Vivo raises prices of cellular plans and profits R $ 1 billion | Telecommunications

Telefônica Brasil, owner of Live, released on Monday (4) the financial results of the third quarter of 2019: the operator celebrates the highest revenue growth in the last three years due to increases in consumer prices, both in prepaid and postpaid. Meanwhile, the fixed internet had a drop in revenue, as the company migrates from old technologies to optical fiber (FTTH).

Vivo is obliged to allow customers to change plans on

Net operating revenue increased by 2.6% to R $ 11.04 billion, driven mainly by mobile services, which registered R $ 7.1 billion (+ 6.6%). In fixed services, there was a drop in revenues, which reached R $ 3.8 billion (-3.9%).

The registered profit was R $ 1.046 billion for the third quarter of 2019. The value of investments (Capex) was R $ 2.4 billion in the same period.

Increase in cellular tariffs increased average spending

In its presentation to shareholders, Vivo reveals the commercial strategy of applying adjustments to all customers: price increases reached 25% in prepaid (Giga Chip), 10% in Controle plans and 8% in pure postpaid.

Average spending per user (ARPU) grew by 6.4% in the year, reaching R $ 29.40. The value in postpaid was R $ 52.40 (+ 2.6%), while in prepaid this corresponds to R $ 12.70 (+ 10%). The M2M segment, for the internet of things, rose 19% (R $ 3 per access).

Compared to 2018, the operator had 0.8% reduction in total mobile accesses: there were 585 thousand mobile postpaid net adds, while prepaid lost 496 thousand accesses.

Vivo still dominates the postpaid with 57.3% market share, but its share fell 1.4 percentage points in the period; prepaid increased by 0.5 percentage point (25.8%). The competition was fierce with Claro, which leads the portability ranking, especially in post plans.

The data (mobile internet) and digital services was the most important in the composition of mobile net revenue: sales were R $ 6.5 billion, an increase of 4.6%. The sale of handsets performed well and brought R $ 645 million to Vivo (+ 31.5%). Even the voice service showed a small increase, reaching R $ 1.3 billion (+ 1.2%).

The operator ended the quarter with 3,190 cities with 4G coverage, reaching 89% of the population. Of these cities, 1,096 have 4.5G. She expects the conclusion of the memorandum of understanding with TIM, which provides for sharing of 2G and 4G networks.

Fixed telephony and satellite TV continue to fall

Net revenue from fixed services had a 3.9% reduction, reaching R $ 3.8 billion. The drop occurs mainly in voice, xDSL broadband and satellite TV services, but the operator celebrates that the revenues from growing services (fiber, IPTV and data) already “weigh more” than legacy technologies.

Net revenue from broadband it was one of the few positive highlights: the segment grew 7.5% and represents R $ 1.4 billion of the total. FTTH, which takes fiber to the user’s home, rose 44.5% and accounts for R $ 531 million, while other technologies generated R $ 901 million (-6.5%).

At TV, IPTV technology surpasses satellite for the first time: it was R $ 227 million (+ 27.7%) against R $ 224 million for DTH (-27.7%). Vivo even removed the satellite TV service from its portfolio.

The services of voice fell 18.8%, but still represent R $ 1.2 billion of revenue. In corporate data and IT, the operator reached R $ 716 million (+ 12.9%).

Vivo has strategy for fiber expansion

The ARPU (average spend) of fiber optic customers is 27% higher than in FTTC, a hybrid of fiber and copper; and 36% higher than in xDSL. In order to grow in fixed services that provide the highest revenue, the operator continues with the expansion of your FTTH network.

In the third quarter, fiber reached the cities of Alvorada / RS, Aracaju / SE, Camboriú / SC, Colatina / ES, Contagem / MG, Guaíba / RS, Jaguariúna / SP, Lajeado / RS, Linhares / ES, Mineiros / GO, Paranavaí / PR and Pirassununga / SP. In 2019, there were 33 new cities, surpassing the 30 launched throughout 2018.

Vivo still needs to overlay the FTTC hybrid network to FTTH. An partnership with American Tower will launch fiber in more than 40 cities in Minas Gerais, covering 800 thousand households and reaching 4 million people.

The model foresees that the partner is responsible for the investment, construction and operation of the home passed cables, while Vivo invests in the equipment with the brand. Vivo Fibra. This is still not very clear, but it seems that Telefónica will “rent” this American Tower network, as if it were a virtual operator.

In total, Vivo serves 154 cities with fiber, while another 101 cities have the hybrid network with copper, used mainly in the locations served by the former GVT. The number of fiber home passes is 49%, while the FTTC reaches 51%. In total, the operator has coverage in 10.2 million homes.

With information: Telefônica Brasil.

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