Telefonica Brasil S.A.(VIV) - 2023 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a revenue growth of 7.5% year-over-year and an EBITDA increase of 11.7% year-over-year, both exceeding inflation [5][6] - EBITDA reached an all-time high of R$5.5 billion in the quarter, with a margin of 42.2%, leading to a net income of R$3.4 billion year-to-date, up 15.9% year-over-year [6][10] - Operating cash flow grew 27.1% year-over-year to R$8.9 billion, while free cash flow expanded 16.7% to R$7.6 billion [6][23] Business Line Data and Key Metrics Changes - Mobile service revenues saw an organic growth of 9.0% year-over-year, driven by upselling to postpaid plans [8] - Handsets and electronics revenue increased by 13.5% year-over-year, attributed to the sale of high-value 5G devices [9] - Digital B2B services generated R$3.2 billion in the last 12 months, up 28% year-over-year, representing 6% of total revenue [14] Market Data and Key Metrics Changes - The postpaid customer base surpassed 60 million, with postpaid access now representing 62% of total mobile access [10] - The fiber operation reached 25.1 million homes passed, with a target of 29 million by the end of next year [12] - The average revenue per user (ARPU) grew by 11% year-over-year, reaching its highest value in the last three years [10] Company Strategy and Development Direction - The company is focused on enhancing its digital services and expanding its fiber and mobile offerings, aiming for a unique value proposition in the market [10][19] - The strategy includes a commitment to achieving net zero emissions by 2040 and investing in renewable energy projects [19] - The company is exploring opportunities in the B2B segment, particularly targeting SMEs with integrated digital solutions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining growth and profitability, citing strong customer acquisition and controlled churn rates [31] - The company is optimistic about future revenue growth, driven by a solid operational performance and a favorable competitive environment [32] - Management noted that while they are not providing specific guidance for 2024, they expect to continue the trend of reasonable CapEx and revenue growth [30] Other Important Information - The company declared R$2.6 billion in dividends and interest on capital and invested R$380 million in share buybacks [7] - A capital reduction request of up to R$5 billion was approved by Anatel, providing flexibility for shareholder remuneration [24] Q&A Session Summary Question: CapEx guidance for 2024 - Management confirmed that CapEx will remain below R$9 billion for the year and indicated that 2024 will not see a peak in CapEx as experienced in previous years [29][30] Question: Sustainability of margin increases - Management highlighted consistent revenue and EBITDA growth above inflation, with a focus on digital services contributing to margin improvements [36][38] Question: Update on network sharing agreement with TIM - Management confirmed successful expansion of 4G coverage and plans for further collaboration on 5G deployment [42][43] Question: Decommissioning of Oi sites - Management provided updates on the decommissioning process, indicating progress in negotiations and expected cost savings [54] Question: Potential tax changes - Management noted ongoing discussions regarding interest on capital and potential impacts from broader tax reforms, but no immediate changes are expected [58][60] Question: Pricing impacts on prepaid plans - Management confirmed that recent price increases on prepaid plans did not negatively affect recharge frequency, and they see room for further pricing adjustments [65][70] Question: Fiber-to-the-home ARPU trends - Management indicated positive trends in fiber-to-the-home ARPU, driven by increased service penetration and customer satisfaction [66][68]