Will Vivo repeat performance of 1Q08 in other Quarters?
Vivo presented a significant result in the 1st quarter of 2008 (1Q08). Got the leadership in 4 of 7 selected indicators by Teleco to follow the performance of cellular operators in Brazil. (more details).
Vivo in the 1Q08 reaped the rewards of a successful strategy for change drawn in 2006, when the operator decided to make cleaning in its customer base, revamping their service and plans to migrate to GSM technology. (more details).
In 2007, the operator was little by little finding the path of growth and taking steps to cover gaps in its coverage with the acquisition of Telemig Celular and frequencies in Band L (1900 MHz).
A comparison of the 1Q08 with 1Q07 shows an improvement of financial economic performance of Vivo in all major indicators.
Note: Vivo includes Telemig in the 1Q07 and in the 1Q08
Net revenues grew 16.4%, 49.3% EBITDA, EBIT 300% and net profit was from R$ 23 million to R$ 256 million.
It is true that this result contributed to the reversal of the provision of ICMS of about R$ 240.6 million made by Telemig. But even without this reversal, the growth of EBITDA still would be 21.9%.
Vivo lost market share in the last 12 months, but presented in 1Q08 significant growth of its net adds. Its participation (share) in net adds in the quarter rose by 1.7% in 1Q07 to 19.1% in 1Q08.
| Vivo* | 1Q07 |
1Q08 |
∆ 12 months |
Market Share |
31.80% |
30.40% |
-1.4 p.p. |
Cellular (thousands) |
32,526 |
38,309 |
17.8% |
Net Adds (thousands) |
37 |
924 |
2,397% |
Share of Net Adds |
1.7% |
19.1% |
17.5 p.p. |
* including Telemig. Note: p.p.= percentage points
In Apr/08 Vivo was in 2nd place in net adds with 24.3% of total Brazil.
The other operational indicators showed small changes in 1Q08 in relation to 1Q07.
| Vivo* | 1Q07 |
1Q08 |
∆ 12 months |
Pre-Paid |
80.7% |
80.9% |
0.2 p.p. |
ARPU (R$) |
29.7 |
29.5 |
-0.7% |
MOU (minutes) |
74 |
77 |
4.1% |
Churn |
2.60% |
2.80% |
0.2 p.p. |
* including Telemig. Note: p.p.= percentage points
These results are reflected in the behavior of the company's shares in BOVESPA (São Paulo Stock Exchange). Vivo exceeded Tim in market cap in March 2008.
Vivo without Telemig
The joint venture of Telemig was one of the factors that helped Vivo to achieve the results presented. But even without Telemig, Vivo obtained significant results in 1Q08. It managed to overcome Tim in gross revenue of services.
Note: Vivo doesn't include Telemig
One of the components of revenue growth in the services of Vivo is the revenue data, which grew 68.5% in 1Q08 in relation to 1Q07, and will represent 11.5% of the gross revenue of services.
Nota: Vivo doesn't include Telemig
Telemig also seems to be benefiting from its incorporation to Vivo. In Minas Gerais, it ended Apr/08 with a difference of only 10 thousand phones in relation to the market leader Tim.
Challenges of Vivo
Despite the significant results produced by Vivo in 1Q08, it is always good to remember that they are not a guarantee of success for the remaining quarters of the year. In 2008, Vivo will face challenges that can undermine their performance as:
To face these challenges Vivo has a strong brand name and is being associated with a quality service.
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