Telefonica Brasil S.a. · BMFBOVESPA:VIVT3
Telefonica Brasil — Q1 2018 Earnings Presentation
38 slides from Telefonica Brasil's earnings presentation, Apr 25, 2018
Slide 1: Form 6-K Telefônica Brasil S.A.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the month of April, 2018 Commission File Number: 001-14475 TELEFÔNICA BRASIL S.A. (Exact name of registran
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Slide 3: Results Telefonica January — March 2018
Results Telefonica January — March 2018
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Slide 5: Highlights
GROWTH OF 4.2% IN NET MOBILE REVENUE, ALLIED TO THE NINTH CONSECUTIVE QUARTER OF RECURRING COSTS REDUCTION, LED TO ANOTHER QUARTER OF SOLID EBITDA EVOLUTION Highlights
Slide 6: Highlights: accesses, market share and ARPU
o Total accessescame to 97.8 million in March 2018, of which 75.1 million in the mobile business (+1.5% y-o-y) and 22.7 million in the fixed business (-2.3% y-o-y), maintaining the pace of net postpaid additions, partially offset by fixed voice disconnections; o Mobile market share of 31.9% in March
Slide 7: Results disclosure and IFRS 15 basis of presentation
Telefônica Brasil SA (B3: VIVT3 and VIVT4, NYSE: VIV) discloses today its results for the first quarter of 2018, presented in accordance with the International Financial Reporting Standards (IFRS) and the pronouncements, interpretations and guidelines issued by the Accounting Pronouncements Committe
Slide 8: Total Fixed Accesses
Total Fixed Accesses 22,714 23,239 (2.3) 22,714 23,239 (2.3) 1) New accounting standard in force since January 2018, which requires revenue to be recognized based on the contract with the customer, not necessarily aligned with billing. For Vivo, revenue recognition of mobile offers with handset subs
Slide 9: Mobile Business Operating Performance
Mobile Business OPERATING PERFORMANCE Thousand 1Q18 1Q17 ?% 4Q17 ?% Total Mobile Accesses 75,098 73,997 1.5 74,940 0.2 Postpaid 37,499 33,825 10.9 36,772 2.0 M2M 6,674 5,279 26.4 6,321 5.6 Prepaid 37,599 40,171 (6.4) 38,168 (1.5) Market Share 31.9% 30.5% 1.4 p.p. 31.7% 0.2 p.p. Postpaid 41.4% 42.0%
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Slide 11: Net postpaid mobile additions and M2M growth
o In 1Q18, net postpaid mobile additions reached 727 thousand accesses, representing an increase of 67.4% y-o-y, while net prepaid disconnections totaled 569 thousand accesses, thus continuing the migration of prepaid customers to postpaid plans (hybrid and pure postpaid). The prepaid customer base
Slide 12: Net Mobile Revenue increased 4.2% y-o-y
In 1Q18, Net Mobile Revenue increased 4.2% y-o-y, due to higher Mobile Service Revenues, which registered a positive variation of 3.5% y-o-y in the quarter, driven by the growing evolution of Data and Digital Services revenue, and by the performance of Net Handset Revenues, which increased 20.8% y-o
Slide 13: Mobile revenue: voice, interconnection, data and digital services
Outgoing Voice revenuefell 30.6% in comparison to 1Q17, mainly reflecting the migration to data services. In addition, the prepaid segment continued to be influenced by a year- over-year decline in the volume of top-ups, mainly due to macroeconomic conditions, whose improvement has not yet been refl
Slide 14: Fixed Line Business Operating Performance
