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Telefonica Brasil (VIV) Q2 Earnings Lag, Revenues Grow Y/Y

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Brazilian telecom carrier, Telefonica Brasil SA (VIV - Free Report) recently reported mixed financial results in the second quarter of 2017.

Second-quarter net income was approximately $272 million, up 36% year over year. Earnings per ADR (American Depository Receipt) were 16 cents, well below the Zacks Consensus Estimate of 22 cents.

Net operating revenues were around $3,331.8 million, up 11.1% year over year.

Total operating costs in the reported quarter were approximately $2,233.1 million, down 1.9% year over year. Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) was about $1,099.1 million, reflecting an increase of 10.3% year over year. EBITDA margin was 33% compared with 35.5% in the prior-year quarter.

Telefonica Brasil is a subsidiary of Spanish telecom giant Telefonica SA (TEF - Free Report) . The company shares a fiercely competitive space with the likes of America Movil SAB (AMX - Free Report) in Brazil. U.S. telecom giant AT&T Inc. (T - Free Report) may also enter in the Brazilian market in future further intensifying the 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-wise Results

Mobile Business’ total revenue increased 3.8% year over year to approximately $2,035.4 million in the reported quarter. As of Jun 30, 2017, the company’s total mobile subscriber base touched 74.335 million (up 1.4% year over year). Post-paid subscriber count increased 9.7% year over year to 34.683 million, while the prepaid customer count fell 4.9% year over year to 39.652 million. In the reported quarter, the company added a net 858,000 postpaid mobile subscribers.

Fixed Line Business’ total revenue dropped 1.3% year over year to approximately $1,296.7 million. As of Jun 30, 2017, total fixed access lines were 23.250 million, reflecting a decrease of 2.1% year-over-year. Fixed Broadband customers were 7.435 million, up 2.6% year over year. Fixed voice lines were 14.168 million, down 3.9% year over year. The Pay-TV subscriber base declined 6.5% year over year to 1.647 million.

ARPU & Churn Rate

Quarterly data ARPU (average revenue per user) was up a substantial 30.3% to about $6.29 while quarterly voice revenue per user dropped 32.3% to around $2.49. Mobile postpaid ARPU was around $16.39, up 2.6% year over year. Mobile postpaid monthly churn rate was 1.8%, compared with 1.9% in the year-ago quarter. Mobile prepaid ARPU was around $4.08, down 2.4% year over year. Prepaid monthly churn rate was 4.6% compared with 4.3% in the year-ago quarter.

Liquidity

Telefonica Brasil exited the second quarter of 2017 with cash and cash equivalent of around $2,323.3 million (up 30.5% year over year) and total debt of around $3,246.5 million (up 20.8% year over year).

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

 

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

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