions and obligations imposed by ANATEL for the use of the spectrum needed for the 4G and 5G services we offer. In November 2021, ANATEL held the largest spectrum auction in its history, which included 4G and, for the first time, 5G blocks, with 700MHz, 2.3GHz, 3.5GHz and 26GHz lots. On that occasion, we acquired 3.5GHz and 26GHz national licenses (100MHz and 600MHz bandwidths, respectively). We also won regional 2.3GHz licenses, with 50MHz bandwidth in the southeast region of Brazil (except São Paulo state and PGO Sector 3) and 40MHz bandwidth in São Paulo state and in the north and mid-west regions of Brazil (except PGO Sectors 22 and 25). These acquired licenses, which we purchased for a total of R$4.45 billion, of which R$0.9 billion is related to licenses and the remaining amount is related to the obligation described below. The licenses ensure we have 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). ANATEL also set forth obligations to be fulfilled by the winners of the 5G spectrum auction. For the 2.3GHz and 3.5GHz spectrum bands, these obligations include coverage commitments, the deployment of fiber optic backbone networks in locations with little or no connectivity infrastructure, the implementation of the Integrated and Sustainable Amazon Program (Plano Amazônia de Integração e Sustentabilidade), and devising a project for a private communications network reserved for the Brazilian federal government, as well as the funding activities related to the migration of satellite TV services from the C-band to the Ku-band. Winners of the 26GHz spectrum bands, in turn, will have to invest in connectivity projects aimed at selected public schools throughout Brazil. The ambitious targets established by ANATEL for the rapid implementation of networks pose several risks to our ability to comply. These include: (1) potential delays in obtaining licenses for the construction of new sites, which could impede our ability to meet coverage deadlines; (2) challenges with our suppliers’ capacity to deliver the necessary equipment at the required scale and speed, which could also lead to increased equipment costs; and (3) a potential shortage of qualified personnel needed to support the accelerated pace of network implementation. 17 Table of Contents In this context, ANATEL announced in December 2024 that the cleaning of the 3.5GHz band in all 5,570 Brazilian municipalities had been completed, enabling these bands to receive 5G standalone technology 14 months ahead of the original schedule outlined in the obligations from the 5G auction notice. Failure to meet the targets and obligations set forth in the bid documents could result in significant consequences. ANATEL may execute our bank guarantees, impose fines, or even revoke our licenses to operate the frequencies. Additionally, inefficient use of any frequency could lead to the loss of the corresponding usage license. Furthermore, ANATEL may impose new or unforeseen targets, conditions, or obligations on us, which could further strain our resources or impact our operations. Any of these factors, whether delays in meeting targets, financial penalties, loss of licenses, or new regulatory obligations, could have a material adverse effect on our operations, financial condition, and business performance. Our sales could be suspended as a result of issues with the quality of our services. ANATEL and other judicial and administrative agencies have the authority to suspend our sales in an attempt to improve the overall quality of telecommunications services. Sales suspensions are generally applied to the services for which there have been complaints by consumers and the consumer protection agencies. When applied, the suspension is temporary and usually lifted once the company presents an action plan for improvement. In July 2012, ANATEL suspended mobile service sales by our competitors, Oi, Claro and TIM, as a result of a considerable increase in consumer complaints. The suspensions lasted about 20 days and ANATEL requested that all telecommunications companies, including us, present an action and investment plan to improve the mobile network. Although our action plan was approved by ANATEL in September 2012, if a similar increase in customer complaints occurs in the future we may face suspension of one or more of our services until a new plan can be presented to and approved by ANATEL, which may materially affect our business and results of operations. We are subject to the risk of noncompliance with data privacy and protection laws, which may lead to sanctions, including financial penalties. Law No. 13,709/2018, known as the General Personal Data Protection Law (Lei Geral de Proteção de Dados), came into force on September 18, 2020. This comprehensive data protection law establishes general principles and obligations applicable across all economic sectors and contractual relationships. To oversee and enforce its application at the time, the National Data Protection Authority (Autoridade Nacional de Proteção de Dados), or the ANPD, was created and, since 2023, has operated under the administration of the Ministry of