February 20, 2019 / 4:59 PM / 9 months ago

UPDATE 1-Telefonica Brasil sees higher revenues, margins in 2019 -CEO

(Updates to focus on prospects for 2019)

By Gabriela Mello

SÃO PAULO, Feb 20 (Reuters) - Telefonica Brasil SA , Brazil’s largest wireless carrier, expects to boost revenues and margins this year by raising prices and automating more of its customer service arm, its chief executive officer said on Wednesday.

“We are optimistic about the (Brazilian) economy and the scenario for telecommunications in 2019 ... We see a very competitive market, but we also see opportunity to be more rational and raise prices,” CEO Christian Gebara told analysts in a conference call to discuss the company’s fourth-quarter results.

The company, which is controlled by Spain’s Telefonica , increased prices in post-paid lines in September and December 2018 and now sees room to hike prices again this year, including for pre-paid lines, Gebara said.

Alongside higher revenues, the telecommunications firm also expects cost cuts from automation efforts to translate into better margins.

“We are increasingly using digital channels, artificial intelligence, which should help in reducing costs and improving margins,” Gebara said.

Asked about the possibility of an auction for 5G spectrum, the next generation of high-speed cellular data services, Gebara said most current devices were not equipped to use such technology. “There is no environment for 5G, but we are preparing ourselves for this, while focusing in expanding our 4G, 4.5G and FTTH,” he said.

Earlier on Wednesday, Telefonica Brasil reported its net profit dropped 2 percent to 1.5 billion reais ($404.55 million) in the fourth quarter, pressured by asset depreciation and stagnant revenues. The net profit was roughly in line with expectations.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 7.4 percent to 4.046 billion reais, which was slightly below the average estimate of 4.078 billion reais compiled by Refinitiv.

Telefonica Brasil also reported its quarterly revenue rose 0.5 percent to 11.08 billion reais ($2.99 billion), while operational expenses declined 3.1 percent to 7.039 billion reais ($1.90 billion).

In a report, analysts at Credit Suisse described the results as slightly negative and maintained their cautious view on growth in the mobile market. “We note the quality of results came in slightly weaker than expected,” they wrote.

Telefonica Brasil shares were trading slightly lower after giving up earlier gains.

$1 = 3.7078 reais Reporting by Gabriela Mello Editing by David Gregorio and Paul Simao

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