UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of July, 2021
Commission File Number: 001-14475
TELEFÔNICA BRASIL S.A.
(Exact name of registrant as specified in its charter)
TELEFONICA BRAZIL S.A.
(Translation of registrant’s name into English)
Av. Eng° Luís Carlos Berrini, 1376 - 28º andar
São Paulo, S.P.
Federative Republic of Brazil
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
2Q21 HIGHLIGHTS
Strong customer base growth in core1
businesses, consolidating the transformation of the Company's access base
|
·
|
Customer base totaled 97 million accesses, an increase
of 5 million subscriptions in relation to the same period of the previous year;
|
|
·
|
Postpaid accesses reached 47 million, which represents
an increase of 4 million accesses in the last 12 months and 58.2% of total mobile accesses;
|
|
·
|
FTTH accesses totaled 4 million (+41.3% year-on-year),
with 1.2 million net additions in the last 12 months;
|
|
·
|
Vivo's FTTH coverage is available in 293 cities (+77
cities since 2Q20) with 17.3 million homes passed (+4.3 million homes passed in 12 months).
|
Net revenue increased +3.2% year-on-year,
due to the positive evolution of mobile revenue and the expansion of FTTH earnings
|
·
|
Core Revenue1 increased +8.2% y-o-y in
2Q21 and already represents 89% of total revenues (+4 p.p. y-o-y);
|
|
·
|
Mobile revenue increased +5.6% y-o-y in 2Q21, reflecting
the improved trends when compared to the same period of last year;
|
|
·
|
FTTH revenues reached R$1.1 billion (+49.7% y-o-y),
capturing the returns of the investments in fiber, while IPTV revenues came to R$343 million (+29.5% y-o-y).
|
Growth in recurring costs2
remains substantially below inflation, even as commercial activity accelerates
|
·
|
Cost of Services and Products Sold3
reflect improved commercial activity, B2B recovery and customer base growth;
|
|
·
|
Costs
of Operation4, disregarding the non-recurring effects
of the period, show that there is still room for additional efficiencies, dropping -2.9% y-o-y;
|
|
·
|
EBITDA2 totaled
R$4,226 million (+3.0% y-o-y) in 2Q21, with an EBITDA margin2 of
39.7%.
|
Net income grew 20.9% y-o-y with improved
operating performance, increasing shareholders return
|
·
|
Free cash flow totaled R$1.9 billion in the quarter,
reflecting the ongoing, efficient financial management;
|
|
·
|
R$1.3 billion of interest on capital has been declared
until June 2021, which represents a dividend yield of 7.7% in the last 12 months.
|
1
Total Company’s revenues excluding fixed voice, xDSL and DTH.
2
Excluding the following non-recurring effects: 1Q20: positive effect of R$75.7 million related to the
sale of towers and rooftops. 2Q21: positive net effect of R$563 million, corresponding to extraordinary tax matters (R$1,549 million referring
to the decision of the Supreme Court on the right to exclude ICMS from the basis of PIS/COFINS contributions and an expense of R$415 million
of tax contingencies) and a regulatory contingencies expense of R$571 million.
3
Services: digital content, regulatory tax, interconnection, and B2B services; Products Sold: mobile devices and accessories, and B2B equipment.
4Personnel
Costs, Commercial and Infrastructure, PDD, General and Administrative and Other Operating Income (Expenses).
|
2
|
|
|
Telefônica Brasil S.A. (B3: VIVT3,
NYSE: VIV), discloses today its results for the second quarter of 2021, presented in accordance with the International Financial Reporting
Standards (IFRS) and with the pronouncements, interpretations and guidelines provided by the Accounting Pronouncements Committee. Totals
are subject to rounding differences.
To access the spreadsheet with the data
available on the Investor Relations site, click here.
Highlights[5]
[6][7][8]
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
Net Operating Revenue
|
10,649
|
3.2
|
21,498
|
1.7
|
Core Revenue1
|
9,453
|
8.2
|
19,016
|
6.4
|
Mobile Revenue
|
6,990
|
5.6
|
14,138
|
3.3
|
Fixed core revenue
|
2,462
|
16.4
|
4,878
|
16.8
|
Non-core Revenue2
|
1,197
|
(24.4)
|
2,483
|
(24.2)
|
Recurring Total Costs3
|
(6,423)
|
3.4
|
(12,817)
|
1.7
|
Reported Total Costs
|
(5,860)
|
(5.7)
|
(12,254)
|
(2.2)
|
Recurring EBITDA3
|
4,226
|
3.0
|
8,681
|
1.7
|
Recurring EBITDA Margin3
|
39.7%
|
(0.1) p.p.
|
40.4%
|
0.0 p.p.
|
Reported EBITDA
|
4,789
|
16.7
|
9,244
|
7.4
|
Reported EBITDA Margin
|
45.0%
|
5.2 p.p.
|
43.0%
|
2.3 p.p.
|
Net Income
|
1,345
|
20.9
|
2,287
|
0.9
|
|
|
|
|
|
CAPEX | EX-IFRS 16
|
2,251
|
17.9
|
4,194
|
18.0
|
Free Cash Flow4
|
1,868
|
(32.6)
|
4,067
|
(16.8)
|
|
|
|
|
|
Core Revenue1 / Net Revenue
|
88.8%
|
4.1 p.p.
|
88.5%
|
4.0 p.p.
|
Non-core Revenue2 / Net Revenue
|
11.2%
|
(4.1) p.p.
|
11.5%
|
(4.0) p.p.
|
|
|
|
|
|
Total Subscribers (Thousand)
|
96,721
|
5.1
|
96,721
|
5.1
|
Core Subscribers
|
87,197
|
8.7
|
87,197
|
8.7
|
% / total accesses
|
90.2%
|
2.9 p.p.
|
90.2%
|
2.9 p.p.
|
Non-core Subscribers
|
9,524
|
(19.0)
|
9,524
|
(19.0)
|
% / total accesses
|
9.8%
|
(2.9) p.p.
|
9.8%
|
(2.9) p.p.
|
1 Total Company’s
revenues excluding fixed voice, xDSL and DTH.