FIXED LINE BUSINESS OPERATING PERFORMANCE Thousand 1Q18 1Q17 ∆% 4Q17 ∆% Total Fixed Accesses 22,714 23,239 (2.3) 22,857 (0.6) Fixed Voice Accesses 13,679 14,242 (4.0) 13,837 (1.1) Residential 8,728 9,237 (5.5) 8,899 (1.9) Corporate 4,510 4,561 (1.1) 4,498 0.3 Others 442 444 (0.6) 441 0.3 Fixed Broad
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Slide 16: Pay TV and fixed net operating revenue
o Pay TV accesses decreased 4.2% y-o-y (-7.3% in 4Q17), closing the first quarter with 1.6 million subscribers, due to the strategic decision of the Company to deprioritize DTH. The improvement in the trend, when compared to the last quarter, is due to the 52.9% y-o-y growth in IPTV accesses in 1Q18
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Slide 18: Consolidated Operating Costs
Corporate Data and IT revenue increased by 0.6% y-o-y, boosted, mainly, by the growing adoption of Cloud and IT services. In 1Q18, Pay TV revenue recorded a decrease of 1.5% in the annual comparison. The Company continued with its more selective strategy for this service, focusing on high value prod
Slide 19: Operating costs decreased 1.2% year over year
Operating costs excluding depreciation and amortization expenses, decreased 1.2% compared to the same period last year, reaching R$ 6,993.7 million in the quarter, in a period in which inflation was +2.7% (IPCA-12M). This is the ninth quarter in a row of recurring operating costs reduction in the Co
Slide 20: Operating Costs decreased 1.2% y-o-y in 1Q18
Personnel Costs rose 5.7% in 1Q18 over the same period last year. This increase is due to the Operating Costs inflation related to wages and benefits and the increase of variable remuneration, mainly attributed to decreased 1.2% y-o-y our own salesforce. in 1Q18 Cost of Services Rendered in 1Q18 dec
Slide 21: EBITDA and Depreciation and Amortization
EBITDA EBITDA (earnings before interest, taxes, depreciation and amortization) totaled R$ 3,765.3 million in EBITDA growth of 1Q18, 7.2% up on the same period last year, reaching EBITDA margin of 35.0%, 1.8 p.p. up on 1Q17. 7.2% y-o-y, reaching R$ 3,765.3 million Reported EBITDA presented a growth o
Slide 22: Depreciation and Amortization increase
1) Amortization of intangible assets generated by the incorporation of Vivo as of 2Q11 and GVT as of 2Q15 In 1Q18, the Depreciation and Amortization line presented an increase of 2.8% in the y-o-y comparison, mainly due to the growth in the fixed asset base. 10
Slide 23: Financial Result and Net Income
Financial Result Consolidated in R$ million 1Q18 1Q17 ∆% 4Q17 ∆% Net Financial Income (172.7) (290.4) (40.5) (177.8) (2.9) Income from Financial Investments 72.0 190.2 (62.1) 111.6 (35.5) Debt Interest (157.3) (294.1) (46.5) (157.3) 0.0 Monetary and Exchange Variation (87.5) (125.5) (30.3) (79.8) 9.
Slide 24: Capex
In 1Q18, Capex increased 16.5% y-o-y, reaching R$ 1,547.4 million, accounting for 14.4% of Net Operating Revenue for the period. The investments were mainly focused in FTTH footprint expansion and adoption, and higher 4G coverage and capacity. 11
Slide 25: Cash Flow
In a Material Fact published on March 12, 2018, the Company announced to its shareholders and the market in general that, in line with its strategy of offering the best experience for its clients and capturing existing growth opportunities in the country: (i) the Company will carry out an estimated
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Slide 27: Debt
