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    VIVT3   BRVIVTACNOR0

TELEFÔNICA BRASIL S.A.

(VIVT3)
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Telefônica Brasil S A : Earnings Release 1Q21

05/11/2021 | 06:26pm EDT

RESULTS

1Q21 May 11th, 2021

Telefônica Brasil S.A.

Investor Relations

1Q21 Results

Telefônica Brasil S.A.

1Q21 HIGHLIGHTS

Efficiency in executing the commercial strategy ensures outstanding operating performance and consolidates the Company as a digital telco

  • Total customer base was up by 2.9% y-o-y, reaching 96 million accesses;
  • FTTH accesses totaled 3,746 thousand (+41.2% y-o-y), with a record 368 thousand net additions in 1Q21;
  • Launch of Vivo Pay and Vida V, and partnerships with Itaucard, Dotz and CDF, strengthen
    Vivo's positioning as a digital services hub;
  • Postpaid accesses grew 5.2% y-o-y and accounted for 57.7% of total mobile accesses, with a market share of 37.0% (total mobile market share of 33.1% in Mar/21);
  • FTTH coverage available in 276 cities (+10 in 1Q21) with 16.3 million HPs (+4.6% y-o-y).

Net revenue shows an inflection point and resumes growth in the quarter, driven by the performance of core businesses1

  • Core business revenue accelerated in 1Q21 (+4.7% y-o-y) and already accounts for 88% of total revenue, +4 p.p. y-o-y;
  • Net revenue increased 0.2% y-o-yin 1Q21, underscoring the successful transformation of Vivo's revenue profile;
  • FTTH revenues exceeded R$1 billion (+61.2% y-o-y), capturing recent investments in fiber. IPTV revenue came to R$325 million (+25.9% y-o-y).

Ongoing focus on cost control leading to a continued decline trajectory, supported by digitalization and process automation

  • Cost of services and products sold2 reflect improved commercial activity and partnerships;
  • Costs from operations3 declined 5.0% y-o-yin 1Q21, capturing the benefits of automation and digitalization of customer services;
  • EBITDA4 totaled R$4,455 million (+0.5% y-o-y) in 1Q21, with a margin of 41.1%.

Assertive allocation of investments and higher cash generation ensure robust returns to shareholders

  • Investments of R$1,943 million in 1Q21, mainly allocated to expand highspeed infrastructure and connect customers;
  • Free cash flow totaled R$2.2 billion (+3.7% y-o-y in 1Q21), reflecting effective financial management;
  • R$700 million in IOC already declared until April 2021, combining robust earnings distribution with strong value creation for shareholders.
  1. Total Revenue excluding fixed voice, xDSL and DTH.
  2. Services: digital content, regulatory taxes, interconnection and B2B services; Products sold: handsets, accessories and B2B equipment.
  3. Personnel Costs, Commercial and Infrastructure, Provision for doubtful account, G&A and Other operating revenues (expenses). Excludes the positive effect related to the sale of towers and rooftops in the amount of R$75.7 million in 1Q20 (-6.5%y-o-y excluding this effect).
  4. Excludes the positive effect related to the sale of towers and rooftops in the amount of R$75.7 million in 1Q20.

2

1Q21 Results

Telefônica Brasil S.A.

Telefônica Brasil S.A. (B3: VIVT3, NYSE: VIV) discloses today its results for the first quarter of 2021, presented in accordance with the International Financial Reporting Standards (IFRS) and the pronouncements, interpretations and guidelines provided by the Accounting Pronouncements Committee. Totals are subject to differences due to rounding up or down.

The spreadsheet with the data is available on our Investor Relations website: http://ri.telefonica.com.br/en/results-and-notices/results-center.

HIGHLIGHTS1 234

Consolidated in R$ million

1Q21

1Q20

∆% YoY

Net Operating Revenue

10,849

10,825

0.2

Core Revenue

1

9,563

9,131

4.7

Mobile Revenue

7,147

7,070

1.1

Fixed core revenue

2,416

2,060

17.2

Non-core Revenue

2

1,286

1,694

(24.1)

Recurring Total Costs

3

(6,394)

(6,393)

0.0

Reported Total Costs

(6,394)

(6,318)

1.2

Recurring EBITDA

3

4,455

4,431

0.5

Recurring EBITDA Margin

3

41.1%

40.9%

0.1 p.p.

Reported EBITDA

4,455

4,507

(1.1)

Reported EBITDA Margin

41.1%

41.6%

(0.6) p.p.

Net Income

942

1,153

(18.3)

CAPEX | EX-IFRS 16

1,943

1,648

18.0

4

2,199

2,120

3.7

Free Cash Flow

Core Revenue / Net Revenue

88.1%

84.4%

3.8 p.p.

Non-core Revenue / Net Revenue

11.9%

15.6%

(3.8) p.p.

Total Subscribers (Thousand)

95,809

93,082

2.9

Core Subscribers

85,816

80,529

6.6

% / total accesses

89.6%

86.5%

3.1 p.p.

Non-core Subscribers

9,993

12,553

(20.4)

% / total accesses

10.4%

13.5%

(3.1) p.p.

  1. Total Revenue excluding fixed voice, xDSL and DTH.
  2. Fixed voice, xDSL and DTH revenues.
  3. Excludes the positive effect related to the sale of towers and rooftops in the amount of R$75.7 million in 1Q20.
  4. Free cash flow after payment of Leasing. Excludes R$470 million received from the sale of towers and rooftops in 1Q20.

3

1Q21 Results

Telefônica Brasil S.A.

