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Brazil's Vivo doubles down on fiber

Bnamericas
Brazil's Vivo doubles down on fiber

Brazil's Vivo, the local subsidiary of Telefónica, is focusing on more profitable fiber-based services in order to increase the value added of its fixed portfolio, focusing on higher-income clients.

In pay TV, for example, fiber represented 17% of its Q1 subscriptions, compared to 10% in the year-ago period. DTH, or satellite TV, fell to 83% from 90% last year.

The numbers were detailed during an earnings call on Wednesday.

Vivo had 1.66mn pay-TV clients at the end of March, according to regulator Anatel, down 7% year-over-year. With a reduced base of subscribers but focused on higher value-added clients, the average revenue per user (ARPU) on pay TV climbed 6.6% to 94.7mn reais (US$29.7mn) in Q1.

Chief revenue officer Christian Gebara (pictured) stressed that Vivo's fiber network will be expanded to 19 new cities this year, some of which are beyond the group's stronghold, São Paulo state.

Fixed-broadband subscriptions were 7.3mn in Q1, 1.7% more than in 1Q16. The fiber base grew 6.9%, to 4.2mn accesses in Q1, with 959,000 of them in the fiber-to-the-home model, 38.5% more than in the previous year.

As a result, broadband revenue grew 11.4% y-o-y in Q1, with ultra-broadband revenue increasing 16.7%.

RESULTS

Vivo's revenues increased 1.5% to 10.5bn reais, with mobile operating revenues growing 5% to 6.20bn reais and fixed revenues falling 2.2% to 4.12bn reais.

On the mobile revenue side, executives highlighted "data and digital services," which jumped 37% to 4.25bn reais. Internet service revenue alone grew 56.6% to 3.40bn reais.

Data now accounts for 69% of the operator's ARPU, with the prospect that customers are willing to pay more for better connectivity.

Net income dropped 18.2% to nearly 997mn reais, which Telefonica attributed to the non-recurring effect of the sale of towers in last year's first quarter.

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