Padtec S A : 2021 Earnings Release

• Combined information for the year 2020, considering Padtec S.A. as its wholly owned subsidiary since January 2020.
• • Padtec: building the future in the present

Since the beginning of its activities in 2001, the subsidiary Padtec S.A. develops and delivers products and solutions that meet the needs of its customers, from the planning and design of each solution to the installation, operation, maintenance, monitoring and technical support of the networks. By offering a complete solution based on DWDM technology, the Company combines high data transmission rates with lower space occupancy and transmitted cost per bit.

The adoption of optical fiber, which in current technologies offers from MBps to multi Tbps (Terabits), requires transport and access networks, backbones and long-distance and metropolitan routes increasingly capable of meeting the demands of consumption, quality and latency (the response time of the networks). Padtec aims to help thousands of broadband operators improve the capabilities of their networks through their products and services and, therefore, is a relevant part of this ecosystem.

Over the past two years, the digital revolution driven by the effects of the Covid-19 pandemic has made the world and societies both more digitally connected and more isolated. In the “new normal”, telecommunications and connectivity are key. Padtec, as well as several other players in the telecommunications industry, experienced a thriving demand for its products and services culminating in the unprecedented solid results obtained in 2021.

However, it is important to note that, in recent months, many of Padtec’s current customers have made expansions, improvements and investments, preparing for the increase in data traffic in their fiber optic networks, caused by greater demand for internet end users (the custimers of Padtec’s customers). There is no guarantee that new investments will be made by these clients in the short term.

On the other hand, Latin America has more than 40 million disconnected homes1 and high-capacity internet access is still low in Latin American countries when compared to more developed regions in the world. Therefore, there is a lot of room for growth of broadband connectivity in homes and businesses and, consequently, of the optical infrastructure essential for this connectivity.

1According to the report “Universalizing access to digital technologies to face the effects of COVID-19” of the Economic Commission for Latin America and the Caribbean – CEPAL of August 2020

Padtec Holding S.A.

According to data from Anatel, Brazil ended 2021 with 41.4 million fixed broadband accesses. Other Anatel information shows that optical fiber continues to stand out as the most used technology for fixed broadband, reaching 24.4 million subscriptions in 2021, 44.3% higher than in 2020, with average annual growth above 50% since 2014, more than all other technologies. In terms of representativeness, optical fiber went from 5% of total accesses in 2014 to 58.8% in 2021, an increase of 54 p.p.

Padtec’s growth is based on three major strategic pillars: (i) local expansion in Brazil and internationally with a focus on Latin America, (ii) diversification of the portfolio of products and services offered, making them increasingly innovative, evolved and robust, and (iii) expansion of its leadership in the Brazilian market, adding new clients to its portfolio and more recurring sales.

In June, Padtec announced a partnership with Televés, a multinational company headquartered in Spain and a leading provider of telecommunications infrastructures solutions, aiming at expanding its operations in Europe, the Middle East and Africa (EMEA). This agreement is part of Padtec’s strategy for the coming years which focuses on expanding its presence in the international market. The partnership with Televés enables both companies to enhance their leverage, their market knowledge and add to their technological and production capabilities.

In November, ANATEL (the Brazilian national telecommunications agency) promoted an auction offering lots to expand the presence and capacity of mobile data in 4G and 5G – the fourth and fifth generations for mobile and broadband networks. In practice, 5G will allow connections at very high speed and excellent quality, reducing the time that information travels over networks, enabling greater automation, with several applications in people’s lives and in the reality of companies. 5G in Brazil brings more opportunities for Padtec (increase in demand for high capacity optical connectivity, offer of more equipment and services of the Company’s portfolio) and for all other actors working in this ecosystem.

In December, Padtec informed that it signed a Memorandum of Understanding with Tropico and Airspan Networks Inc. The companies will work on the development of 5G networks solutions in various spectrum bands (including 700 MHz, 2.3 GHz, 3.5 GHz and 26 GHz) to provide end-to-end solutions for both traditional telecommunications operators, which already operate in the mobile segment, as well as for regional providers. Initially, the partners will conduct a high-level technical and economic feasibility study and produce a 5G solution proposal. This agreement is part of the Company’s strategy for the coming years, which focuses on its entry into the 5G mobile communications market.

Padtec is well positioned in the telecommunications ecosystem and offers the market increasingly innovative solutions and services and the state-of-the-art of technology, in a competitive manner, seeking to consolidate its leadership in Brazil and expand its presence abroad.

Padtec’s purpose is to make connectivity an important tool for socioeconomic integration, viable and accessible to everybody. Greater connectivity implies less displacement of people and, therefore, less carbon emissions and a healthier and more productive life.

Padtec Holding S.A.

On a daily basis, the Company improves its commitment to Environmental, Social and Governance (ESG) issues, by offering solutions that allow the conduction of essential services and digital inclusion with production practices committed to the environment, the preservation of resources, the safety of its employees and its customers and that add value to all its stakeholders.

In the Social pillar, the highlights in 2021 were:

• In August, the subsidiary Padtec S.A. completed 20 years of history and innovation.
• Adoption of hybrid and totally remote work models in the post-pandemic of Covid-19.
• 189 new employees were hired, 59% of them to increase the Company’s workforce. Thus, Padtec ended 2021 with 709 employees, 20% of whom were women. Eighteen employees oxygenated their careers by accepting new challenges through the Internal Selection program.
• According to a survey conducted internally with employees in November, engagement level reached 86%, the highest percentage since 2016.
• Padtec continued to focus on the culture of innovation and internal entrepreneurship in order to identify innovative and creative ways to boost its business and create new startups.
• According to a survey hired to measure the level of satisfaction and loyalty of its customers (carried out in 4Q21), the Net Promoter Score (NPS) reached 55%, an increase of 13 p.p. This index places Padtec in the Quality Zone of the global NPS scale.
• Implementation of several initiatives with customers:
• • Padtec Talks: a series of virtual events held regularly that address technical issues related to the solutions offered by the Company and the trends in the telecommunications market;
  • Inauguration of the EAD Studio to carry out distance training, with theoretical and practical classes, taught live;
  • Creation of the Satisfaction Committee: bringing together people from different areas of the Company to listen to customers needs, discuss innovations appropriate to each consumer profile and promote improvements in the products and services offered;
  • Padtec Classroom: a series of virtual and short technical courses conducted by the Padtec Training Center team.
• In 2021, Padtec continued the social actions developed under its Padtec Enlightenment program, whose objective is to cooperate for socio-cultural development, digital inclusion and the training of children and adolescents. In this program, employees make donations (in cash, food or other resources) to Non-Governmental Organizations and social assistance institutions and the Company contributes with an amount equivalent to that collected in the limit amount determined by the Board at the beginning of each year.
• In August, the subsidiary Padtec S.A. underwent an external audit to supervise its Quality Management System, which maintained the recommendation to its ISO 9001 certification until 2Q22. ISO 9001 is valid for three years and annual external audits are conducted at the Company to ensure the integrity of this management system.

In the Governance framework, the following stand out:

• The election of Carlos Raimar Schoeninger as Company’s Chief Executive Officer in January. Mr. Schoeninger has more than 20 years of experience in executive positions in the telecommunications

Padtec Holding S.A.