2 Fixed voice,
xDSL and DTH revenues.
3 Excluding the following non-recurring
effects: 1Q20: positive effect of R$75.7 million related to the sale of towers and rooftops. 2Q21: positive net effect of R$563 million,
corresponding to extraordinary tax matters (R$1,549 million referring to the decision of the Supreme Court on the right to exclude ICMS
from the basis of PIS/COFINS contributions and an expense of R$415 million of tax contingencies) and a regulatory contingencies expense
of R$571 million.
4 Free cash flow after lease payments. Excludes R$470
million received from the sale of towers and rooftops in 1Q20.
|
3
|
|
|
MOBILE
BUSINESS[9]
Operating
Performance
Thousand
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
TOTAL MOBILE SUBSCRIBERS
|
80,965
|
8.8
|
80,965
|
8.8
|
Postpaid
|
47,093
|
9.2
|
47,093
|
9.2
|
M2M
|
11,182
|
13.3
|
11,182
|
13.3
|
Prepaid
|
33,872
|
8.2
|
33,872
|
8.2
|
MARKET SHARE1
|
33.0%
|
(0.0) p.p.
|
33.0%
|
(0.0) p.p.
|
Postpaid1
|
36.9%
|
(1.9) p.p.
|
36.9%
|
(1.9) p.p.
|
Prepaid1
|
28.8%
|
1.4 p.p.
|
28.8%
|
1.4 p.p.
|
ARPU (R$/month)
|
26.8
|
(4.3)
|
27.0
|
(4.9)
|
Postpaid (Human)
|
48.0
|
(3.8)
|
48.9
|
(3.4)
|
M2M
|
2.8
|
(4.9)
|
2.9
|
(2.8)
|
Prepaid
|
12.1
|
(0.4)
|
12.1
|
(2.0)
|
MONTHLY CHURN
|
2.9%
|
(0.4) p.p.
|
2.9%
|
(0.3) p.p.
|
Postpaid (ex-M2M)
|
1.3%
|
(0.2) p.p.
|
1.2%
|
(0.3) p.p.
|
Prepaid
|
4.9%
|
(0.5) p.p.
|
4.9%
|
(0.4) p.p.
|
Total mobile accesses reached 80,965
thousand at the end of 2Q21, an increase of 6,557 thousand accesses in the last 12 months, due to the strong performance in both postpaid
and prepaid segments. We maintained our unchallenged leadership in the mobile business, with a market share of 33.0% in April 2021.
Postpaid accesses totaled 47,093
thousand in June 2021, representing an increase of 3,976 thousand accesses year-on-year and 58.2% of the total mobile access base. Postpaid
net additions were 1,080 thousand in the quarter, driven by the migration of prepaid customers to hybrid plans and the increasing
positive balance of number portability to Vivo. This significant rise in our postpaid customer base and the lower historical churn are
direct proof of the quality of Vivo's network.
In prepaid, the customer base reached
33,872 thousand accesses at the end of June 2021, an increase of 2,581 thousand accesses in the last year, with market share of 28.8%
in April 2021 (+1.4 p.p. year-on-year). Vivo’s renowned quality of service provided, the resumption of economic activity in the
country and the new government emergency aid, resulted in 203 thousand prepaid net adds in the last quarter.
In the Machine-to-Machine (M2M)
segment, the customer base reached 11,182 thousand, a growth of 13.3% year-on-year, with net additions of 313 thousand in the
month of June 2021, the best monthly volume ever.
Mobile ARPU decreased 4.3% year-on-year
in 2Q21, due to the mix of gross additions more concentrated in pure postpaid entry plans and the strong growth of accesses in hybrid
and prepaid plans.
1
Data published by Anatel referring to April 2021, most recent available data with information of all large carriers.
|
4
|
|
|
Financial
Performance
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
NET MOBILE REVENUE
|
6,990
|
5.6
|
14,138
|
3.3
|
Mobile Service Revenue
|
6,441
|
3.1
|
12,944
|
1.6
|
Postpaid
|
5,217
|
2.1
|
10,499
|
0.7
|
Prepaid
|
1,224
|
8.0
|
2,445
|
5.9
|
Handset Revenues
|
550
|
47.3
|
1,194
|
25.1
|
Mobile Net Revenue grew 5.6% y-o-y
in 2Q21, resulting from the solid performance in mobile service revenue and the advance in handset sales compared to 2Q20.
Mobile Service Revenue was up 3.1%
year-on-year in 2Q21, reflecting growth in sales for both postpaid and prepaid.
Because of the growth in customer base,
mainly due to migrations from prepaid to hybrid, Postpaid[1]
Revenue increased 2.1% compared to 2Q20. We continue to focus on strengthening our value proposition, expanding the attractiveness
of our offerings through several partnerships with the most important digital content providers. Last quarter we included Skeelo, a digital
book app, for all postpaid customers.
Prepaid Revenues rose 8.0% in 2Q21,
reflecting the combination of increased customers additions and higher recharge volume. At the end of June 2021, more than 80% of the
prepaid mobile accesses were subscribed in the Vivo Turbo offer, ensuring amplified recharge recurrence. We highlight the representativeness
of top-ups made through digital channels, which represented 36% of the total, +6 p.p. year-on-year.
Handset Revenue increased 47.3% over
the same quarter last year. The positive performance in the quarter is related to the launch of newer versions of mobile devices, such
as Apple and Samsung, and the modernization of Vivo's own stores, that will offer a broad portfolio of technology-related products, such
as mobile accessories and connected home equipment. In 2Q21, we had some negative effects of reduced opening hours in some of the stores,
negatively impacting commercial activity, due to tighter confinement measures during the month of April.
