Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenues increased by 7.4%, driven by an 8.8% rise in mobile service revenues.
- EBITDA expanded by 7.3% year-over-year, with operating cash flow reaching BRL6.5 billion.
- Postpaid access grew by 7.2%, and homes connected with FTTH increased by 12.7%.
- Net income expanded by 8.2% year-over-year, enhancing profitability.
- Vivo's B2B digital services and B2C new businesses represented 9.9% of total revenues, up 1.2 percentage points year-over-year.
Negative Points
- OpEx growth was driven by strong commercial performance and volatility in other revenues and expenses.
- Reduced sales of real estate and network assets, as well as lower tax recoveries, impacted year-over-year comparisons.
- The migration from concession to authorization is still pending approval, with no specific date for completion.
- The competitive mobile market presents challenges with new offerings from regional players.
- The company faces exposure to FX depreciation, particularly affecting handset costs and CapEx.
Q & A Highlights
Q: What are the main barriers for increasing mobile plan prices more significantly? Is it competitors' prices or consumer budget constraints?
A: Christian Gebara, CEO, explained that the strategy goes beyond price increases, focusing on service combinations like fiber and mobile convergence. Price increases have been driven by inflation, but the company emphasizes reducing churn and increasing customer lifetime value through bundled services.
Q: How confident is Vivo in becoming a relevant player in digital services, and can it be a profitable business?
A: Christian Gebara, CEO, expressed confidence in digital services, noting that they already represent around 10% of revenues. The company leverages its large customer base and extensive channels to drive growth in both B2B and B2C digital services, which have shown significant revenue increases.
Q: Could you discuss alternative non-operating drivers of net income, such as profits from the sale of reversible assets or potential reversals in concession liabilities?
A: David Sanchez-Friera, CFO, stated that while they cannot disclose specific impacts yet, opportunities for growth in EBITDA and potential benefits from interest rate reductions are expected. The company is also monitoring tax recoveries closely.
Q: Can you elaborate on the increased pace of broadband adds and the pickup in FTTH ARPU?
A: Christian Gebara, CEO, attributed the growth to a well-executed strategy, highlighting the quality of service, customer experience, and the ability to offer bundled services. The ARPU increase is driven by customer demand for higher speeds and additional services.
Q: How do you view competition in the mobile segment, and what are the expected economic benefits from the migration from concession to authorization?
A: Christian Gebara, CEO, noted that the mobile market is competitive, but Vivo focuses on maximizing customer relationships through unique value propositions. The migration is expected to bring operational efficiencies, though specific benefits will be clearer once regulatory approvals are finalized.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
