Telefonica Brasil S.A. (VIV) Q4 2022 Earnings Call Transcript

Telefonica Brasil S.A. (NYSE:VIV) Q4 2022 Earnings Conference Call February 16, 2023 9:00 AM ET

Company Participants

Joao Pedro Carneiro - Director, IR

Christian Gebara - CEO

David Melcon - CFO and IRO

Conference Call Participants

Fred Mendes - Bank of America

Luca Sari - UBS

Marcelo Santos - JPMorgan

Feni Kanamori - HSBC

Sumit Datta - New Street Research

Felipe Cheng - Santander

Operator

Good morning, ladies and gentlemen. Welcome to Vivo's Fourth Quarter 2022 Earnings Call. This convention is being recorded and nan replay will beryllium disposable astatine nan company's website astatine ri.telefonica.com.br. The position will besides beryllium disposable for download.

This telephone is besides disposable successful Portuguese. To access. you tin property nan Globe icon connected nan little correct broadside of your zoom surface and past take to participate nan Portuguese room. After that, prime communal location audio for a amended experience.

[Foreign Language]

We would for illustration to pass you that each attendees will only beryllium listening to nan convention during nan position and past we will commencement nan question-and-answer conception wherever further instructions will beryllium provided.

Before proceeding, we would for illustration to explain that immoderate statements that whitethorn beryllium made during this convention telephone regarding nan company's business prospects, operational and financial projections and goals are nan beliefs and assumptions of Vivo's Equity Board and nan existent accusation disposable to nan company.

These statements whitethorn impact risks and uncertainties arsenic they subordinate to early events and therefore, depends connected circumstances that whitethorn aliases whitethorn not occur. Investors should beryllium alert of events related to nan macroeconomic scenario, nan manufacture and different factors that could origin results to disagree materially from those expressed successful nan respective forward-looking statements.

Present astatine this conference, we person Mr. Christian Gebara, CEO of nan company; Mr. David Melcon, CFO and Investor Relations Officer; and Mr. Joao Pedro Carneiro, IR Director.

Now, I will move nan convention complete to Mr. Joao Pedro Carneiro, Investor Relations Director of Vivo. Mr. Carneiro, you whitethorn statesman your conference.

Joao Pedro Carneiro

Good greeting everyone and invited to Telefonica Brasil's convention telephone to coming nan fourth 4th and afloat twelvemonth 2022 results. The telephone will commencement pinch our CEO, Christian Gebara, commenting Vivo's operating and financial highlights, followed by an update connected nan advancement of our integer ecosystems and ESG initiatives. Then our CFO, David Melcon, will spell done our costs and CapEx evolution, nett income, free rate flow, and shareholder remuneration.

I'll now manus it complete to Christian.

Christian Gebara

Thank you, Joao. Good greeting and convey you for joining our earning calls. I commencement by presenting nan highlights of nan 4th fourth and afloat year. 2022 was a transformational twelvemonth for Vivo and nan telecommunications manufacture successful Brazil. With nan first deployment of 5G standalone and past mobile marketplace consolidation, some of which are bringing important improvements to nan value of work and customer experience.

We closed nan year, pinch 112 cardinal access, up 13.7% year-over-year, reinforcing our position arsenic 1 of nan Brazilian companies among each sectors, pinch nan largest number of clients.

Our 58.7 cardinal entree successful postpaids and 5.5 cardinal successful FTTH gave america a very coagulated recurring gross base, protecting our results from ostentation impacts. In nan consciousness of our full gross grew 10.1% year-over-year successful nan 4th quarter, driven by nan description of 13.6% of our mobile work revenues and by nan champion fixed gross results since nan 4th fourth of 2015 pinch a maturation of 2.9%. As a result, our EBITDA expanded 6.1% year-over-year, reaching for 1.3% margin.

The beardown operating capacity delivered during 2022 was culminated by a applicable magnitude of free rate travel closing nan twelvemonth pinch BRL7.3 billion. The reversed rate generation, which is 1 of nan cardinal elements of our equity story, allowed america to state complete BRL5 cardinal successful dividends and liking connected superior during 2022.

On apical of nan BRL600 cardinal finance successful buyback our shares, we firmly judge our shares to beryllium undervalued. Hence, we're starting a caller stock buyback programme aiming to put an further BRL500 cardinal during nan adjacent 12 months.

To proceed enhancing differentiating our shareholder remuneration capability, yesterday we revenge pinch Anatel a petition that if approved, we will let america to perchance trim our superior banal by up to BRL5 billion. This will springiness america further elasticity to determine connected early rate distribution and really to amended our superior allocation.

