3Q24 Results: Telefônica Brasil S.A.

Rhea-AI Summary

Telefônica Brasil (VIV) reports strong Q3 2024 results with notable growth across key metrics. Net operating revenue increased 7.1% YoY to R$14,039 million, driven by mobile services (+8.8%) and FTTH (+14.0%). EBITDA grew 7.4% YoY to R$5,950 million with a 42.4% margin. Net income rose 13.3% YoY to R$1,667 million. The company expanded its 5G coverage to 394 cities, reaching 57% of Brazil's population. Total subscribers increased 3.3% YoY to 115.2 million. Capex decreased 5.0% YoY while operating cash flow improved 18.6% YoY. The company committed to distribute ≥100% of net income as dividends for 2024-2026.

Positive

• Net operating revenue grew 7.1% YoY to R$14,039 million
• EBITDA increased 7.4% YoY to R$5,950 million
• Net income rose 13.3% YoY to R$1,667 million
• Mobile service revenue up 8.8% YoY with postpaid revenue growing 10.4%
• FTTH revenue increased 14.0% YoY
• Operating cash flow improved 18.6% YoY
• Capex intensity reduced by 2.3 percentage points YoY

Negative

• Free cash flow declined 12.9% YoY to R$1,671 million
• Other revenues decreased 12.4% YoY
• EBITDA AL margin slightly decreased by 0.1 percentage points YoY

Insights

Financial Analyst

Telefônica Brasil delivered a robust 3Q24 performance with significant growth across key metrics. Net revenue increased by 7.1% YoY to R$14,039 million, driven by strong mobile services growth of 8.8% and FTTH revenue surge of 14.0%. The company's strategic focus on high-value customers is evident in the 10.4% postpaid revenue growth.

Particularly noteworthy is the improvement in operational efficiency, with EBITDA growing 7.4% YoY to R$5,950 million while maintaining margin expansion. The reduced Capex intensity (-5.0% YoY) alongside increased operating cash flow (+12.0% YoY) demonstrates effective capital management. The commitment to distribute >100% of net income through 2026 signals strong shareholder focus and financial health.

Telecom Infrastructure Analyst

The expansion of FTTH network to 444 cities with 28.3 million homes passed represents significant infrastructure development. The 12.5% growth in homes connected indicates strong market penetration. The strategic 5G rollout reaching 394 cities and covering 57% of Brazil's population positions Telefônica as a leader in next-gen connectivity.

The reduction in Capex while maintaining network expansion demonstrates improved deployment efficiency. The focus on high-value postpaid customers, evidenced by the 7.6% YoY growth in customer base and increased ARPU of R$53.0, suggests a sustainable growth trajectory in the competitive Brazilian telecom market.

SAO PAULO, Nov. 5, 2024 /PRNewswire/ -- Telefônica Brasil - (B3: VIVT3; NYSE: VIV), announces its results for 3Q24.

Strong operating performance resulting in revenues, EBITDA, and net income growth along with reduced Capex intensity.

R$ million	3Q24	3Q23	% Y-o-Y	9M24	9M23	% Y-o-Y
Net Operating Revenue	14,039	13,112	7.1	41,264	38,565	7.0
Mobile Services	9,212	8,465	8.8	26,821	24,614	9.0
FTTH	1,790	1,570	14.0	5,264	4,568	15.2
Corporate Data, ICT, and others	1,129	1,060	6.5	3,389	3,195	6.1
Electronics	856	814	5.1	2,553	2,411	5.9
Other Revenues¹	1,053	1,202	(12.4)	3,236	3,777	(14.3)
Total Costs	(8,089)	(7,573)	6.8	(24,582)	(22,999)	6.9
EBITDA	5,950	5,539	7.4	16,682	15,566	7.2
EBITDA / Net Revenue Margin	42.4 %	42.2 %	0.1 p.p.	40.4 %	40.4 %	0.1 p.p.
EBITDA AL	4,702	4,400	6.9	12,965	12,111	7.1
EBITDA AL / Net Revenue Margin	33.5 %	33.6 %	(0.1) p.p.	31.4 %	31.4 %	0.0 p.p.
Net Income	1,667	1,472	13.3	3,785	3,429	10.4
Earnings per Share (EPS)	1.02	0.89	14.4	2.30	2.07	11.2
CAPEX ex-IFRS 16	2,495	2,626	(5.0)	6,710	6,665	0.7
Operating Cash Flow (OpCF)	3,455	2,913	18.6	9,972	8,901	12.0
OpCF/ Net Revenue Margin	24.6 %	22.2 %	2.4 p.p.	24.2 %	23.1 %	1.1 p.p.
Operating Cash Flow AL (OpCF AL)	2,207	1,774	24.4	6,255	5,446	14.9
OpCF AL / Net Revenue Margin	15.7 %	13.5 %	2.2 p.p.	15.2 %	14.1 %	1.0 p.p.
Free Cash Flow	1,671	1,918	(12.9)	7,139	7,556	(5.5)
Total Subscribers (Thousand)	115,245	111,582	3.3	115,245	111,582	3.3

