Vivo: 1Q10 profits, market share up; margins down

4 May 2010

Brazil’s leading mobile operator by subscribers, Vivo Participacoes, reported a rise in first-quarter profits and market share, but said profit margins fell as it was forced to cut prices in a competitive domestic market. Vivo, a 50:50 joint venture between Spain’s Telefonica and Portugal Telecom, posted net income of BRL191.9 million (USD110 million) in the three months to end-March 2010, up from BRL133 million in the corresponding period of 2009. However, the results fell short of a survey of six analysts, compiled by the local Estado newswire, which were predicting an average forecast of BRL243.7 million. On a positive note, Vivo controlled 43% of the mobile market by 31 March 2010 and also increased its share of the more profitable post-paid segment (to 19.5%), having obtained 71.5% of all post-paid net additions in the three months under review. Nonetheless, aggressive pricing and a change in price policy saw Vivo’s average revenue per user (ARPU) falling 9.2% compared with the year before. The cellco reported 1Q10 revenues of BRL4.23 billion, up 4.8% year-on-year, and driven by a 52% spike in data and value added service (VAS) revenue. EBITDA was BRL1.27 billion, up from BRL1.22 billion in 1Q09; the EBITDA margin was 30.1% in the first three months of this year, down slightly from 30.4% in the year-earlier period.