MOBILE BUSINESS1

OPERATING PERFORMANCE

Thousand

1Q21

1Q20

∆% YoY

TOTAL MOBILE SUBSCRIBERS

79,682

74,749

6.6

Postpaid

46,013

43,725

5.2

M2M

10,692

10,415

2.7

Prepaid

33,669

31,024

8.5

MARKET SHARE

1

33.1%

33.0%

0.1 p.p.

Postpaid

1

37.0%

39.0%

(2.0) p.p.

Prepaid

1

28.9%

27.1%

1.8 p.p.

ARPU (R$/month)

27.3

29.0

(5.6)

Postpaid (Human)

49.7

51.3

(3.1)

M2M

3.0

3.0

(0.8)

Prepaid

12.1

12.5

(3.5)

MONTHLY CHURN

2.9%

3.1%

(0.2) p.p.

Postpaid (ex-M2M)

1.1%

1.5%

(0.4) p.p.

Prepaid

4.8%

5.1%

(0.3) p.p.

Total Mobile Subscribers reached 79,682 thousand at the end of 1Q21, a 6.6% increase y-o-y, with a market share of 33.1% in March 2021, maintaining undisputed leadership in the mobile business. The Covid-19 pandemic drastically increased the demand for quality coverage, a feature in which Vivo stands out.

In the postpaid segment, Telefônica Brasil reached 46,013 thousand accesses in 1Q21, up 5.2% y-o- y and accounting for 57.7% of the total mobile customer base. Postpaid net additions recorded 1,143 thousand new accesses in the quarter, the highest level since the end of 2017, driven by the migration of prepaid customers to hybrid plans. The partnerships with digital services also contributed to increase the attractiveness of the portfolio, including plans that offer unique language course apps, like +Babbel, and unlimited access to magazines and newspapers, with GoRead, that lead to additional ARPU and customer engagement.

The prepaid customer base reached 33,669 thousand accesses at the end of March 2021, up 8.5% y-o-y, with a market share of 28.9% in March 2021 (+1.8 p.p. y-o-y). In terms of net additions, the volume decelerated slightly, given that these customers have higher correlation with the country's economic performance. 1Q21 was marked by the gap between Government incentives, that ended at the end of 2020, and the resumption of activities in the country, contributing to the slowdown in this segment, on the quarterly comparison.

In the Machine-to-Machine(M2M) segment, the access base reached 10,692 thousand customers, up 2.7% y-o-y. The Company is also leading in this business, with 35.5% market share in March 2021.

Mobile ARPU fell 5.4% y-o-y in 1Q21, reflecting the greater increase of customers in the prepaid and hybrid segments, which have lower average spend when compared to the pure postpaid segment.

1 Data published by Anatel referring to March 2021.

4

1Q21 Results

Telefônica Brasil S.A.

FINANCIAL PERFORMANCE

Consolidated in R$ million

1Q21

1Q20

∆% YoY

NET MOBILE REVENUE

7,147

7,070

1.1

Mobile Service Revenue

6,503

6,489

0.2

Postpaid

5,281

5,314

(0.6)

Prepaid

1,222

1,176

4.0

Handset Revenues

644

581

10.9

Net Mobile Revenues increased 1.1% y-o-y in 1Q21, due to the positive performance of service and handset revenues.

Mobile Service Revenues saw a slight improvement, +0.2% y-o-y in 1Q21, reflecting the 4.0% upturn in Prepaid Revenues, thanks to a combination of more customers and higher recharge volume, mainly through digital channels. At the end of March 2021, more than 80% of prepaid accesses were on the Vivo Turbo weekly offer, ensuring increased recharge recurrence and, therefore, improved revenue predictability.

Postpaid Revenues1 declined 0.6% y-o-y in 1Q21, due to higher wholesale revenues in 1Q20. Excluding this effect, Postpaid Revenues grew 0.2% y-o-y in the quarter, mainly due to customer base growth supported by the migration of prepaid customers to the hybrid segment.

We remain focused on strengthening our value proposition, expanding the attractiveness of our offers through partnerships with digital content providers.

In the hybrid segment, Vivo Easy continues to be a trend among young people. This is a 100% digital and customizable plan which more than doubled its number of customers on an annual comparison.

Net Handset Revenues jumped 10.9% y-o-y. The launch of mobile devices, such as Apple and Samsung, with new features, contributed to the evolution of this line. In addition, the positive performance shows the sales department's agility and ability to reinvent itself. Despite physical stores being partially closed due to the Covid-19 pandemic, our team was able to offer alternative service models, including drive-thru, and continuous improvements to the virtual store's interactivity and navigability.

1 - Postpaid revenues includes M2M, NICs, wholesale and other.

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Telefônica Brasil SA published this content on 11 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 11 May 2021 22:25:03 UTC.


© Publicnow 2021
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Net income 2021 5 335 M 1 006 M 1 006 M
Net Debt 2021 3 372 M 636 M 636 M
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Technical analysis trends TELEFÔNICA BRASIL S.A.
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TrendsNeutralNeutralBearish
Income Statement Evolution
Consensus
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Mean consensus BUY
Number of Analysts 12
Last Close Price 43,85 BRL
Average target price 58,49 BRL
Spread / Average Target 33,4%
EPS Revisions
Managers and Directors
Christian Mauad Gebara Chief Executive Officer & Director
David Melcon Sanchez-Friera Chief Financial & Investor Relations Officer
Eduardo Navarro de Carvalho Chairman
Francisco Javier de Paz Mancho Director
Luiz Fernando Furlán Director
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