Yes

No

o         Total accesses reached 97.2 million in the quarter (+3.5% y-o-y), of which 81.9 million in the mobile business and 15.3 million in the fixed business;

o         Leadership in higher mobile revenue segments, with continuous growth in postpaid accesses, +16.0% y-o-y in 1Q15. Postpaid clients accounted for 35.3% of the mobile access base (+3.6 p.p. y-o-y);

o         Mobile ARPU recorded y-o-y growth of 4.3% in 1Q15, fueled by the 26.3% y-o-y growth in Data ARPU;

o         Broadband accesses totaled 3,911 thousand in 1Q15 (-0.2% y-o-y), while the FTTH solution had 429 thousand accesses (+81.7% y-o-y), accelerating net additions to 54 thousand accesses (52 thousand in 4Q14);

o         Growth in TV accesses remained good, with y-o-y upturn of 22.7%. In 1Q15, net additions came to 20 thousand accesses. The IPTV base came to 111 thousand accesses in 1Q15;

o         Net operating revenue increased by 4.3% y-o-y in 1Q15, registering the best performance in around three years;

o         Mobile service revenue registered strong acceleration, growing by 8.4% y-o-y. Excluding the effect of MTR reduction in 2015, the variation came to +11.6% in 1Q15 over 1Q14;

o         Data and VAS (Value Added Services) revenue grew 31.3% y-o-y and already accounts for 42% of mobile service revenue in 1Q15, leveraged by the upturn in mobile internet revenue, which increased by 45.8% y-o-y;

o         Fixed service revenue posted y-o-y variation of -4.0%. Excluding the VC and the basic tariff reduction effect, this figure would be of -0.4% in 1Q15 over 1Q14;

o        Fixed broadband revenue posted annual growth of 3.4% in the quarter, while revenue from IT and corporate data presented growth of 1.9% in 1Q15 over 1Q14;

o        Pay TV revenue grew by 22.0% y-o-y in 1Q15, increasing its share as a percentage of fixed service revenue by 1.3 p.p. over 1Q14;

o         First-quarter recurring EBITDA totaled R$2.6 billion, virtually stable compared to 1Q14, affected by the higher bad debt levels in a more challenging economic environment. The EBITDA margin stood at 28.6% in 1Q15, 1.2 p.p. down on 1Q14;

o         Investments of R$1.3 billion in the quarter, 26.8% higher than in 1Q14;

o         Dividends and Interest on Own Capital declared based on the net profit until April/15 totaled R$785.0 million.

Notes: (1) y-o-y: annual variation and (2) q-o-q: quarterly variation.

o    In the machine-to-machine (M2M) market, the access base continued to record exceptional performance, reaching 3.7 million customers in March, a growth of 40.0% when compared to the last year.

o    In 1Q15, mobile net additions reached 1,931 thousand accesses, with postpaid net additions reaching 552 thousand accesses in the quarter, equivalent to a market share of net additions of 32.7% in the first quarter of 2015.

o    Total ARPU climbed by 4.3% y-o-y, while data ARPU increased by 26.3% in 1Q15 compared to 1Q14. Excluding the MTR reduction occurred in the period, the ARPU would have posted annual growth of 7.4% in 1Q15.

o    The prepaid customer base reduced by 1.1% y-o-y, slowing the trend seen in recent quarters, due to a more restrictive credit policy for migrations to postpaid.

NET OPERATING REVENUES

Consolidated in R$ million

1Q15

4Q14

∆%

1Q14

∆%

Net operating mobile revenues

6,243.0

6,219.0

0.4

5,758.7

8.4

Net service mobile revenues

5,904.3

5,918.8

(0.2)

5,446.1

8.4

Access and Usage

2,871.4

2,949.4

(2.6)

2,833.7

1.3

Network usage

484.8

569.1

(14.8)

672.1

(27.9)

Data plus VAS

2,479.3

2,282.4

8.6

1,888.2

31.3

Messaging P2P

413.6

418.4

(1.2)

427.7

(3.3)

Internet

1,598.0

1,398.2

14.3

1,096.2

45.8

VAS

467.7

465.8

0.4

364.4

28.3

Other services

68.8

117.9

(41.6)

52.1

32.2

Net handset revenues

338.6

300.2

12.8

312.7

8.3

Data and VAS revenue continued to post strong performance in 1Q15, growing by 31.3% in the annual comparison. The success in sales of data packages and plans, and the higher penetration of smartphones within our customer base have been drivers for such evolution. In the quarter, data and VAS revenue increased to 42.0% of the net mobile service revenue, reaching 7.3 p.p. of annual growth. Considering outgoing revenue only, data and VAS accounted for 45.6% in 1Q15.
 