Justice. In 2025, following a decree that designated the ANPD as the autonomous administrative authority for the protection of children and adolescents in digital environments, it was transformed into a regulatory agency, which in change granted it greater functional, technical, decision-making, administrative, and financial autonomy, while expanding its supervisory powers. Certain aspects of the LGPD are still subject to further regulation by the ANPD, as outlined in Ordinances No. 11/2021, No. 35/2022, and Resolution No. 23/2024, in accordance with its biennial regulatory schedule. The LGPD sets forth detailed requirements for the collection, use, processing, and storage of personal data across all economic sectors, regardless of whether the data is collected in digital or physical environments. Many of our services and processes rely on the use of personal data, and we are required to ensure compliance with the LGPD in how we collect, store, and manage such data. The administrative sanctions provided under the LGPD (articles 52, 53, and 54) became enforceable on August 1, 2021, pursuant to Law No. 14,010/2020. Additionally, the ANPD has issued 10 regulations to date, including key rules such as the Administrative Sanctions and Dosimetry Regulation (Resolution No. 4/2023), the Security Incident Communication Regulation (Resolution No. 15/2024), and the International Data Transfer and Standard Contractual Clauses Regulation (Resolution No. 19/2024). 18 Table of Contents Given that the ANPD continues to publish resolutions and guidelines throughout the year, there may be potential impacts or a need to adjust our internal data privacy governance workflows and processes. In addition to oversight by the ANPD, other administrative bodies, such as Brazilian National Consumer Secretariat (Secretaria Nacional do Consumidor), or the SENACON, the various state consumer defense and protection departments (órgãos de proteção e defesa do consumidor), or the PROCONs, or the various state and federal public prosecutor’s offices (Ministério Público), may invoke the LGPD in their inquiries. In some cases, these administrative bodies are authorized to apply sanctions. Furthermore, data subjects themselves can initiate individual or collective legal actions alleging noncompliance with the law. In the event of a violation of the LGPD, we may be subject to (1) legal notices and the required adoption of corrective measures, (2) fines of up to 2% of our or our economic group’s revenues up to a limit of R$50.0 million per infraction (which can be cumulative), (3) publication of the infraction following confirmation of its occurrence, (4) the blocking and erasing of personal data involved in the infraction, (5) partial or complete suspension of the infringing processing activities for up to one year and (6) partial or complete prohibition to engage in processing activities. We may be held liable for material, punitive, individual or collective damages to the data subjects due to the processing of their personal data and could be held individually or jointly liable for material, punitive, individual or collective damages caused by us, our subsidiaries, service providers that may process personal data on our behalf or our affiliates due to non-compliance with the obligations set forth by the LGPD and other laws and regulations in force that address data protection, which may adversely affect our reputation and results and, consequently, the value of our shares. Failure or insufficiency to adopt efficient measures to protect personal data or failure to maintain compliance with the LGPD may lead to the application of fines, obligation to disclose relevant incidents to the market, obligation to eliminate personal data from relevant databases and suspension of access to our databases and prohibition of our activities related to the processing of compromised data. We also may be subject to sanctions not related to the supervision of the ANPD, since consumer protection authorities and the Public Prosecutor’s Office have already been active in pursuing data privacy violations even before the LGPD became effective. Accordingly, failure to protect personal data processed by us, or any failure to implement adequate data protection measures in response to applicable legislation, may subject us to additional costs such as the payment of fines and indemnities, implementation of adjustment measures, and loss of business, in addition of civil sanctions, which may adversely affect our reputation and results. In addition, the application of administrative sanctions under other laws dealing with privacy and data protection issues might be possible, such as the Consumer Protection Code and the Brazilian Civil Rights Framework for the Internet. These administrative sanctions may be imposed by other public authorities, such as the Public Prosecutors’ Offices, the National Consumer Secretariat and consumer protection agencies. We may also be subject to liability in the civil sphere for violation of these laws. Sanctions imposed against us by these authorities may also adversely affect our reputation and results