Telefónica Brasil is experiencing a difficult time on the Stock Market. The largest listed subsidiary of the operator is trading at the minimum prices for four years on the Stock Market in the area of 38 reais, after having reached an annual maximum of 55.35 reais on April 6. On Wall Street, its ADRs are at record lows, trading below the seven dollar mark.
Since the beginning of the year, the shares of Telefónica Brasil have dropped close to 20%. The parent company’s titles, on the other hand, seem to have left behind the punishment suffered in recent months, and are rebounding around 11% from their annual minimum, registered at the end of October, thanks to the improvement in the accounts.
In general terms, Telefónica Brasil is being penalized by the economic uncertainties in Brazil before the arrival of the new Government, under the command of Lula da Silva, which seeks to implement a new fiscal policy.
In recent days, both the real and the Brazilian stock market have been severely shaken by Lula da Silva’s plans to raise the 2023 budget, with an increase in the public deficit. The fulfillment of the electoral promises will suppose an additional cost for the public coffers of between 160,000 and 200,000 million reais (between 29,000 and 36,300 million euros).
Internally, however, the company has accelerated growth since January. In the first nine months of the year, revenue increased by 8.8%, with an increase of 10.6% in the third quarter, with the integration of Oi’s assets. Recurring ebitda grew 7.3% through September, with a rise of 12.3% in the third quarter. Net profit fell by 18.6% up to September, due to the absence of extraordinary items, with a rise of 9.3% between July and September.
Telefónica Brasil closed the third quarter with a total of 111.6 million customers, 14.6% more than on the same date of the previous year, and once again at the head of the group.
In addition, the telco defends its traditional strategy of strong remuneration for shareholders. In the first nine months of the year, the operator allocated 3.4 billion reais to dividends and another 500 million to buy back shares. In the recent presentation of results, Telefónica Brasil pointed out that the payout of the last 12 months it stands at 113%, with a dividend yield of 9.2%.
The company raised its capex by 20.2% in the third quarter, up to 2,586 million reais, a figure that represents 21.2% of its revenues. Telefónica Brasil accelerated investment to boost fiber deployments, thanks to its investment vehicles, as well as in 5G, with the aim of turning on this technology in all state capitals this month.
Telefónica announced a broad reorganization of its stake in the Brazilian subsidiary, with the elimination of the historic holding SP Telecomunicações Participações, which divided its stake between the group’s parent company and Telefónica Latinoamérica Holding.