Yes

No

Mobile ARPU recorded y-o-y growth of 10.8% in 4Q16, fueled by the higher share of postpaid clients in the mix and the higher data usage, whose ARPU increased by 31.8% y-o-y in 4Q16, corresponding to 62.3% of total ARPU;

Broadband accesses totaled 7.3 million customers in 4Q16 (+2.5% y-o-y), with FTTx* connections accounting for 57% of the base, accompanied by y-o- y growth of 9.3%. Broadband ARPU increased 7.5% in 4Q16 over 4Q15, influenced by the growth in the ultra-broadband customer base;

Net operating service revenue grew 1.8% in 4Q16 over 4Q15 (4.2% up y-o- y excluding regulatory effects), and 1.7% in 2016 over 2015, maintaining the positive trajectory observed throughout the year;

Mobile services revenue rose 3.9% y-o-y in 4Q16. Excluding the effect from MTR reductions in 2016, this line increased 6.2% over 4Q15. Data and digital services revenue increased 23.7% y-o-y in 4Q16, accounting for 62% of mobile services revenue;

Operating costs fell 1.1% in 4Q16 over 4Q15. Excluding the effect from the corporate restructuring in 4Q16, the reduction was 1.8% (LTM IPCA +6.3%), reflecting the continuous efforts to reduce costs by focusing on increasing efficiency and synergies;

EBITDA totaled R$3.6 billion in 4Q16, 5.6% up on 4Q15, accompanied by an EBITDA margin of 33.3% (+1.4 p.p. y-o-y). Excluding the R$52.5 million non- recurring effect in 4Q16, EBITDA moved up by 7.1% over the previous year, with a margin growth of 1.9 p.p., fueled by the capture of synergies and efficiency initiatives. In 2016, recurring EBITDA totaled R$13,663 million (+7.3% y-o-y), accompanied by an EBITDA margin of 32.1% (+1.9 p.p. y-o- y);

CAPEX amounted to R$2.8 billion in 4Q16 and R$8.0 billion in 2016, excluding the investment in licenses made in the third quarter. EBITDA - Capex  grew 28.2% in 2016 over 2015, reaching R$5.7 billion;

Net income totaled R$4,085 million in 2016 (+22.6% y-o-y), with IOC and dividends for the fiscal year amounting to R$4.1 billion⁴ , resulting in a payout of 105.6% on adjusted net income.

Total accesses increased 0.7% over 2015, totaling 73,778 thousand accounting for 45.3% of mobile accesses, up by 2.9 p.p. in the annual accesses. The postpaid segment continues to be worthy of mention, with y-o-y expansion of 7.5%, totaling 33,391 thousand accesses and accounting for 45.3% of mobile accesses, up by 2.9 p.p. in the annual comparison. The human¹ postpaid base reached 26,123 thousand clients, 9.5% up y-o-y.

Voice revenue fell 6.7% in 4Q16 over 4Q15, chiefly due to the lower B2B traffic and service maturity. Excluding VC reductions (-20.6%), voice revenue fell 3.7% y-o-y.

Interconnection revenue moved down by 48.5% over 4Q15, due to the reduction in TU-RL (-65.9%) and TU-RIU (-21.3%) in February 2016. Excluding this effect, interconnection revenue declined by 6.6%, due to the lower incoming traffic.

Broadband revenue moved up by 9.6% y-o-y, fueled by higher ultra-broadband revenue, which accounted for approximately 60.3% of this line in the period and increased by 17.5% over the previous year, reflecting the Company’s efforts to expand the base in FTTx and clients' migration to higher speeds, with ARPU increase.

Corporate data and IT revenue increased 3.1% y-o-y, due to the higher revenue from wholesale and corporate agreements.

Pay TV revenue grew 4.6% in 4Q16 over 4Q15. The Company continued with its selective strategy for this service, focusing on higher-value products, such as IPTV, in order to improve customer experience and boost the profitability of the subscriber base.

Other services revenue moved up by 6.8% y-o-y in 4Q16, mainly influenced by the sale of equipment to corporate clients.

