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Telefonica Brasil (VIV)
NYSE:VIV

Telefonica Brasil (VIV) AI Stock Analysis

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VI

Telefonica Brasil

(NYSE:VIV)

Rating:78Outperform
Price Target:
$12.00
▲(3.36%Upside)
Telefonica Brasil demonstrates strong financial performance and growth prospects, supported by impressive earnings call highlights. The bullish technical indicators are offset by overbought conditions, and while valuation metrics are mixed, the high dividend yield remains a strong attraction. Attention to potential liabilities and cost pressures is advised.
Positive Factors
Corporate Strategy
Vivo announced a new buyback program of up to R$1.8bn in shares, indicating confidence in the company's value.
Earnings
Vivo reported positive 3Q results across the board, meeting above-consensus numbers with better underlying trends.
Financial Performance
Vivo's board of directors approved a proposal for a R$2bn capital reduction, which is a positive sign for higher dividend payouts.
Negative Factors
Operational Challenges
Vivo reported soft results due to a deceleration in mobile and pressured margins.

Telefonica Brasil (VIV) vs. SPDR S&P 500 ETF (SPY)

Telefonica Brasil Business Overview & Revenue Model

Company DescriptionTelefonica Brasil S.A., operating under the brand name Vivo, is a leading telecommunications company in Brazil. It provides a comprehensive range of telecommunication services including mobile and fixed-line voice services, broadband internet, and pay television. The company is part of the multinational Telefonica Group and serves millions of customers across Brazil, offering advanced digital solutions and connectivity services to both individual and corporate clients.
How the Company Makes MoneyTelefonica Brasil, also known as Vivo, generates revenue primarily through its telecommunications services. Its key revenue streams include mobile services, which encompass voice, data, and value-added services, and fixed-line services, including broadband internet, pay television, and traditional telephone services. Mobile services contribute a significant portion of the company's income, driven by customer subscriptions, data usage, and service upgrades. Additionally, the company capitalizes on partnerships with content providers and technology firms to enhance its service offerings, and it continually invests in infrastructure to improve network quality and expand its customer base, thus bolstering its revenue.

Telefonica Brasil Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: 22.47%|
Next Earnings Date:Jul 28, 2025
Earnings Call Sentiment Positive
The earnings call highlights Vivo's strong growth in mobile and fiber services, profitability, and digital service expansion, alongside significant ESG achievements. However, challenges such as prepaid revenue decline and cost of services pressure were noted.
Q1-2025 Updates
Positive Updates
Strong Growth in Mobile and Fiber Services
Postpaid service reached over 67 million customers with a yearly growth of 7.7%. Fiber customer base increased by 12.9%. Mobile service revenue grew by 6.5% and fixed revenues by 6.2%.
Profitability and Cash Flow Performance
EBITDA increased by 8.1% during the period. Operating cash flow reached BRL3.8 billion, growing 12.7% year-over-year, accounting for almost 27% of total revenues.
Significant Net Income Growth
Net income grew by 18.1% year-over-year, reaching BRL1.1 billion. Commitment to shareholder remuneration with payments amounting to BRL2.6 billion.
B2B and Digital Services Expansion
B2B segment revenue grew by 25.5%, contributing 7.7% to revenues. The Cloud segment saw a 38% increase year-over-year.
ESG Achievements
Recognized as the leading Brazilian company in the Dow Jones Best-in-Class Index and featured prominently in B3’s Corporate Sustainability Index.
Negative Updates
Prepaid Revenue Decline
Significant drop in prepaid revenues due to migration to hybrid plans, impacting overall revenue figures in the mobile segment.
Cost of Services Pressure
Cost of services grew by 7.7% year-over-year driven by the demand for B2B services.
Company Guidance
During Vivo's first quarter 2025 earnings call, several key metrics were discussed, highlighting the company's robust performance. Vivo achieved a noteworthy 7.7% increase in its postpaid customer base, reaching over 67 million clients. Fiber customer growth was even more impressive at 12.9%. Total revenues rose by 6.2%, with mobile service revenue increasing by 6.5% and fixed revenues by 6.2%. The company also reported an 8.1% rise in EBITDA and a substantial 18.1% growth in net income, amounting to BRL 1.1 billion. Operating cash flow saw a 12.7% year-over-year increase, reaching BRL 3.8 billion. Vivo's commitment to shareholder remuneration was underscored by distributions totaling BRL 2.6 billion, with further capital reductions planned. The company also emphasized its strategic focus on digital services and B2B growth, with the latter experiencing a 25.5% increase, contributing to 22% of total revenues. Lastly, Vivo highlighted its achievements in sustainability, including its recognition in the Dow Jones Best-in-Class Index and its efforts toward environmental protection and diversity.

