Telefonica Brasil S.A.(VIV) - 2025 Q3 - Quarterly Report

Financial Performance - For the three-month period ended September 30, 2025, the net operating revenue for the company was R$14,227,820, an increase from R$13,568,717 in the same period of 2024, representing a growth of 4.9%[17] - The gross profit for the nine-month period ended September 30, 2025, was R$19,290,494, compared to R$17,994,454 in 2024, reflecting an increase of 7.2%[17] - The net income for the period was R$1,888,359 for the three-month period ended September 30, 2025, up from R$1,667,444 in 2024, indicating a growth of 13.3%[17] - The company’s total operating income for the nine-month period ended September 30, 2025, was R$6,930,663, compared to R$6,206,315 in 2024, reflecting an increase of 11.7%[17] - Net income for the three-month period ended September 30, 2025, was R$1,888,359, compared to R$1,667,444 for the same period in 2024, representing an increase of 13.2%[20] - For the nine-month period ended September 30, 2025, net income reached R$4,291,025, up from R$3,784,905 in 2024, reflecting a growth of 13.4%[20] - Comprehensive income for the three-month period ended September 30, 2025, was R$1,979,011, compared to R$1,670,942 in 2024, indicating an increase of 18.4%[20] Assets and Liabilities - As of September 30, 2025, Telefônica Brasil S.A. reported total assets of R$ 122.08 billion, a slight decrease from R$ 123.41 billion as of December 31, 2024[15] - The company's current assets increased to R$ 22.64 billion from R$ 21.42 billion, representing a growth of approximately 5.7%[15] - Non-current assets decreased to R$ 99.44 billion from R$ 101.99 billion, a decline of about 2.5%[15] - Total liabilities as of September 30, 2025, were R$53,640,552, slightly down from R$53,679,809 at the end of 2024[16] - The company's total equity decreased to R$68,438,152 as of September 30, 2025, from R$69,729,582 at the end of 2024[16] - Current liabilities decreased to R$22,871,638 as of September 30, 2025, from R$23,429,881 at the end of 2024, a reduction of 2.4%[16] Cash Flow and Financial Management - Cash and cash equivalents stood at R$ 6.38 billion, up from R$ 6.27 billion, indicating a growth of about 1.8%[15] - The management has emphasized the importance of cash flow management, with cash flows for the nine-month period being a critical focus area[11] - Net cash generated by operating activities reached R$15,507,989, a slight increase from R$15,269,932 in the prior year[22] Regulatory and Market Environment - The company faces risks from regulatory changes that may affect interconnection fees, which are a significant part of its revenue[54] - ANATEL's new General Regulation on Consumer Rights will come into effect on September 1, 2025, replacing the previous regulation[55][56] - The dual VAT model established by the tax reform will replace several existing taxes, with a transition period from 2026 to 2032[109] Acquisitions and Investments - Terra Networks acquired Samauma Brands Electronics Trade, Import and Export Ltda. for up to R$66,451, with R$58,696 allocated to net assets acquired[59] - The acquisition of Samauma resulted in a preliminary fair value of net assets acquired amounting to R$4,562, with goodwill generated at R$54,134[68] - The merger of IoTCo Brazil into CloudCo Brazil was completed on July 1, 2025, aimed at reducing operational costs and leveraging internal synergies[77] - The acquisition of FiBrasil for R$850,000 will increase the Company's stake to 75.01%, enhancing its presence in the fiber optic network sector[82] Taxation and Legal Matters - The Company is contesting tax assessments totaling R$39,502,275 as of September 30, 2025, primarily related to goodwill amortization deductions[151] - The effective combined rate of Income Tax and Social Contribution on Net Income is expected to exceed the 15% minimum stipulated by the new OECD Pillar II rules, effective January 2025[153] - The total possible risk of loss for tax contingencies is R$42,048,569 as of September 30, 2025, compared to R$40,850,071 on December 31, 2024[191] Personnel and Social Charges - The company reported an increase in personnel, social charges, and benefits to R$4,823,646, up from R$4,617,839 in the previous year[21] - Social charges and benefits increased to R$806,525 thousand in Q3 2025 from R$563,773 thousand in Q4 2024, representing a 42.9% increase[178] Property, Plant, and Equipment (PP&E) - As of September 30, 2025, the total property, plant, and equipment (PP&E) for Telefônica Brasil S.A. is R$44,715,943, a decrease from R$46,796,018 on December 31, 2024, representing a decline of approximately 4.5%[167] - The company added R$6,327,883 in new PP&E during the nine-month period ending September 30, 2025, compared to R$7,271,393 in the same period of 2024, indicating a decrease of about 12.9%[167] - The cost of PP&E as of September 30, 2025, is R$189,220,367, up from R$184,954,868 on December 31, 2024, marking an increase of about 2.3%[167] Earnings and Shareholder Returns - The company reported basic and diluted earnings per common share of R$0.58782 for the three-month period ended September 30, 2025, compared to R$0.50851 in 2024, a rise of 15.6%[17] - The return of capital to shareholders amounted to R$1,500,000 on January 24, 2024, and R$2,000,000 on December 18, 2024[19]