Report
Soomit Datta

New Street: Brazilian Telcos - Covid & Consolidation: Good set up for the Stocks (Buy TIM/VIVO)

Given the limited revisions to earnings over Q1 and with trends pretty unchanged through mid-May, the ~1x of lost EBITDA on EV multiples since Covid implies stocks are braced for deteriorating pandemic news flow in Brazil.
Underlyings
Telecomunicacoes de Sao Paulo S/A ADS

Telefonica Brasil S.A.

Telefonica Brasil SA Pfd

Telefonica Brasil is a holding company. Through its subsidiaries and associated companies, Co. is engaged throughout Brazil in rendering Fixed Switched Telephone Service Concession Arrangement ("STFC"); Multimedia Communication Service ("SCM", data communication, including broadband internet); Personal Mobile Service ("SMP"); and Conditioned Access Service ("SEAC" - Pay TV) by means of DTH (a satellite technology), IPTV and cable technologies. Co.'s broadband accesses with speeds higher than 34 Mbps in the state of SAPSo Paulo. Co.'s commercial distribution network (marketed under the Vivo brand), as of Dec 31 2017, consisted of 295 own sales outlets throughout Brazil.

TIM SA (Brazil)

TIM Participacoes is holding company. Through its subsidiaries in various telecommunications markets throughout Brazil, Co. operates mobile, fixed and long distance telephony, data transmission and ultra-broadband (speeds of more than 34 MB per second, or Mbps) services. Co. offers extensive data coverage throughout Brazil, with Co.'s general packet radio services technology, or GPRS, covering 100% of Co.'s coverage area and Co.'s EDGE technology reached almost 95% of Co.'s coverage area, in addition to Co.'s 3G and 4G network covering approximately 89% and 74%, respectively, of the urban population of Brazil.

Provider
New Street Research
New Street Research

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Analysts
Soomit Datta

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