Upload
others
View
2
Download
0
Embed Size (px)
Citation preview
Telefônica Brasil S.A.Investor Relations
CorporatePresentation
June, 2019
2
2019: MAIN MESSAGES TO THE MARKET
Revenues
EBITDA
Cash
Gradual revenue improvement driven by price increases and expressive fiber growth
Continued EBITDA expansion as a result of efficient cost control and digitalization
Double-digit growth of FCF even with higher investments benefited by tax gains
Unmatched shareholder remuneration, producing one of the highest dividend yields in BrazilRemuneration
3
REMARKABLE UBB OPPORTUNITY IN BRAZIL, AS PENETRATION IS STILL
LOW AND DEMAND CONTINUES TO RISE
Penetration of UBB¹ in Brazil remains very low… …especially in smaller cities, demonstrating there is a lot of space for the opportunity to be captured
30
61
22
9
Potential Market² Connected
with BB
Connected
with UBB¹
Not
Connected
1- UBB: Speeds above 34 Mbps (FTTH, FTTC and Cable). 2- ABC Household and B2B.
Penetration
over Potential
Market
15%
UBB in Brazilian CitiesUBB Penetration
(Households)
23%
3%
13%
1%
UBB Growth(Households)
70%
155%
123%
386%
43 cities• > 500 thousand pop.
• 21.7 MM households
• 14.6 MM accesses
268 cities• 100 to 500 thousand pop.
• 18.2 MM households
• 9.7 MM accesses
352 cities• 50 a 100 thousand pop.
• 8.0 MM households
• 2.6 MM accesses
4,907 cities• < 50 thousand pop.
• 21.5 MM households
• 4.3 MM accesses
4
ACCELERATED FIBER EXPANSION, LAUNCHING 9 NEW CITIES IN 1Q19 AND
REACHING NEW REGIONS OF BRAZIL
Strong presence throughout Brazil, already delivering >300k HPs and 9 new cities in 1Q19
FTTH Cities FTTH HPs Million
Cities launched in 1Q19
› Boituva/SP
› Cabedelo/PB
› Catanduva/SP
› Mafra/SC
› Santa Maria/RS
› São Bento do Sul/SC
› São José do Rio Pardo/SP
› Varginha/MG
› Vitória/ES
RS
SC
PR
SPRJ
MGES
BA
MS
GO
MT
ROAC
AM
RR
PA
AP
MA
PI
CE RN
PEAL
SE
PB
TO
DF
Expanding our presence to northern regions of Brazil, entering untapped high-potential capitals
121130
+9
2018 1Q19
8.79.0
+0.3
2018 1Q19Teresina/PI
Pop.: 0.8M
Manaus/AMPop.: 1.8M
Belém/PAPop.: 1.5M
São Luís/MAPop.: 1.0M
5
-3.2%
TRANSFORMATION OF FIXED REVENUE MIX UNDERWAY, BENEFITED
BY OUTPERFORMING FIBER-RELATED REVENUES
Weight over Fixed Revenues
6.3%8.0% 8.2%
1Q17 1Q18 1Q19
64%52% 57%
FTTH + IPTV revenues already representing 16.3% of fixed revenues, with a CAGR 17-19 of 55.2%
Fixed Revenues¹ R$ Million
1,7261,409
1,2311,386
471471
588 616
4,0243,894
1Q18 1Q19
Voice and Accesses Broadband
Pay TV Data and IT
YoY
4.8%
12.6%
-18.4%
0.0%
Transforming the fixed revenue mix
Fixed Revenues ex-Voice YoY%
FTTH Revenue R$ million and YoY% IPTV Revenue R$ million and YoY%
182292
437
1Q17 1Q18 1Q19
50%
1- The chart’s breakdown does not disclose other services revenues.