SMS revenue fell by 3.3% y-o-y, reflecting the maturity of the service. The variation over 4Q14 was more controlled (-1.2% q-o-q), due to the adoption of higher value added offers which bundles SMS, voice and data packages.
 

Mobile internet revenue maintained high level growth, increasing 45.8% in the y-o-y comparison, and accounting for 64.5% of data revenue in 1Q15. This performance is directly linked to the strong growth in postpaid data accesses, especially 4G, to the increased sales of stand-alone data packages mainly in the prepaid segment, and to the smartphone handset base, which increased by 7,1% in the quarter. In the pure individual postpaid customer segment, 85% of the customers own smartphones or webphones.

First-quarterVAS revenue climbed by 28.3% over the same period of last year, influenced by the “Plataforma de Educação”, “Vivo Segurança”, “Vivo Sync”, “Vivo Som de Chamada” and “Vivo Música” services, which support the high growth pace of VAS.
 

Other services revenue reached R$68.8 million, 32.2% higher than in 1Q14. This growth reflects the evolution of digital services, such as insurance, and the periodic recovery of taxes on disputed invoices.

Mobile handset revenue climbed by 12.8% over last quarter and 8.3% over 1Q14, face to the 16% growth in the postpaid customer base, in line with the strong migration of customers to the 4G base.

o    The fixed accesses base totaled 15,311 thousand accesses in 1Q15, 0.5% down comparing to the first quarter of 2014, due to the maturity of the fixed voice business, partially offset by the performance in the Pay TV segment and by the virtually stable performance in fixed broadband.

o    Fixed voice accessestotaled 10,609 thousand in1Q15, reducing by 2.0%  y-o-y. Corporate accesses increased by 0.8% compared to the previous year. Residential segment performance was mainly influenced by the adjustment of the fixed wireless solution sales strategy, with the adoption of stricter credit criteria by the Company as of 4Q14.

o    Fixed broadband accessesrecorded 3,911 thousand customers in 1Q15, 0.2% less than in 1Q14.The FTTH footprint exceeded 4.2 million homes passed in March 2015 (2.7 million addressable homes*) and the fiber access base already totals 429 thousand accesses, 14.4% more than in 4Q14. Between March 2014 and March 2015, Telefônica reached 56.7% of the share of broadband net additions at speeds higher than 34 Mbps in the state of São Paulo.

o    Pay TV accessesclimbed by 22.7% over 1Q14, to 791 thousand subscribers in 1Q15, with 20 thousand net additions in the quarter. It is worth mentioning the IPTV technology customer base, which ARPU is higher and already reaches 111 thousand accesses.

Voice and accessrevenue declined by 9.1% over 1Q14, justified by the fixed to mobile substitution, in addition to the regulatory impact. Excluding the VC reduction, the decline would come to 2.0% y-o-y.

Network usage revenue decreased by 18.3% when compared to 1Q14, due to the lower incoming fixed traffic. In 1Q15 over 4Q14, this line recorded reduction of 11.8%.

Broadbandrevenue grew 3.4% in the annual comparison and 1.2% over 1Q14. This performance reflects the efforts to expand ARPU, despite the current fierce competitive environment in broadband. To address this issue, the Company has been focusing on the migration of customers to higher speeds, mainly in FTTH, expanding the fiber customer base, which has higher ARPU, lower churn and already totals 429 thousand accesses.

Revenue from corporate data and ITincreased by 1.9% y-o-y, reducing by 0.5% when compared to 4Q14, mainly due to the renewal of large contracts with price adjustments.

In the 1Q15, the Pay TVrevenue recorded growth of 22.0% in the annual comparison. Such evolution is due to the fast growth of the DTH and IPTV subscriber base, with an increased adoption of HD packages, whose ARPU is higher.

Other servicerevenue fell by 7.8% in the 1Q15 over 1Q14, impacted by the volatility in the sale of equipment linked to contracts with large clients.

