NEW YORK (Reuters) - Telefonica Brasil SA, the South American nation’s largest telecommunications firm, is eyeing aggressive organic expansion in the next three years with a special focus on the country’s fast-growing broadband segment, executives said on Monday.
At a presentation to investors and analysts in New York, Telefonica Brasil CEO Eduardo Navarro said the company planned 24 billion reais (£5.2 billion) in capital expenditures over the next three years, well above rivals like TIM Participações SA, Telecom Italia SpA’s Brazilian unit.
Meanwhile, the company separately will shell out 2.5 billion reais specifically to expand in broadband, which Telefonica Brasil and rivals see as key, especially as mobile and paid TV markets stagnate in Latin America’s largest economy.
“Fibre is something we are doing very aggressively in Spain and here in Brazil. The demand for ultra broadband is huge,” Navarro said, referring to the Telefonica group as a whole.
“We have great advantages when you take our experience from Spain. Spain has the highest fibre penetration in the West, and we want to replicate that in Brazil.”
While there has been some speculation about the acquisition of part or whole of debt-ridden rival Oi SA by its competitors, Navarro said most growth would be organic.
On the cost side, he said the company planned to save 1.2 billion reais through digitalization by 2020, with operating cash flow coming to “at least” 20 percent of revenue within three years, up from its current level of 15.4 percent.
In terms of dividends, Chief Financial Officer David Melcon said the company would continue along a similar path.
“Because we have low leverage, we can continue with similar shareholder remuneration,” he said.
Reporting by Gram Slattery; editing by Jason Neely and Cynthia Osterman