82138
199
1Q17 1Q18 1Q19
45%
6
139
227251
Jan/19 Feb/19 Mar/19
IN MOBILE, RATIONAL PRICING STRATEGY LEADING TO ARPU INCREASE,
WITH LIMITED IMPACT ON CHURN
Undisputed mobile leadership with expanding market share
Postpaid
Market Share
40.1%
30.5%
31.8%32.1%
1Q17 1Q18 1Q19
…as an isolated effect of the price increase carried out for hybrid customers…
9% 11%
20%
Pure Postpaid Hybrid Prepaid
…that contributed to an ARPU expansion with limited impact on churn
28.4 29.5
1Q18 1Q19
1.71% 1.74%
2018 1Q19
3.8%
Mobile Market Share
Postpaid Net Adds Thousand
Price increase of entry plans %
Total ARPU R$ per month Postpaid Churn ex-M2M
September/18December/18
March and
April/19¹
1- In March/19, Vivo increased prices of the 15-day prepaid offers in 20%, while the same increase was performed for the 7-day prepaid offers in some regions in April/19.
Postpaid Net
Adds in 1Q19
617k
In 1Q19, we had a softer volume of postpaid net adds, with recent improving trends…
7
IMPROVED MOBILE REVENUES GROWTH WITH RECOVERING MSR AND
CONTINUED EXPANSION OF HANDSET SALES
Mobile Revenues¹ R$ Million
1.6%
MSR²
YoY
55.1%
8.0%
-20.8%
MSR improving over the last quarters with strong postpaid
growth
7.5%
5.4%
8.0%
3Q18 4Q18 1Q19
Human Postpaid Revenue Growth YoY%
4.7%
-1.0%0.0%
1.6%
3Q18 4Q18 1Q19
Mobile Service Revenue Growth YoY%
1- The chart’s breakdown does not disclose other services revenues. 2- Mobile service revenues.
1,431 1,133
4,948 5,345
386 5986,765
7,081
1Q18 1Q19
Voice Data and Digital Services Handsets
8
DIGITALIZATION AND SMART CAPEX ALLOCATION TO CONTINUE TO
IMPROVE EBITDA AND OPCF MARGINS
36%already
captured
R$1.6bnannual Opex
savings by 2021¹ arising from digitalization
EBITDA expansion due to cost control through digitalization and simplification
1- In the 2018-2021 period.
Recurring Costs Performance 1Q19 vs. 1Q16
12.3%
-1.2%
Inflation Recurring Costs
EBITDA Growth %Real and Consensus
5.5%4.3% 5.1%
2018 2019C 2020C
Digitalization Development
7.7 8.0 8.0
0.5 1.0 1.08.2 9.0 9.0
2018 2019E 2020E
Base Capex Fiber Acceleration Project
CapexR$ billion
Investments focused on cutting-edge technologies, improving returns and customer experience
Smart Capex allocation led to savings in 2018
Reducing investments in legacy technologies
(2G, 3G, Copper and DTH)
R$7 billion in 3 years to be invested in FTTH expansion
Robust investment in 4G/4.5G focused on enhancing quality
R$3 billion in 3 years to be invested in transforming our IT
platform
9
IN 2018, WE REGISTERED A NEW TAX ASSET OF R$6.2 BN RELATED TO
CONTRIBUTIONS OF PIS/COFINS OVER ICMS MADE BY TELESP AND VIVO
Impact on Income Statement in 2Q and
3Q supporting relevant additional profit
in 2018
Record Net Income registered in 2018 producing unique level of remuneration
Note: numbers shown above do not consider other one-offs registered in 2Q18 and 3Q18 which impacted results of these quarters. Considering these one-offs, the net effect of all one-offs on net income would be of R$3.6 billion.