Now, we spell to descent four, wherever we tin spot that for nan 2nd consecutive quarter, our topline grew good supra inflation. The 10.1% year-over-year description results from nan 13% maturation for halfway revenues that already correspond 93% of our full revenues. This is peculiarly important arsenic our non-core business, which for years served arsenic a resistance to our gross performance, now weights little than lines pinch imaginable to support double-digit maturation rates for years to come, specified arsenic FTTH and B2B data, ICT, and integer services.

Moving to descent five, connected nan near manus broadside of nan slide, you tin spot that our mobile revenues accrued 13.4% year-over-year, arsenic postpaid, prepaid, and handset revenues each grew double-digit. The mobile marketplace consolidation and our starring commercialized capacity person been nan main drivers here.

On nan correct side, we item our fixed halfway capacity and successful which we had revenues climbing 11.9% year-over-year. The halfway products already represents 76% of our wired statement business, up six percent points connected an yearly basis.

As a result, our full fixed revenues grew 2.9% year-over-year successful nan 4th quarter, this being nan champion early maturation complaint we reached since nan 4th fourth of 2015. As usual, nan main drivers were FTTH and information and ICT, and integer services. Services that are difficult to replicate and supply america pinch a robust level for continued betterment of our fixed business going forward.

On descent six, we item their operating capacity connected mobile and fibre adjacent successful a twelvemonth that astir apt was nan champion successful our caller history regarding our customer guidelines evolution.

On mobile, we added 14 cardinal caller customers during 2022 reaching 98 cardinal access, up 16.8% year-over-year, moreover aft carrying retired this relationship of 3.4 cardinal inactive lines coming from Oi Mobile's acquisition, of which 339,000 were eliminated during nan 4th quarter.

Our postpaid guidelines grew astatine an moreover higher pace, up 18.2% year-over-year, arsenic nan migration of prepaid users towards hybrid plans continues to beryllium very successful, while churn remains astatine grounds debased levels adjacent to 1%.

Also, we proceed to beryllium nett gainers successful portability of postpaid lines, intelligibly starring nan champion worth proposition. As a result, we closed nan twelvemonth pinch homebuyer marketplace stock of 38.9% of almost 1 percent points since April, which was nan first period successful which Anatel reported nan consolidation of Oi' entree pinch nan buyers basis.

In fiber, we ended 2022 pinch 23.3 cardinal homes passed pinch FTTH aft rolling retired nan web to 3.7 cardinal caller premises. Moreover, we added 874,000 FTTH entree during nan year, expanding our customer guidelines by 19% to 5.5 cardinal location connected.

Our convergent offer, Vivo Total has been very successful, representing astir 70% of nan FTTH nett adds we registered during nan 4th quarter. Being nan only subordinate tin of providing 5G positive fibre level unsocial offering connected a national-wide ground is simply a cardinal differentiator, enabling america to support connected improving our operating capacity and reducing postpaid and fibre churn.

Moving to descent seven. During 2022, our integer B2B revenues grew 29% year-over-year, reaching BRL2.7 billion. These revenues that aggregated products specified arsenic cloud, cybersecurity, IoT, digital, B2B solutions, among different already correspond 5.6% of our full topline and we presume out-weight noncore revenues.

These services and solutions are successful awesome request arsenic companies of each sizes are becoming much and much alert of really beneficial is to put successful digitization of their business.

We'll proceed to lever connected our starring brands, complete portfolio, transmission and rich | capabilities to beryllium nan preferred partner of Brazilian companies successful their integer translator capturing this unsocial opportunity.

Moving to nan correct manus broadside of nan slide, you tin spot that we proceed to create our beingness arsenic a integer finance hub, taking advantage of nan dozens millions commercialized relationships we person pinch individuals done our connectivity services to summation our stock of wallet and customer monetization.

Apart from Vivo Money, which closed nan twelvemonth pinch a indebtedness portfolio of complete BRL180 million, increasing by almost 7 times year-over-year, we are besides offering co-branded in installments cards successful business pinch [Indiscernible] and handsets and location security products.

In summation to that, Vivo Ventures, our firm task superior fund, made its 2nd finance successful a FinTech by investing BRL10 cardinal successful Klubi that enactment arsenic a consortium administrator pinch financing exemplary that's becoming expanding applicable successful Brazil.

On descent eight, we update you connected our ESG initiatives. During 2022, we were capable to present coagulated results connected each fronts. In environment, we reduced by 50% year-over-year our nonstop greenhouse gases emanation and accrued by 20%, nan postulation of physics discarded done our Recycle pinch Vivo program.

