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Telefonica Brasil SA VIV

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Morningstar’s Analysis

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Competition Dents Telefonica Brasil's Q1; ADRs Remain Attractive

Analyst Note

| Michael Hodel, CFA |

Telefonica Brasil (Vivo) posted modestly disappointing first-quarter results as stiff wireless competition from America Movil’s Claro has pressured Vivo’s premium pricing. Offsetting that pressure, growth in the Brazilian wireless market has accelerated nicely, allowing Vivo to still expand wireless services year over year. The firm’s fixed-line business also delivered strong results as its fiber build-out continues apace. We don’t expect to significantly change our $11 fair value estimate, 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.

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 Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 32,759