Tax assets compensating payments of federal taxes during the next years generating an incremental
source of cash while allowing for stronger shareholder remuneration
Cash effect arising from Federal Tax
credits (approx. R$2 billion/year)
Other processes still waiting for final
decisions could generate extra gains in
the future (R$1.7 bn to R$2.2 bn)
EBITDA
Financial
Result
Tax Asset (Balance Sheet)
Impact from decisions for TELESP and Vivo on income statement and balance sheet
2.0
1.8
3.8
1.4
1.0
2.4
3.4
2.8
6.2
2Q18: TELESP (2003-2014)
3Q18: Vivo (2004-2013)
TotalR$ billion
10
STRONG CASH FLOW GROWTH BOOSTED BY CASH TAX GAINS LEADING
TO HIGH LEVEL OF SHAREHOLDER REMUNERATION
Record Net Income registered in 2018 allowing for unmatchable remuneration
Free Cash Flow expanding double-digit driven by solid operating performance and tax gains
Free Cash Flow From Business Activities R$ million
5,739 6,9201,165
2017 2018 1Q19
Growth YoY
+16%
FCF to be boosted by approx. R$2 billion per year going
forward due to tax assets registered in 2Q and 3Q18
Cash tax gains represent approx. 8% of current market cap
Extra proceeds more than compensate additional Capex
envelope defined for fiber acceleration project (2018-20)
4,609
8,9281,342
2017 2018 1Q19
Growth YoY
+22%
Net Income R$ million
Net Income almost doubled in 2018, driven by
continuous cost control, solid EBITDA growth, and
the non-recurring effects in the year
R$7.0 billion of dividends and IOC declared in
2018, plus R$1.3 billion in IOC already declared in
2019
3.3 4.1 4.6
7.0
2015 2016 2017 2018
R$/share (PN³)
Payment of R$ 7.0 billion in dividends + IOC¹
2019 remuneration is 52% higher YoY
Payment Date² Gross Amount
R$ 3.2 bn
R$ 3.8 bn
R$ 1.95
R$ 2.33
Aug 20, 2019
Dec 17, 2019
R$ 4.28 R$ 7.0 bnTotal
Dividends and IOC deliberations R$ Billion
+52.3%
FCF 2018
R$ 6.9 bn
R$ 1.3 billion of Interest on Capital already declared based on 2019 financial statements
RECORD DISTRIBUTION OF DIVIDENDS AND IOC IN 2018, BOOSTED BY
STRONG NET INCOME AND CASH GENERATION
+52.3%
Schedule of Payments
111- Based on 2018 net income. To be approved by the General Shareholders Meeting. 2- The Company’s Executive Board decided that the dividends and IOC will be paid out on Aug 20, 2019 and Dec 17,
2019 if ratified by the General Shareholders’ Meeting. 3- Gross amount per ON: R$3.89.
+55 11 3430.3687
[email protected] | www.telefonica.com.br/ir
For further information:
Investor Relations
1Q19 RESULTS COMPARATIVE
Total Revenues 1Q19 YoY% Recurring Costs 1Q19 YoY%
Mobile Revenue 1Q19 YoY% Recurring EBITDA 1Q19 YoY%
1.7% 1.3% 1.7%
-9.5%
Fixed Revenues (YoY%)
-3.2% -2.0% +11.6%
11.0 8.9 4.2R$ billion
4.7% 7.6% 1.2%
-3.8%
Mobile Service Revenue (YoY%)
+1.6% +6.3% +0.4%
7.1 3.3 4.0R$ billion
2.9% 4.3% 5.3%
-20,9%
Recurring EBITDA Margin
35.6% 33.1% 35.7%
3.9 3.0 1.5R$ billion
1.1%
-0.1% -0.2% -5.1%
Costs ex-COGS
-2.9% N/A -0.9%
7.1 6.0 2.7R$ billion
13
5.1
-14.6%
1.8
-3.9%
3.9
-5.4%
1.2
24.4%
14
DETAILED 1Q19 MOBILE MARKET
23.4%
36.9%
13.3%
17.8%
Vivo Claro TIM Oi
41.0
24.5 20.611.0
55.8%
43.4%37.4%
29.1%
-8.0%
2.0%
12.0%
22.0%
32.0%
42.0%
52.0%
62.0%
Vivo Claro TIM Oi
18.029.5 22.8 16.1
Share of postpaid net adds 1Q19 Postpaid customers (million) and mix of postpaid customers
Mobile ARPU 1Q19 R$
Even so, we remain as undisputed leaders in postpaid,
with the best mix and ARPU of the industry
Lower level of net adds in 1Q19 due to price
increases, especially in hybrid
15
1Q19 HIGHLIGHTS
HIGHLIGHTS
1Q19 1Q18 ∆% YoY 1Q19 1Q18 ∆% YoY
NET OPERATING REVENUES 10,975 10,789 1.7 10,975 10,789 1.7
Net Mobile Revenues 7,081 6,765 4.7 7,081 6,765 4.7
Net Handsets Revenues 598 386 55.1 598 386 55.1
Net Fixed Revenues 3,894 4,024 (3.2) 3,894 4,024 (3.2)
OPERATING COSTS (7,072) (6,995) 1.1 (6,614) (6,995) (5.4)
EBITDA 3,903 3,795 2.9 4,360 3,795 14.9
EBITDA MARGIN 35.6% 35.2% 0.4 p.p. 39.7% 35.2% 4.6 p.p.
