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Telefonica Brasil (VIV)
NYSE:VIV
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Telefonica Brasil
(NYSE:VIV)
Rating:77Outperform
Price Target:
$13.50
▲(21.95%Upside)
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)
Market Cap
$18.09B
Dividend Yield0.4%
Average Volume (3M)1.48M
Price to Earnings (P/E)17.8
Beta (1Y)0.31
Revenue Growth-5.69%
EPS Growth-0.05%
CountryUS
Employees32,759
SectorCommunication Services
Sector Strength82
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.12
Shares Outstanding1,630,643,700
10 Day Avg. Volume1,321,761
30 Day Avg. Volume1,480,105
Financial Highlights & Ratios
PEG Ratio-2.87
Price to Book (P/B)1.49
Price to Sales (P/S)0.00
P/FCF Ratio9.59
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.50Price Target Upside12.92% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
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: 16.77%|
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's financial performance is robust with strong revenue and profit growth, healthy operational margins, and stable balance sheet. Cash flow generation is a key strength, supporting operational and strategic initiatives. However, careful attention to revenue growth and liability management is needed for sustained performance.Income Statement
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.82
Very Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 55.85B | 52.10B | 48.04B | 44.03B | 43.13B |
| Gross Profit | 24.49B | 22.68B | 20.61B | 36.04B | 30.07B |
| EBITDA | 21.54B | 19.52B | 19.82B | 19.00B | 18.01B |
| Net Income | 5.55B | 5.03B | 4.09B | 6.24B | 4.77B |
Balance Sheet | |||||
| Total Assets | 124.94B | 120.74B | 119.12B | 115.74B | 108.74B |
| Cash, Cash Equivalents and Short-Term Investments | 6.69B | 4.36B | 2.27B | 6.45B | 5.76B |
| Total Debt | 20.75B | 18.74B | 19.30B | 16.93B | 13.24B |
| Total Liabilities | 55.14B | 51.11B | 50.67B | 45.66B | 39.18B |
| Stockholders Equity | 69.73B | 69.57B | 68.40B | 70.01B | 69.56B |
Cash Flow | |||||
| Free Cash Flow | 10.55B | 9.97B | 9.05B | 8.78B | 11.05B |
| Operating Cash Flow | 19.88B | 18.79B | 18.94B | 18.07B | 19.34B |
| Investing Cash Flow | -8.91B | -7.85B | -14.20B | -8.13B | -6.41B |
| Financing Cash Flow | -8.63B | -8.85B | -8.91B | -9.26B | -10.56B |
Telefonica Brasil Technical Analysis
Positive
11.07
Price Trends
10.68
Positive
9.78
Positive
9.07
Positive
Market Momentum
0.09
Positive
50.70
Neutral
28.06
Neutral
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 11.07 is below the 20-day moving average (MA) of 11.30, above the 50-day MA of 10.68, and above the 200-day MA of 9.07, indicating a neutral trend. The MACD of 0.09 indicates Positive momentum. The RSI at 50.70 is Neutral, neither overbought nor oversold. The STOCH value of 28.06 is Neutral, 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $17.35B | 11.90 | 16.28% | 5.71% | -5.14% | -7.47% | |
77 Outperform | $18.09B | 17.83 | 7.95% | 0.40% | -5.69% | -0.05% | |
75 Outperform | $8.74B | 14.37 | 13.18% | 0.35% | -6.63% | 2.46% | |
69 Neutral | $8.68B | 9.71 | 11.08% | 0.21% | -4.13% | 4.96% | |
62 Neutral | $28.18B | 9.21 | -7.17% | 0.43% | 0.89% | -494.16% | |
62 Neutral | $42.18B | -1.51 | -12.07% | 2.79% | 2.09% | -71.01% | |
59 Neutral | $30.64B | ― | -0.55% | 1.01% | -2.29% | -182.68% |
* Communication Services Sector Average
Performance Comparison
VIV
Telefonica Brasil
11.07
2.95
36.33%
TLK
PT Telekomunikasi Indonesia Tbk
17.40
-0.71
-3.92%
SKM
Sk Telecom
22.42
0.40
1.82%
TEF
Telefonica
5.40
1.10
25.58%
TIMB
TIM
18.09
4.88
36.94%
VOD
Vodafone
11.52
2.50
27.72%
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.