Telefonica Brasil S.A.(VIV) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company closed 2022 with 112 million accesses, a 13.7% year-over-year increase, reinforcing its position as one of the largest companies in Brazil by client count [8] - Total revenue grew by 10.1% year-over-year in Q4, driven by a 13.6% increase in mobile service revenues and a 2.9% increase in fixed revenues, marking the best growth since Q4 2015 [9][16] - EBITDA expanded by 6.1% year-over-year, reaching a margin of 1.3% [9] - Free cash flow for the year was BRL7.3 billion, allowing for over BRL5 billion in dividends and interest on capital [10] Business Line Data and Key Metrics Changes - Mobile revenues increased by 13.4% year-over-year, with growth across postpaid, prepaid, and handset revenues [14] - Fixed core revenues climbed 11.9% year-over-year, with core products now representing 76% of the wired line business [15] - Digital B2B revenues grew by 29% year-over-year, reaching BRL2.7 billion, now representing 5.6% of total revenues [22] Market Data and Key Metrics Changes - The company added 14 million new mobile customers in 2022, reaching 98 million accesses, despite eliminating 3.4 million inactive lines from the Oi Mobile acquisition [17] - The postpaid base grew by 18.2% year-over-year, with churn rates remaining low at close to 1% [18] - FTTH access reached 5.5 million, with a 19% increase in the customer base [20] Company Strategy and Development Direction - The company is focused on enhancing its shareholder remuneration capabilities and has filed a request to potentially reduce its capital stock by up to BRL5 billion [12] - The strategy includes expanding 5G coverage and increasing FTTH penetration, with a commitment to invest less than BRL9 billion in 2023 [36] - The company aims to leverage its digital B2B and B2C services to capture growth opportunities in the market [22][100] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about finding a solution for the concession agreement with Anatel, emphasizing the low impact of core revenues on overall revenue mix [82][83] - The expectation of lower inflation in 2023 is seen as beneficial for the telecommunications sector, with potential for cost reductions and margin increases [46][52] - The company is confident in its ability to maintain strong cash flow generation and shareholder returns despite market challenges [41][86] Other Important Information - The company has initiated a new share buyback program, aiming to invest an additional BRL500 million over the next 12 months [11] - Significant investments in ESG initiatives were reported, including a 50% reduction in greenhouse gas emissions and a 20% increase in electronic waste collection [27][28] Q&A Session Summary Question: Why BRL5 billion for capital reduction? - Management believes BRL5 billion is the right amount to create a platform for higher cash distribution than annual net income, allowing for a payout above 100% if approved [47][48] Question: Opportunities to reduce costs in 2023? - Management highlighted that lower inflation and the integration of Oi Mobile assets will lead to cost savings and margin expansion [52][53] Question: Competitive environment in mobile? - The company is raising prices in response to inflation and expects competitors to follow suit, reflecting its superior value proposition [72][73] Question: Details on Vivo Money performance? - The loan portfolio reached BRL183 million, growing significantly year-over-year, with low levels of bad debt [77][80] Question: Future growth in B2B digital services? - Management sees strong growth potential in B2B digital services, driven by increasing demand for digitalization among businesses [100]