Vivo posts R$ 1.7 billion net profit in the third quarter, up 13.3%

This is a machine translation of Telefônica Brasil's press release

São Paulo, November 5, 2024 – Vivo’s financial indicators show consistent and growing results in the third quarter of the year. The performance of the postpaid and fiber segments and efficient operational management guaranteed the company revenue of R$14.0 billion, an increase of 7.1%. Net income will be R$1.7 billion, a significant increase of 13.3% when compared to the same period of the previous year.

Mobile service revenue increased by 8.8% to R$9.2 billion, with postpaid services standing out, with revenues growing by 10.4% to R$7.7 billion. Fixed revenues reached R$4.0 billion, an annual increase of 3.6%. Fiber is consolidating itself as a driver of growth and transformation in the segment, generating revenues of R$1.8 billion in the period, an increase of 14.0%. This expansion responds positively to the company's commercial strategy of prioritizing Vivo Total – a convergent postpaid and fiber offering – which ended the quarter with 2.1 million subscribers, representing 30.7% of fiber accesses. Vivo ended the quarter with a base of 6.7 million homes and businesses already connected to the technology, an increase of 12.5%.

The wide range of electronics, from cell phones to smart home devices, increased revenue from devices and electronics by 5.1%, which ended the quarter at R$856 million. Sales of 5G-compatible smartphones stood out, accounting for 86% of the models sold in the period.

EBITDA grew 7.4% to R$5.9 billion, with a margin of 42.4%, influenced by the result of mobile service revenue and cost control. Also noteworthy is the company's operating cash generation, which has accumulated almost R$10.0 billion since the beginning of the year, an annual growth of 12.0% and a margin of 24.2%.

Investments in the quarter totaled R$2.5 billion, directed to strengthening the mobile network, with an emphasis on expanding 5G, present in all cities with more than 200,000 inhabitants, totaling 394 municipalities. Vivo leads the 5G market, with a market share of 39.7% and 13.8 million accesses, representing 16.6% of its mobile accesses – excluding M2M and dongle devices. Resources were also allocated to expanding the fiber network, which now covers 28.3 million homes. The company is approaching its goal of 29 million by the end of this year.

“In recent months, we have accelerated the expansion of our infrastructure, contributing to the growth of fiber and postpaid services. The strategy of combining the two services into a single offering, Vivo Total, continues to evolve and has already surpassed the two million subscriber mark. In 5G, we have reached 57% of the population covered. We have also expanded the options for our customers to access a diverse ecosystem of digital services, which includes everything from personal loans to healthcare solutions,” highlights Christian Gebara, CEO of Vivo. “For our shareholders, these initiatives help to achieve one of the highest returns in the market, with consistent and sustainable growth,” concludes Gebara.

The company ended the quarter with a total base of 115.2 million accesses, of which 101.5 million were from the mobile network. Postpaid customers stood out, totaling 65.0 million, an increase of 7.6%, with the highest ARPU in the last five years – excluding M2M – ensuring the company's continued leadership in this segment, with 43.2% market share (ex. M2M – Sep/24).

Operational management

Total costs for the quarter, excluding depreciation and amortization expenses, reached R$8.1 billion, an increase of 6.8% due to the greater commercial activity in the period, partially offset by operational efficiencies and greater adoption of digital channels.

The remuneration paid to shareholders in 2024 amounts to R$4.8 billion to date, of which R$2.2 billion in interest on equity, R$1.5 billion in funds arising from the capital reduction, while R$1.1 billion was invested in the company's own share buybacks. For the years 2024 to 2026, Vivo intends to distribute to its shareholders an amount equal to or greater than 100% of the net profit of each fiscal year.

On Tuesday (5), the Board of Directors authorized the second capital reduction proposal, of R$ 2 billion. If approved, at the Extraordinary General Meeting, which will take place on December 18, it will be subject to the expiration of the 60-day period for creditors to object. The resources will be paid, in a single installment, by July 31, 2025, based on the shareholding position of February 27, 2025.

“This quarter, we once again reported strong revenue growth and positive business development, resulting in an increase in net income and robust cash generation. The continuity of these results consolidates our leading position in the market and reinforces our commitment to shareholder remuneration,” said David Melcon, Vivo’s Chief Financial Officer (CFO).

Digital ecosystem

The digital ecosystem dedicated to companies, comprised of cloud services, cybersecurity, sales and rental of IT equipment, IoT, big data and messaging, has recorded revenues of R$3.8 billion in the last 12 months, an increase of 16.9%, representing 6.9% of Vivo's total revenue. Agribusiness is a highlight in the commercial strategy for the corporate segment and, in the period, there was a 112% increase in websites sold, further expanding Vivo's presence in the sector. Last month, Vivo Ventures – the company's Corporate Venture Capital – acquired a minority stake in Agrolend, a fintech that provides credit to small and medium-sized rural producers in Brazil.

For consumers, Vivo Pay stands out, a 100% digital platform that consolidates the company's financial solutions, such as personal loans, insurance, FGTS advances, PIX installments, among others. Considering the last 12 months, revenues from these services total R$450 million, with growth of 16.0%.

In addition, the total amount of loans granted via Vivo Pay, since the start of operations in October 2020 until the end of the third quarter, reached R$823 million. In September, the Central Bank approved the application for authorization to operate Vivo Pay Sociedade de Crédito SA, which gives the company more flexibility to develop new financial services and increase efficiency in this business front.

In entertainment, Vivo continues to distribute music and video services, generating revenue of R$684 million in the last 12 months, 30.0% higher than the same period last year, and 2.8 million subscribers.

In health and well-being, Vale Saúde Sempre has reached more than 370 thousand subscriptions since the beginning of operations and more than 50 thousand medical consultations, exams and procedures throughout 2024. In the last 12 months, the segment's revenue reached R$ 48 million.

Combined, revenues from these new businesses for consumers reached R$1.6 billion in the last 12 months, a growth of 30.2%, representing 2.9% of Vivo's total revenue.

Sustainable growth

Towards the goal of achieving NetZero, that is, zeroing net greenhouse gas (GHG) emissions, the company is advancing its ESG agenda in the quarter and reaching 87% of partners acting for the climate, increasing this representation by 27 pp compared to the previous year. Since the beginning of the program, of the 125 participating carbon-intensive suppliers, there has been a 14 pp increase in the number of partners accounting for their emissions and a 23 pp increase among those with GHG reduction targets.

To promote diversity and inclusion, Vivo reinforced its actions and created more than 50 vacancies for the Mulheres de Fibra program and dedicated 50% of the vacancies in the Jovem Aprendiz program to black talents. In October, the Telefônica Vivo Foundation celebrated its 25th anniversary and, in a commemorative event, explored how technology, especially Artificial Intelligence, can contribute to education.

The quarter was also full of recognition. Highlights for the Top 3 Best Companies to Work for in Brazil 2024, in the Super Large category (more than 10 thousand employees), in the national ranking of GPTW ( Great Place To Work ); 1st place in the eight categories of the Institutional Investor - Latin America Executive Team 2024 ranking in the general vote of the sell side , including Best ESG Program; Leaders League Compliance Awards , as best compliance department: Telecom and Technology; and Valor 1000 award, best in IT and Telecom.