On diversity, we reached a 22.4% business of activity roles by achromatic group increasing 3 percent points year-over-year. Also during 2022, Telefonica Vivo Foundation invested BRL58 cardinal to support students and teachers of nan nationalist acquisition strategy and create their integer capabilities, benefiting 2.2 cardinal people.

We were besides recognized arsenic a starring telecom institution successful position of firm sustainability by S&P successful their 2023 sustainability yearbook.

Finally, we are pleased to denote we had nan 2nd highest people among 83 participants successful [Indiscernible] Easy 2022 process being nan only telco we've been nan apical 10 champion qualified companies. This is an betterment vis-à-vis 4th spot achieved successful 2021, reflecting nan efforts we make to create a much inclusive, greenish and sustainable company.

Now, David will return america done nan financial highlights of nan quarter.

David Melcon

Thank you, Christian and bully greeting everyone. Moving to descent nine, nan continued statement of our costs guidelines building remains underway arsenic we accelerate gross to subordinate it to nan integer B2B and B2C services and solutions that led to summation life worth of customers.

Looking astatine nan costs of services and bully short that correspond 35% of our OpEx successful nan quarter, it grew 11% year-over-year, driven by nan ongoing translator of our business operation arsenic revenues coming from nan waste of integer solutions and services, handset, and accessories outlays full topline description starring to an amended maturation profile.

Cost of operations, which comprise nan remaining 65% of our OpEx accrued 14% year-over-year successful nan quarter. Here moreover though we proceed to trim costs specified arsenic commissioning, billing, telephone centers, and backmost offices, assisted by nan accrued usage of integer channels and costs platforms, this was compensated by nan effects related to higher unit costs and little betterment of taxes and waste of unused web instrumentality successful nan quarter.

Another affirmative note, we expect to incorporated Garliava, nan SPE that held nan assets we bought from Oi Mobile during nan first 4th of 2023, unlocking further savings, while besides allowing for nan taxation amortization of nan goodwill arising from this acquisition.

Moving to descent 10, successful 2022, we invested BRL9.5 billion, which is nan highest-ever yearly superior expenditure, excluding licenses made by us. This twelvemonth was peculiarly pressured by finance made to incorporated Oi Mobile assets of astir BRL500 cardinal and by nan first deployment of 5G to cardinal cities to commencement building a web that was precocious considered arsenic nan 1 delivering nan fastest 5G successful Brazil.

We besides accelerated our FTTH compass footprint, taking nan opportunity to further consolidate our activity successful fiber. Even so, our operating rate travel expanded 4.4% year-over-year reaching BRL9.8 billion.

For 2023, we conscionable provided a marketplace guidance connected CapEx that will bring a beardown revenues successful nan coming years, committing to put little than BRL9 cardinal successful nan period, frankincense allowing for an important betterment of our CapEx per income ratio. This year's finance will beryllium focused connected nan continued description of our 5G sum connected nan refurbishment of our wide mobile capacity and connected nan summation of our FTTH penetration.

Moving to descent 11, successful 2022, our nett income reached BRL4.1 billion. The year-over-year comparison was impacted by immoderate affirmative non-recurring events that use nan erstwhile twelvemonth results arsenic good arsenic nan higher mean liking complaint seen into 2022 versus 2021, which coupled pinch our accrued level of nett indebtedness straight penalized our financial results.

On nan different hand, we present erstwhile again an fantabulous consequence successful position of free rate flow, pinch a generating of BRL7.3 cardinal successful 2022, representing 15.2% of our revenues. This 11.3% free rate travel output is among nan very champion successful nan sector, and past retired really resilient our business is nether immoderate circumstance.

Finally, now going to descent 12. Here we item nan components of our 2022 shareholder remuneration, arsenic good arsenic talk nan further levers that will let for a continuation of a beardown rate churn going forward.

Considering nan dividend and liking connected superior events declared pinch grounds day successful 2022, our full distribution reached BRL5.1 billion, of which BRL2 cardinal were already paid retired to our shareholders successful October 18, 2022, while nan remaining BRL3.1 cardinal will beryllium paid retired connected April 18, and July 18, 2023.

In addition, we invested complete BRL600 cardinal raised to bargain backmost our ain shares, resulting successful a full of BRL5.7 cardinal of shareholder remuneration balanced to 8.9% of nan institution marketplace headdress arsenic of December 2022. We support moving connected ways to support nan rate returns to our shareholders. As such, yesterday, our Board of Directors, greenish lighted nan following.

First, nan proportionality to our 2023, wide shareholders gathering to beryllium held adjacent April of dividend based connected 2022 results of BRL827 cardinal to beryllium paid retired connected July 18, 2023.

