New Street Research - Telefonica Brasil S.A. (VIVT3) Vivo (Buy, TP: BRL61, +30%) Vivo Q3 23 – Solid quarter, strong FCF paves way for bumper cash return

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New Street Research

David Lopes ...

Soomit Datta

EUR 9623.00 For Business Accounts Only

Vivo (Buy, TP: BRL61, +30%) Vivo Q3 23 – Solid quarter, strong FCF paves way for bumper cash return

Vivo reported solid Q3s, with revenue and EBITDA (stripping out a BRL175m gain) 1.2% and 1.5% ahead of consensus, respectively. Service revenue grew 7.5% YoY (similar to Q2) driven by 3% growth in fixed and 9% in wireless, and remaining well ahead of inflation (which is creeping up again in Brazil). FCF generation, supported by falling capex, remains a highlight, with YTD of BRL7.6 billion representing >10% yield to equity – there will be more to come in Q4. FCF paves the way for the BRL5 billion capital stock reduction which we expect in early 2024.

01/11/2023 1 EN

Underlying

Telefonica Brasil S.A.

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BRVIVTACNOR0 BM&F Bovespa - Securities, Commodities and Futures Exchange Brazil

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New Street Research

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Analysts

David Lopes

Soomit Datta

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Vivo (Buy, TP: BRL61, +30%) Vivo Q3 23 – Solid quarter, strong FCF paves way for bumper cash return

Vivo (Buy, TP: BRL61, +15%) Vivo - Q4 23: Double digit EBITDA growth, improving cash returns

TIM/Vivo - Maintain Buys; Solid Wireless supported by improving Tower dynamics

OpenAI: o3 is a game changer - a few steps away from AG. After the $1bn-to-train model, the $1m-inference model.

Airtel Africa (Buy, TP: GBp200, +85%) Second share buyback program

Takeaways from our conversation with VerticalScope (FORA-TO, Not rated)

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