Telefonica Brasil S.A.(VIV) - 2020 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a net income of BRL 1.2 billion for the quarter, a 25% year-over-year increase [42] - Operating cash flow reached BRL 7.5 billion, with a margin of 23.5%, expanding by 3.4 percentage points year-over-year [13] - Free cash flow for the first nine months of 2020 grew 50% year-over-year to BRL 8.9 billion, surpassing the total for the entire year of 2019 [43] Business Line Data and Key Metrics Changes - Mobile service revenues decreased by 1% year-over-year but increased by 3.3% quarter-over-quarter [10][11] - Fiber revenues, including FTTH and IPTV, grew by 47.3% year-over-year and 14.5% quarter-over-quarter [11][23] - Postpaid customer base accounted for almost 60% of total mobile access, with 844,000 net additions in the quarter [9] Market Data and Key Metrics Changes - The overall mobile market share stood at 33.3%, the highest in 14 years, with a significant reduction in postpaid churn [20] - Prepaid revenues grew by 5.8%, driven by customer acquisition efforts [18] - FTTH net additions totaled 267,000, reaching 3.1 million homes connected, a 34% year-over-year increase [24] Company Strategy and Development Direction - The company is focused on digitalization and simplification initiatives to reduce costs and improve customer experience [12][35] - There is a strong emphasis on expanding the fiber footprint, with plans to reach 268 cities by the end of the year [31] - The company aims to maintain leadership in mobile and fixed services while exploring partnerships and potential M&A opportunities in the fiber market [100][102] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of revenue and customer demand as COVID-19 restrictions ease [91] - The company is confident in its ability to capture growth opportunities in the digital space and maintain strong cash flow generation [45] - Future CapEx is expected to decrease as the company shifts focus to growth technologies and network sharing agreements [82] Other Important Information - The company was recognized as one of the top 10 companies in the new S&P/B3 ESG Index, highlighting its commitment to sustainability [48] - A national campaign for recycling electronic waste was launched, along with the inauguration of a biogas power plant [49] Q&A Session Summary Question: Migration of concessions to authorizations and prepaid pricing - Management is optimistic about the migration process but acknowledges it is still early in the regulatory phase [58][60] - There are plans to increase prepaid prices, but the timing is uncertain due to competitive pressures [61][62] Question: Prepaid performance and legacy business deterioration - The strong prepaid growth is attributed to quality service and effective customer management [67] - Legacy services are declining due to strategic decisions to focus on FTTH and IPTV, with expectations of continued revenue decline in these areas [73] Question: CapEx trends and fiber market strategies - CapEx is expected to decrease as the company prioritizes growth technologies and network sharing [82] - The company is confident in its competitive position in the fiber market despite the presence of smaller players [85] Question: Outlook for Q4 and cost reduction strategies - Management anticipates a positive trend in Q4 due to improved economic conditions and customer demand [91] - There is still room for cost reductions through digital initiatives and operational efficiencies [93]