DESK3

Desktop S.A. is a Brazilian telecommunications company that operates mainly in the provision of fixed broadband services via fiber optics. The group’s history dates back to 1997, with the founding of Desktop Online Informática by Denio Alves Lindo, who remains a shareholder and CEO. The company’s current corporate structure was established in July 2006, accompanying the evolution of the internet access market in the country. From 2013 onward, Desktop began directing its investments toward fiber-optic networks, at a time when legacy technologies such as radio, copper and coaxial cable still predominated. At the end of 2024, the company had approximately 1.131 million active subscribers, serving 194 cities in the interior of the State of São Paulo, with practically its entire base connected via fiber.

Desktop’s recent trajectory has been marked by a cycle of consolidation and accelerated growth. In 2019, the company merged SigmaBBS Comércio e Informações por Teleprocessamento Ltda., initiating a process of streamlining its structure and capturing synergies among group companies. In 2020, the entry of FIP Makalu Brasil Partners IJ, with the acquisition of 60% of the capital, strengthened its financial capacity for organic and inorganic expansion. During this period, it acquired regional providers such as ISSO Internet e Telecomunicações Ltda.-ME and Netell Internet Ltda., in addition to merging DIS Provedor de Serviços de Conexão Internet Ltda., which contributed to expanding its customer base and network footprint. In 2021, after an IPO on B3 with a primary share offering to the market, Desktop intensified the consolidation of regional ISPs in the interior of São Paulo, combining corporate reorganizations, the change of its corporate name to Desktop S.A. and the merger of several acquired companies.

The company’s common shares are traded on B3 under the ticker DESK3, as a result of the public offering carried out in July 2021. Entering the capital markets enabled Desktop to finance a robust infrastructure expansion and M&A plan. Between 2021 and 2023, the company completed significant transactions such as the acquisition of Netion Soluções em Internet via Rádio S.A., C-Lig Telecomunicações S.A., Starnet Telecomunicações Ltda., Net Barretos Participações S.A., LPNet Telecomunicações Ltda. and other regional internet companies. In 2022, Infolog TI Tecnologia Ltda. and IDC Telecom were added and subsequently merged, and in 2023 the acquisition of Cilnet Comunicação e Informática Ltda. (Fasternet) was completed. In parallel, the company also carried out a private capital increase in March 2023, strengthening its capital structure to support its growth strategy and the expansion of its fiber-optic network, which reached around 55 thousand kilometers in December 2024.

Desktop’s business model is based on the provision of telecommunications services within a single operating segment, classified as net service revenue. Strategic, investment, purchasing and resource allocation decisions are made on a consolidated basis, and the core focus is to provide high-speed connectivity via fiber optics. Approximately 100% of active customers subscribe to internet products with fixed broadband plans, to which additional services can be added. The portfolio includes bundles that combine internet with streaming services, antivirus, content apps, telemedicine, high-definition digital TV for part of the base and, more recently, mobile telephony through an MVNO model, which positions the company as a provider of convergent fixed and mobile connectivity solutions in its operating area.

Commercial activity is focused on individuals, with a residential focus, in the interior of the State of São Paulo. In December 2024, Desktop operated in 194 cities, benefiting from a context of growing demand for fiber optics in Brazil. The national fiber broadband market has grown strongly over the past decade, replacing legacy technologies such as radio and metallic cable, driven by the digitalization of the economy, increased streaming consumption, online gaming and intensive data usage in households. Within this scenario, Desktop has consolidated itself as one of the largest internet service provider (ISP) platforms in the country and the largest ISP platform in the interior of São Paulo, according to Anatel data. The subscriber base has grown consistently, with entry into 169 new cities between the end of 2020 and the end of 2024, supporting a compound annual growth rate of net service revenue of around 60% between 2018 and 2024.

The company does not show any relevant revenue concentration in large corporate clients, since no individual client accounted for more than 10% of net revenue in the last fiscal year. This diversification is aligned with its focus on the residential segment and small municipalities, which reduces dependence on large contracts. Commercial operations combine own and outsourced channels, including online sales, a virtual store, social networks, telesales, door-to-door teams and more than 100 proprietary physical stores across its coverage area. These sales and service points act as a support base for customers, as well as acquisition channels for new subscribers, with digital media strategies, local events and regional campaigns tailored to the socioeconomic profile of each municipality served.

On the operational front, Desktop has developed an expansion model based on quantitative analyses and historical data from network projects. The selection of new cities goes through market screening, demand assessment, capex investment estimates and approval by internal committees, aiming to optimize the rate of return on invested capital. In-house teams are mostly responsible for planning and designing fiber-optic networks, while the physical construction is carried out by a mix of local suppliers and large specialized companies, coordinated by the company’s management team. The goal is to maximize the penetration of installed fiber ports – the ratio between connected subscribers and available capacity – by tracking indicators such as the internal rate of return (IRR) of projects by city, which, in many of the cases launched since 2020, show high annual projections according to the company’s internal models.

Desktop is subject to regulation by the National Telecommunications Agency (Anatel), as it provides telecommunications services of collective interest, including fixed broadband, fixed telephony, pay TV (SeAC) and, via MVNO contracts, mobile services. The company must comply with authorization, quality and continuity requirements, as well as sector obligations such as contributions to FUST and FUNTTEL and fees related to FISTEL (TFI and TFF), in addition to payments related to Condecine-Teles and the Contribution for the Promotion of Public Broadcasting, due to the provision of audiovisual services. Operations also depend on Anatel’s approval of interconnection contracts, infrastructure-sharing agreements with power utilities and MVNO agreements. Non-compliance with regulations may result in penalties ranging from warnings and fines to more severe sanctions, underscoring the importance of regulatory monitoring in the management of the business.

In the environmental, social and governance field, Desktop has structured an ESG agenda formalized with the publication, in July 2024, of its first sustainability report, referring to 2023 initiatives, prepared based on the Global Reporting Initiative (GRI) methodology. The document describes practices for waste management, greenhouse gas emissions inventories, water resource use, energy consumption and recycling and circular economy initiatives. On the social pillar, it reports information on the workforce, labor practices, people development programs, health, safety and diversity, equity and inclusion. In governance, the company highlights initiatives related to ethics in business relationships, whistleblower channels, the profile of the board of directors, corporate policies and information management and security. These practices complement Desktop’s growth strategy, which combines network expansion, regional consolidation and a focus on high-speed connectivity for its subscriber base, through DESK3 shares traded on B3.