and, consequently, the value of our ADSs and common shares. Our expansion into new business sectors may expose us to operational and regulatory risks. As part of our strategy to diversify our business, we have entered and may continue to enter into new business segments such as energy, education, and financial services, each of which is subject to distinct regulatory frameworks and competitive dynamics. See “Item 4. Information on the Company—B. Business Overview.” Entering these markets exposes us to regulatory uncertainties, operational challenges, and potential difficulties in achieving profitability. We may encounter well-established competitors with significant market share, brand recognition, and financial resources, which could make it difficult for us to establish a competitive position or achieve the expected returns on our investments in these new ventures. 19 Table of Contents Additionally, our expansion into regulated industries, including financial services, introduces new legal and compliance obligations. With our recently obtained authorization to operate as a financial institution, we must comply with the regulations and resolutions imposed by the Central Bank of Brazil including capital adequacy requirements, operational risk management, and cybersecurity, fraud prevention, and anti–money laundering (AML). Although we have implemented governance models from day zero, failure to meet these obligations could result in regulatory sanctions, financial penalties, reputational damage, or, in extreme cases, the revocation of our authorization to operate as a financial institution. Furthermore, regulatory and tax regimes in these new business segments may change over time, potentially increasing compliance costs or imposing additional operational restrictions. Any adverse regulatory developments could impact our ability to operate efficiently, limit our growth prospects, or require us to make significant adjustments to our business strategy. If we are unable to successfully navigate these regulatory and competitive challenges, our financial performance and long-term growth could be negatively affected. Risks Relating to Legal and Compliance Matters We face risks associated with litigation. We are party to a number of lawsuits and other proceedings. An adverse outcome in, or any settlement of, these or other lawsuits could result in significant costs to us. In addition, our senior management may be required to devote substantial time to these lawsuits, which they could otherwise devote to our business. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.” We are exposed to risks in relation to compliance with anti-corruption laws and regulations and economic sanctions programs. We are required to comply with anti-corruption laws and regulations in Brazil and in jurisdictions where our securities are traded. In particular, we are subject, in Brazil, to Law No. 12,846/2013, and in the United States, to the U.S. Foreign Corrupt Practices Act of 1977. Additionally, our operations may be subject to, or otherwise affected by, economic sanctions programs and other forms of trade restrictions (hereinafter referred to as sanctions), including those administered by the United States, including the U.S. Treasury Department’s Office of Foreign Assets Control. Although we have internal policies and procedures designed to ensure compliance with such anti-corruption laws and sanctions regulations (to the extent applicable), there can be no assurance that such policies and procedures will be sufficient or that our employees, directors, officers, partners, agents and service providers will not take individual actions in violation of our policies and procedures (or otherwise in violation of the relevant anti-corruption and sanctions laws and regulations) for which we, our subsidiaries or such employees, directors, officers, partners, agents and service providers may be ultimately responsible. Violations of such laws and regulations could lead to sanctions, reputational harm, or other legal consequences that could have a material adverse effect on our business, results of operations and financial condition. 20 Table of Contents Internet regulation in Brazil is still limited and several legal issues related to the Internet are uncertain. In 2014, Brazil enacted a law, which we refer to as the Brazilian Civil Rights Framework for the Internet (Marco Civil da Internet), setting forth principles, guarantees, rights and duties for the use of the Internet in Brazil, including provisions about internet service provider liability, internet user privacy and internet neutrality. In May 2016, further regulations were passed in connection with the referred law. The administrative penalties imposed by the Brazilian Civil Rights Framework for the Internet include notification, fines (up to 10% of the revenues in Brazil of the relevant entity’s economic group in the preceding fiscal year) and suspension or prohibition from engaging in data processing activities. The Brazilian Civil Rights Framework for the Internet also determines joint and several liability between foreign parent companies