Consolidated in R$ million

4Q16

4Q15

∆%

3Q16

∆%

2016

2015

∆%

Operating costs

(7,250.3)

(7,328.6)

(1.1)

(7,283.1)

(0.5)

(28,486.0)

(29,419.5)

(3.2)

Personnel

(988.2)

(910.3)

8.6

(939.0)

5.2

(3,859.8)

(3,541.9)

9.0

Costs of services rendered

(2,782.1)

(2,986.2)

(6.8)

(3,050.6)

(8.8)

(11,906.2)

(12,203.2)

(2.4)

Interconnection

(462.8)

(615.0)

(24.7)

(453.7)

2.0

(1,924.1)

(2,647.0)

(27.3)

Taxes and contributions

(430.8)

(327.3)

31.6

(496.3)

(13.2)

(1,861.2)

(1,650.0)

12.8

Third-party services

(1,320.5)

(1,477.8)

(10.6)

(1,463.9)

(9.8)

(5,705.1)

(5,632.7)

1.3

Others

(568.0)

(566.1)

0.3

(636.7)

(10.8)

(2,415.8)

(2,273.5)

6.3

Cost of goods sold

(553.8)

(692.8)

(20.1)

(513.5)

7.8

(2,118.9)

(2,597.1)

(18.4)

Selling expenses

(2,290.3)

(2,263.5)

1.2

(2,257.8)

1.4

(8,910.1)

(9,143.4)

(2.6)

Provision for bad debt

(344.2)

(272.1)

26.5

(342.6)

0.5

(1,348.2)

(1,294.8)

4.1

Third-party services

(1,845.6)

(1,874.9)

(1.6)

(1,840.9)

0.3

(7,216.9)

(7,460.8)

(3.3)

Others

(100.5)

(116.5)

(13.7)

(74.3)

35.3

(345.0)

(387.8)

(11.0)

General and administrative expenses

(473.7)

(383.2)

23.6

(372.9)

27.0

(1,622.3)

(1,371.3)

18.3

Third-party services

(345.4)

(298.1)

15.9

(292.3)

18.2

(1,254.1)

(1,100.1)

14.0

Others

(128.3)

(85.1)

50.8

(80.6)

59.2

(368.2)

(271.2)

35.8

Other net operating revenue (expenses)

(162.2)

(92.6)

75.2

(149.3)

8.6

(68.7)

(562.6)

(87.8)

Personnel costs rose 8.6% over last year, chiefly due to non-recurring costs of R$49.1 million related to the organizational restructuring in 4Q16. Excluding the non-recurring effect, personnel costs climbed by only 3.2%, significantly below the period’s inflation. This variation can be explained mainly by the continuous adoption of the policy of insourcing field services and call center employees, focusing on improving customer experience, and the collective bargaining agreement with base date in September 2016.

EBITDA (earnings before interest, taxes, depreciation and amortization) totaled R$3,623.3 million in 4Q16, 5.6% up on 4Q15. Excluding expenses related to the corporate restructuring in 4Q16, this line grew 7.1% y-o-y, mainly due to the cost efficiency measures adopted by the Company and the capture of synergies from the acquisition of GVT.

The EBITDA margin reached 33.3%, with a y-o-y increase of 1.4 p.p. in 4Q16. The fourth-quarter recurring EBITDA margin came to 33.8%, corresponding to a y-o-y increase of 1.9 p.p.

In 2016, EBITDA amounted to R$14,022.4 million, 10.3% up on 2015, impacted by non-recurring events throughout the year. Excluding this effect, recurring EBITDA totaled R$13,662.6 million in 2016, accompanied by a recurring EBITDA margin of 32.1%.

Net income totaled R$1,214.8 million in 4Q16, 9.0% up on 4Q15, mainly due to the improved operating result recorded in 4Q16 and the lower depreciation because of the reevaluation of the useful life of fixed assets.

In 2016, net income amounted to R$4,085.2 million, 22.6% up on 2015, chiefly due to the increased EBITDA and the non-recurring effect from the sale of towers in 1Q16.

Capex totaled R$2,800.1 million in 4Q16 and R$8,189.1 million in 2016. Excluding the amount related to the 2.5GHz licenses acquired in the auction of unoccupied frequencies held by Anatel on December 17, 2015 totaling R$185.5 million in 3Q16, full-year capex reached R$8,003.7 million (-3.8% y-o-y), accounting for 18.8% of net operating revenue. The amount invested reflects the successful implementation of efficiency initiatives and the capture of synergies.

