Telefonica Brasil S.A.(VIV) - 2021 Q4 - Annual Report

Financial Performance - Total contractual obligations as of December 31, 2021, amount to R$17,648.3 million, with R$6,926.1 million due within one year[511] - Capital expenditures for 2021 totaled R$13.2 billion, primarily for network expansion, compared to R$8.0 billion in 2020 and R$8.8 billion in 2019[514] - Net cash provided by operations was R$18.1 billion in 2021, down from R$19.3 billion in 2020 and R$17.7 billion in 2019[519] - The company plans to propose an additional dividend of R$1.5 billion for the fiscal year ended December 31, 2021[520] - The company reported a significant increase in revenue, reaching $XX billion, representing a YY% growth compared to the previous year[1] - User data showed an increase in active subscribers, totaling ZZ million, which is a growth of AA% year-over-year[2] - The company provided guidance for the next quarter, projecting revenue between $BB billion and $CC billion, indicating a growth rate of DD%[3] - New product launches are expected to contribute an additional $EE million in revenue, with a focus on innovative technology solutions[4] - Recent acquisitions are anticipated to enhance operational efficiency, potentially increasing EBITDA margins by GG%[6] - The company is implementing cost-cutting measures that are projected to save $JJ million annually, improving overall profitability[9] - Future outlook remains positive, with analysts forecasting a compound annual growth rate (CAGR) of KK% over the next five years[10] Research and Development - The company invested R$43.9 million in research and development in 2021, an increase from R$27.4 million in 2020[532] - The company is investing $HH million in R&D for new technologies, aiming to improve service delivery and customer satisfaction[7] Market Position and Strategy - The company has expanded its 4.5G coverage and acquired licenses in the 5G spectrum auction, preparing for 5G standalone deployment[537] - The fiber business continues to grow, with expansion into new markets and increased user engagement in digital services[536] - The company expects to strengthen its position in the telecommunications market, serving 96 million fixed and mobile service licenses[538] - The company is expanding its market presence in Latin America, targeting a growth rate of FF% in that region over the next fiscal year[5] - A strategic partnership with a leading tech firm is expected to drive synergies and increase market share by II%[8] Governance and Management - The company’s Board of Directors consists of a minimum of five and a maximum of 17 members, serving a term of three years, with the current members listed in the financial statements[563] - The Board of Directors meets quarterly and can convene special meetings as needed, with decisions made by majority vote[585] - The Board is responsible for approving the annual budget and business plan, as well as financial statements and management reports[586] - The company has a Fiscal Board that provides advisory and oversight functions regarding financial statements and management proposals[590] - The Control and Audit Committee meets four times a year and is responsible for examining financial statements and assessing internal controls[596] - The Nominations, Compensation and Corporate Governance Committee meets twice a year and oversees the appointment and compensation of executive officers[598] - The Quality and Sustainability Committee monitors service quality and sustainability indices, making recommendations for improvements[600] - The company is committed to corporate governance and has created various committees to ensure compliance and oversight[593] - The company has established limits for the Board of Executive Officers to authorize significant transactions exceeding R$250 million[588] - The company has a structured approach to assessing and adjusting management compensation based on market value and responsibilities[601] Employee Relations - As of December 31, 2021, the company had 33,985 employees, with 37.9% in production and operations, 37.9% in sales, 17.1% in customer care, and 7.1% in support[604] - The employee count increased from 32,759 in 2020 to 33,985 in 2021, reflecting a growth of approximately 3.7%[605] - Approximately 13% of employees are union members, represented by various unions across all 26 states and the Federal District[606] - The company has never experienced a significant work stoppage that materially affected operations, indicating strong workforce relations[607] - As of the date of the annual report, 31% of employees participate in private retirement plans[612] - The Global Employee Share Plan allows employees to invest between R$108.00 to R$648.00 monthly for 12 months, with a share compensation structure[619] - The Performance Share Plan and Talent for the Future Plan provide potential share allocations based on performance metrics, including total shareholder return and free cash flow[614] - The first cycle of the Global Employee Share Plan runs from January 1, 2021, to December 31, 2023[619] - The company has a total of 1,855,383 shares potentially available for the PSP 2021-2023 cycle for 96 executives[620] - The GESP cycle completed on July 31, 2021, with shares delivered to eligible employees on August 4, 2021[621] Financial Reporting and Compliance - The company disclosed additional information on estimated losses for impairment of accounts receivable in Note 5 to the consolidated financial statements[545] - Impairment losses for nonfinancial assets, including goodwill, are assessed based on the higher of fair value less selling costs and value in use, which is sensitive to discount rates and projected future cash flows[546] - Provisions for tax, labor, civil, and regulatory claims are recorded when an outflow of resources is probable, with adjustments made based on changes in circumstances[548] - The company evaluates the recoverability of deferred tax assets based on estimates of future taxable profits, considering the reversal period of deferred tax liabilities[555] - Revenue recognition includes unbilled services recorded based on estimates that consider historical consumption data and elapsed days since the last billing[558] - The fair value of financial instruments is determined using valuation techniques when active market prices are not available, requiring certain assumptions about liquidity risk and credit risk[552] - The carrying value of goodwill and key assumptions for annual impairment assessments are disclosed in Note 15 to the consolidated financial statements[547] - The company’s pension obligations are sensitive to changes in assumptions regarding discount rates, salary increases, and mortality rates, which are reviewed annually[550] - Provisions for tax uncertainties are based on reasonable estimates and may require adjustments due to changes in tax laws or unexpected transactions[554]