Telefonica Brasil S.A.(VIV) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues increased by 7.7% in Q4 2024, with mobile revenues growing by 7% and fixed revenues growing by 8%, marking the best performance for the fixed segment [11][12] - EBITDA increased by 7.8% year-over-year, maintaining a high EBITDA margin of 42.5% [30][32] - Net income for 2024 reached BRL 5.5 billion, a growth of 10.3% compared to the previous year, resulting in earnings per share of BRL 3.38, up 11% [32][34] - Operating cash flow grew by 11% year-over-year, reaching BRL 13.7 billion, representing almost 25% of total revenues [12][31] Business Line Data and Key Metrics Changes - The mobile segment accounted for 65% of total revenues, with postpaid revenues growing by 9.1% in Q4, representing 84% of total mobile service revenues [13][15] - Fixed revenues grew by 8%, driven by a 12.4% increase in FTTH and a 21.1% expansion in data, ICT, and digital services [13][19] - B2B revenue growth was 8.5% year-over-year, with digital B2B solutions expanding over 20% [23] Market Data and Key Metrics Changes - The number of homes connected via fiber grew by 12.7% in Q4, totaling 7 million connections [10][17] - The mobile customer base grew by 3.3% year-over-year, reaching over 102 million accesses, with postpaid users increasing to over 66 million [15][20] Company Strategy and Development Direction - The company is focusing on enhancing its digital ecosystem, with new businesses representing over 10% of total revenues [14] - Vivo aims to maintain selective expansion of its fiber footprint while increasing penetration of connections over its network [19] - The company is transitioning from a fixed voice concession to an authorization model, which is expected to unlock significant operational efficiencies and cost savings [37][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance, highlighting strong customer retention and low churn rates [10][16] - The company is committed to maintaining a shareholder remuneration policy of at least 100% of net income for 2025 and 2026 [34][46] - Management noted that the migration from copper to fiber will significantly improve operational efficiency and profitability [39][100] Other Important Information - Vivo joined the Dow Jones Best-in-Class World Index, highlighting its commitment to sustainability [25] - The company achieved a record in its recycling program, collecting 37 tonnes, three times more than the previous year [25] Q&A Session Summary Question: Dividend perspective for 2025 - Management confirmed a commitment to a payout of at least 100% of net income for 2025 and 2026, with BRL 4.2 billion already committed for shareholder remuneration [46][48] Question: Mobile service revenue decrease - Management explained that while there was a strong growth of 7% in Q4, the comparison to a very strong Q3 may have skewed perceptions, and they remain optimistic about future growth [54][56] Question: Margin expectations amid rising inflation - Management indicated that despite cost pressures, they expect to maintain strong margins due to operational efficiencies and digitalization efforts [62][70] Question: Concession migration and asset sales - Management outlined a four-year plan for the concession migration, emphasizing the potential for significant operational savings and revenue growth from migrating customers to fiber [64][66] Question: B2B revenue growth sustainability - Management confirmed that the strong growth in B2B revenues is expected to continue, driven by a focus on digital services and cloud solutions [78][81] Question: Timeline for customer migration from copper - Management stated that they have a plan to accelerate the migration of customers from copper to fiber, with significant benefits expected within the first four years [85][87] Question: Impact of concession migration on free cash flow - Management indicated that benefits from the migration will be captured over the next four years, with a focus on maximizing free cash flow [133][134] Question: Use of cash beyond shareholder remuneration - Management confirmed that they are exploring acquisition opportunities while maintaining a low debt level [131][132]