1 - Postpaid
revenues includes M2M, dongles, wholesale and other.
|
5
|
|
|
FIXED
LINE BUSINESS
Operating
Performance
Thousand
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
TOTAL FIXED SUBSCRIBERS
|
15,756
|
(10.5)
|
15,756
|
(10.5)
|
Core fixed subscribers1
|
6,232
|
6.7
|
6,232
|
6.7
|
FTTx
|
5,313
|
5.6
|
5,313
|
5.6
|
FTTH
|
4,046
|
41.3
|
4,046
|
41.3
|
IPTV
|
919
|
14.1
|
919
|
14.1
|
Non-core fixed subscribers2
|
9,524
|
(19.0)
|
9,524
|
(19.0)
|
|
|
|
|
|
ARPU | FTTH (R$/month)
|
90.9
|
5.6
|
92.8
|
10.8
|
ARPU | IPTV (R$/month)
|
124.9
|
9.5
|
122.2
|
5.8
|
|
|
|
|
|
Core fixed subscribers1 / Total Fixed subscribers
|
39.6%
|
6.4 p.p.
|
39.6%
|
6.4 p.p.
|
Non-core fixed subscribers2 / Total Fixed subscribers
|
60.4%
|
(6.4) p.p.
|
60.4%
|
(6.4) p.p.
|
Total fixed accesses reached 15,756
thousand in 2Q21, a 10.5% reduction in comparison with 2Q20, justified by the maturity of non-core services (fixed voice, xDSL and DTH)
which was partially offset by the accesses growth in more advanced technologies, that represent 39.6% of the total, a 6.4 p.p. year-on-year
increase.
Core accesses[1]
totaled 6,232 thousand in 2Q21, a 6.7% improvement y-o-y. This performance is a result of the Company's strategy, focused on expanding
the fiber network, which allows us to offer high-quality connection and higher speeds, driving not only the expansion of the FTTH customer
base (+41.3% y-o-y), but also that of IPTV (+14.1% y-o-y).
We closed 2Q21 with more than 4.0
million FTTH accesses after a net addition of 300 thousand in the quarter, proving the importance of the service and the outstanding
fiber quality associated with Vivo’s product. These features led to a 5.6% y-o-y increase in FTTH ARPU.
IPTV also posted ARPU growth,
+9.5% y-o-y in the quarter, through the delivery of a unique service in terms of content and navigability.
1
FTTx and IPTV.
2
Fixed voice, xDSL and DTH.
|
6
|
|
|
Financial
Performance
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
NET FIXED REVENUE
|
3,659
|
(1.1)
|
7,361
|
(1.2)
|
Core fixed revenue1
|
2,462
|
16.4
|
4,878
|
16.8
|
FTTx
|
1,317
|
14.3
|
2,629
|
17.2
|
FTTH
|
1,062
|
49.7
|
2,072
|
55.1
|
IPTV
|
343
|
29.5
|
668
|
27.7
|
Corporate Data, ICT and others
|
802
|
14.8
|
1,581
|
12.1
|
Non-core fixed revenue2
|
1,197
|
(24.4)
|
2,483
|
(24.2)
|
|
|
|
|
|
Core fixed revenue1 / Net fixed revenue
|
67.3%
|
10.1 p.p.
|
66.3%
|
10.2 p.p.
|
Non-core fixed revenue2 / Net fixed revenue
|
32.7%
|
(10.1) p.p.
|
33.7%
|
(10.2) p.p.
|
Fixed Core Revenue[1]
grew 16.4% y-o-y in 2Q21 and already represents 67.3% of total fixed revenue (+10.1 p.p. y-o-y). This greater representativeness of the
core businesses is the result of the company's strategic decision to focus its investments on cutting-edge technologies and reinforces
our positive outlook for the future.
FTTx Revenues grew 14.3% y-o-y
in the quarter, boosted by the significant performance of FTTH Revenues, +49.7% y-o-y. We continue to focus on the expansion of
fiber, as a future proof technology, and during the last twelve months, our fiber network reached 77 new cities, adding 4.3 million homes
passed. At the end of the quarter, we totaled 17.3 million homes passed in 293 cities.
More recently, FiBrasil, a neutral fiber
wholesale network created in partnership with TEF Infra and CDPQ, began operations, with the objective of expanding fiber coverage across
Brazil. This will allow us to further accelerate the volume of passed and connected homes, increasing network penetration and, as a result,
enhance value capture.
IPTV, which is directly linked
to fiber connectivity, continues to reinforce the Company’s value proposition. In 2Q21, IPTV Revenues grew a solid 29.5%
y-o-y.
Revenues from Corporate Data,
ICT and others presented a record figure in 2Q21, with 14.8% y-o-y growth. The strong performance is due to the full portfolio of
products and services offered by Vivo and the resumption of investments by our client companies, that had been postponed in 2020 due
to the uncertainties caused by the pandemic.
1
FTTx, IPTV, Corporate data and IT, Wholesale and other fixed revenues.
2 Fixed voice, xDSL and DTH revenues.
|
7
|
|
|
COSTS
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
TOTAL COSTS
|
(5,860)
|
(5.7)
|
(12,254)
|
(2.2)
|
COST OF SERVICES AND PRODUCTS SOLD
|
(1,883)
|
22.6
|
(3,799)
|
21.0
|
Services
|
(1,167)
|
11.8
|
(2,311)
|
14.4
|
Products sold
|
(715)
|
45.5
|
(1,488)
|
33.0
|
COSTS FROM OPERATIONS
|
(3,978)
|
(15.0)
|
(8,455)
|
(10.0)
|
Personnel
|
(993)
|
8.4
|
(2,006)
|
5.3
|
Commercial and Infrastructure
|
(3,041)
|
1.0
|
(6,052)
|
(0.0)
|
Provision for Bad Debt
|
(380)
|
(28.4)
|
(744)
|
(24.5)
|
General and Administrative Expenses
|
(254)
|
(17.8)
|
(557)
|
(9.3)
|
Other Net Operating Revenues (Expenses)
|
690
|
684.2
|
903
|
446.0
|
Recurring Total Costs1
|
(6,423)
|
3.4
|
(12,817)
|
1.7
|
Like seen in the previous quarter, we are presenting
a new cost classification, separating costs directly related to revenue generation from those linked to operation and maintenance of the
Company’s activities. The historical data is available on the Investor Relations website.