Telefonica Brasil Financial Statement Overview

Summary
Telefonica Brasil exhibits robust financial performance with consistent revenue and profit growth, strong operational margins, and solid cash flow generation. The balance sheet shows financial stability, although attention to liability management is crucial.
Income Statement
85
Very Positive
Telefonica Brasil shows strong revenue growth with a consistent upward trend from 2020 to TTM 2025, driven by robust gross and net profit margins. The Gross Profit Margin remained steady around 43-44% in recent years, and the Net Profit Margin increased to 10.1% in TTM 2025 from 9.9% in 2024. EBIT and EBITDA margins are healthy, with EBITDA Margin at 37.9% for TTM 2025, reflecting operational efficiency. However, the decline in revenue growth rate from 9.2% in 2022 to 1.5% in 2024 needs monitoring.
Balance Sheet
78
Positive
The balance sheet is solid, with a Debt-to-Equity ratio of 0.30 in TTM 2025, indicating manageable leverage. The company maintains a strong equity position with an Equity Ratio of 53.8%, highlighting financial stability. Return on Equity improved to 8.4% in TTM 2025, up from 8.0% in 2024, showcasing effective use of equity. However, the relatively high total liabilities might pose risks if not managed properly.
Cash Flow
82
Very Positive
Cash flow analysis reveals a robust Operating Cash Flow to Net Income Ratio of 3.51 in TTM 2025, indicating strong cash generation capabilities. The Free Cash Flow has shown growth, although the Free Cash Flow Growth Rate slightly decreased in TTM 2025. The Free Cash Flow to Net Income Ratio of 1.80 signifies efficient cash management. Continued focus on managing capital expenditures is crucial for sustaining cash flow strength.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue56.69B55.85B52.10B48.04B44.03B43.13B
Gross Profit24.74B24.49B22.68B20.61B36.04B30.07B
EBITDA21.49B21.54B19.52B19.82B19.00B18.01B
Net Income5.71B5.55B5.03B4.09B6.24B4.77B
Balance Sheet
Total Assets126.61B124.94B120.74B119.12B115.74B108.74B
Cash, Cash Equivalents and Short-Term Investments8.19B6.69B4.36B2.27B6.45B5.76B
Total Debt20.56B20.75B18.74B19.30B16.93B13.24B
Total Liabilities58.46B55.14B51.11B50.67B45.66B39.18B
Stockholders Equity68.07B69.73B69.57B68.40B70.01B69.56B
Cash Flow
Free Cash Flow10.30B10.55B9.97B9.05B8.78B11.05B
Operating Cash Flow20.04B19.88B18.79B18.94B18.07B19.34B
Investing Cash Flow-9.39B-8.91B-7.85B-14.20B-8.13B-6.41B
Financing Cash Flow-9.22B-8.63B-8.85B-8.91B-9.26B-10.56B

Telefonica Brasil Technical Analysis

Technical Analysis Sentiment
Positive
Last Price11.61
Price Trends
50DMA
10.16
Positive
100DMA
9.39
Positive
200DMA
8.94
Positive
Market Momentum
MACD
0.38
Negative
RSI
75.90
Negative
STOCH
88.27
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VIV, the sentiment is Positive. The current price of 11.61 is above the 20-day moving average (MA) of 10.82, above the 50-day MA of 10.16, and above the 200-day MA of 8.94, indicating a bullish trend. The MACD of 0.38 indicates Negative momentum. The RSI at 75.90 is Negative, neither overbought nor oversold. The STOCH value of 88.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VIV.

Telefonica Brasil Risk Analysis

Telefonica Brasil disclosed 41 risk factors in its most recent earnings report. Telefonica Brasil reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
Changes in taxes and other assessments may adversely affect us and our shareholders. Q4, 2022
2.
The ongoing war between Russia and Ukraine may have a material adverse effect on the global and Brazilian economies as well as on us. Q4, 2022

Telefonica Brasil Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TLTLK
79
Outperform
$16.98B11.5216.28%5.89%-5.14%-7.47%
79
Outperform
$9.83B15.9813.18%0.42%-6.63%2.46%
VIVIV
78
Outperform
$18.92B18.657.95%1.95%-5.69%-0.05%
SKSKM
74
Outperform
$8.99B10.2111.08%4.37%-4.13%4.96%
61
Neutral
$41.01B-0.64-14.21%3.80%2.39%-73.52%
TETEF
59
Neutral
$30.24B-0.55%4.50%-2.29%-182.68%
VOVOD
57
Neutral
$26.30B9.21-7.17%4.74%0.89%-494.16%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VIV
Telefonica Brasil
11.61
3.66
46.04%
TLK
PT Telekomunikasi Indonesia Tbk
17.02
-0.39
-2.24%
SKM
Sk Telecom
23.79
2.89
13.83%
TEF
Telefonica
5.33
1.26
30.96%
TIMB
TIM
20.17
6.81
50.97%
VOD
Vodafone
10.67
2.11
24.65%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jun 12, 2025