Free cash flow from business activities totaled R$1,542.0 million in 4Q16, down by R$659.6 million on 4Q15, reflecting the acceleration of investments in 4Q16, partially offset by the improved operating result. Free cash flow excluding non-recurring items reduced by R$704.3 million, mainly due to the effects mentioned above.

The Company closed 2016 with a gross debt of R$9,224.1 million, 14.0% of which denominated in foreign currency. Currently, foreign exchange exposure of debt is 100% covered by hedge operations. Gross debt composition includes bilateral agreements extending the payment terms with suppliers, booking R$ 722.6 million in non-current liabilities (R$ 1,228.7 million in 4Q15).

Net debt totaled R$4,079.8 million at the close of 2016, accounting for 0.29x EBITDA. In 2016 over 2015, net debt contracted by R$501.1 million, or 10.9%, essentially due to the reception of the proceeds from the sale of towers in 1Q16 and the operating cash flow generation in the period.

Telefônica Brasil's common (ON) and preferred (PN) shares are traded on the BM&FBOVESPA under the tickers VIVT3 and VIVT4, respectively. The Company's ADRs are traded on the NYSE, under the ticker VIV.

VIVT3 and VIVT4 shares closed 2016 at R$36.40 and R$44.08 respectively, appreciating by 7.1% and 23.3% over 2015, versus an appreciation of 38.9% in the Bovespa Index (Ibovespa). In 2016, total shareholder return (TSR) reached 30.3% for preferred shares and 13.8% for common shares.

The Company's ADRs closed the quarter at US$13.38, 48.5% up on 2015, versus a 12.3% valuation in the Dow Jones' index.

In 2016, the daily traded volume of VIVT3 and VIVT4 averaged R$563.7 thousand and R$88,922.9 thousand, respectively. The daily traded volume of ADRs averaged US$24,965.5 thousand in the same period.

The chart below shows the Company’s stock performance:

On January 31, 2017, the Company paid the 2^nd and 3^rd installments related to the auction of the national 700 MHz frequency bands for the rendering of SMP services (Personal Mobile Service), held by ANATEL on September 30, 2014, totaling R$859.0 million. This amount already had been included in Company’s capex in 2014.

This installment refers to the Company's share of responsibility under the agreement signed with ANATEL, whereby the operators winning this auction set up EAD, the company responsible for the isonomic operation of all TV channel and RTV redistribution procedures and for solving problems arising from interference in radio communication systems, in addition to other operations involving obligations of the operators winning the auction, as provided for in the agreement.

At the meeting held on January 26, 2017, the Company’s Board of Directors approved the Company’s 5^th issue of simple, non-convertible, unsecured debentures, in a single series totaling R$2.0 billion, which will be object of public distribution with restricted distribution efforts, under a firm commitment regimen, pursuant to CVM Instruction 476, of January 16, 2009, as amended (“Restricted Offering” and “CVM Instruction 476”, respectively).

The Restricted Offering is exclusively for professional investors, and it is automatically exempt from registration for public distribution, pursuant to CVM Instruction 476.

The Company will issue 200,000 debentures, with nominal unit value of R$10,000.00 on February 8, 2017 (“issue date”). The debentures will mature in 5 years as of the issue date, that is, on February 8, 2022. The nominal unit value of each debenture will not be monetarily restated.

The outstanding balance of the nominal unit value of each debenture will bear interest of 108.25% of the accumulated variation of the average daily rate of interbank one-day deposits (“DI”), "over extra-group", expressed as an annual percentage, based on a year of 252 business days, calculated and disclosed daily by the CETIP.

The net proceeds obtained by the Company with the issue will be fully allocated to the restructuring of the Company’s financial liabilities to meet the capital needs in the normal course of its business.

INCOME STATEMENT

Consolidated in R$ million

4Q16

4Q15

∆%

3Q16

∆%

2016

2015

∆%

Gross operating revenues

16,712.6

16,295.3

2.6

16,259.1

2.8

65,006.7

64,318.7

1.1

Net Operating Revenues

10,873.6

10,760.8

1.0

10,693.4

1.7

42,508.4

42,133.7

0.9

Mobile

6,592.6

6,426.9

2.6

6,439.0

2.4

25,538.2

25,136.2

1.6

Fixed

4,281.0

4,333.9

(1.2)

4,254.4

0.6

16,970.2

16,997.5

(0.2)

Operating costs

(7,250.3)

(7,328.6)

(1.1)

(7,283.1)

(0.5)