NET INCOME 1,387 1,098 26.3 1,342 1,098 22.2
CAPEX 1,696 1,547 9.6 1,696 1,547 9.6
OPERATING CASH FLOW (EBITDA - CAPEX) 2,207 2,247 (1.8) 2,665 2,247 18.6
TOTAL SUBSCRIBERS (THOUSAND) 94,994 97,812 (2.9) 94,994 97,812 (2.9)
Mobile Subscribers 73,529 75,098 (2.1) 73,529 75,098 (2.1)
Fixed Subscribers 21,465 22,714 (5.5) 21,465 22,714 (5.5)
Consolidated in R$ millionPro forma (ex-IFRS 16)¹ Reported
16
1Q19 MOBILE AND FIXED REVENUES
NET OPERATING REVENUES | MOBILE SERVICES
NET OPERATING MOBILE REVENUES 7,081 6,765 4.7 7,048 0.5
Net Mobile Service Revenues 6,482 6,379 1.6 6,480 0.0
Data and Digital Services 5,345 4,948 8.0 5,152 3.7
Voice 1,133 1,431 (20.8) 1,327 (14.7)
Others 5 1 702.4 1 334.6
Net Handset Revenues 598 386 55.1 567 5.5
0
NET OPERATING REVENUES | FIXED SERVICES
NET OPERATING FIXED REVENUES 3,894 4,024 (3.2) 4,038 (3.6)
Broadband6 1,386 1,231 12.6 1,409 (1.6)
FTTH 437 292 49.6 426 2.6
Other Technologies 949 939 1.1 983 (3.5)
Pay TV 471 471 0.0 494 (4.5)
IPTV 199 138 45.1 200 (0.1)
Other Technologies 272 334 (18.5) 294 (7.5)
Corporate Data and IT 616 588 4.8 618 (0.2)
Fixed Voice 1,409 1,726 (18.4) 1,502 (6.2)
Others 12 7 61.9 15 (19.6)
Consolidated in R$ million
Consolidated in R$ million
∆% QoQ
1Q19 1Q18 ∆% YoY 4Q18 ∆% QoQ
1Q18 ∆% YoY 4Q181Q19
17
1Q19 MOBILE OPERATING
OPERATING PERFORMANCE | MOBILE SERVICES
Thousand 1Q19 1Q18 ∆% YoY 4Q18 ∆% QoQ
TOTAL SUBSCRIBERS 73,529 75,098 (2.1) 73,160 0.5
Postpaid 41,023 37,499 9.4 40,406 1.5
M2M 8,684 6,674 30.1 8,212 5.7
Prepaid 32,506 37,599 (13.5) 32,754 (0.8)
MARKET SHARE 32.1% 31.8% 0.3 p.p. 31.9% 0.2 p.p.
Postpaid 40.1% 41.4% (1.3) p.p. 40.6% (0.4) p.p.
Prepaid 25.7% 25.9% (0.2) p.p. 25.3% 0.4 p.p.
ARPU (R$/month)2 29.5 28.4 3.8 29.3 0.7
Postpaid (Human) 53.2 52.4 1.6 52.0 2.2
M2M 2.9 2.6 10.4 2.7 8.9
Prepaid 12.1 12.9 (6.2) 12.6 (4.5)
MONTHLY CHURN 3.2% 3.1% 0.1 p.p. 4.1% (0.9) p.p.
Postpaid (ex-M2M) 1.7% 1.6% 0.1 p.p. 1.7% 0.1 p.p.
Prepaid 5.0% 4.5% 0.5 p.p. 6.8% (1.8) p.p.
