Telefonica Brasil S.a. · BMFBOVESPA:VIVT3
Telefonica Brasil — Q4 2018 Earnings Presentation
18 slides from Telefonica Brasil's earnings presentation, February 2019
Slide 1: Results 4Q18
Results 4Q18 Investor Relations Telefônica Brasil S.A. February, 2019
Slide 2: Disclaimer
Disclaimer This presentation may contain forward- The exclusive purpose of such looking statements concerning future statements is to indicate how we prospects and objectives regarding growth intend to expand our business and of the subscriber base, a breakdown of the they should therefore not be re
Slide 3: Strategic priorities for 2019
Strategic priorities for 2019 Focus on revenue growth through outstanding performance in high-value services while leveraging on potential macro improvement Strong EBITDA expansion due to efficient cost management and evolution of digitalization initiatives Sustain solid cash generation to continue
Slide 4: 2018 Highlights
2018 HIGHLIGHTS Unique assets Postpaid Net Adds FTTH Net Adds Footprint Expansion with Acceleration irreplicable position in key +3.6m (+7.5% YoY) +604k +30 new FTTH cities 3,100 4G cities segments 55.2% of Accesses in Postpaid +50.0% YoY 1,000 4.5G cities Transforming Growing Businesses¹ Recurring
Slide 5: Mobile revenues presenting solid expansion driven by recovery of service revenues and handset sales
Mobile revenues presenting solid expansion driven by the initial recovery of service revenues and strong handset sales Mobile Revenues¹ R$ Million Accelerated QoQ growth 0.0% Mobile Service Revenues Growth | QoQ% 3.0% MSR² YoY _Postpaid revenues growing +5.3% YoY 7,056 +1.0 p.p. in 4Q18 6,850 6,732
Slide 6: Leadership in postpaid net adds and controlled churn leading to incomparable customer base profile
Leadership in postpaid net adds and controlled churn leading to incomparable customer base profile Expanding mobile market leadership… …whose profile improves as we continue with migrating efforts and controlled churn Mobile Market Share 31.7% 31.9% 40.5% Net Migration of Prepaid to Hybrid Postpaid
Slide 7: Clear improvement of fixed revenues mix during 2018 with double-digit increase of growth products
Clear improvement of fixed revenues mix during 2018 with double-digit increase of growth products Fixed Revenues R$ Million Growing revenues (ex-voice and DTH) expanding double-digit in 2018 Fixed Revenues5 ex-Voice and DTH | YoY% -3.5% YoY 4,184 4,045 4,038 9.0% 10.5% 631 -2.0% 6.2% 634 618 499 405
Slide 8: Outstanding operating performance of fiber-related products leading to expressive ARPU increase
Outstanding operating performance of fiber-related products leading to expressive ARPU increase in 2018 Broadband Accesses and ARPU Pay TV Accesses and ARPU BB Accesses | Thousand YoY Pay TV Accesses| Thousand YoY TOTAL 7,432 7,458 0% TOTAL 1,588 1,567 -1% 61% 67% 10% IPTV 24% 37% 52% FTTX¹ xDSL 39%
Slide 9: In 2018 we exceeded our internal expectations in fiber footprint expansion and results
In 2018 we exceeded our internal expectations in terms of fiber footprint expansion and results, confirming the UBB opportunity in Brazil In 2018 we beat our goals and launched a record …while continuing to deliver sound results in the number of 30 new FTTH cities… cities that were recently launched
Slide 10: Investments of R$ 8.2 billion in 2018, focused on higher-return technologies
Investments of R$ 8.2 billion in 2018, with focus on higher-return, future-proof technologies and IT transformation Capex ex-Licenses 70% of our Capex investments were oriented to growth… R$ Billion 18.8% 18.5% 18.9% 2018 YoY% 2018 YoY% 3G -39% 4G +8% Copper -12% 70% Fiber +26% 8.0 8.0 8.2 DTH -41%
Slide 11: 12th consecutive quarter of recurring costs reduction led to record EBITDA margin
12th consecutive quarter of recurring costs¹ reduction led to record EBITDA Margin in the quarter MAIN HIGHLIGHTS Personnel Costs¹ YoY 1.1% 1.1% _13.7% of total Opex 4Q18 COST EVOLUTION _Ongoing restructuring as a part of the digitalization and simplification program -0.9% 4Q17 3Q18 4Q18 37.0% Cost
Slide 12: Significant reduction in major cost lines as digitalization changes customer interaction
Significant reduction in major cost lines as digitalization changes the way we interact with our customers Fronts KPIs 2017 2018 Opex lines evolution BILLING & Fostering sales and _E2E Online Fixed B2C sales +43% YoY POSTING -15% YoY top-ups through 4Q17 4Q18 digital channels _% of digital top-ups 2
Slide 13: Net income reported in 2018 reached a historical record
Net income reported in 2018 reached a historical record, almost doubling on an YoY basis 2018 Net Income | R$ Million and % YoY REPORTED (CONSIDERING IFRS CHANGES¹) | R$ Million +13.0% Recurring ∆ YoY% 6.1% 6.6% -37.6% 10.3% 93.7% 895 (515) 339 (159) 3,759 8,928 4,609 2017 Recurring EBITDA D&A Recur
Slide 14: Free Cash Flow soaring 20.6% YoY in 2018
Free Cash Flow soaring 20.6% YoY in 2018 with solid EBITDA expansion and efficient financial management Free Cash Flow¹ reaching R$ 6.9 billion in the year, allowing Strong balance sheet contributes to low for higher investments and shareholder remuneration leverage YoY R$ Million 2017 2018 R$ Milli
Slide 15: Record distribution of dividends and IOC in 2018
Record distribution of dividends and IOC in 2018, boosted by strong net income and cash generation Dividends and IOC deliberations Schedule of Payments R$ Billion FCF 2018 R$ 6.9 bn _Payment of R$ 7.0 billion in dividends + IOC¹ _2019 remuneration is 52% higher YoY +52.3% Payment Date² Gross Amount
Slide 16: Effects of IFRS 15 on our 4Q18 results
Effects of IFRS 15 on our 4Q18 results Pro forma¹ Reported¹ R$ million 4Q18 Δ% YoY IFRS 4Q18 Δ% YoY IFRS 15: new accounting standard in w/o IFRS Adjustments w/ IFRS force since January 2018, which Net Operating Revenue 11,093.9 0.5% -8.4 11,085.5 0.5% requires revenue to be recognized Net Service Re
Slide 17: Investor Relations
FOR FURTHER INFORMATION: INVESTOR RELATIONS +55 11 3430.3687 ir.br@telefonica.com www.telefonica.com.br/ir
Slide 18: Sustainability: Responsible Business Plan
Sustainability: Responsible Business Plan 2018 MAIN TOPICS MAIN INDICATORS MONITORED Risk Management 100% of Telefônica Brasil’s energy consumption comes from renewable Ethical sources (with Renewable Energy Credits) The Responsible Business Plan is our performance model to monitor Sustainable Pro