Telefonica Brasil Sales Trail Estimates as Rivals Push Offers

  • Prepaid customers fall 21% as Brazilians use fewer SIM cards
  • More lucrative monthly wireless subscribers rise 8.1%

Telefonica Brasil SA, the nation’s largest wireless carrier, posted sales that missed analysts’ estimates amid aggressive pricing and feature offers from competitors as Latin America’s biggest economy remains mired in its worst recession in a century.

Revenue rose 0.6 percent to 10.4 billion reais ($2.96 billion), the Sao Paulo-based company said Wednesday in a statement. Analysts predicted 10.6 billion reais, the average of estimates compiled by Bloomberg.

Telefonica has avoided margin-crushing price battles with rivals Tim Participacoes SA and Oi SA, focusing instead on delivering quality services for a premium price. The number of prepaid customers fell 21 percent to 42 million. The reduction in interconnectivity rates in the country has led Brazilians to cut back on owning multiple SIM, or access, cards. Many users had a card and phone number from more than one carrier so that they could make calls to other people in their network and avoid the high fees charged when calling outside the network.

Still, as Telefonica focuses on higher-income customers, it sees the elimination of pre-paid cards as beneficial in the long term as some users switch to more lucrative monthly accounts and because of the company’s costs associated with maintaining active SIM cards. The carrier has also said it wants to introduce usage-based broadband caps, following a similar measure taken by its parent company, Telefonica SA, in Spain.

  • Telefonica had 31.3 million monthly customers at the end of the first quarter, up 8.1 percent from a year earlier.
  • Net income almost tripled to 1.22 billion reais, exceeding the 1.05 billion-real average estimate of analysts compiled by Bloomberg.
  • Broadband customers rose 3.7 percent from a year earlier to 7.2 million.

Telefonica Brasil concluded its integration of broadband provider GVT in April, less than a year after it acquired the company. It also consolidated brands under the Vivo name.

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