Recurring Total Costs[1],
excluding Depreciation and Amortization expenses, were R$6,423 million for the quarter, up 3.4% for the year, but below inflation (IPCA-12M),
which registered an increase of 8.35%.
Cost of Goods and Services Sold grew
22.6%, reflecting the revenue growth and improved commercial performance in 2Q21, mainly in the B2B segment.
|
·
|
Services – a 11.8% upturn over 2Q20. The change
reflects higher demand for B2B services and digital content, as well as regulatory fees related to the growth of the customer base in
the period.
|
|
·
|
Goods Sold – a 45.5%
y-o-y increase in 2Q21 due to the resumption of B2B and higher volume of handset sales, whose revenue increased 47.3% y-o-y.
|
On the other hand, Operating
Costs decreased, reflecting the Company's continuous and efficient cost management.
|
·
|
Personnel – +8.4% y-o-y
in 2Q21, due to the annual wage adjustment and hiring of new employees.
|
|
·
|
Commercial and Infrastructure
– an increase of 1.0% when compared to 2Q20, due to higher maintenance and electricity expenses as a result of the increase
in tariffs. These higher expenses were partially offset by increased adoption of digital channels and e-billing, as well as lower rental
costs.
|
|
·
|
Provision for Bad Debt –
reduced 28.4% year-on-year and ended 2Q21 at R$380 million, representing 2.4% of Gross Revenue (-1.1 p.p. year-on-year). The essentiality
and value associated to connectivity services
means that customers are prioritizing the payment of their bills with Vivo. This behavior, together with the improvement in the economic
environment and the execution of credit and collection actions, contributed to the reduction in the provision for bad debt.
|
1 - Excluding
the following non-recurring effects: 1Q20: positive effect of R$75.7 million related to the sale of towers and rooftops. 2Q21: positive
net effect of R$563 million, corresponding to extraordinary tax matters (R$1,549 million referring to the decision of the Supreme Court
on the right to exclude ICMS from the basis of PIS/COFINS contributions and an expense of R$415 million of tax contingencies) and a regulatory
contingencies expense of R$571 million.
|
8
|
|
|
|
·
|
General and Administrative
– a 17.8% year-on-year reduction in the quarter, due to lower expenses with building maintenance and IT.
|
|
·
|
Other Operating Income (Expenses)
– showed an income of R$690 million, in 2Q21, mainly due to the non-recurring effects of the period. The positive net impact totaled
R$563 million in 2Q21, corresponding to extraordinary tax matters (R$1,549 million referring to the decision of the Supreme Court on the
right to exclude ICMS from the basis of PIS/COFINS contributions and an expense of R$415 million of tax contingencies), as well as a regulatory
contingencies expense of R$571 million.
|
EBITDA
Recurring
EBITDA[1] (earnings before interest, taxes, depreciation
and amortization) totaled R$4,226 million in 2Q21, up 3.0% over 2Q20, with an EBITDA margin of 39.7% (-0.1 p.p. y-o-y). The positive performance
reflects the expansion of total net revenues of 3.2% y-o-y and continuous cost control through digitization and operational efficiency.
Considering
the non-recurrent effects of the period, 2Q21 Reported EBITDA grew 16.7% year-on-year, with a Reported EBITDA margin of
45.0% (+5.2 p.p. year-on-year).
In 6M21,
Recurrent EBITDA reached R$8,681 million (+1.7% y-o-y) with an EBITDA margin of 40.4%.
DEPRECIATION AND AMORTIZATION
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
DEPRECIATION AND AMORTIZATION
|
(3,013)
|
8.5
|
(5,919)
|
7.2
|
Depreciation
and Amortization grew 8.5% over 2Q20, reflecting higher asset base and rise in the number of leasing contracts.
1 - Excluding
the following non-recurring effects: 1Q20: positive effect of R$75.7 million related to the sale of towers and rooftops. 2Q21: positive
net effect of R$563 million, corresponding to extraordinary tax matters (R$1,549 million referring to the decision of the Supreme Court
on the right to exclude ICMS from the basis of PIS/COFINS contributions and an expense of R$415 million of tax contingencies) and a regulatory
contingencies expense of R$571 million.
|
9
|
|
|
FINANCIAL RESULT
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
FINANCIAL RESULT
|
(157)
|
110.0
|
(472)
|
75.2
|
Income from Financial Investments
|
59
|
21.0
|
89
|
(5.3)
|
Debt Interest
|
(214)
|
34.4
|
(402)
|
34.7
|
Monetary and Exchange Variation and Others
|
(3)
|
n.a.
|
(159)
|
144.5
|
In 2Q21, the Financial Result was an expense
of R$157 million, +110% y-o-y, due to the higher indebtedness related to contracts recognized as leasing, because of IFRS16, and monetary
updates of contingencies, that were partially offset by the non-recurring effect related to the judicial decision on the right to exclude
ICMS from the basis of PIS/COFINS contributions.
NET INCOME
In 2Q21, Net Income reached
R$1.345 million, +20.9% year-on-year, mainly due to positive revenue evolution and improved operating performance.
In 6M21, Net Income was R$2,287 million, up 0.9% year-on-year.
