Slide 1: Results 2Q19
Results 2Q19 Telefônica Brasil S.A. Investor Relations July, 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 of intend to expand our business and the subscriber base, a breakdown of the various they should therefore n
Slide 3: 2Q19 Highlights
2Q19 HIGHLIGHTS Key Segments Revenues Profitability Cash +37.9% +0.4% -2.4% +12.7% FTTH Customers YoY YoY YoY YoY FTTH Revenues Total Revenues Recurring Costs ex-COGS 1H19 Free Cash Flow (+55.1% YoY) (+0.1% YoY Total Costs) (R$ 3.4 bn) +8.5% +2.3% 34.9% +24.3% Postpaid Customers YoY YoY EBITDA Margi
Slide 4: Mobile revenues growth benefited by strong handset sales and improving prepaid trends
MOBILE REVENUES GROWTH BENEFITED BY STRONG HANDSET SALES AND IMPROVING PREPAID TRENDS, WITH POSITIVE PERSPECTIVES FOR 2H19 Mobile Revenues¹ R$ Million Sequential improvement in prepaid offset by punctual deceleration in postpaid, with good trends going forward 2.3% Mobile Service Revenue Growth YoY%
Slide 5: Unmatched quality of network and service translates into market and ARPU leadership
UNMATCHED QUALITY OF NETWORK AND SERVICE TRANSLATES INTO MARKET AND ARPU LEADERSHIP Market share remains on the rise, solidifying our …as Vivo remains the best rated network Brazil in terms undisputed leadership of overall capacity, coverage and service quality Mobile Market Share P3 connect 2019 Mo
Slide 6: Fixed revenue growing quarter over quarter with broadband weighing more than voice
FIXED REVENUE GROWING QUARTER OVER QUARTER WITH BROADBAND ALREADY WEIGHING MORE THAN VOICE Fixed Revenues¹ R$ Million Transformation of fixed revenue mix leading to sequential improvement -2.8% Fixed Revenues YoY% YoY 2Q18 1Q19 2Q19 0.1% 4,008 QoQ 3,897 -2.8% -3.7% -3.2% 633 658 3.8% 475 466 -1.8% W
Slide 7: Improvement of customer base profile with fiber uptake leading to continued ARPU growth
IMPROVEMENT OF CUSTOMER BASE PROFILE WITH FIBER UPTAKE LEADING TO CONTINUED ARPU GROWTH Broadband Accesses and ARPU Pay TV Accesses and ARPU BB Accesses Thousand Pay TV Accesses Thousand 7,463 1,614 7,268 YoY TOTAL -3% 1,460 YoY TOTAL -10% 21% 30% YoY FTTH 38% 30% 44% YoY IPTV 33% 79% 70% 70% YoY FT
Slide 8: Fast expansion of our FTTH presence in new and existing cities
FAST EXPANSION OF OUR FTTH PRESENCE BOTH IN NEW AND EXISTING CITIES, IMPROVING OUR OVERALL POSITIONING Accelerating our FTTH expansion by delivering 12 new Large number of cities to be launched in 2019, in cities in 2Q19 and reaching 9.5 million HPs line with our expansion plan FTTH Cities FTTH HPs
Slide 9: Investment of R$ 2.4 billion in 2Q19, aligned with guidance
INVESTMENT OF R$ 2.4 BILLION IN 2Q19, ALIGNED WITH GUIDANCE PROVIDED FOR 2019 Capex ex-Licenses¹ R$ Million Focus on quality improvement and footprint expansion of fiber and 4G/4.5G networks 18.6% 17.1% Fiber Investment 14.8% 1H18 142 FTTH + IPTV Cities +34% 110 FTTC Cities 1H19 4,055 3,686 4G/4.5G
Slide 10: MOU signed with TIM for sharing of 2G and 4G mobile infrastructure
MOU¹ SIGNED WITH TIM FOR THE SHARING OF 2G AND 4G MOBILE INFRASTRUCTURE TO RESULT IN ENHANCED QUALITY AND EFFICIENCY Improving ROCE with smart Capex allocation by deprioritizing legacy technologies and focusing on higher-return projects 2G network sharing in a Single Grid model New sharing agreement
Slide 11: Margin expansion driven by controlled cost evolution
MARGIN EXPANSION DRIVEN BY CONTROLLED COST EVOLUTION RESULTING FROM DIGITALIZATION AND EFFICIENCIES 2Q19 Cost Evolution ex-Cost of Personnel YoY Cost of Services Rendered YoY Goods Sold¹ 3.0% 2.8% 2.1% 37.2% 36.1% 35.6% 34.7% 34.9% -2.6% -5.8% -2.4% 2Q18 1Q19 2Q19 2Q18 1Q19 2Q19 -3.0% -2.4% -3.1% 13
Slide 12: Leveraging on artificial intelligence and e-care apps to unlock cost savings
LEVERAGING ON ARTIFICIAL INTELLIGENCE AND E-CARE APPS TO UNLOCK COST SAVINGS WHILE FURTHER IMPROVING CUSTOMER EXPERIENCE › Virtual assistant AURA is already used in more than 20 +192% channels, such as Meu Vivo app, call centers and website, with >50 million interactions up to date Unique AURA Users
Slide 13: Recurring net income increasing double-digit in 1H19
RECURRING NET INCOME INCREASING DOUBLE-DIGIT IN 1H19 BOOSTED BY IMPROVED OPERATING AND FINANCIAL RESULTS 1H19 Net Income Reported¹ R$ million +24.3% YoY (Recurring)³ (2,043) 604 (111) 147 (311) 212 4,264 2,762 2,221 1H18 Non-Recurring 1H18 Recurring EBITDA D&A Recurring Recurring Taxes IFRS 16 Effec
Slide 14: Free cash flow growing 13% YoY in 1H19
FREE CASH FLOW GROWING 13% YOY IN 1H19 DESPITE CAPEX ACCELERATION, DUE TO IMPROVED FINANCIAL MANAGEMENT AND EBITDA GROWTH Free Cash Flow¹ R$ million 1H18 1H19 Strong balance sheet leading to net cash position Recurring Interest and Working FCF from CAPEX Gross Debt² R$ billion EBITDA Income Taxes Ca
Slide 15: Effects of IFRS 16 on our 2Q19 results
EFFECTS OF IFRS 16 ON OUR 2Q19 RESULTS Pro forma Reported IFRS 16 2Q19 IFRS 2Q19 New accounting standard R$ Million Δ% YoY Δ% YoY w/o IFRS16 Adjustments w/ IFRS16 in force since January 2019, under which lessees are required to Net Operating Revenue 10,870 0.4% 0 10,870 0.4% account for leases in th
Slide 16: Investor Relations
For further information: Investor Relations +55 11 3430.3687 ir.br@telefonica.com | www.telefonica.com.br/ir