What Drove the Modest Growth in TEF Brasil’s 4Q15 Mobile Revenue?



Telefónica Brasil’s mobile revenue in 4Q15

Organically, Telefónica Brasil’s (TEF) revenue rose ~3.4% YoY (year-over-year) and was ~2.6 billion euros in 4Q15. Let’s turn to the performance of the company’s mobile component in this market during the quarter.

On an organic level, YoY, Telefónica Brasil’s mobile revenue rose modestly by ~3.3% to reach ~1.5 billion euros in 4Q15. YoY, the component’s handset revenue rose organically by ~16.4% to ~0.08 billion euros during the quarter.

Meanwhile, a solid increase in data revenue supported the growth of TEF’s overall mobile service revenue in this market in 4Q15. Organically, Telefónica Brasil’s mobile service revenue rose ~2.7% YoY to ~1.4 billion euros during the same period.

Meanwhile, organically, the data revenue component of this revenue stream rose by ~37.6% YoY to ~0.71 billion euros during 4Q15. Telefónica’s mobile data ARPU (average revenue per user) grew by a significant ~40.5% organically YoY in 4Q15.

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Shrinking prepaid base of Telefónica Brasil

During 4Q15, Telefónica’s mobile connections in Brazil (EWZ) continued to shrink due to the company’s prepaid component. Telefónica’s mobile connections in the market fell ~8.3% YoY to reach ~73.3 million. Meanwhile, YoY, Telefónica’s contract connections grew by ~9.6% to ~31.1 million in the mobile space at the end of 4Q15.

Additionally, the company’s prepaid mobile connections in this market fell by ~18.2% YoY to ~42.2 million by the end of the same quarter.

For diversified exposure to Telefónica and some of its peers, you may consider investing in the iShares Exponential Technologies ETF (XT). The ETF held a combined total of ~2% in Telefónica, Vodafone (VOD), Deutsche Telekom (DTEGY), and Orange (ORAN) at the end of December 2015.


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