CAPEX
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
Network
|
1,874
|
19.7
|
3,491
|
18.3
|
Technology, Information System and Others
|
377
|
10.0
|
704
|
16.1
|
CAPITAL EXPENDITURES | EX-IFRS 16
|
2,251
|
17.9
|
4,194
|
18.0
|
IFRS 16 | Leasing
|
665
|
94.2
|
1,683
|
256.2
|
TOTAL | IFRS 16
|
2,916
|
29.5
|
5,878
|
45.9
|
|
|
|
|
|
CAPITAL EXPENDITURES EX-IFRS 16 / NET REVENUE
|
21.1%
|
2.6 p.p.
|
19.5%
|
2.7 p.p.
|
Capex reached R$2,251 million
in 2Q21, equivalent to 21.1% of Net Operating Revenue for the quarter. Investments continue to be directed towards strengthening Vivo’s
mobile network and the expansion of the fiber network, ensuring greater availability of Vivo's services in the face of growing demand
for quality, high-speed connectivity.
By including the effect of IFRS
16, there was an increase of 29.5% y-o-y, due to the renegotiations of long-term lease contracts executed at the beginning of 2021.
|
10
|
|
|
CASH
FLOW[15]
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
Recurring EBITDA
|
4,226
|
3.0
|
8,681
|
1.7
|
Capital Expenditures
|
(2,251)
|
17.9
|
(4,194)
|
18.0
|
Taxes and Net Financial Result
|
(404)
|
177.6
|
(753)
|
120.4
|
Working Capital Variation
|
716
|
(38.5)
|
1,251
|
1.4
|
FREE CASH FLOW FROM BUSINESS ACTIVITIES1
|
2,286
|
(28.8)
|
4,985
|
(15.1)
|
IFRS16 | Lease Payments
|
(418)
|
(5.1)
|
(917)
|
(6.2)
|
FREE CASH FLOW AFTER LEASE PAYMENTS1
|
1,868
|
(32.6)
|
4,067
|
(16.8)
|
Free Cash Flow after Leasing payments was
R$1,868 million in 2Q21, a reduction of 32.6% year-on-year, reflecting the increased level of investments, higher financial and tax payments,
and lower working capital.
In the first half of 2021, the Free Cash Flow after
Leasing payments was R$4,067 million, a reduction of 16.8% y-o-y (R$824 million), mainly reflecting the increased level of investments,
besides higher financial and tax payments.
DEBT
Loans,
Financing and Debentures
ISSUANCES
|
CURRENCY
|
INTEREST RATE
|
DUE DATE
|
SHORT TERM
|
LONG TERM
|
TOTAL
|
PSI
|
R$
|
2,5% a 5,5%
|
2023
|
0.04
|
0.04
|
0.09
|
Suppliers
|
R$
|
108,3% a 149,0% of CDI
|
2022
|
491
|
20
|
511
|
Debentures 1st Issue - Minas Comunica
|
R$
|
IPCA + 0,5%
|
2021
|
30
|
0
|
30
|
Debentures 5th Issue - Single Series
|
R$
|
108,25% do CDI
|
2022
|
1,000
|
0
|
1,000
|
Financial Leases
|
R$
|
IPCA
|
2033
|
34
|
305
|
339
|
ISSUANCES | EX-IFRS 16
|
|
|
|
1,555
|
325
|
1,880
|
IFRS 16 Effects | Leasing
|
R$
|
IPCA
|
2044
|
2,483
|
8,483
|
10,966
|
TOTAL | IFRS 16
|
|
|
|
4,038
|
8,808
|
12,846
|
Net
Debt | ex-IFRS 16
|
|
|
|
|
Long-term
Debt Profile
|
|
|
|
|
|
|
Consolidated in R$ million
|
06/30/2021
|
03/31/2021
|
06/30/2020
|
|
2Q21
|
Short-Term Debt
|
1,507
|
1,555
|
2,660
|
|
Year
|
Pro forma
|
IFRS 16
|
Long-Term Debt
|
310
|
325
|
1,878
|
|
(R$ million)
|
(R$ million)
|
Total Debt
|
1,817
|
1,880
|
4,538
|
|
2022
|
43
|
2,572
|
Cash and Cash Equivalents
|
(8,435)
|
(6,903)
|
(8,188)
|
|
2023
|
36
|
2,035
|
Derivatives
|
23
|
(7)
|
(14)
|
|
2024
|
33
|
1,364
|
Contingent Consideration Guarantee Asset1
|
0
|
0
|
(490)
|
|
2025
|
29
|
937
|
Net Cash
|
(6,595)
|
(5,030)
|
(4,153)
|
|
After 2025
|
170
|
1,637
|
|
(0.41)
|
(11,940.12)
|
(0.26)
|
|
Total
|
310
|
8,545
|
The Company’s gross debt3
reached R$1,817 million at the end of 2Q21, 100% denominated in local currency, a 60.0% drop y-o-y due to the settlement of loans and
financing in the period.
1 Excludes
R$470 million received from the sale of towers and rooftops in 1Q20.
2Alignment of the classification criterion
for the asset backing the contingent consideration to calculate pro-forma net debt.
3 Excluding the effects of IFRS 16.
|
11
|
|
|
Excluding the effect of IFRS 16,
the Company recorded net cash of R$6,595 million in the quarter, reflecting increased cash generation in the period. Considering
the effect of IFRS 16, net debt closed 2Q21 at R$4,533 million.
RETURNS TO SHAREHOLDERS
In 1H21, the Board of Directors
approved the payment of interest on capital totaling the gross amount of R$1,330 million based on monthly balances recorded in the period.
Such payout will be considered as part of the mandatory minimum dividends for fiscal year 2021, ad referendum of the Annual Shareholders'
Meeting to be held in 2022, and payments will be made as described in the table below, which also includes the amounts per share distributed.
