I am raising my recommendation from hold to buy on Telefônica Brasil (NYSE: VIV ) shares after disclosure of its 2nd quarter results . This article is a continuation of my initial coverage article published on July 11, 2024, andMore than 5 years of experience in equity analysis in LatAm. We provide our clients with in-depth research and insights to help them make informed investment decisions.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, an ...

Financial Data and Key Metrics Changes - Total revenue increased by 7.1% year over year, reaching BRL 14.6 billion, driven by high single-digit growth in both mobile and fixed revenues [7][9] - EBITDA grew by 8.8% year over year, with a margin of 40.5%, reflecting disciplined cost management and operational efficiency [7][22] - Operating cash flow reached BRL 7.3 billion, up 12.5% year over year, highlighting strong free cash flow generation [8][24] - Net income rose by 13.5% year over year, reaching BRL 2.4 billion, driven by solid operational execution [25] Business Line Data and Key Metrics Changes - The mobile segment saw postpaid growth of 7% year over year, now comprising 67% of the total mobile customer base [6] - Fiber access expanded by 12.6% year over year, reaching 7.4 million connected homes, with FTTH revenues growing by 10.4% [6][12] - New businesses represented 11.2% of total revenues, up 1.7 percentage points year over year, with OTT subscriptions increasing by 34.5% [10][14] - B2B revenues grew by 13.3% year over year, with digital B2B services increasing by 31.3% [15] Market Data and Key Metrics Changes - The company reported a strong competitive position in the mobile market, with a focus on upselling data and digital services [48] - The fiber market remains competitive, with the company holding a significant share of the addressable market [80] Company Strategy and Development Direction - The company is focused on sustainable growth through strategic initiatives in connectivity and digital services, emphasizing service convergence and high-value offerings [6][9] - The acquisition of CDPQ's stake in Fyre Brazil is expected to consolidate leadership in fiber and unlock significant synergies [13] - The company aims to continue expanding its fiber footprint and exploring M&A opportunities to enhance growth [34][81] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the competitive landscape and maintain strong operational performance [48][96] - The company anticipates continued growth in net income and EBITDA, supported by disciplined cost management and strategic investments [25][60] Other Important Information - The company has paid over BRL 5 billion to shareholders so far in 2025, reaffirming its commitment to shareholder remuneration [26] - The company has implemented a reverse stock split followed by a forward stock split, which increased average daily trading volumes by 77% [26] Q&A Session Summary Question: What can be expected regarding leases optimization? - Management indicated that initiatives to optimize leases are ongoing, with a focus on reducing unit costs and improving coverage [28][39] Question: What synergies are being captured from the FiBrazil integration? - Management noted that while synergies are not yet fully realized, the integration is expected to enhance operational efficiency and revenue generation [30][32] Question: How is the competitive environment in mobile? - Management acknowledged strong competition but emphasized their strategy of upselling and maintaining low churn rates [48][49] Question: What is the outlook for financial expenses and OpEx? - Management explained that financial expenses were impacted by seasonality and that OpEx growth is being managed effectively [54][60] Question: How is the integration of acquired operations progressing? - Management confirmed that the integration of IPNET and VITIT is on track, contributing positively to overall performance [72] Question: What steps are being taken to improve mobile net adds? - Management highlighted a focus on migrating prepaid customers to hybrid plans and enhancing customer loyalty through service convergence [78]

Telefônica Brasil (VIV) Q2 2025 Earnings Call July 29, 2025 09:00 AM ET Speaker0Good morning, ladies and gentlemen. Welcome to Vivo's Second Quarter twenty twenty five Earnings Call. This conference is being recorded, and the replay will be available at the company's website at ri.telefonica.com.br. The presentation will also be available for download. This call is also available in Portuguese.To access, you can press the globe icon on the lower right side of your Zoom screen and then choose to enter the Po ...

RESULTS 2Q25 Telefônica Brasil S.A. Investor Relations July 28th, 2025 | VIVT | V | | --- | --- | | | 115 | | B3 LISTED | N | ***Este documento está clasificado como USO INTERNO por TELEFÓNICA. ***This document is classified as INTERNAL USE by TELEFÓNICA. This presentation may contain forward -looking statements concerning prospects and objectives regarding the capture of synergies, growth of the subscriber base, a breakdown of the various services to be offered and their respective results Our actual resul ...