Personnel costsincreased by 5.1% in the annual comparison, fueled by the pay rise of 7.0% granted in January 2015. In 1Q15 over 4Q14, this line declined by 22.9%, as the fourth-quarter figure was impacted by the provision for the corporate restructuring program in the amount of R$ 212 million.

The cost of services renderedincreased by 2.9% in 1Q15 over 1Q14, influenced by the MTR reduction held in February 2014. Excluding this effect, the increase would come to 9.5%, mainly due to higher site leasing expenses tied to the efforts to ensure quality and increase capacity and mobile coverage, mainly in 4G, in addition to higher expenses with purchase of TV and mobile content, which grow in line with the increase in the subscriber base and the share of data in revenue.

Cost of goods sold increased by 13.5% in 1Q15 compared to 1Q14, due to the higher volume of higher-value handsets, with 4G-technology, in the equipment portfolio mix, which unit costs are higher, to the higher subsidies and the stronger impact from the currency exchange variation.

First-quarter service selling expenses increased by 8.3% y-o-y, particularly due to the higher commercial activity in the period and the more challenging economic scenario:

Provisions for bad debt closed 1Q15 at R$324.4 million, with default levels at 2.4% of total gross revenue (+0.8 p.p. y-o-y), due to the current economic scenario. The Company continues to adopt strict credit and collection criteria in order to reduce default levels.

Third-party services posted y-o-y increase of 1.5% in the quarter, influenced mostly by higher expenses linked to the growth of the mobile subscriber base. The simplification of plans and offers positively impacted expenses with call center.

General and administrative expenses fell by 6.0% in 1Q15 over 1Q14, chiefly due to the strict cost control, with savings in several fronts.

Other net operating revenues (expenses) totaled an expense of R$144.1 million in 1Q15, 46.6% up on 1Q14, mainly as a result of higher labor contingencies in the period.

EBITDA(earnings before interest, taxes, depreciation and amortization) totaled R$2,568.8 million in 1Q15, in line with the 1Q14 figure, reflecting the important increase in mobile revenue which was offset by the higher provision for bad debt, and higher costs related to quality assurance and purchase of TV content. The EBITDA marginreached 28.6%, a y-o-y decline of 1.2 p.p., compared to a recurring margin of 29.8% in 1Q14.

Net income amounted to R$579.7 million in the first quarter of 2015, reducing by 12.3% when compared to 1Q14, chiefly due to higher financial expenses in the period.

Capex totaled R$1,269.7 million in 1Q15, accounting for 14.1% of net operating revenue of the period. Total investments in 1Q15 were 26.8% higher compared to 1Q14. This increase is in line with the Company’s plan and reflects an improved Capex execution, focused on the expansion of the FTTH footprint, investments in transmission infrastructure, 3G capacity and 4G coverage to ensure the Company’s superior quality standards.

In 1Q15, operating cash flow amounted to R$1,003.0 million, R$268.0 million less than in 1Q14. Cash used in investment activities increased by R$322.6 million in the period, due to the higher volume of payments to suppliers in 1Q15. As a result, cash flow after investment activities consumed R$821.6 million in 1Q15, a reduction of R$590.6 million over 1Q14. Cash used in financing activities declined by R$1,109.5 million compared to 1Q14, mainly due to reduced dividend and interest on equity payments, partially offset by the higher disbursement with overdue obligations and debt amortization in the period.

In the comparison with 4Q14, operating cash flow decreased by R$1,955.4 million, chiefly due to the payment of FISTEL, held in March, while cash used in investment activities declined by R$1,451.4 million, due to the payment of the 700 MHz  license in December 2014. As a result, cash flow after investment activities decreased by R$504.0 million. Cash used in financing activities recorded a reduction of R$708.1 million, due to reduced dividend and interest on equity payments, resulting in an upturn of R$204.1 million in cash flow after financing activities

The Company closed 1Q15 with gross debt of R$6,983.5 million, 8.6% of which denominated in foreign currency. The 18.4% reduction over 1Q14 was mainly driven by the settlement of debentures and amortizations of loans hired with BNDES, BNB and BEI.

