Brazilian telecom carrier,
Telefonica Brasil SA
) reported third-quarter 2013 net income of R$760.2 million
($332.4 million), down 18.8% year over year.
Revenues rose 1.9% year over year to R$8,618.2 million
Consolidated EBITDA dropped 18.2% year over year to R$2,381.3
million ($1,248.3 million) in the third quarter, while EBITDA
margin of 27.6% was down 680 basis points (bps). Operating
expenses increased 12.4% year over year to R$6,236.9 million
total revenue climbed 7.5% year over year to R$ 5,739.2 million
($2,509.2.6 million) in the reported quarter, primarily driven by
Data and VAS, Access and usage revenues and text revenues.
Average revenue per user (ARPU) grew 6.6% to R$23.6 ($10.3),
driven by 24% rise in Data ARPU. Customer churn rose to 4.3% from
3.5% in the third quarter of 2012.
As of Sep 30, 2013, the total subscriber base was 76.614
million (up 0.2% year over year). Post-paid subscribers increased
23.3% year over year to 22.138 million, while prepaid decreased
7.4% year over year to 54.476 million customers.
Fixed Line Business
total revenue fell 7.7% year over year to R$2,879.0 million
($1,258.7 million). Pay-TV was the worst performer with a 14.3%
decline in net revenue followed by an 11.5% reduction in fixed
voice and access.
At the end of the third quarter, total fixed access lines
reached 15.098 million, reflecting a 0.1% year-over-year
increase. Fixed Broadband customers were 3.883 million compared
with 3.754 million a year ago. The Pay-TV subscriber base shrunk
5% year over year to 588,000 customers, while fixed voice
subscribers totaled 10.627 million, down 0.8% year over
Telefonica Brasil - a subsidiary of
) - exited the quarter with cash and cash equivalents of
R$8,630.5 million ($3,773.3 million) compared with R$6,680.2
million ($3,296 million) in the year-ago quarter. Total debt was
R$9213.3 million ($402.8 million) and net debt-to-EBITDA ratio
was a negative 0.02 times.
Telefonica Brasil, which operates with other Latin American
telecom service providers such as
America Movil S.A.B. de C.V.
Hawaiian Telcom Holdco Inc.
) currently holds a Zacks Rank #4 (Sell).
We remain apprehensive about Telefonica Brasil's fixed line
segment that is significantly challenged by persistent erosion in
the voice telephony business. Additional factors such as cuts in
tariff rates, loss of subscribers, adverse effects from
regulatory changes and fierce competition will likely act as
roadblocks in the company's growth path.
AMER MOVIL-ADR (AMX): Free Stock Analysis
HAWAIIAN TELCOM (HCOM): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
TELEF BRASIL SA (VIV): Free Stock Analysis
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