Core Viewpoint - Telefônica Brasil reported strong operating performance in 2Q25, leading to significant growth in revenue, EBITDA, and net income [1]. Financial Performance - Net Operating Revenue reached R$14,645 million, a 7.1% increase from R$13,679 million in 2Q24 [2]. - EBITDA grew by 8.8% YoY to R$5,933 million, with an EBITDA margin of 40.5%, up 0.6 percentage points from the previous year [4][6]. - Net Income attributed to Telefônica Brasil was R$1,344 million, reflecting a 10.0% increase compared to R$1,222 million in 2Q24 [6]. Revenue Breakdown - Mobile Services revenue increased by 7.3% YoY to R$9,555 million, driven by a 10.6% growth in postpaid services and a 5.1% increase in mobile ARPU, reaching R$31.1 [2][3]. - Fixed revenue rose by 8.0% YoY, supported by FTTH growth of 10.4% and Corporate Data, ICT, and Digital Services revenue growth of 20.7% [4]. Subscriber Growth - Total subscribers increased by 1.3% YoY, reaching 116,190 thousand, with postpaid customer base growing by 7.0% YoY to 68.5 million accesses [2][3]. Capital Expenditure - Capex for 2Q25 totaled R$2,439 million, a 4.2% increase YoY, representing 16.7% of revenues, reflecting a decrease in Capex intensity [5]. Cash Flow and Shareholder Returns - Operating Cash Flow was R$3,494 million, up 12.2% YoY, with a margin of 23.9% [6]. - The total remuneration paid to shareholders reached R$5,233 million, with commitments to distribute at least 100% of net income for fiscal years 2024 to 2026 [7].

Core Viewpoint - Growth investors are increasingly focused on identifying stocks with above-average financial growth, which can lead to solid returns, but finding such stocks is challenging due to inherent volatility and risks [1] Group 1: Company Overview - Telefonica Brasil (VIV) is highlighted as a recommended stock due to its favorable Growth Score and top Zacks Rank [2] - The company has a historical EPS growth rate of 1.5%, but projected EPS growth for this year is expected to be 8.3%, significantly outperforming the industry average of 1.1% [5] Group 2: Key Growth Metrics - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive [4] - Telefonica Brasil has an asset utilization ratio (sales-to-total-assets ratio) of 0.44, indicating higher efficiency in generating sales compared to the industry average of 0.39 [7] - The company's sales are projected to grow by 1.2% this year, while the industry average is stagnant at 0% [7] Group 3: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements, and Telefonica Brasil has seen its current-year earnings estimates revised upward by 1.4% over the past month [9][8] - The combination of a Zacks Rank 2 and a Growth Score of B suggests that Telefonica Brasil is positioned as a potential outperformer for growth investors [11]

Core Insights - Investors are comparing Telefonica Brasil (VIV) and Telus (TU) for potential value opportunities in the Diversified Communication Services sector [1] Group 1: Zacks Rank and Earnings Outlook - Telefonica Brasil has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Telus has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank is based on recent positive revisions to earnings estimates, suggesting that VIV has an improving earnings outlook [3] Group 2: Valuation Metrics - VIV has a forward P/E ratio of 16.19, significantly lower than TU's forward P/E of 21.74 [5] - The PEG ratio for VIV is 0.74, indicating better value compared to TU's PEG ratio of 4.99, which factors in expected earnings growth [5] - VIV's P/B ratio is 1.57, while TU's P/B ratio is 2.13, further highlighting VIV's relative undervaluation [6] Group 3: Value Grades - Based on various valuation metrics, VIV holds a Value grade of A, whereas TU has a Value grade of C, suggesting that VIV is the more attractive option for value investors [6]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks across various market conditions, utilizing established valuation metrics to uncover potential opportunities [2][3] Company Summary: Telefonica Brasil (VIV) - Telefonica Brasil (VIV) holds a Zacks Rank of 1 (Strong Buy) and an A grade in the Value category, indicating strong potential for value investors [4] - The stock is currently trading at a P/E ratio of 17.51, which is lower than the industry average of 18.96. Over the past 12 months, VIV's Forward P/E has fluctuated between 10.45 and 17.57, with a median of 13.10 [4] - VIV has a PEG ratio of 0.80, significantly lower than the industry average of 1.41. Its PEG has ranged from 0.63 to 1.14 over the past 52 weeks, with a median of 0.81 [5] - The P/B ratio for VIV is 1.58, which is attractive compared to the industry average of 2.50. The P/B ratio has varied between 0.96 and 1.67 in the last 12 months, with a median of 1.20 [6] - These valuation metrics suggest that Telefonica Brasil is likely undervalued, supported by a strong earnings outlook, making it an appealing value stock at present [7]

Group 1 - Investors in Telefônica Brasil S.A. should monitor stock movements due to high implied volatility in options, particularly the Aug. 15, 2025 $7.50 Call [1] - Implied volatility indicates market expectations for significant price movement, suggesting potential upcoming events that could lead to a rally or sell-off [2] - Analysts currently rate Telefônica Brasil as a Zacks Rank 3 (Hold) in the Diversified Communication Services industry, with no earnings estimate increases and one decrease over the last 60 days, lowering the consensus estimate from 13 cents to 12 cents per share [3] Group 2 - The high implied volatility may indicate a developing trade, as options traders often seek to sell premium on such options to capture decay, hoping the stock does not move as much as anticipated [4]

Group 1 - The focus is on global equities, particularly in emerging markets and lesser-known investment opportunities [1] - The goal is to provide deep, actionable insights that help investors navigate complex markets with greater confidence [1] Group 2 - The article expresses the author's personal opinions and indicates a beneficial long position in the shares of VIV [2] - There is no compensation received for the article other than from Seeking Alpha, and there is no business relationship with any mentioned company [2]