2021
|
Deliberation
|
Shareholding Position
|
Gross Amount (BRL million)
|
Net Amount (BRL million)
|
Share Class
|
Gross Amount (BRL)
|
Net Amount (BRL)
|
Payment Date
|
IOC
(based on May-21)
|
06/17/2021
|
06/30/2021
|
630
|
536
|
Common
|
0.373900
|
0.317815
|
up to 07/31/2022
|
IOC
(based on Mar-21)
|
04/15/2021
|
04/30/2021
|
280
|
238
|
Common
|
0.166114
|
0.141197
|
up to 07/31/2022
|
IOC
(based on Feb-21)
|
03/18/2021
|
03/31/2021
|
270
|
230
|
Common
|
0.160098
|
0.136084
|
up to 07/31/2022
|
IOC
(based on Jan-21)
|
02/12/2021
|
02/26/2021
|
150
|
128
|
Common
|
0.088896
|
0.075561
|
up to 07/31/2022
|
|
|
|
|
|
|
|
|
|
2020
|
Deliberation
|
Shareholding Position
|
Gross Amount (BRL million)
|
Net Amount (BRL million)
|
Share Class
|
Gross Amount (BRL)
|
Net Amount (BRL)
|
Payment Date
|
Dividends
(based on Dec-20)
|
04/15/2021
|
04/15/2021
|
1,588
|
1,588
|
Common
|
0.941818
|
0.941818
|
10/05/2021
|
Dividends
(based on Nov-20)
|
11/12/2020
|
12/28/2020
|
1,200
|
1,200
|
Common
|
0.710827
|
0.710827
|
10/05/2021
|
IOC
(based on Nov-20)
|
11/12/2020
|
12/28/2020
|
260
|
221
|
Common
|
0.154013
|
0.130911
|
07/13/2021
|
IOC
(based on Oct-20)
|
11/16/2020
|
11/27/2020
|
400
|
340
|
Common
|
0.236902
|
0.201367
|
07/13/2021
|
IOC
|
09/17/2020
|
09/28/2020
|
650
|
552.5
|
Common
|
0.360985
|
0.306837
|
07/13/2021
|
(based on Aug-20)
|
Preferred
|
0.397084
|
0.337521
|
IOC
|
06/17/2020
|
06/30/2020
|
900
|
765
|
Common
|
0.499826
|
0.424852
|
07/13/2021
|
(based on May-20)
|
Preferred
|
0.549808
|
0.467337
|
IOC
|
03/19/2020
|
03/31/2020
|
150
|
127.5
|
Common
|
0.083304
|
0.070809
|
07/13/2021
|
(based on Feb-20)
|
Preferred
|
0.091635
|
0.077890
|
IOC
|
02/14/2020
|
02/28/2020
|
270
|
229.5
|
Common
|
0.149948
|
0.127456
|
07/13/2021
|
(based on Jan-20)
|
Preferred
|
0.164942
|
0.140201
|
In addition, the Company has continued
to periodically execute its Share Buyback Program currently in effect, and ended June 2021 with 6.0 million shares in Treasury. In July
2021, we acquired another 0.5 million shares, increasing the number of shares in treasury to 6.5 million shares or 0.4% of the total capital.
|
12
|
|
|
06/30/2021
|
Common/Total
|
Controlling Group
|
1,244,241,119
|
73.6%
|
Minority Shareholders
|
440,700,252
|
26.1%
|
Treasury
|
6,043,552
|
0.4%
|
Total Number of Shares
|
1,690,984,923
|
|
|
|
|
Book Value per Share:
|
R$ 40.81
|
VIVT3 shares closed 2Q21 at R$42.00,
down 5.0% from the closing price at the end of March 2021, with average daily traded volume of R$97 million.
In the same period, the ADRs (VIV)
ended 2Q21 quoted at US$8.50, an appreciation of 8.0% influenced by the appreciation of the Brazilian real against the American dollar.
The daily trading volume averaged US$10 million.
The chart below shows the Company's
stock performance in the past 12 months:
|
13
|
|
|
DIGITAL
BUSINESS
Based on the strategic pillar #temtudonaVivo
(Vivo has everything), we are strengthening the Company as a platform to distribute products and services and continuing to move
forward in the development of an ecosystem with relevant partners to fuel our consolidation as a digital services hub.
Financial
Services
This vertical is one of the Company’s
priorities, with the purpose of offering services that create value for our customers.
In this context, we continued to
accelerate the performance of Vivo Money, our digital personal credit service that offers rates from 1.49% per month for postpaid
and hybrid customers. In 2Q21, the number of contracts and the amount granted doubled compared to 1Q21.
Vivo Pay, Vivo's free digital
account, showed significant activation rates and more than 30% of active customers have registered a Pix code to perform transactions
from Vivo Pay.
Still in the financial vertical,
the new Vivo Itaucard, a cobranded credit card that offers benefits such as cashback of up to 10% at Vivo stores, presented a relevant
increase in the average expense per client. In the upcoming months, it will be possible to contract the Vivo Itaucard at Vivo's physical
stores.
Health
In the health and wellness vertical,
we launched Vida V, a digital platform that will offer telemedicine services such as medical consultations, wellness and health
programs, and discounts at pharmacies. The new service is being jointly developed with Teladoc Health, a world leader in telemedicine,
and will be available to all Brazilians in the second half of this year.
Market
Place – Shopping vivo
During
2Q21, Vivo Marketplace enhanced its product range and number
of integrated sellers, with the addition of anchor partners in the smartphone, IT, connected home and pet categories.
We
expanded our partnership with Dotz, with the objective of increasing loyalty and profitability of the customer base. We also strengthened
our partnership with CDF, in line with our purpose of being a benchmark in the provision of technology support services
for connected homes, through Vivo Guru. These models enable the Company to have a
minority interest in its partners' business, depending on the achievement of agreed targets.
These and other future initiatives
position Vivo as a Company that goes beyond telecommunication services and combines a unique set of advantages to capture opportunities
that will increase revenue and create value in the digital environment.
|
14
|
|
|
ESG – ENVIRONMENTAL, SOCIAL
AND GOVERNANCE
Telefônica Brasil has a business
model designed to contribute to the country’s growth, offering high-quality connection and services that bring people closer and
facilitate their lives. The Company’s purpose is to “Digitalize to bring closer”; it seeks to go beyond the financial
result by developing programs and projects to promote, in addition to efficiency, environmental preservation and the well-being of society.