and local Brazilian subsidiaries for the payment of fines that may be imposed for breach of its provisions. Administrative penalties may be applied cumulatively. Daily fines may be imposed in judicial proceedings, as a way to compel compliance with a Brazilian court order. If for any reason a company fails to comply with the court order, the fine can reach significant amounts. We may be subject to liability under these laws and regulations should we fail to adequately comply with the Brazilian Civil Rights Framework. However, unlike in the United States, little case law exists around the Brazilian Civil Rights Framework for the internet and existing jurisprudence has not been consistent. Legal uncertainty arising from the limited guidance provided by current laws in force allows for different judges or courts to decide very similar claims in different ways and establish contradictory jurisprudence. This legal uncertainty allows for rulings against us and could set adverse precedents, which individually or in the aggregate could seriously harm our business, results of operations and financial condition. In addition, legal uncertainty may harm our customers’ perception and use of our service. Risks Relating to the Common Shares and the ADSs Holders of our ADSs may face difficulties in serving process on or enforcing judgments against us and other persons. We are organized under the laws of Brazil, and all of our executive officers and our independent public accountants reside or are based in Brazil. Also, four of our 12 board members reside or are based in Brazil. Substantially all of our assets are located in Brazil. As a result, it may not be possible for holders of the ADSs to effect service of process upon us or these other persons within the United States or other jurisdictions outside Brazil or to enforce any judgments obtained in the United States or other jurisdictions outside Brazil against us or such other persons. Because judgments of U.S. courts for civil liabilities based upon the U.S. federal securities laws may only be enforced in Brazil if certain conditions are met, holders may face greater difficulties in protecting their interests due to actions by us, our board members or executive officers than would shareholders of a U.S. corporation. Holders of our ADSs are not entitled to directly attend shareholders’ meetings and may only vote through the depositary. Under Brazilian law, only shareholders registered as such in our corporate books may attend shareholders’ meetings. All common shares underlying our ADSs are registered in the name of the depositary. A holder of ADSs, accordingly, is not entitled to directly attend shareholders’ meetings. Holders of our ADSs may exercise their limited voting rights with respect to our common shares represented by the ADSs indirectly, and only in accordance with the deposit agreement relating to the ADSs. There are practical limitations on the ability of ADS holders to exercise their voting rights due to the additional steps involved in communicating with ADS holders. For example, we are required to publish a notice of our shareholders’ meetings in a Brazilian newspaper published in the same city as our headquarters, and the same newspaper's website must provide digital certification for all the documents kept on such website. Holders of our shares can exercise their right to vote at a shareholders’ meeting by attending the meeting in person or voting by proxy and/or remote voting. By contrast, holders of our ADSs will receive notice of a shareholders’ meeting by mail from the ADR depositary following our notice to the ADR depositary requesting the ADR depositary to do so. To exercise their voting rights, ADS holders must instruct the ADR depositary on a timely basis. This voting process will take longer for ADS holders than for direct holders of our shares. 21 Table of Contents We cannot assure you that holders will receive the voting materials in time to ensure that such holders can instruct the depositary to vote the shares underlying their respective ADSs. In addition, the depositary and its agents are not responsible for failing to carry out holder’s voting instructions or for the manner of carrying out your voting instructions. This means that holders may not be able to exercise their right to vote and may have no recourse if our shares held by such holders are not voted as requested. Holders of our ADSs or common shares might be unable to exercise preemptive rights with respect to the common shares unless there is a current registration statement in effect which covers those rights or unless an exemption from registration applies. Under Brazilian law, if we issue new shares for cash as part of a capital increase, we must grant our shareholders the right to purchase a sufficient number of shares to maintain their existing ownership percentage. Rights to purchase shares in these circumstances are known as preemptive rights. Holders of our ADSs or common shares in the United States will not be able to exercise any preemptive rights unless a registration statement under the U.S. Securities Act of 1933, as