Telefônica Brasil's Q3 2024: A Strong Performance Driven by Mobile Growth and Cost Control

Telefônica Brasil S.A. (VIV), Brazil's largest telecommunications company, reported a robust 13.3% year-over-year (YoY) increase in net income for the third quarter of 2024, driven by strong mobile service revenue growth and effective cost control measures. The company's solid performance was underpinned by a 10.4% YoY increase in postpaid revenue, which contributed to a 3.5% YoY increase in postpaid ex-M2M and ex-dongles ARPU. This growth was fueled by an increase in the customer base (+7.6% YoY) and lower churn rates. Additionally, the company expanded its 5G coverage to 394 cities, reaching 57% of Brazil's population.


The company's expansion of 5G coverage has had a positive impact on its mobile service revenue growth. The increased availability of 5G services has likely attracted new customers and encouraged existing customers to upgrade their plans, further boosting mobile service revenue. Additionally, the company's cost control measures played a significant role in driving its overall profitability. Telefônica Brasil's EBITDA margin increased by 1.6 percentage points YoY to 42.2%, primarily due to strong performance in core revenues (+9.6% YoY) and effective cost control (+4.6% YoY). This resulted in an 11.7% YoY increase in EBITDA, with a net effect of R$175 million in the quarter related to a post-closing price adjustment agreement from the acquisition of part of Oi Mobile's assets.


Telefônica Brasil's digital services and other revenue streams also contributed significantly to its overall financial performance. Non-core revenue accounted for 5.9% of net revenue in 3Q23, with Digital B2B revenues totaling R$3.2 billion in the LTM, marking a 28.2% year-over-year increase. These diversified revenue streams, along with the company's strong mobile and fixed core revenues, drove its double-digit net income and free cash flow growth in 9M23.

In conclusion, Telefônica Brasil's strong Q3 2024 results were driven by mobile service revenue growth, cost control measures, and the expansion of 5G coverage. The company's diversified revenue streams and solid financial performance position it well for continued growth and success in the Brazilian telecommunications market. Investors should consider Telefônica Brasil as a strong value investment, given its low-risk business model, effective management, and favorable market trends.