Debt Loans and Financing (R$ million) March 2018 Consolidated Currency Interest Rate Due Date Short-Term Long-Term Total Local Currency BNDES UR LTIR LTIR + 0.00% to 3.38% 2023 658.3 770.1 1,428.5 BNDES R$ 2.5% to 6.0% 2023 71.4 147.3 218.7 BNDES R$ SELIC D-2 + 2.32% 2023 76.5 291.8 368.3 BNB R$ 7.0
Slide 28: Net Debt and Net Debt / EBITDA
Net Debt 3,083.8 3,809.9 4,124.8 After 2022 660.9 Net Debt / EBITDA³ 0.21 0.26 0.30 Total 5,210.3 1) Includes the investment in BNB given as a guarantee for the loan from that bank. 2) Alignment of the classification criterion for the asset backing the contingent consideration to calculate pro-forma
Slide 29: Capital Market
Capital Market Telefônica Brasil's common (ON) and preferred (PN) shares are traded on B3 under the tickers VIVT3 and VIVT4, respectively. The Company's ADRs are traded on the NYSE, under the ticker VIV. VIVT3 and VIVT4 shares closed the first quarter of 2018 at R$ 44.20 and R$ 50.40, respectively,
Slide 30: Capital Stock and Dividends
Capital Stock 31-Mar-2018 Common Prefered Total Controlling Company Shareholders 540,033,264 704,207,855 1,244,241,119 94.47% 62.91% 73.58% Minority Shareholders 29,320,789 415,131,868 444,452,657 5.13% 37.09% 26.28% Treasury 2,290,164 983 2,291,147 0.40% 0.00% 0.14% Total Number of Shares 571,644,2
Slide 31: Dividends and IOC
Net Gross Net Gross Payment Shareholding Amount Amount Amount 2017 Deliberation Amount Shares Beginning Position (BRL per Share per Share (BRL million) Date million) (BRL) (BRL) Dividends ON 1.217277 1.217277 04/12/2018 04/12/2018 2,191.9 2,191.9 12/11/2018 (based on Dec-17) PN 1.339005 1.339005 IOC
Slide 32: Income Statement (Reported)
INCOME STATEMENT (Reported) Consolidated in R$ million 1Q18 1Q17 ∆% 4Q17 ∆% Gross Operating Revenue 16,334.4 16,570.4 (1.4) 16,536.7 (1.2) Mobile 10,331.2 10,153.0 1.8 10,357.6 (0.3) Fixed 6,003.2 6,417.4 (6.5) 6,179.1 (2.8) Net Operating Revenue 10,789.0 10,590.1 1.9 11,033.5 (2.2) Mobile 6,764.8 6
Slide 33: Taxes and Net Income
Taxes (526.0) (284.5) 84.9 (81.2) 547.8 Net Income 1,098.0 996.2 10.2 1,516.9 (27.6) 17
Slide 34: Balance Sheet (Reported)
BALANCE SHEET (Reported) Consolidated in R$ million 31/03/2018 31/12/2017 ∆% ASSETS 102,281.1 101,382.8 0.9 Current Assets 17,910.4 16,731.7 7.0 Cash and Cash Equivalents 4,354.5 4,050.3 7.5 Accounts Receivable from Customers 10,363.5 9,955.2 4.1 Provision for Doubtful Accounts (1,592.8) (1,366.7) 1
Slide 35: Balance Sheet liabilities and shareholders' equity
Deferred Taxes 882.3 709.3 24.4 Loans and Financing 2,096.9 2,320.1 (9.6) Debentures 3,113.4 3,108.3 0.2 Provisions 6,814.4 6,709.8 1.6 Derivative Financial Instruments 18.0 15.4 16.9 Deferred Revenues 380.8 350.6 8.6 Lincence of Authorization 119.2 117.4 1.5 Other Liabilities 668.9 655.3 2.1 SHAREH
Slide 36: Conference Call
Conference Call English Date: April 25, 2018 (Wednesday) Time: 10:00 AM (Brasilia time) and 9:00 AM (New York time) Telephone: +1 (412) 717-9224 Access code: Telefônica Brasil Click here to access the webcast. A replay of the conference call will be available one hour after the event, until May 7, 2
Slide 37: Forward-looking statements
This document may contain forward-looking statements. Such statements do not constitute historical facts and merely reflect the expectations of the Company's management. Such terms as "anticipate", "believe", "estimate", "expect", "foresee", "intend", "plan", "project", "target" and similar, are int
Slide 38: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TELEFÔNICA BRASIL S.A. Date: April 23, 2018 By: /s/ Luis Carlos da Costa Plaster Name: Luis Carlos da Co