Company Reports

Telefonica Brasil (Vivo) delivered solid fourth-quarter results as wireless market consolidation and the strength of the firm's assets drove revenue growth and margin expansion. We believe Vivo remains well positioned in Brazil's telecom market. After updating our model, we are increasing our fair value estimate to $14 per ADR from $13.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. Recent consolidation has made the wireless industry much more attractive, but the market still faces several challenges, including a legacy of low wireless pricing and a fragmented fixed-line industry, coupled with economic and political instability. We expect Vivo’s performance will continue to improve over the next couple of years and that a solid balance sheet should enable it to ride out any bumps along the way.

Telefonica Brasil (Vivo) continues to reap the benefits from recent wireless market consolidation, with solid revenue growth and margin expansion. Efforts to expand the fiber network have also driven improving broadband customer growth. We believe Vivo remains well-positioned in the Brazilian telecom market. We are maintaining our fair value estimate at $13 per ADR and we believe the shares remain undervalued.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. Recent consolidation has made the wireless industry much more attractive, with only three major carriers left in the country. However, the market still faces several challenges, including a legacy of low wireless pricing, and a fragmented fixed-line industry, coupled with economic and political instability. While results will likely remain volatile, we expect Vivo’s performance will generally improve over the next couple of years.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. Recent consolidation has made the wireless industry much more attractive, with only three major carriers left in the country. However, the market still faces several challenges, including a legacy of low wireless pricing, and a fragmented fixed-line industry, coupled with economic and political instability. While results will likely remain volatile, we expect Vivo’s performance will generally improve over the next couple of years.

Pricing actions taken during the second quarter produced strong wireless results at Telefonica Brasil (Vivo) driving solid margin expansion and cash flow growth. We are maintaining our fair value estimate of $13 per ADR. While the stock has rallied, we believe it remains undervalued.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. The wireless industry is now much more attractive after Vivo, TIM, and America Movil carved up Oi's wireless business, leaving three major carriers in the country. But the market still faces several challenges, including a fragmented fixed-line industry and economic weakness amid political instability that has also hurt the value of the Brazilian real in recent years. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

Telefonica Brasil (Vivo) continues to post solid results without getting much attention from investors, in our view. We are increasing our fair value estimate to $13 per ADR from $12, primarily thanks to the strong real. We like Vivo’s position as the largest wireless carrier in Brazil, with a large and growing fiber network footprint and extremely solid balance sheet.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. The wireless industry is now much more attractive after Vivo, TIM, and America Movil carved up Oi's wireless business, leaving three major carriers in the country. But the market still faces several challenges, including a fragmented fixed-line industry and economic weakness amid political instability that has also hurt the value of the Brazilian real in recent years. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

Telefonica Brasil (Vivo) reported a solid end to 2022 while extending its share repurchase program by another BRL 500 million and asking regulators to approve plans to expand shareholder returns by up to BRL 5 billion in future years. We are maintaining our $12 fair value estimate per ADR, and we continue to believe Vivo shares are very attractive. The firm generated BRL 7.1 billion in cash flow ($1.4 billion equal to $0.83 per ADR) during 2022 after funding nearly BRL 10 billion in network investment. Management expects capital spending to decline to around BRL 9 billion in 2023, which should allow for another year of strong cash generation.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. The wireless industry is now much more attractive after Vivo, TIM, and America Movil carved up Oi's wireless business, leaving three major carriers in the country. But the market still faces several challenges, including a fragmented fixed-line industry and economic weakness amid political instability that has also hurt the value of the Brazilian real in recent years. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

Telefonica Brasil (Vivo) posted solid third-quarter results. We are maintaining our $12 fair value estimate per ADR, which we view as attractive, sitting near a five-year low. The political and economic situation in Brazil remains challenging, but the real has held up well against the U.S. dollar. We expect Vivo to generate around BRL 48 billion in revenue during 2022, or $9 billion, up from $8 billion in 2021. The firm is on pace to deliver about $1.4 billion of free cash flow this year, or nearly 11% of its current market capitalization. Vivo also possesses an extremely strong balance and a solid competitive position, in our view.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. But the market faces several challenges, including stiff competition, a fragmented fixed-line industry, and general economic weakness that has also hurt the value of the Brazilian real in recent years. The plan to carve up Oi’s wireless assets appears to be nearing completion, promising to significantly improve the industry’s structure, cutting the number of wireless players to three. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. But the market faces several challenges, including stiff competition, a fragmented fixed-line industry, and general economic weakness that has also hurt the value of the Brazilian real in recent years. The plan to carve up Oi’s wireless assets appears to be nearing completion, promising to significantly improve the industry’s structure, cutting the number of wireless players to three. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

Improved pricing, linked to inflation but also reflecting an improved competitive environment, and the Oi acquisition provided a sharp boost to Telefonica Brasil’s (Vivo) second-quarter results. Revenue increased 11% year over year on 15% growth in wireless services revenue. Even excluding the Oi business, wireless service revenue was up 9%, the fastest pace in a decade. Profitability remains under pressure from rising compensation costs and growth in lower-margin businesses. We expect the integration of Oi to allow margins to expand over the next several quarters. We are maintaining our $12 fair value estimate per ADR.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. But the market faces several challenges, including stiff competition, a fragmented fixed-line industry, and general economic weakness that has also hurt the value of the Brazilian real in recent years. The plan to carve up Oi’s wireless assets appears to be nearing completion, promising to significantly improve the industry’s structure, cutting the number of wireless players to three. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

Telefonica Brasil (Vivo) delivered solid customer growth during the first quarter, helping lift revenue growth to 4.6% year over year, the fastest pace in at least six years. On the downside, though, customers appear to be taking cheaper plans on average, offsetting the benefit of increased pricing. Inflationary pressure, increased network costs, higher interest expense, and growth in lower-margin businesses weighed on profitability. We are maintaining our $12 fair value estimate per ADR.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. But the market faces several challenges, including stiff competition, a fragmented fixed-line industry, and general economic weakness that has also hurt the value of the Brazilian real in recent years. The plan to carve up Oi’s wireless assets appears to be nearing completion, promising to significantly improve the industry’s structure, cutting the number of wireless players to three. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. But the market faces several challenges, including stiff competition, a fragmented fixed-line industry, and general economic weakness that has also hurt the value of the Brazilian real in recent years. The plan to carve up Oi’s wireless assets appears to be nearing completion, promising to significantly improve the industry’s structure, cutting the number of wireless players to three. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. But the market faces several challenges, including stiff competition, a fragmented fixed-line industry, and general economic weakness that has also hurt the value of the Brazilian real in recent years. The plan to carve up Oi’s wireless assets appears to be nearing completion, promising to significantly improve the industry’s structure, cutting the number of wireless players to three. While results will likely remain volatile, we expect Vivo will prosper as Brazilians continue to adopt wireless and fixed-line data services.