November 4, 2019 / 2:10 PM / a month ago

UPDATE 2-Telefonica Brasil sees stronger results in Q4, eyes partnerships - CEO

(Adds details and analysts’ comments)

By Gabriela Mello

SAO PAULO, Nov 4 (Reuters) - Telefonica Brasil SA is likely to deliver stronger results in the fourth-quarter, as Brazil’s economic outlook improves and one-off effects that hit the two previous quarters will no longer be felt, its chief executive said on Monday.

“We expect the approved reforms and the upcoming ones to gradually improve consumption levels, boosting customer flow and sales,” CEO Christian Gebara told journalists in an interview to discuss quarterly earnings.

He noted the company, which operates under the brand Vivo in Brazil, is currently more focused on growing its operating profit and revenues than margins.

“We are constantly looking for new sources of revenue,” the CEO said, adding Brazil’s largest wireless carrier aims to increase services offered to its customers, as a lower inflation in Brazil keeps a lid on future price hikes.

Besides tie-ups with streaming platforms to strengthen entertainment tools, Vivo plans to provide other solutions to customers, including credit to those who do not have a bank account, Gebara said.

Controlled by Spain’s Telefonica, the Brazilian subsidiary also seeks partnerships to speed up fiber-to-the-home (FTTH) network expansion and reach more cities across Brazil, he added.

The carrier recently struck a deal with American Tower Corp, which last year purchased the broadband network of state-run utilities firm Cia Energetica de Minas Gerais SA, known as Cemig.

As part of the agreement, which will add 40 cities and 800,000 potential customers to Vivo in a three-year period, American Towers will build part of the network and Telefonica Brasil will cover the last mile.

Additionally, the company put in place a franchise model under the brand Terra, targeting cities with up to 50,000 inhabitants. “With our own resources it would take a long time to expand FTTH, so we are very much open to partnerships,” the CEO said.

Telefonica Brasil shares were up 1.4% up in early morning trading at 54.10 reais, lifting gains so far this year to more than 24%.

Earlier on Monday, the carrier posted a 69.6% fall in third-quarter net income compared with the same period a year ago, when it reported a non-recurring gain related to taxes.

Its net profit hit 965 million reais ($242 million), well below analysts consensus estimate of 1.148 billion reais as compiled by Refinitiv.

But analysts at Credit Suisse cited in a note to clients a 4.6% growth in mobile revenue as positive highlight amid price hikes in post-paid plans and better trends in pre-paid. ($1 = 3.9916 reais) (Reporting by Gabriela Mello and Anthony Boadle; Editing by Louise Heavens and Marguerita Choy)

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