Net debt totaled R$2,618.2 million at the close of 1Q15, accounting for 0.25 of EBITDA of the last twelve months. In comparison with 1Q14, net debt declined by R$1,048.9 million, chiefly resulting from the mark to market of derivatives contracted to cover the operation of purchase of GVT. Foreign exchange exposure of debt is 100% covered by hedge transactions.

Telefonica 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 1Q14 at R$40.73 and R$49.48, appreciating respectively by 2.1% and 5.6% over the previous quarter, versus an appreciation of 2.3% in the Bovespa

Index (Ibovespa). The Company's ADRs closed the quarter at US$15.29, 13.4% down on 4Q14, versus depreciation in the Dow Jones' index of 1.2% in the period.

The daily traded volume of VIVT3 and VIVT4 in the quarter averaged R$750.2 thousand and R$57,065.8 thousand, respectively. In the same period, the daily traded volume of ADRs averaged US$32,046.0 thousand.

The chart below shows the Company’s stock performance for the quarter:

On January 30, 2015, the Board of Directors approved the payment of interim dividends totaling R$2,750.0 million, based on net income for fiscal year 2014, equivalent to R$2.296523 per common share and R$2.526175 per preferred share.

On April 09, 2015, subsequent to the first quarter of 2015, the Annual Shareholders’ Meeting approved the payment of dividends based on the profit for 2014 in the amount of R$0.015526 per common share and R$0.017079 per preferred share, totaling R$18.6 million.

On March 12, 2015, was approved, in Board of Directors Meeting, the declaration, based on the net profit accumulated until April, 2015, of dividends in the amount of R$0.170179 per ON share and R$0.187196 per PN share, totaling R$270.0 million, and of interest on own capital in the gross amount of R$0.324600 per ON share and R$0.357060 per PN share, totaling R$515.0 million. Therefore, the total of dividends and IOC based on the accumulated results for 2015 sum R$785.0 million.

These payments will be carried out on a date to be defined by the Board of Executive Officers to holders of common and preferred shares of record as described in the table below.

On September 18, 2014, the Company published a material fact announcing that on the same date the Company and Vivendi S.A. and its subsidiaries entered into a Sale and Purchase Agreement and Other Covenants through which all the shares issued by GVT Participações S.A., the parent company of Global Village Telecom S.A., will be acquired by the Company. The signature of the Agreement and related documents was dully approved by the Company’s Board of Directors at the meeting held on the same date.

The consideration for the acquisition of GVT’s shares will be executed as follows by the Company to the Sellers:

•          An instalment totaling €4,663.00 million payable on demand and in cash, financed with a capital increase through public subscription.

•          One instalment in shares issued by the Company equivalent to 12% of common shares and 12% of preferred shares after the merger of GVTPar’s shares.

All common shares and 0.7% of the preferred shares, which corresponds to 4.5% of the capital resulting from the Company’s and GVT’s association, will be, as Vivendi decided to accept Telefónica S.A.’s offer, swapped by a 8.3% interest with voting rights in Telecom Itália S.p.A. (equivalent to 5.7% of its capital stock – 1,110 billion common shares).

On December 22, 2014, ANATEL granted preliminary approval for the acquisition of GVT’s total control by the Company, provided certain conditions are complied with: (i) the presentation of all the tax compliance certificates required by ANATEL; (ii) the elimination of STFC’s existing overlapping authorizations between the Company and GVT; (iii) the assumption by the Company of the obligation to maintain the geographic service coverage to users (contracts, plans and services); and (iv) the presentation of a coverage expansion plan.

On December 30, 2014, the Company filed a new request with ANATEL for the approval of the share transfer of Telecom Itália S.p.A. and the Company.

On March 25, 2015, the Brazilian Antitrust Authority (CADE) approved the Concentration Control Agreement (“ACC”), involving the Company, GVT and CADE, whose purpose is the acquisition of all GVT’s shares by the Company. This ACC envisages certain conditions, including the following: (i) the maintenance of the services, plans and contracts currently offered by both GVT and the Company for a certain period; (ii) the maintenance of the current geographical coverage offered by GVT and the Company, as well as the expansion of their operations; (iii) the maintenance, for a certain period, of some specific quality indicators related to

TELEFÔNICA BRASIL S.A.

Date:

May 13, 2015

By:

/s/ Luis Carlos da Costa Plaster

Name:

Title:

Investor Relations Director