In the environmental perspective,
Vivo is the first company in the sector to use 100% renewable energy in its production chain. Our distributed generation project, with
renewable sources of solar, hydro, and biogas, foresees the installation of more than 80 plants by the first half of 2022. By that date,
the project will produce 81 average megawatts of energy, which is enough to supply the entire consumption for a city of 320,000 inhabitants.
This project ensures the supply of renewable energy to our operations and brings more efficiency to the company in energy costs.
In this quarter, which includes
the month of celebration of the Environment Day, Telefônica Brasil was nominated for the maintenance of the ISO 14.001 certification,
which currently covers 51 municipalities.
Regarding the circular economy,
the company starts a new stage of the Recicle com a Vivo movement, aimed at collecting, reconditioning, and recycling modems and decoders
for broadband and TV services. The goal is to encourage customers, through its artificial intelligence, Aura, who have not utilized the
equipment for a while, to return it and ensure the proper disposal of the devices. We expect to reach the end of 2021 with more than 1.5
million refurbished equipment, which will return to the market, complying with all safety standards, in perfect working condition. Additionally,
through a partnership with the Telefônica Vivo Foundation, we developed a campaign to donate 50,000 reais to the Pimp My Carroça
Institution. With this resource, new carts and safety kits will be acquired to provide income, acknowledgement, and autonomy to the garbage
collectors for the dignified and valuable work they do.
To expand our good practices to
other parts of Telefônica Brasil's value chain, we implemented the project to develop the supply chain for a performance in emissions
management for the climate change topic, promoting training in greenhouse gas emissions management in order to expand the sustainable
performance to the value chain. As a result, these suppliers will be able to prepare their greenhouse gas emission inventories, find alternatives
in the use of energy and renewable fuels, and act to improve the processes that impact emissions.
Telefônica Brasil operates
in a business that contributes to the development of the country and positively impacts thousands of companies and, for this reason, it
increasingly works with its suppliers to disseminate ESG issues relevant to the company. In 2021, the company highlighted the theme of
fighting climate change and, to this end, promoted a virtual meeting for more than 115 suppliers of different sizes and segments to raise
awareness and developed a program to boost the management of Greenhouse Gas (GHG) emissions. One of the major goals is to create a Voluntary
Pact of the suppliers that hold carbon-intensive activities to reduce GHG emissions, reducing 39% of the emissions coming from the chain
by 2025.
On the social dimension,
Telefônica Brasil, besides being a GPTW certified company, is also present in the GPTW 2021 Best Companies for Women to Work Ranking
and was recognized with the WEPs Brazil 2021 Award, in the Bronze category (Large Companies), for the advancement in gender equality
actions in the professional environment, value chain and society. One implementation of this commitment was the opening of 100 new positions
for women in 30 Brazilian cities to work in the "Women in Technical Areas" program, which aims to include women in activities
that were mostly held by men.
|
15
|
|
|
Telefônica has also launched
Vivo Explore, its new program to promote the learning culture and the sharing of knowledge among the company's 33 thousand employees,
which establishes the individual's role as an essential condition for learning to happen. The Explore+, a spin-off of the program, was
also developed to offer scholarships for language, undergraduate, graduate, and MBA courses, also with a diversity perspective and in
search of equal opportunities, where trans employees will receive 100% scholarship on the chosen course, black and/or disabled employees
will have 50%, and other percentages are available for other employees. Telefônica Brasil has also acted with diversity by supporting
artistic activities that promote and value black culture and artists, including new sponsorships in the fine arts, a special season of
the Teatro Vivo em Casa and exclusive content focused on the theme on the Vivo Cultura platform.
Regarding governance, Telefônica
Brasil has further strengthened its data security and protection management by being awarded the ISO 27001 certification for the Vulnerability
Management process of its digital security program, Vivo Segura, thus ensuring alignment with the best international practices for information
security management systems.
Additionally, the company was also
highlighted again in the telecommunications sector according to the Merco ranking of the 100 best companies in Corporate Responsibility
and 2020 Governance and ranked 11th most responsible companies during the pandemic. In the overall ranking, the company has
moved up 23 positions from the previous year and is in 16th place, and in the last two years we have evolved 62 places in the
ranking. In this context, Arcet Global, one of the largest CX institutes in the world, recognized DNA Vivo (Telefônica Brasil's
CX program) as one of the 3 best CX strategies in the global Customer Centricity World Series Awards 2021, and was also a finalist in
the 'Customer Centricity Culture' and 'Best CX Measurement' categories.
The advances and recognitions obtained
reinforce Telefônica Brasil's commitment to create shared value with its customers, with society as a whole, and with the environment,
demonstrating its continuous efforts to build a more equitable, more inclusive and regenerative economy.
For more information on Telefônica
Brasil’s ESG initiatives, access the Sustainability Report 2020.
|
16
|
|
|
INCOME
STATEMENT[18][19]
Consolidated in R$ million
|
2Q21
|
∆% YoY
|
6M21
|
∆% YoY
|
Gross Operating Revenue
|
15,696
|
4.8
|
31,732
|
3.1
|
Net Operating Revenue
|
10,649
|
3.2
|
21,498
|
1.7
|
Core Revenue1
|
9,453
|
8.2
|
19,016
|
6.4
|
Mobile core revenue
|
6,990
|
5.6
|
14,138
|
3.3
|
Fixed core revenue
|
2,462
|
16.4
|
4,878
|
16.8
|
Non-core Revenue2
|
1,197
|
(24.4)
|
2,483
|
(24.2)
|
Total Costs
|
(5,860)
|
(5.7)
|
(12,254)
|
(2.2)
|
Cost of Services and Products sold
|
(1,883)
|
22.6
|
(3,799)
|
21.0
|
Services
|
(1,167)
|
11.8
|
(2,311)
|
14.4
|
Products sold
|
(715)
|
45.5
|
(1,488)
|
33.0
|
Costs from Operations
|
(3,978)
|
(15.0)
|
(8,455)
|
(10.0)
|
Personnel
|
(993)
|
8.4
|
(2,006)
|
5.3
|
Commercial and Infrastructure
|
(3,041)
|
1.0
|
(6,052)
|
(0.0)
|
Provision for Bad Debt
|
(380)
|
(28.4)
|
(744)
|
(24.5)
|
General and Administrative
|
(254)
|
(17.8)
|
(557)
|
(9.3)
|
Other Net Operating Revenue (Expenses)
|
690
|
684.2
|
903
|
446.0
|
|
|
|
|
|
EBITDA
|
4,789
|
16.7
|
9,244
|
7.4
|
EBITDA Margin %
|
45.0%
|
5.2 p.p.
