Telefonica Brasil S.A.(VIV) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues grew by 7.6% year-over-year, driven mainly by Mobile Oi service revenue, which increased by 10.4% [7] - EBITDA grew by 11.1% year-over-year, contributing to a 120 basis point margin expansion [8] - Net income reached BRL2 billion in the first half of 2023, an increase of 28.9% compared to the same period last year [9] - Free cash flow generation totaled BRL5.6 billion year-to-date, reflecting a 21.7% increase year-over-year [37] Business Line Data and Key Metrics Changes - Mobile service revenues experienced a 100% organic double-digit expansion in the first comparable quarter since the acquisition of Oi Mobile [11] - Fixed revenues from FTTH and Corporate Data, ICT, and Digital services grew at mid-teens rates, contributing positively to overall fixed revenue expansion [12] - The fiber business added 3.7 million homes, totaling 24.7 million homes passed, with a 15.1% year-over-year increase in customers [15] Market Data and Key Metrics Changes - Despite the disconnection of nearly 4 million inactive users from Oi, market share has consistently increased since consolidation began [13] - Postpaid churn reached its lowest historical level of 1% per month, nearly half the level from 2019 [14] - The average revenue per user (ARPU) grew by 11% year-over-year, indicating a positive trend in customer spending [13] Company Strategy and Development Direction - The company is focused on expanding its 5G coverage and enhancing mobile internet quality while capturing opportunities in FTTH expansion [98] - Vivo's strategy includes upselling to postpaid plans and integrating digital services to enhance customer lifetime value [52][60] - The company aims to reach 29 million homes passed by the end of 2024, maintaining a focus on quality connections [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial position and operational momentum, anticipating continued growth in mobile, fiber, and digital services [98] - The company remains optimistic about the macroeconomic environment and its ability to navigate competitive pressures [98] - Management highlighted the importance of consolidation in the market, viewing it as a positive development for the industry [42] Other Important Information - Vivo was recognized by Microsoft as its partner of the year 2023, showcasing the success of its partnership in providing digital solutions [21] - The company has made significant strides in ESG initiatives, including recycling electronic waste and promoting diversity within its workforce [24][25] Q&A Session Summary Question: Update on capital stock reduction and FTTH expansion - Management confirmed that the request for capital stock reduction is under review by Anatel and expressed confidence in receiving approval [40] - Regarding FTTH expansion, management noted that competition remains strong but emphasized their leadership in net additions and quality of service [44] Question: Mobile pricing strategy and postpaid user adjustments - Management indicated that recent price adjustments are expected to be sufficient for the year, with potential for further adjustments in prepaid pricing [51][53] Question: ARPU and churn dynamics - Management attributed positive ARPU growth to price increases, successful migration from prepaid to hybrid plans, and enhanced digital service offerings [60][62] Question: Working capital and financial services revenue - Management highlighted positive working capital dynamics and indicated that financial services revenue may see growth as new products are developed [70][78] Question: Fiber expansion and personnel expenses - Management provided insights into the profile of new cities for fiber expansion and discussed ongoing efforts to insource critical areas to stabilize personnel expenses [81][86] Question: Migration process and regulatory environment - Management expressed optimism about finding a solution regarding the migration process and emphasized the importance of discussing related financial numbers together [90][93]