Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Telefonica Brasil SA (VIV, Financial) reported a robust performance with all key lines posting real growth, maintaining its leadership position in the market.
- The customer base increased by 7.6%, with significant growth in fibre connections (FTTH) by 12.5%.
- Total revenues rose by 7.1%, driven primarily by an 8.8% increase in mobile service revenues.
- EBITDA grew by 7.4% year over year, with a margin expansion to 24.2% of revenues.
- The company achieved a double-digit net income growth of 10.4%, which will be fully distributed to shareholders.
Negative Points
- The competitive environment remains challenging, with new entrants like Nubank offering aggressive pricing in the prepaid segment.
- Operational expenses grew by 6.8% year over year, impacting cost management efforts.
- The company faces volatility in lease payments, which can affect cash flow projections.
- Legacy fixed revenues continue to decline, although the pace has decelerated slightly.
- There are uncertainties regarding regulatory approvals for the migration from concession to authorization, which could impact future cost optimizations.
Q & A Highlights
Q: How do you view the competitive environment and pricing, especially with new entrants like Nubank offering lower price points?
A: Christian Gebara, CEO: Nubank's entry is another competitor, but we are used to competition. Their offer is a prepaid model with hybrid characteristics, which allows them to be aggressive in pricing. However, our hybrid plans offer more value with content and services. We are confident in our strong network, product portfolio, and distribution channels to remain competitive.
Q: Can you explain the significant increase in lease expenses in the third quarter?
A: David Sanchez-Friera, CFO: Lease expenses can be volatile due to ongoing negotiations with tower companies. The cash flow impact this quarter was higher than last year but lower than the fourth quarter of last year. Despite this, our operating cash flow after leases remains strong, growing 14.9% year over year.
Q: What is the outlook for mobile service revenue growth, and how sustainable is it?
A: Christian Gebara, CEO: The growth is sustainable, driven by our strategy across all segments, including migration from prepaid to hybrid and postpaid, and upselling additional services. Our combined ARPU strategy, which includes digital services, is proving successful, and we aim to continue this trend.
Q: Could you provide insights into the CapEx outlook and the potential for reducing capital intensity?
A: Christian Gebara, CEO: We aim to reduce CapEx intensity by optimizing deployment and growing revenues, particularly from new digital services that require less CapEx. Our CapEx to sales ratio has already decreased by 1% point year over year, and we plan to continue this trend without compromising our network leadership.
Q: What are the expected economic benefits from migrating from concession to authorization, and what is the timeline for regulatory approvals?
A: Christian Gebara, CEO: We expect to optimize costs and investments post-migration, but prefer to wait for approval before detailing the benefits. The proposal is currently being analyzed by the minister, with a decision expected by mid-next year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
