July 24, 2019 / 11:13 AM / 4 months ago

UPDATE 2-Telefonica Brasil to boost revenue with price hikes in 2nd half of 2019 -CEO

(Recasts with CEO’s remarks on prospects for second half, adds analyst comments, share price, company details)

By Gabriela Mello

SAO PAULO, July 24 (Reuters) - Telefonica Brasil SA plans to boost revenue in the second half of 2019 by raising prices in the mobile segment, as the company bets on a more vigorous economic recovery, Chief Executive Officer Christian Gebara said on Wednesday.

The carrier operating under the brand Vivo aims to lift prices in the postpaid mobile sector - in which customers are billed after the fact according to their phone use - in August, and in the hybrid plan known as “control” in the fourth quarter, he added.

“We’re very optimistic about the country and the mobile business in the second half of the year,” Gebara told analysts on a conference call to discuss second-quarter results, which beat market expectations despite a 55% slump in net profit.

He said the company expects competitors to follow a more rational approach toward prices, especially in the pre-paid service. Telefonica Brasil is also betting on handset sales to lift revenue in the coming months, according to Gebara.

“We have been working on our inventory and we expect to compete with retailers,” he added.

In the fixed-line segment, the Brazilian subsidiary of Spain’s Telefonica sees average revenue per user (ARPU) growing as it improves the technology by expanding the fiber-to-the-home (FTTH) broadband service.

“We will be able to increase margins going forward as we bring FTTH to as many cities as we can,” Gebara said, noting the company might consider options to accelerate the process, such as sharing infrastructure with other players.

Despite the current focus on organic growth, Gebara added the company is evaluating acquisition opportunities, including Copel Telecom, a subsidiary of utilities firm Copel, and state-run carrier Sercomtel, both based in the south of Brazil.

Earlier on Wednesday, the company reported a second-quarter net profit of 1.42 billion reais ($376.31 million), above a consensus estimate of 1.338 billion reais ($354.39 million) compiled by Refinitiv, despite stagnant revenue and fierce competition.

Analysts at Bradesco BBI judged the results as largely in line with expectations but highlighted soft revenue growth in mobile service.

“We remain skeptical about significant improvement on this front, as Vivo needs to defend its dominant market share in postpaid as TIM and Claro improve their operations,” they wrote in report, referring to two of Vivo’s main competitors in the Brazilian market.

Shares of Telefonica Brasil reversed earlier losses and were trading 0.2% higher at 53.62 reais in early afternoon. So far this year the shares have risen more than 23%. ($1 = 3.7655 reais) (Reporting by Gabriela Mello in Sao Paulo Editing by Bernadette Baum and Matthew Lewis)

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