4Q23 and 2023 Results: Telefônica Brasil S.A.
- Net income rises by +23.1% YoY in 2023 for Telefônica Brasil.
- Core revenue increases by 10.8% YoY, driven by strong mobile and fixed core revenue growth.
- EBITDA grows by 9.9% YoY, with a margin of 42.5%.
- Operating cash flow improves by 25.9% YoY, with a margin of 25.5%.
- Net income attributed to Telefônica Brasil reaches R$5,029 million in 2023, showing a significant increase.
- Shareholder remuneration in 2023 amounts to R$4,786 million, with commitments for future distributions.
- Capex ex-IFRS 16 totals R$8,960 million in 2023, meeting investment guidance.
- The company commits to distributing at least 100% of net income to shareholders for the next three fiscal years.
- None.
Insights
The reported increase in Telefônica Brasil's net income of +23.1% year-over-year (YoY) in 2023 is a significant indicator of the company's financial health and operational efficiency. The growth in net income is particularly noteworthy given that it surpasses the net operating revenue growth of 8.4% YoY, suggesting that the company has effectively managed to enhance its profitability margins. This is further evidenced by the expansion of the EBITDA margin by 1.1 percentage points (p.p.) and the EBITDA After Leases (AL) margin by 0.5 p.p., indicating a robust control over operating costs and successful leverage of economies of scale.
Investors may find the Capex reduction of 6.0% YoY and the commitment to distributing an amount equal to or above 100% of net income in dividends for the years 2024 to 2026 particularly attractive, as it reflects a shareholder-friendly policy. However, the decline in Free Cash Flow (FCF) by 27.5% YoY could raise concerns about the company's liquidity and its ability to sustain such high dividend payouts without affecting future investments. The strategic focus on expanding the FTTH network, indicated by the growth in homes passed and connected, aligns with the increasing demand for high-speed internet services and may contribute to future revenue streams.
Telefônica Brasil's performance in the mobile segment, specifically the increase in Mobile Service Revenue (MSR) by 8.7% YoY, driven by postpaid revenue growth of 11.3% YoY, reflects a competitive edge in customer retention and acquisition strategies. The reported lowest historical churn level of 0.97% per month and the highest Average Revenue Per User (ARPU) in the last four years suggest a strong customer value proposition and effective pricing strategies. The company's ability to maintain a positive trajectory in fixed revenue, particularly with a 16.5% YoY increase in FTTH revenues, indicates a successful pivot towards high-growth areas within the telecommunications sector.
From a market perspective, the focus on fiber technology and corporate data services may position Telefônica Brasil advantageously in the face of increasing demand for digital transformation and remote work solutions. The expansion of the FTTH network to additional cities and the growth in homes connected showcases the company's commitment to infrastructure development, which is essential for sustaining long-term revenue growth in a highly competitive market.
Telefônica Brasil's financial results reflect broader economic trends, such as the increasing reliance on digital connectivity and the importance of telecommunications infrastructure in supporting economic activities. The company's investment strategy, marked by a decrease in CAPEX while still expanding its FTTH network, suggests an optimization of capital allocation towards high-return projects. This strategic approach may bolster investor confidence in the company's economic stewardship and its capability to adapt to market demands.
The company's financial performance, particularly the growth in net income and operating cash flow, indicates a positive economic contribution not only to shareholders but also to the broader Brazilian economy through employment and network infrastructure development. The commitment to shareholder remuneration reflects a distribution of wealth that can have multiplier effects on the economy. However, the sustainability of such remuneration policies should be monitored, especially in light of potential economic downturns that could affect consumer spending and, subsequently, Telefônica Brasil's revenue streams.
SÃO PAULO, Feb. 20, 2024 /PRNewswire/ --Telefônica Brasil - (B3: VIVT3; NYSE: VIV), announces its results for 4Q23 and 2023.
Net Income expands by +
R$ million | 4Q23 | 4Q22 | % Y-o-Y | 2023 | 2022 | % Y-o-Y |
Net Operating Revenue | 13,535 | 12,659 | 6.9 | 52,100 | 48,041 | 8.4 |
Core Revenue | 12,790 | 11,771 | 8.7 | 48,910 | 44,151 | 10.8 |
Mobile Revenue | 9,643 | 8,899 | 8.4 | 36,669 | 33,070 | 10.9 |
Fixed core revenue | 3,146 | 2,872 | 9.5 | 12,241 | 11,081 | 10.5 |
Non-core Revenue | 745 | 888 | (16.1) | 3,190 | 3,890 | (18.0) |
Total Costs | (7,783) | (7,425) | 4.8 | (30,782) | (28,760) | 7.0 |
EBITDA | 5,752 | 5,234 | 9.9 | 21,318 | 19,282 | 10.6 |
EBITDA Margin | 42.5 % | 41.3 % | 1.1 p.p. | 40.9 % | 40.1 % | 0.8 p.p. |
EBITDA After Leases (AL) | 4,461 | 4,110 | 8.5 | 16,572 | 14,940 | 10.9 |
EBITDA AL Margin | 33.0 % | 32.5 % | 0.5 p.p. | 31.8 % | 31.1 % | 0.7 p.p. |
Net Income attributed to Telefônica Brasil | 1,601 | 1,126 | 42.1 | 5,029 | 4,085 | 23.1 |
Earnings per Share (EPS) | 0.97 | 0.68 | 42.8 | 3.03 | 2.44 | 24.0 |
CAPEX ex-IFRS 16 | 2,295 | 2,489 | (7.8) | 8,960 | 9,530 | (6.0) |
Operating Cash Flow (OpCF) | 3,457 | 2,746 | 25.9 | 12,358 | 9,752 | 26.7 |
OpCF Margin | 25.5 % | 21.7 % | 3.9 p.p. | 23.7 % | 20.3 % | 3.4 p.p. |
Operating Cash Flow After Leases (OpCF AL) | 2,167 | 1,622 | 33.6 | 7,612 | 5,410 | 40.7 |
OpCF AL Margin | 16.0 % | 12.8 % | 3.2 p.p. | 14.6 % | 11.3 % | 3.4 p.p. |
Free Cash Flow | 592 | 816 | (27.5) | 8,148 | 7,289 | 11.8 |
Total Subscribers (Thousand) | 113,001 | 112,330 | 0.6 | 113,001 | 112,330 | 0.6 |
Net revenue grew +
Fixed revenue maintained its positive performance, increasing +
EBITDA totaled
Operating Cash Flow grew (+
Net income attributed to Telefônica Brasil reached
To download the complete version of the Company's earnings release, please visit our website: https://ri.telefonica.com.br/en
View original content:https://www.prnewswire.com/news-releases/4q23-and-2023-results-telefonica-brasil-sa-302066672.html
SOURCE Telefônica Brasil S.A.
FAQ
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