(28,486.0)

(29,419.5)

(3.2)

Personnel

(988.2)

(910.3)

8.6

(939.0)

5.2

(3,859.8)

(3,541.9)

9.0

Costs of services rendered

(2,782.1)

(2,986.2)

(6.8)

(3,050.6)

(8.8)

(11,906.2)

(12,203.2)

(2.4)

Interconnection

(462.8)

(615.0)

(24.7)

(453.7)

2.0

(1,924.1)

(2,647.0)

(27.3)

Taxes and contributions

(430.8)

(327.3)

31.6

(496.3)

(13.2)

(1,861.2)

(1,650.0)

12.8

Third-party services

(1,320.5)

(1,477.8)

(10.6)

(1,463.9)

(9.8)

(5,705.1)

(5,632.7)

1.3

Others

(568.0)

(566.1)

0.3

(636.7)

(10.8)

(2,415.8)

(2,273.5)

6.3

Cost of goods sold

(553.8)

(692.8)

(20.1)

(513.5)

7.8

(2,118.9)

(2,597.1)

(18.4)

Selling expenses

(2,290.3)

(2,263.5)

1.2

(2,257.8)

1.4

(8,910.1)

(9,143.4)

(2.6)

Provision for bad debt

(344.2)

(272.1)

26.5

(342.6)

0.5

(1,348.2)

(1,294.8)

4.1

Third-party services

(1,845.6)

(1,874.9)

(1.6)

(1,840.9)

0.3

(7,216.9)

(7,460.8)

(3.3)

Others

(100.5)

(116.5)

(13.7)

(74.3)

35.3

(345.0)

(387.8)

(11.0)

General and administrative expenses

(473.7)

(383.2)

23.6

(372.9)

27.0

(1,622.3)

(1,371.3)

18.3

Third-party services

(345.4)

(298.1)

15.9

(292.3)

18.2

(1,254.1)

(1,100.1)

14.0

Others

(128.3)

(85.1)

50.8

(80.6)

59.2

(368.2)

(271.2)

35.8

Other net operating revenue (expenses)

(162.2)

(92.6)

75.2

(149.3)

8.6

(68.7)

(562.6)

(87.8)

EBITDA

3,623.3

3,432.2

5.6

3,410.3

6.2

14,022.4

12,714.2

10.3

EBITDA Margin %

33.3%

31.9%

1.4 p.p.

31.9%

1.4 p.p.

33.0%

30.2%

2.8 p.p.

Depreciation and Amortization

(1,815.2)

(1,914.9)

(5.2)

(1,972.6)

(8.0)

(7,654.4)

(7,319.6)

4.6

Depreciation

(1,154.8)

(1,276.1)

(9.5)

(1,315.1)

(12.2)

(5,054.3)

(4,820.3)

4.9

Amortization of intangibles

(289.0)

(311.5)

(7.2)

(289.1)

(0.0)

(1,180.0)

(1,212.4)

(2.7)

Others amortizations

(371.4)

(327.3)

13.5

(368.4)

0.8

(1,420.1)

(1,286.9)

10.4

EBIT

1,808.1

1,517.3

19.2

1,437.7

25.8

6,368.0

5,394.6

18.0

Net Financial Income

(315.3)

(200.3)

57.4

(296.3)

6.4

(1,234.5)

(1,108.7)

11.3

Income from financial investments

210.1

200.9

4.6

211.7

(0.8)

719.4

850.7

(15.4)

Interest and other financial income (expenses)

(117.6)

(99.3)

18.4

(57.2)

105.6

(361.4)

(380.3)

(5.0)

Charges

(220.3)

(269.8)

(18.3)

(292.9)

(24.8)

(1,061.1)

(1,003.0)

5.8

Monetary and exchange variation

(154.7)

77.1

n.a.

(145.5)

6.3

(183.5)

(1,475.7)

(87.6)

Gains (losses) on derivative transactions

(32.8)

(109.2)

(70.0)

(12.4)

164.5

(347.9)

899.6

n.a.

Gain (loss) on investments

0.2

0.5

(60.0)

0.3

(33.3)

1.2

1.9

(36.8)

Taxes

(278.2)

(203.0)

37.0

(189.0)

47.2

(1,049.5)

(956.6)

9.7

Net income

1,214.8

1,114.5

9.0

952.7

27.5

4,085.2

3,331.2

22.6