{"id":36848,"date":"2023-07-17T14:57:50","date_gmt":"2023-07-17T18:57:50","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/vivo-great-telecom-business-but-not-that-appealing-for-the-long-term-nyseviv\/"},"modified":"2023-07-17T14:57:57","modified_gmt":"2023-07-17T18:57:57","slug":"vivo-great-telecom-business-but-not-that-appealing-for-the-long-term-nyseviv","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=36848","title":{"rendered":"Vivo: Great Telecom Business But Not That Appealing For The Long Term (NYSE:VIV)"},"content":{"rendered":"
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Investment thesis<\/span><\/h2>\n

Long story short, when it comes to Telef\u00f4nica Brasil S.A. (NYSE:VIV<\/span>), or simply Vivo (how users refer to it), I recommend a hold stance for investors who already have its shares.<\/p>\n

This means retaining the shares in the portfolio and continuing to receive generous dividends. While Vivo remains a stable company, it may not offer significant growth opportunities compared to other investment options. Investors should be aware of the limitations and uncertainties surrounding Vivo’s growth prospects and evaluate the potential for better returns in other investment opportunities. While holding Vivo’s shares is unlikely to result in losses, the expected return may be slightly above inflation, which can swipe most gains from the company’s growth.<\/span><\/p>\n

A brief description of Vivo<\/h2>\n

Telef\u00f4nica Brasil, or simply Vivo (how users refer to it), is one of the largest telecommunications companies in Brazil and a subsidiary of Telef\u00f3nica S.A. (<\/span>TEF), a Spanish multinational telecommunications company. Vivo is a major player in the Brazilian telecommunications market, offering a wide range of services including mobile and fixed-line telephony, broadband internet, television services, and data transmission.<\/span><\/p>\n

Vivo was formed in 2011 when Telef\u00f3nica acquired the Brazilian operations of Portugal Telecom and merged them with its existing fixed-line and mobile operations in Brazil. The company operates under the brand name Vivo, which is well-recognized and widely used across the country.<\/p>\n

Vivo has a vast customer base and a significant market presence in Brazil. It offers mobile services through its extensive network and has strong 4G and 4.5G coverage across the country. In addition to mobile services, Vivo provides fixed-line services, including voice, broadband, and television, both through traditional means and fiber-optic connections. The company has been investing in expanding its network infrastructure and improving its services to meet the growing demand for telecommunications in Brazil. Vivo is known for its focus on customer service and has a wide range of plans and packages to cater to different consumer needs.<\/p>\n

Currently, the company is the leader in the mobile telephony and fiber broadband markets, with just over 98 million mobile accesses, which account for 39% of the market share, and 5.6 million FTTH (Fiber to the Home) accesses, with approximately 17% of the share. Additionally, it has 6.9 million fixed-line customers, a segment that has become extremely challenging due to concession rules.<\/p>\n

This combination of these factors, along with the high payout and successive share buyback programs, has helped bring more visibility to Vivo’s shares. This has contributed to the company becoming one of the favorites among investors in recent years. In 2015, there was another significant acquisition when the company bought GVT, a company that operated fixed-line telephony, pay TV, and internet services, to consolidate its presence in these sectors.<\/p>\n

Understanding Vivo\u2019s business model and sector<\/h2>\n

Mobile Market<\/h3>\n

Vivo’s main market is mobile telephony. This segment mainly includes mobile voice and data services, such as 4G and 5G, and is divided into three billing modalities. They are:<\/p>\n