* Brazil unit of Spain's Telefonica to raise capex 11-12 pct
* Signs of "more rational" prices in mobile market this year
* Net income 34 percent higher than expected on one-time
By Brad Haynes
SAO PAULO, Feb 25 Brazilian phone company
Telefonica Brasil SA plans to increase investments
this year in an attempt to boost broadband speeds as fixed-line
revenue suffers from rising competition.
The Brazilian unit of Spain's Telefonica is
budgeting an 11 percent to 12 percent rise in capital spending
in 2013 from last year, Controller Cristiane Barretto Sales told
analysts on Monday during a call to discuss earnings.
"We are not happy with our general performance in the fixed
business, mainly in TV and broadband. We are in the process of
implementing a strong tactical plan to turn around this
business," said senior executive Paulo Cesar Teixeira.
The need for rising investments reflects the increasingly
crowded Brazilian telecom market, where a sharp slowdown has
toughened the fight for the highest spending subscribers.
Stiffer broadband competition in Telefonica's core Sao Paulo
market contributed to a 7.6 percent drop in fixed-line revenue
in the fourth-quarter from a year earlier, barely offset by
rising revenue from wireless services.
Executives said faster broadband performance would help
compete with America Movil's NET unit, new
residential offerings from Telecom Italia's TIM
Participacoes and GVT, the broadband provider up for
sale by French group Vivendi.
In the fourth quarter, cost controls and one-time asset
sales helped the company hold net income stable from a year
earlier at 1.474 billion reais ($748 million), beating the
average forecast of 1.1 billion reais in a Reuters poll of
Shares of Telefonica Brasil rose 3.3 percent in Sao Paulo
trading, the biggest rise on the Bovespa stock index.
Improved efficiency and personnel cuts since the integration
of mobile unit Vivo have allowed Telefonica to generate more
cash even as aggressive pricing from wireless competitors
weighed on average revenue per mobile user.
Teixeira said he hoped pricing in Brazil's wireless market
would be "more rational" this year, citing regulatory
restrictions on certain promotional plans last year.
He added that Telefonica does not intend to reduce mobile
pricing or offer unlimited pre-paid voice and data plans like
the aggressive offers from some of its rivals.
Amid the stiff competition, asset sales and more sustainable
savings from renegotiated contracts allowed Telefonica to cut
costs and boost profitability in the fourth quarter.
Earnings before interest, taxes, depreciation and
amortization rose 17 percent to 3.854 billion reais, well above
a forecast of 3.0 billion reais. Without one-time savings and
asset sales, EBITDA rose 9 percent to 3.178 billion reais from a