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Telefonica Brasil (VIV) Beats Q1 Earnings, Misses Revenues

Brazilian telecom carrier Telefonica Brasil SA VIV -- a subsidiary of Spanish telecom giant Telefonica SA TEF -- reported mixed financial results in the first quarter of 2016. The company’s earnings beat the Zacks Consensus Estimate while revenues lagged the same.

First-quarter net income was approximately $312.6 million, up a whopping 179.3% year over year. Moreover, earnings per ADR (American Depository Receipt) were 19 cents, above the Zacks Consensus Estimate of 17 cents.

Net operating revenues were around $2,679 million, up 0.6% year over year but significantly below the Zacks Consensus Estimate of $2,874 million.

Total operating costs in the reported quarter were approximately $1704.6 million, down 9% year over year. Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) was about $972.1 million, reflecting an increase of 23.8% year over year. EBITDA margin was 36.3% compared with 29.5% in the prior-year quarter.

Segment-wise Results

Mobile Business’ total revenue declined 0.3% year over year to approximately $1,594.2 million in the reported quarter.

As of Mar 31, 2016, the company’s total subscriber base touched 73.271 million (down 10.5% year over year). Post-paid subscriber count increased 8.1% year over year to 31.259 million, while the prepaid customer count fell 20.7% year over year to 42.012 million. M2M customer base was 4.397 million, up 19.1% year over year.

Fixed Line Business’ total revenue improved 2% year over year to approximately $1,082.5 million. Pay-TV revenues jumped 21.1% while broadband revenues increased 11.5% year over year.

As of Mar 31, 2016, total fixed access lines were 23.950 million, reflecting a 0.3% year-over-year increase. Fixed Broadband customers were 7.214 million, up 3.7% year over year. The Pay-TV subscriber base grew 4.9% year over year to 1.787 million, while fixed voice subscribers totaled 14.949 million, down 1.8% year over year.

ARPU & Churn Rate

Quarterly data ARPU (average revenue per user) was up a substantial 35.7% to about $3.57 while quarterly voice revenue per user dropped 7.2% to around $3.34. On the other hand, postpaid monthly churn rate was 1.8%, same as the figure reported in the year-ago quarter. Prepaid monthly churn rate was 4.5% against 3.5% in the prior-year quarter.  


Telefonica Brasil exited the first quarter of 2016 with cash and cash equivalents of around $1,043.9 million, down 23.8% from the end of 2015.

Zacks Rank

Telefonica Brasil currently sports a Zacks Rank #1 (Strong Buy). Other favorably ranked stocks worth considering in this sector include BCE Inc. BCE and Windstream Holdings, Inc. WIN. Both the stocks sport the same Zacks Rank as Telefonica Brasil.

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TELEFONICA S.A. (TEF): Free Stock Analysis Report
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WINDSTREAM HLDG (WIN): Free Stock Analysis Report
TELEF BRASIL SA (VIV): Free Stock Analysis Report
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