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Telefonica Brasil (VIV) Q3 Earnings Top, Revenues Grow Y/Y

Brazilian telecom carrier Telefonica Brasil SA VIV reported mixed financial results in the third quarter of 2017.

Third-quarter net income was approximately $386.4 million, increasing 28.3% year over year. Earnings per ADR (American Depositary Receipt) were 23 cents, a penny better than the Zacks Consensus Estimate.

Telefonica Brasil S.A. Price, Consensus and EPS Surprise


Telefonica Brasil S.A. Price, Consensus and EPS Surprise | Telefonica Brasil S.A. Quote

Net operating revenues were around $3,440 million, increasing 1.8% year over year.

Total operating costs in the reported quarter were approximately $2,278 million, decreasing 1% year over year. Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) was about $1,161.9 million, reflecting an increase of 7.8% year over year. EBITDA margin was 33.8% compared with 31.9% in the prior-year quarter.

Telefonica Brasil is a subsidiary of Spanish telecom giant Telefonica SA TEF. The company shares a fiercely competitive space with the likes of America Movil SAB AMX in Brazil. U.S. telecom giant AT&T Inc. T may also enter the Brazilian market in the future, further intensifying competition. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Segment Results

Mobile Business’ total revenues increased 2.7% year over year to approximately $2,088.8 million in the reported quarter. As of Sep 30, 2017, the company’s total mobile subscriber base touched 74.562 million (up 1.5% year over year). Post-paid subscriber count increased 9.7% year over year to 35.664 million, while prepaid customer count declined 5.1% year over year to 38.897 million. In the reported quarter, the company added a net 981,000 postpaid mobile subscribers.

Fixed Line Business’ total revenues inched up 0.5% year over year to approximately $1,351.2 million. As of Sep 30, 2017, total fixed access lines were 23.077 million, reflecting a decline of 2.7% year-over-year. Fixed Broadband customers were 7.452 million, increasing 1.9% year over year. Fixed voice lines were 14.007 million, decreasing 4.3% year over year. The Pay-TV subscriber base declined 8.2% year over year to 1.618 million.

ARPU & Churn Rate

Quarterly data ARPU (average revenues per user) was up 26.3% to about $6.54 while quarterly voice revenues per user dropped 32.5% to around $2.43. Mobile postpaid ARPU was around $16.27, increasing 0.7% year over year. Mobile postpaid monthly churn rate was 1.8%, compared with 1.7% in the year-ago quarter. Mobile prepaid ARPU was around $4.27, declining 0.6% year over year. Prepaid monthly churn rate was 4.8% compared with 4.7% in the year-ago quarter.


Telefonica Brasil exited the third quarter of 2017 with cash and cash equivalent of around $1,764.1 million (down 4.4% year over year) and total debt of around $2,545.9 million (down 8.9% year over year).

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