(Adds comments from Telefonica Brasil executives)
By Ana Mano
SAO PAULO Feb 21 Telefonica Brasil SA
, the country's biggest telephone carrier, said on
Tuesday that fourth-quarter net income was in line with
estimates as cost and expense controls helped offset tepid
Profit rose 9 percent to 1.21 billion reais ($391 million)
from the same period a year earlier, according to a securities
filing. The number was in line with the average consensus
estimate of 1.21 billion reais compiled by Thomson Reuters.
In the first results delivered under Chief Executive Eduardo
Navarro, who took the helm from Amos Genish last November,
Telefonica said net operating revenue grew a modest 1 percent to
10.8 billion reais last quarter amid a harsh recession.
Earnings before interest, tax, debt and amortization, a
gauge of profitability known as EBITDA, rose 5.6 percent to 3.62
billion reais in the quarter, slightly above a 3.61 billion
reais consensus estimate.
Keen on maintaining financial discipline and low debt
levels, Navarro said 2016 was marked by a drive to reduce
spending and costs.
In remarks made after the release of results, Navarro said
the only expense line to grow last year was labor, albeit at a
slower pace than inflation.
"Our cost discipline never affected the quality of services
rendered," he said, adding measures like abolishing paper bills
and enhancing customer experience through online channels would
lower costs further.
A focus on higher-paying customer, particularly on the
post-paid mobile segment, also helped Telefonica navigate
through tough economic times.
"While the growth in the number of our clients is not so
impressive, the profitability per customer is higher than that
of our competitors," Luis Plaster, investor relations director,
The strategy helped Telefonica raise EBITDA margin to 33.3
percent, the highest for any quarter last year, Plaster said.
With voice services representing progressively less of the
company's total revenue, Navarro's Telefonica will focus on
expanding mobile data and fiber-to-the-home networks as a means
to keep the highest revenue per user in the industry.
"Our strategy was providing 4G services in selected cities,"
Navarro said, explaining first the company wanted to focus on
key markets that included capital cities like Sao Paulo and Rio
Now, the company plans to expand 4G services to cover 90
percent of the Brazilian urban population, or about 2,000
cities, by the end of 2017, the executive said.
($1 = 3.0949 reais)
(Reporting by Ana Mano; Editing by Sandra Maler and Andrew Hay)