1	Other Revenues include Voice, xDSL, FTTC and IPTV.

Net revenue grew (+7.1% YoY), driven by the strong performance of Mobile Service Revenue (MSR) (+8.8 YoY), boosted by double-digit growth in postpaid revenue (+10.4% YoY). Postpaid's strong performance is related to the increase in customer base (+7.6% YoY), which totaled 65.0 million in the quarter, driven by migrations from prepaid and adding new customers, that contributed to the +3.5% YoY increase in postpaid ex-M2M and ex-dongles ARPU, to R$53.0.

Fixed revenue increased +3.6% YoY, driven by the FTTH (+14.0% YoY) and Corporate Data, ICT and Digital Services (+6.5% YoY) revenues. FTTH network is currently present in 444 cities (+5 cities YoY) with 28.3 million homes passed (+12.7% YoY) and 6.7 million homes connected (+12.5% YoY).

EBITDA totaled R$5,950 million (+7.4% YoY), with a margin of 42.4% (+0.1 p.p. YoY), reflecting the strong performance of mobile service revenue (+8.8% YoY) and cost control (+6.8% YoY).

In 3Q24, Capex ex-IFRS 16 amounted to R$2,495 million (-5.0% YoY), representing 17.8% of revenues (-2.3 p.p. YoY), directed towards strengthening our mobile network, with emphasis on 5G coverage, that is already present in 394 cities, including all cities with over 200 thousand inhabitants, representing 57% of the Brazilian population.

In 9M24, Operating Cash Flow totaled R$9,972 million (+12.0% YoY), with a margin of 24.2% (+1.1 p.p. YoY) over net revenue.

Net income attributed to Telefônica Brasil reached R$1,667 million in 3Q24 (+13.3% YoY). Shareholder remuneration paid up in 2024 was R$4,790 million (+0.1% vs FY 2023), of which R$2,190 million of interest on equity, R$1,500 million in capital reduction, while R$1,110 million were invested in share buybacks. For the years 2024 to 2026, the Company has committed to distribute an amount equal to or above 100% of net income for each fiscal year.

To download the complete version of the Company's earnings release, please visit our website: https://ri.telefonica.com.br/en

View original content:https://www.prnewswire.com/news-releases/3q24-results-telefonica-brasil-sa-302296988.html

SOURCE Telefônica Brasil S.A.

FAQ

What was Telefonica Brasil's (VIV) revenue growth in Q3 2024?

Telefonica Brasil's net operating revenue grew 7.1% year-over-year to R$14,039 million in Q3 2024.

How much did VIV's net income increase in Q3 2024?

VIV's net income increased 13.3% year-over-year to R$1,667 million in Q3 2024.

What is Telefonica Brasil's dividend policy for 2024-2026?

The company committed to distribute an amount equal to or above 100% of net income as dividends for each fiscal year from 2024 to 2026.

How many cities does VIV's 5G network cover in Q3 2024?

VIV's 5G network covers 394 cities, including all cities with over 200,000 inhabitants, representing 57% of Brazil's population.