2023 Management Report

Activity report. The message to shareholders for 2023 turned out to be promising and challenging for the Company. In 2023, we aimed for financial balance and began negotiations on issues related to our concession agreement. At the same time, we recorded significant growth in our core businesses, Oi Fibra and ICT services in Oi Soluções. In Oi Fibra, revenue growth in 2023 was +11% YoY. Operationally, we continue to strive for greater efficiency and customer satisfaction across several segments. We are focusing our efforts on expanding operations for the deployment of fiber-optic broadband access through the Oi Fibra service. In this segment, we achieved connections for 4.0 million homes in 2023, which corresponds to a 3 percent increase compared to the previous year. Oi Fibra is currently our main product, accounting for approximately 46 percent of Nova Oi's revenue. Oi Fibra, which has already been recognized as the operator with the most satisfied internet customers in Brazil, led the growth of high-speed connections, with the activation of 1.1 million accesses over 300 megabits in 2023 (40% of the total among major operators). Oi Fibra also earned the title of the fastest internet in ten states of Brazil and ranked second overall, surpassing the annual performance of the leading operator in several major cities.

It is also important to note the performance in 2023 regarding the revenues generated by the portfolio of business services provided by Oi Soluções, which currently account for 24 percent of the company's income. Through this operation, we aim to generate profit by integrating fiber optic infrastructure with a comprehensive portfolio of ICT products, in partnership with startups and key industry players. ICT products have shown a growth of 29% compared to the previous year, 2023. In terms of regulation, we have been diligently working on adapting our obligations arising from our concession agreement and have successfully negotiated with both the Federal Court of Audit (TCU) and the Brazilian telecommunications regulator (ANATEL) to reach an agreed-upon arrangement regarding the terms and conditions for adapting our fixed telephony concession to a licensing model.

After discussions

Since October, we have made significant progress this week. The group working under SecexConsens (Department of External Control for Reconciliation and Conflict Prevention) has completed the negotiation phase for a conciliatory solution and is striving to create conditions for addressing key aspects of our Plan. The agreement depends on the confirmation of its terms in the shortest possible time, taking into account the governance assumptions of each party involved in the process.

We are counting on the migration of the STFC concession to a licensing model.

• preserving service in areas where there is no alternative to the voice channel for a certain period of time
• provision of guarantees and additional obligations in accordance with the adjustment rules

In addition, we expect the resumption of the arbitration procedure and a postponement of the payment of the negotiation fines imposed by ANATEL until a decision is made on the arbitration. A final resolution of the regulatory issue will enable the implementation of an ambitious cost-cutting plan, as there is significant potential for efficiency and the removal of regulatory restrictions on the sale or encumbrance of real estate.

Despite the successful implementation of the Transformation Plan during the first judicial reorganization

We continue to face significant challenges in implementing our long-term sustainability, which is based on three main pillars: improving operational performance by increasing core revenue generation and establishing an organizational structure; resolving the regulatory situation regarding the concession; and restructuring our future obligations, particularly our financial debt.

Thus, we have filed a petition for a second judicial reorganization in 2023.

Our capital structure has deteriorated due to delays in closing deals for the sale of UPI; disputes with other operators regarding the amount withheld during the sale of UPI Mobile Assets, which led to the suspension of advance payments amounting to 1.7 billion reais; the appreciation of the US dollar against the Brazilian real; in addition to a decrease in economic activity in the post-pandemic period and a deepening structural crisis in the fixed-line telephony segment, as well as a more challenging competitive environment in the broadband access segment in the context of ongoing high interest rates combined with higher household debts, subsequently affecting the industry's ability to take on and exit from obligations.

Thus, the year 2023 was marked by intense negotiations, which led to significant events and ensured a reduction in our future obligations, such as the settlement of liabilities related to the LTLA submarine cable, as well as the liquidity needed to maintain the current working capital of operations. Additionally, we expect to achieve a restructuring of our financial debt and claims from suppliers under the take-or-pay agreements, adjusting it according to our payment capacity without jeopardizing our operations and the expansion of our business in the fiber optic cable segment, our core product.

The main commercial terms for carrying out this restructuring have been agreed upon with the group of creditors.

During the General Creditors' Meeting held on March 26, 2024, which was postponed until April 10 for the signing of documentation, followed by their presentation for voting. In light of these challenges, we reaffirm our commitment to providing digital access to everyone and aim to become leaders in digital solutions and fiber optic connections that enhance the lives of people and businesses.

Accordingly, we are bringing actions to life.

aimed at making us a more sustainable company in line with ESG principles. Our actions are based on caring for our people, including employees, suppliers, and customers, as well as the environment and the way we manage our company.

We will go through the process of valuing and respecting our employees.

Even during the most challenging moments. As a result of this process, we received the Top Employers certification for excellence in people management. This certification adds to our other achievements in human resources management. These include the Gupy award - 100 HRDs that inspire, and a special achievement as the company that improved the most in the people management ranking in Annuary 360º, Época Negócios 2022 magazine. In terms of environmental and social issues, we invest in sustainable projects, such as clean energy production, like the Oi Energy program, and educational projects, such as NAVE, an institution ranked among the top 10 public high schools in Brazil. Finally, we couldn't fail to mention Oi Futuro, our institute for innovation and creativity for social impact, which in 2023 took a strategic step to expand its collaboration networks for a new period of innovation in its core program, making way for new partners and sponsors. In the new management system, where there are more sponsoring companies, program management will be entrusted to Oi Futuro, which already has an interdisciplinary team.

Economic situation

The beginning of 2023 was marked by a high degree of uncertainty and volatility in the Brazilian market, despite the fact that, from a monetary policy perspective, the context differed from much of the global economy. With inflation under control, due to falling prices for food and industrial goods and the normalization of global supply chains, the Central Bank of Brazil began a cycle of interest rate cuts in August, leading to the SEILIC rate (the Central Bank's policy rate) reaching 11.75 percent by the end of 2023. The broad national consumer price index (IPCA) is expected to finish 2023 below the inflation ceiling of 4.75 percent. On the fiscal level, the government approved a tax reform in December 2023, which could have a potentially significant impact on long-term growth. A return to pre-pandemic levels of economic activity is expected, with GDP growth anticipated to exceed 3 percent, driven by an increase in household consumption, which rose by nearly 4 percent. On the global market, one of the key points is the continuation of the interest rate hike cycle in major economies due to ongoing inflation stemming from the global supply chain crisis in 2020. The Federal Reserve raised rates to 5.5 percent annually, the highest level in decades, a measure that was followed by the European Central Bank.