Brazilian fixed and mobile operator Telefonica Brazil (Vivo) posted net income of BRL661 million (USD299.4 million) for the three months ended 31 March 2014, down 18% year-on-year and well below the BRL746 million average forecast in a Reuters’ poll of analysts. The carrier added that a weak local economy, intense competition and a drop in sales from fixed line services combined to impact on revenue, which edged up less than one percentage point when compared to 1Q13, to BRL8.612 billion. Further, the Telefonica-owned group warned that it expects the forthcoming football World Cup tournament could have an adverse drag on earnings. Its CFO Paulo Cesar Teixeira said: ‘In terms of revenues, we have an impact because many cities will declare holidays during the games … With this situation, it’s possible to have a negative impact.’ Earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 7% to BRL2.563 billion, below market expectations of BRL2.594 billion.
Like many other Brazilian telcos, Vivo is investing heavily on its networks ahead of the World Cup to avoid the embarrassment of the service outages that blighted last year’s Confederations Cup in the country. According to another senior official, Alberto Horcajo, the operator is upping its capital expenditure by 15% in 2014.