18
1Q19 FIXED OPERATING
OPERATING PERFORMANCE | FIXED SERVICES
Thousand 1Q19 1Q18 ∆% YoY 4Q18 ∆% QoQ
TOTAL SUBSCRIBERS 21,465 22,714 (5.5) 22,029 (2.6)
Fixed Broadband 7,386 7,443 (0.8) 7,458 (1.0)
FTTH 2,034 1,412 44.1 1,893 7.5
Other Technologies 5,352 6,031 (11.3) 5,564 (3.8)
Pay TV 1,522 1,591 (4.4) 1,567 (2.9)
IPTV 617 430 43.5 579 6.6
Other Technologies 904 1,161 (22.1) 988 (8.4)
Voice 12,558 13,679 (8.2) 13,005 (3.4)
MARKET SHARE | Fixed Broadband 23.9% 25.4% (6.2) 24.3% (1.6)
Market Share | FTTH 32.1% 38.8% (17.2) 32.7% (1.9)
MARKET SHARE | Pay TV 8.8% 8.9% (0.3) 8.9% (0.7)
Market Share | IPTV 80.6% 84.6% (4.8) 80.1% 0.6
MARKET SHARE | Voice 34.0% 34.3% (0.9) 34.1% (0.3)
ARPU | Broadband (R$/month) 62.2 55.2 12.7 62.9 (1.0)
ARPU | Pay TV (R$/month) 101.8 99.0 2.8 103.9 (2.0)
ARPU | Voice (R$/month)5 35.5 40.8 (12.9) 36.9 (3.7)
19
1Q19 IFRS INCOME STATEMENT
Consolidated in R$ million 1Q19 1Q18 ∆% YoY 4Q18 ∆% QoQ
GROSS OPERATING REVENUE 16,683 16,334 2.1 16,787 (0.6)
Gross Operating Mobile Revenue 10,846 10,361 4.7 10,692 1.4
Gross Operating Fixed Revenue 5,837 6,003 (2.8) 6,095 (4.2)
NET OPERATING REVENUE 10,975 10,789 1.7 11,085 (1.0)
Net Operating Mobile Revenue 7,081 6,765 4.7 7,048 0.5
Net Operating Fixed Revenue 3,894 4,024 (3.2) 4,038 (3.6)
OPERATING COSTS (6,614) (6,995) (5.4) (7,039) (6.0)
Personnel (904) (959) (5.8) (1,034) (12.6)
Costs of Services Rendered (2,450) (2,777) (11.8) (2,825) (13.3)
Interconnection (305) (284) 7.4 (302) 1.2
Taxes and Contributions (409) (414) (1.1) (380) 7.6
Third-party Services (1,379) (1,369) 0.7 (1,320) 4.5
Others (356) (710) (49.9) (824) (56.8)
Cost of Goods Sold (754) (484) 55.7 (735) 2.6
Commercial Expenses (2,216) (2,228) (0.5) (2,184) 1.5
Provision for Bad Debt (426) (398) 7.0 (365) 16.8
Third-party Services (1,724) (1,736) (0.7) (1,711) 0.7
Others (66) (94) (29.6) (108) (38.9)
General and Administrative Expenses (306) (374) (18.2) (380) (19.3)
Other Net Operating Revenue (Expenses) 15 (172) n.a. 119 (87.4)
EBITDA 4,360 3,795 14.9 4,046 7.8
EBITDA Margin % 39.7% 35.2% 4.6 p.p. 36.5% 3.2 p.p.
DEPRECIATION AND AMORTIZATION (2,588) (1,998) 29.5 (2,323) 11.4
Depreciation (1,888) (1,343) 40.6 (1,661) 13.7
Amortization of Intangibles (397) (353) 12.3 (358) 10.7
Others Amortizations (304) (302) 0.6 (303) 0.2
EBIT 1,772 1,796 (1.3) 1,724 2.8
FINANCIAL RESULT (90) (173) (48.1) (125) (28.3)
GAIN (LOSS) ON INVESTMENTS (0) 1 n.a. (1) (90.0)
Taxes (340) (526) (35.3) (111) 206.5
NET INCOME 1,342 1,098 22.2 1,487 (9.7)