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Telefonica Brasil SA ADR VIV

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Morningstar’s Analysis

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Telefonica Brasil Continues to Muddle Along as Business Shifts; ADRs Remain Attractive

Analyst Note

| Michael Hodel, CFA |

Telefonica Brasil’s (Vivo) revenue growth continued to trail its major Brazilian wireless rivals during the second quarter as its premium market position erodes. We expect the firm will post improving results in the coming quarters as its customer mix increasingly resembles other carriers’ and recent pricing increases take hold. On the fixed-line side of the business, Vivo continues to aggressively migrate its customer base to its fiber network, helping stabilize revenue. Our $11 fair value estimate is unchanged and we believe the ADRs are attractive.

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Company Profile

Business Description

Telefonica Brasil, known as Vivo, is the largest wireless carrier in Brazil with nearly 80 million customers, equal to about 34% market share. The firm is strongest in the postpaid business, where it has 45 million customers, about 38% share of this market. It is the incumbent fixed-line telephone operator in Sao Paulo state and, following the acquisition of GVT, the owner of an extensive fiber network across the country. The firm provides Internet access to 6 million households on this network. Following its parent Telefonica’s footsteps, Vivo is cross-selling fixed-line and wireless services as a converged offering. The firm also sells pay-tv services to its fixed-line customers.

Contact
Avenida Engenheiro Luis Carlos Berrini, 1376, 32nd Floor
Sao Paulo, SP, 04571-936, Brazil
T +55 1134303687
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 32,759