Brazil's Telefonica profit falls by nearly half as expenses rise (updated)

Telefonica Brasil, SA

26/07/2022 23:01

(Adds more details, context)
    SAO PAULO, July 26 (Reuters) - Telefonica Brasil  VIVT3.SA 
said on Tuesday its second-quarter net profit fell 44.6%, as
higher financial and operating costs offset good results from
its mobile phone unit.
    The company, a unit of Spain's Telefonica  TEF.MC , which
operates in Brazil under the Vivo brand, posted net income of
746 million reais ($139.4 million).
    Telefonica's bottom line was mainly affected by a 282% jump
in financial expenses, as the company took on more debt to pay
for the acquisition of 5G licenses and the mobile phone business
of carrier Oi, at a time of rising borrowing costs.
    Recurring earnings before interest, taxes, depreciation and
amortization came in at 4.58 billion reais, up 8.3% from the
previous year. 
    Operating net revenue for the period rose 11.1% to 11.83
billion reais. Net revenue from the company's mobile phone
services, its main business, grew 16% to 8.1 billion reais,
boosted by new clients brought over from Oi, which Telefonica
agreed to buy in 2020.
    The migration of Oi's clients is expected to be fully
completed by the end of the first quarter of 2023.
    Amid rampant inflation in Brazil, Telefonica's operating
costs rose by 27.3% in the period, to reach 5.06 billion reais. 

($1 = 5.3511 reais)

 (Reporting by Peter Frontini; Editing by Leslie Adler and
Richard Pullin)
 ((Peter.Siqueira@thomsonreuters.com; +55 11 56447727;))