Brazilian telecom carrier Telefonica (MC:TEF) Brasil SA (NYSE:VIV) -- a subsidiary of Spanish telecom giant Telefonica SA (NYSE:TEF) -- reported mixed financial results in the first quarter of 2016. The company’s earnings beat the Zacks Consensus Estimate while revenues lagged the same.
First-quarter net income was approximately $312.6 million, up a whopping 179.3% year over year. Moreover, earnings per ADR (American Depository Receipt) were 19 cents, above the Zacks Consensus Estimate of 17 cents.
Net operating revenues were around $2,679 million, up 0.6% year over year but significantly below the Zacks Consensus Estimate of $2,874 million.
Total operating costs in the reported quarter were approximately $1704.6 million, down 9% year over year. Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) was about $972.1 million, reflecting an increase of 23.8% year over year. EBITDA margin was 36.3% compared with 29.5% in the prior-year quarter.
Segment-wise Results
Mobile Business’ total revenue declined 0.3% year over year to approximately $1,594.2 million in the reported quarter.
As of Mar 31, 2016, the company’s total subscriber base touched 73.271 million (down 10.5% year over year). Post-paid subscriber count increased 8.1% year over year to 31.259 million, while the prepaid customer count fell 20.7% year over year to 42.012 million. M2M customer base was 4.397 million, up 19.1% year over year.
Fixed Line Business’ total revenue improved 2% year over year to approximately $1,082.5 million. Pay-TV revenues jumped 21.1% while broadband revenues increased 11.5% year over year.
As of Mar 31, 2016, total fixed access lines were 23.950 million, reflecting a 0.3% year-over-year increase. Fixed Broadband customers were 7.214 million, up 3.7% year over year. The Pay-TV subscriber base grew 4.9% year over year to 1.787 million, while fixed voice subscribers totaled 14.949 million, down 1.8% year over year.
ARPU & Churn Rate
Quarterly data ARPU (average revenue per user) was up a substantial 35.7% to about $3.57 while quarterly voice revenue per user dropped 7.2% to around $3.34. On the other hand, postpaid monthly churn rate was 1.8%, same as the figure reported in the year-ago quarter. Prepaid monthly churn rate was 4.5% against 3.5% in the prior-year quarter.
Liquidity
Telefonica Brasil exited the first quarter of 2016 with cash and cash equivalents of around $1,043.9 million, down 23.8% from the end of 2015.
Zacks Rank
Telefonica Brasil currently sports a Zacks Rank #1 (Strong Buy). Other favorably ranked stocks worth considering in this sector include BCE Inc. (TO:BCE) and Windstream Holdings, Inc. (NASDAQ:WIN) . Both the stocks sport the same Zacks Rank as Telefonica Brasil.
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