amended, or the Securities Act, is effective with respect to that future issuance of shares, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement. Unless we file a registration statement or an exemption from registration applies, holders of our ADSs may receive only the net proceeds from the sale of their preemptive rights by the depositary, or if the preemptive rights cannot be sold, they will lapse and they will not receive any value for them. For more information on the exercise of these rights, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Description of our Bylaws—Preemptive Rights.” An exchange of ADSs for common shares risks the loss of certain foreign currency remittance and Brazilian tax advantages. The different forms of foreign portfolio investments in Brazil, including investments via depositary receipts, are regulated by (i) Joint Resolution No. 13/2024, or Resolution No. 13, enacted by the CVM and the Central Bank—which, effective January 1, 2025, revoked the rule that had been in effect for the preceding 10 years (i.e., CMN Resolution No. 4,373/2014)—, and (ii) by Law No. 14,286/2021, which, effective December 31, 2022, significantly amended the prior legislation on the matter (i.e., Law No. 4,131/1962). Resolution No 13/2024 regulates the issuance of depositary receipts in foreign markets in respect of shares of Brazilian issuers. Pursuant to this regulation, the ADSs benefit from a certificate of foreign capital registration, which permits Citibank N.A., as depositary, to convert dividends and other distributions with respect to common shares into foreign currency and to remit these proceeds abroad. Holders of ADSs who exchange their ADSs for common shares will then be entitled to rely on the depositary’s certificate of foreign capital registration for five business days from the date of exchange. Thereafter, if acting as an individual investor, they will not be able to remit non-Brazilian currency abroad unless they obtain their own certificate of foreign capital registration, constituting a Brazilian financial institution as representative, or unless they qualify under the applicable CMN rules, which entitles certain investors to buy and sell shares on Brazilian stock exchanges without obtaining separate certificates of registration. Further rules may be issued by CVM and by the Central Bank to regulate foreign investments in ADSs, including with regard to the exchange of ADSs for common shares and the remittance of funds arising from the sale of these common shares. If holders of ADSs do not qualify under the applicable CMN rules, they will generally be subject to less favorable tax treatment with respect to our common shares. There can be no assurance that the depositary’s certificate of registration or any certificate of foreign capital registration obtained by holders of ADSs will not be affected by future legislative or regulatory changes, or that additional Brazilian law restrictions applicable to their investment in the ADSs may not be imposed in the future. 22 Table of Contents Holders of our common shares will be subject to, and holders of our ADSs could be subject to, Brazilian income tax on capital gains from sales of common shares or ADSs. Law No. 10,833/2003, or Law No. 10,833, provides that gains on the disposition of assets located in Brazil by nonresidents of Brazil, whether to other nonresidents or to Brazilian residents, will be subject to Brazilian taxation. The common shares are expected to be treated as assets located in Brazil for purposes of the law, and gains on the disposition of common shares, even by nonresidents of Brazil, are expected to be subject to Brazilian taxation. Based on the fact that the ADSs are issued and registered abroad, we believe that gains on the disposition of ADSs made outside of Brazil by nonresidents of Brazil to another non-Brazilian resident would not be subject to Brazilian taxation, since they would not fall within the definition of assets located in Brazil for purposes of Law No. 10,833. However, considering the generic and unclear scope of Law No. 10,833 and the absence of judicial/administrative court rulings in respect thereto, we cannot be assured that such an interpretation of this law will prevail in the courts of Brazil. In case of any assessment by the Brazilian tax authorities, the gains arising from the disposal of ADSs made are subject to capital gain tax in Brazil at (i) progressive rates ranging from 15% to 22.5%, or (ii) 25%, if the non-Brazilian holder is located in a tax haven jurisdiction. See “Item 10. Additional Information—E. Taxation—Brazilian Tax Considerations.” Our controlling shareholder has the power to control and direct our business. As of December 31, 2025, Telefónica S.A., our controlling shareholder, together with its affiliates owned, directly and indirectly, approximately 77.1% of our total capital stock. See “Item 7.A. Major Shareholders.” As a result of their share ownership, Telefónica and its affiliates have the power to control us and our controlled subsidiaries and will be able to cast a majority of the votes in our general shareholders meetings.