Telefonica Brasil Beats ''11 Ests - Analyst Blog
27 February 2012 - 7:45PM
Zacks
Brazilian telecom carrier
Telefonica Brasil SA (VIV)
reported fiscal 2011 net income of R$5.07 billion ($3.04 billion),
up 18.2% year over year. Earnings per ADS came in at $2.71, which
outpaced the Zacks Consensus Estimate of $2.46.
Revenue grew 5.4% year over year to
R$33.2 billion ($19.9 billion) and surpassed the Zacks Consensus
Estimate of $19.3 billion. The outperformance was primarily driven
by growth in mobile revenue.
Consolidated EBITDA rose 6.4% year
over year to R$12 billion ($7.2 billion) with EBITDA margin
increasing 30 bps to 36.3%. Operating expenses grew 4.8% to R$21.1
billion ($12.7 billion) from the prior year.
Revenue
Segments
Mobile
revenue climbed 10.5% year over year to R$19.6 billion ($11.7
billion), driven primarily by data and VAS, and network usage
revenues. Telefonica Brasil added 4.52 million customers to reach
71.6 million (up 18.7% year over year) subscribers at the end of
2011. Post-paid and prepaid subscribers grew 27.6% and 16.3% year
over year to 16.1 million and 47.7 million, respectively.
Average revenue per user (ARPU)
fell 2.9% to R$24 ($14.4) in 2011 as lower voice ARPU outstripped
the strong growth in data ARPU. Churn deteriorated 20 bps year over
year to 2.8%.
Fixed
revenue inched down 1.2% to R$13.6 billion ($8.1 billion) from the
prior year. Fixed voice and access revenue saw the largest decline
of 9% followed by interconnection revenue (down 6.6%). These
declines were partly offset by the solid growth in Pay TV (up
57.3%), data transmission (up 10.8%) and other services revenues
(up 10.6%).
Pay TV saw the largest growth of
43.7% year over year followed by fixed broadband (up 9.5%)
revenues. Fixed voice nevertheless fell 2.8% year over year.
Total fixed access lines reached
15.31 million at the end of 2011, reflecting a 1.4% year-over-year
increase. Telefonica Brasil registered 80,000 net additions for its
fixed broadband service, bringing the total subscriber base to
roughly 3.63 million (up 9.5% year over year). The Pay TV
subscriber base shot up 43.7% year over year to 699,000 customers.
Fixed voice lost 1,09,000 customers, touching 10.98 million at the
end of 2011.
Liquidity
Telefonica Brasil, a subsidiary of
Telefonica SA (TEF), exited the year with cash and
cash equivalents of R$2.9 billion ($1.77 billion) compared with
R$3.7 billion last year. Net debt increased substantially to R$3.16
billion ($1.9 billion) in 2011 from R$2.1 billion in 2010. Net
debt-to-EBITDA ratio stood at 0.26 times compared with 0.19 times
in 2010.
Capital expenditure increased 16.4%
year over year to R$5.74 billion ($3.4 billion) in 2011.
Our Take
Telefonica Brasil has attractive
long-term opportunities in both fixed-line and mobile businesses.
Despite stiff competition from its rivals such as America
Movil S.A.B. de C.V. (AMX) and
Telecom Italia S.P.A. (TI), we believe the
fixed-line business will benefit from the expansion of video,
broadband Internet andPay TV services.
Furthermore, the demand for 3G in
the mobile market is growing by the day, thereby minimizing the
adverse affects from regulatory changes and drops in tariff
rates.
We are currently maintaining our
long-term Neutral recommendation on the stock. However, for the
short term (1-3 months), Telefonica Brasil holds a Sell rating with
a Zacks # 4 Rank.
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis Report
TELECOM ITA-ADR (TI): Free Stock Analysis Report
TELEF BRASIL SA (VIV): Free Stock Analysis Report
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