2Q22 Results: Telefônica Brasil S.A.

Rhea-AI Summary

Telefônica Brasil (VIV) reported strong financial results for 2Q22, with net operating revenues increasing by 11.1% year-over-year to R$11.831 billion, driven by mobile service revenue growth of 15.1%. The company added 4.671 million postpaid accesses through the Oi Mobile acquisition and achieved total subscribers of 113.706 million. Recurring EBITDA rose 8.3% to R$4.578 billion with a margin of 38.7%. Despite a 44.6% decline in net income to R$746 million, free cash flow post-leases improved by 15.5% to R$2.157 billion. The company also issued R$3.5 billion in sustainability-linked bonds.

Positive

• Net operating revenues increased by 11.1% YoY to R$11.831 billion.
• Mobile service revenue grew by 15.1% YoY.
• Total subscribers reached 113.706 million, boosted by 4.671 million new postpaid accesses.
• Recurring EBITDA rose by 8.3% YoY to R$4.578 billion with a margin of 38.7%.
• Free cash flow after leases increased by 15.5% YoY to R$2.157 billion.
• Successful issuance of R$3.5 billion in sustainability-linked bonds.

Negative

• Net income decreased by 44.6% YoY to R$746 million.

SÃO PAULO, July 26, 2022 /PRNewswire/ -- Telefônica Brasil - (B3: VIVT3; NYSE: VIV), announces its results for 2Q22.

Acceleration of the customer base evolution leads to double-digit revenue growth

R$ million	2Q22	2Q21	% y-o-y	6M22	6M21	% y-o-y
Net Operating Revenues	11,831	10,649	11.1	23,183	21,498	7.8
Core Revenue	10,839	9,453	14.7	21,124	19,016	11.1
Mobile Revenue	8,110	6,990	16.0	15,691	14,138	11.0
Fixed Core Revenue	2,729	2,462	10.8	5,433	4,878	11.4
Non-Core Revenue	992	1,197	(17.1)	2,059	2,483	(17.1)
Recurring Total Costs	(7,253)	(6,423)	12.9	(14,093)	(12,817)	10.0
Reported Total Costs	(7,253)	(5,860)	23.8	(14,093)	(12,254)	15.0
Recurring EBITDA	4,578	4,226	8.3	9,090	8,681	4.7
Recurring EBITDA Margin	38.7 %	39.7 %	(1.0) p.p.	39.2 %	40.4 %	(1.2) p.p.
Reported EBITDA	4,578	4,789	(4.4)	9,090	9,244	(1.7)
Reported EBITDA Margin %	38.7 %	45.0 %	(6.3) p.p.	39.2 %	43.0 %	(3.8) p.p.
Net Income	746	1,345	(44.6)	1,496	2,287	(34.6)
Capex  | Ex- IFRS 16	2,575	2,251	14.4	4,455	4,194	6.2
Operating Cash Flow (OpCF)	2,003	1,975	1.4	4,634	4,487	3.3
OpCF/Net Revenue Margin	16.9 %	18.5 %	0.1	20.0 %	20.9 %	(4.2)
Free Cash Flow after Lease Payments	2,157	1,868	15.5	4,634	4,067	(13.9)
Total Subscribers (thousand)	113,706	96,721	17.6	113,706	96,721	17.6
Core Subscribers	105,821	87,197	21.4	105,821	87,197	21.4
Non-Core Subscribers	7,885	9,524	(17.2)	7,885	9,524	(17.2)

 

Net Operating Revenue grew 11.1% YoY (or +7.6% YoY when excluding the effect of the Oi Mobile acquisition) led by Mobile Service Revenue which increased 15.1% on a yearly comparison (or +9.4% YoY when excluding the effect of

the Oi Mobile acquisition). Revenue increase was driven by the accelerated expansion of the customer base growth, which now has 114 million total accesses, due to the incorporation of Oi Mobile and solid organic growth in the quarter. Handset revenue had a robust increase of 26.4% YoY, given the larger portfolio of smartphones and accessories at Vivo's stores. 

We added 4,671 thousand postpaid accesses with the acquisition of Oi Mobile. However, our organic growth also presented solid additions of 1,361 thousand new accesses this quarter. Core services subscribers account now for 93.1% of all accesses, a 2.9 p.p. YoY increase.

Vivo reached 5.0 million (+24.8% YoY) homes connected with FTTH. Currently, Vivo's FTTH coverage is available in 354 cities (+13 cities in 2Q22), with 21.0 million homes passed.

Core fixed revenue (+10.8% YoY), now corresponds to 73.3% (+6.0 p.p.) of our Net Fixed Revenue (+1.7% YoY). This growth relates to a 23.7% YoY increase in FTTH Revenue, as we continue to expand our network and connect customers throughout Brazil. Core business revenue now represents 91.6% (+2.9 p.p.) of total revenues.

Recurring Total Costs grew 12.9% YoY, slightly above inflation (IPCA-12M), which increased 11.9%.  

Recurring EBITDA totaled R$4,578 million (+8.3% YoY) in 2Q22, with a Recurring EBITDA margin of 38.7%.

In 2Q22, we bought back R$ 198 million in shares with the new Share Buyback Program that will last until Feb-23. In the last 12 months, the Company registered 122% in dividend payout, and an 8.4% dividend yield, considering the share buyback program.

Free Cash Flow after Leases reached R$ 2.2 billion this quarter (+15.5% YoY).

In July 2022, Telefônica Brasil issued R$3.5 billion in Sustainability-Linked Bonds, a debt instrument linked to the achievement of ESG goals. This investment commits the Company to reduce 40% of direct emissions of Greenhouse Gases and reach at least 30% of black people in leadership positions by 2027.

TELEFÔNICA BRASIL – Investor Relations

Christian Gebara
David Melcon
João Pedro Carneiro
Gabriel Figueiredo Menezes 
ir.br@telefonica.com 

To download the complete version of the Company's earnings release, please visit our website: http://www.telefonica.com.br/ir

View original content:https://www.prnewswire.com/news-releases/2q22-results-telefonica-brasil-sa-301593829.html

SOURCE Telefônica Brasil S.A.

FAQ

What are Telefônica Brasil's 2Q22 revenue results for VIV?

In 2Q22, Telefônica Brasil reported net operating revenues of R$11.831 billion, an increase of 11.1% year-over-year.

How did the Oi Mobile acquisition affect Telefônica Brasil's subscriber numbers?

The acquisition of Oi Mobile contributed to an addition of 4.671 million postpaid accesses, bringing total subscribers to 113.706 million.

What was the EBITDA margin for Telefônica Brasil in 2Q22?

Telefônica Brasil achieved a recurring EBITDA margin of 38.7% in 2Q22.

What was the change in net income for Telefônica Brasil in 2Q22?

Net income for Telefônica Brasil declined by 44.6% year-over-year to R$746 million in 2Q22.

What is Telefônica Brasil's free cash flow after leases for 2Q22?

The free cash flow after lease payments for Telefônica Brasil reached R$2.157 billion in 2Q22, marking a 15.5% increase year-over-year.