Telefonica Brasil, SA (VIV) is currently focusing on high-growth areas like data transmission and video services, apart from boosting its fiber network, which is expected to deliver decent growth in the future. The company’s bundled offering bolstered by high-quality service is strengthening its competitive position, aiding the expansion of its market share.
Telefonica Brasil is investing in technology upgrade and expansion of broadband network infrastructure to retain competitiveness in a rapidly changing market. In this context, it has joined close rival Claro for building backhaul infrastructure for 4G and 3G networks under a three-year contract that will fortify its Vivo brand. These improved offerings are expected to deliver an upsurge in data growth, going forward.
Telefonica Brasil has attractive long-term opportunities in mobile business thanks to continued expansion of the subscriber base. The company continues to ramp up leadership in both data and post-paid segments. The company has launched various attractive post-paid and prepaid data plans such as Vivo Sempre and Vivo Ilimitado and expects to launch more offers going forward.
On the downside, Telefonica Brasil’s fixed line voice business is being exposed to competition from alternative services including wireless telephony, VoIP (voice over Internet Protocol) and cable services (voice, video and broadband). Competition in the local phone market remains intense while the long-distance market has matured. Impact of wireless substitution remains high as a growing number of customers are taking advantage of discounted calling plans from national wireless operators.
The company’s mobile business competes with Personal Mobile Service and fixed line telecommunication and Internet service providers. Competition is expected to intensify with new rivals entering the market and the rapid development of new technologies, products and services. Specifically, Vivo is facing stiff competition from its biggest rival America Movil’s Claro.
Telefonica Brasil currently has a Zacks Rank #3 (Hold).
Other stocks to Consider
Better-ranked stocks worth considering in this sector include SK Telecom Co. Ltd. (SKM), Vonage Holdings Corporation (VG) and TIM Participacoes S.A. (TSU). SK Telecom and Vonage Holdings sport a Zacks Rank #1 (Strong Buy), whereas TIM Participacoes holds a Zacks Rank #2 (Buy).
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