Telefonica Brasil S.A.(VIV) - 2025 Q4 - Earnings Call Transcript

Financial Performance and Key Metrics - Vivo's total revenues in Q4 2025 increased by 7.1%, with mobile service revenue growing by 7% and fixed services by 5.4% [7] - EBITDA rose by 8.1% year-over-year, with a 17.7% increase when excluding concession migration effects, resulting in an EBITDA margin of 42.9% [21][7] - Net income for 2025 reached BRL 7.2 billion, reflecting a double-digit growth rate, while free cash flow increased by 11.4% to BRL 9.2 billion [7][23] Business Line Performance - The postpaid mobile segment saw a 6.5% year-over-year increase, reaching 70.8 million customers, representing 69% of the mobile base [6] - Fiber connections grew to 7.8 million, with a footprint extending to 31 million homes, and a take-up ratio of 25.2% [11] - New business revenues surged by 27% over the last 12 months, now accounting for 12.1% of total revenues, driven by B2C and B2B solutions [9] Market Performance - Vivo's mobile base reached 103 million accesses, with a 0.7% year-over-year increase, and 5G customers grew to 23.1 million, improving the 5G take-up ratio by 8.6 percentage points [10] - B2B revenues amounted to BRL 13.5 billion, up 13.7% year-over-year, with digital B2B growing by 29.5% [15] - The fiber market remains competitive, with Vivo increasing its market share from 18.8% to 19.3% in 2025 [75] Company Strategy and Industry Competition - Vivo is focused on enhancing its convergent offerings, with 62.7% of FTTH customers being convergent, and plans to drive more customers to the Vivo Total package [86] - The company aims to optimize CapEx while maintaining infrastructure leadership, with a CapEx to revenue ratio reduced to 15.6% [21] - Vivo sees potential for consolidation in the fiber market due to fragmentation, indicating a willingness to explore M&A opportunities [77] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about future net income growth, driven by stable EBITDA growth and reduced depreciation starting in mid-2026 [32] - The competitive landscape in mobile is stable, with Vivo planning price increases in line with inflation for various segments [40] - The company is leveraging AI to enhance operational efficiency and customer engagement, with expectations for significant cost savings [89] Other Important Information - Vivo's commitment to shareholder remuneration remains strong, with a payout ratio of 103.4% in 2025 and plans for BRL 7 billion distribution in 2026 [24] - The company has approved a BRL 1 billion share buyback program to enhance shareholder value [25] - Vivo's ESG initiatives have been recognized globally, reflecting its commitment to sustainability [17] Q&A Session Summary Question: Distribution strategy for 2026 - Management discussed the balance between buybacks, interest on capital, and capital reduction, emphasizing a commitment to distribute at least 100% of net income [29][30] Question: CapEx outlook for 2026 and competitive environment - Management highlighted ongoing CapEx optimization and plans for price increases in mobile services, indicating a stable competitive environment [36][40] Question: Lease expenses reduction - Management explained the reduction in lease expenses due to ongoing renegotiations and a favorable tenancy ratio, with expectations for continued improvements [50][53] Question: Prepaid ARPU trends - Management noted improvements in prepaid ARPU driven by customer engagement strategies and migration to higher-value plans [56][58] Question: Mobile market share and B2B growth - Management confirmed stable mobile market share and strong growth in B2B revenues, particularly in digital services [66][68]