|
43.0%
|
2.3 p.p.
|
|
|
|
|
|
Depreciation and Amortization
|
(3,013)
|
8.5
|
(5,919)
|
7.2
|
|
|
|
|
|
EBIT
|
1,776
|
33.9
|
3,326
|
7.7
|
|
|
|
|
|
Financial Result
|
(157)
|
110.0
|
(472)
|
75.2
|
|
|
|
|
|
Gain (Loss) on Investments
|
1
|
n.a.
|
3
|
123.1
|
|
|
|
|
|
Taxes (Income tax / Social contribution)
|
(275)
|
97.6
|
(570)
|
2.9
|
|
|
|
|
|
Net Income
|
1,345
|
20.9
|
2,287
|
0.9
|
1
Total Company’s revenues excluding fixed voice, xDSL and DTH.
2
Fixed voice, xDSL and DTH revenues.
|
17
|
|
|
BALANCE SHEET
Consolidated in R$ million
|
06/30/2021
|
12/31/2020
|
∆%
|
ASSETS
|
113,739
|
108,738
|
4.6
|
Current Assets
|
24,258
|
19,061
|
27.3
|
Cash and Cash Equivalents
|
8,413
|
5,762
|
46.0
|
Accounts Receivable
|
7,921
|
8,183
|
(3.2)
|
Inventories
|
676
|
633
|
6.7
|
Other current assets
|
7,249
|
4,483
|
61.7
|
Non-Current Assets
|
89,480
|
89,678
|
(0.2)
|
Accounts Receivable
|
404
|
380
|
6.3
|
Guarantees and Deposits
|
2,791
|
2,813
|
(0.8)
|
Other assets
|
1,792
|
1,550
|
15.7
|
Property, Plant and Equipment, Net
|
44,329
|
44,353
|
(0.1)
|
Intangible Assets, Net
|
40,165
|
40,582
|
(1.0)
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
113,739
|
108,738
|
4.6
|
LIABILITIES
|
44,969
|
39,182
|
14.8
|
Current Liabilities
|
23,408
|
17,875
|
31.0
|
Accounts Payable and Suppliers
|
8,127
|
7,377
|
10.2
|
Taxes, Fees and Contributions
|
2,609
|
1,607
|
62.3
|
Loans, Financing, Debentures and Leasing
|
4,399
|
3,683
|
19.5
|
Interest on Capital and Dividends
|
6,586
|
3,866
|
70.3
|
Provisions and Contingencies
|
647
|
418
|
55.0
|
Other Liabilities
|
1,040
|
924
|
12.6
|
Non-Current Liabilities
|
21,560
|
21,307
|
1.2
|
Accounts Payable
|
354
|
323
|
9.6
|
Deferred Income Tax and Social Contribution
|
4,960
|
4,415
|
12.4
|
Loans, Financing, Debentures and Leasing
|
8,545
|
9,557
|
(10.6)
|
Provisions and Contingencies
|
5,858
|
5,192
|
12.8
|
Other Liabilities
|
1,842
|
1,820
|
1.2
|
SHAREHOLDERS' EQUITY
|
68,770
|
69,557
|
(1.1)
|
|
18
|
|
|
CONFERENCE
CALL
Date: July 28, 2021 (Wednesday)
Time: 10:00 a.m. (Brasilia) and
9:00 a.m. (New York)
Telephones:
|
·
|
Brazil: (+55
11) 4090-1621 or (+55 11) 4210-1803
|
|
·
|
United Kingdom: (+44
20) 3795-9972
|
|
·
|
Spain: (+34
91) 038-9593
|
Web Phone: click here
Access code: Telefônica
Brasil
Click here to access the webcast in English
Click here to access the webcast in Portuguese
A replay of the conference call will be
available one hour after the event, until August 03, 2021, at (+55 11) 3193-1012 (Code: 8446086#).
TELEFÔNICA BRASIL
Investor Relations
Christian Gebara
David Melcon
Luis Plaster
João Pedro Carneiro
Av. Eng. Luis Carlos Berrini, 1376
– 17th floor – Cidade Monções – SP – 04571-000
Telephone: (+55 11) 3430-3687
E-mail: ir.br@telefonica.com
Information available on the website:
www.telefonica.com.br/ri
This document may contain forward-looking
statements. Such statements do not constitute historical facts and merely reflect the expectations of the Company's management. Such
terms as "anticipate", "believe", "estimate", "expect", "foresee", "intend",
"plan", "project", "target" and similar are intended to identify such statements, which evidently involve
risks and uncertainties, both foreseen and unforeseen by the Company. Therefore, the future results of the Company's operations may differ
from current expectations and the reader should not rely exclusively on the positions performed herein. These forward-looking statements
express opinions formed solely on the date on which they were issued, and the Company is under no obligation to update them in line with
new information or future developments.
|
19
|
|
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
TELEFÔNICA BRASIL S.A.
|
Date:
|
July 27, 2021
|
|
By:
|
/s/ Luis Carlos da Costa Plaster
|
|
|
|
|
Name:
|
Luis Carlos da Costa Plaster
|
|
|
|
|
Title:
|
Investor Relations Director
|
Telefonica Brasil (NYSE:VIV)
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