Second, nan deliberation of BRL106 cardinal successful liking connected superior guidelines connected January 2023 results. Third, nan cancellation of 13.4 cardinal shares held internationally connected December 31, 2022 balanced to 0.8% of our capital.

Fourth, nan creation of a caller stock buyback programme to beryllium executed from February 2023 to February 2024, pinch a imaginable to put up to BRL500 cardinal to buyback our stock.

Fifth, nan petition to Anatel of a Prior Consent to perchance trim our superior banal by up to BRL5 billion, which, if approved, will bring important elasticity to determine connected nan early remuneration of our shareholders and superior structure.

As you tin see, we stay highly committed to support our differentiation arsenic 1 of nan fewer companies that mixed important maturation avenues, specified arsenic nan 1 presented by nan mobile consolidation, fibre capillarity and soaring request for integer B2B and B2C solutions pinch a stone coagulated equilibrium expanse and rate travel procreation capacity while providing starring shareholders deals.

Thank you. And now we tin move to nan Q&A.

Question-and-Answer Session

Operator

Thank you. We are going to commencement nan question-and-answer convention for investors and analysts. [Operator Instructions] Our first mobility comes from Fred Mendes, The Bank of America. Please, Mr. Fred, your microphone is open.

Fred Mendes

Hello. Good morning, everyone. Thanks. Thanks for nan questions. I person 2 present connected my side. The first 1 is related to superior reduction. Meaning I deliberation was a bully move during nan superior simplification was apt to summation nan dividends. But nan mobility is why BRL5 billion? I mean, why not more, considering nan equity of 65 cardinal you guys have? There'll beryllium my first one.

And past arsenic nan 2nd one, astatine slightest of nan script we person today, it looks for illustration 2023 is going to beryllium a twelvemonth of little inflation, right, which I deliberation is peculiarly bully for nan telcos. How do you spot nan opportunity to trim costs here, yet expanding margins further successful 2023? Thank you.

Christian Gebara

Hi, Fred. Thank you for nan question. Look, free rate travel generation, I mean, transcend nan yearly nett income. It has been for illustration this for galore years now. And we person constricted supplier reserves left. Therefore, we judge a superior simplification reside nan situation, allowing america to create a level to administer much rate than yearly nett income. No, we usage -- I mean, we've had our 100% payout complete nan past fewer years.

So pinch this superior reduction, if it's approved, we should beryllium capable to person a higher payout than 100. No, and we judge BRL5 cardinal is nan correct magnitude to person a communicative for nan adjacent fewer years now.

Also, regarding timing, no, I'm judge you -- your mobility is besides astir this. I mean, we -- now we request to hold astir six months for an Anatel Prior Consent approval, and past we will request to spell done besides each nan soul governance approval, specified arsenic Board and wide assembly.

David Melcon

And I tin return nan opening of nan 2nd mobility and past Christian tin besides elaborate. Look, we are showing nan OpEx breakdown, showing nan costs of work equipment sold and costs operation. On nan first one, I mean, we person been increasing 11% successful nan past quarter, but if you look to nan revenues that are linked to those costs, which are chiefly person to do pinch integer work and handsets, we are increasing much than 50%.

Now, conscionable a B2B integer services, they turn 29% now. And successful nan different portion of nan costs that person to do much pinch operation, location are a fewer things that hap successful nan 2nd half of this year.

Now, nan first 1 is that determination connected Vita IT, which is simply a company, B2B institution that's allowing america to accelerate nan maturation successful B2B. This is bringing successful further costs, peculiarly connected unit costs. That's why we are seeing an summation connected unit costs astatine year-over-year, adjacent year, we shouldn't spot specified a growth.

Also, we person nan costs from integration of Oi, conscionable to punctual you that we are paying 146 cardinal for nan transmission work statement to Oi, which is much than 12 cardinal per month, this will decorativeness astatine nan extremity of nan first 4th 2023. So, it's thing that we will not person successful nan 9 months of 2023.

Also ostentation for adjacent year, we are expecting to beryllium little than 2022. So, this is besides a lever. Also, we are saying that nan caller gross streams are coming pinch higher OpEx, but without CapEx. So, this is specified an upside because we look to operating rate travel separator that we will spot that will beryllium an grow for adjacent year.

And besides that is besides starring to nan communicative of integration of Oi is that we are readying to incorporated to merge earlier which is nan institution we acquired nan assets from Oi mobile successful nan next, let's say, 1 period aliases 1 period and a half. This not only will bring savings successful OpEx, but besides this will unlock nan taxation use coming from nan amortization of nan goodwill. And these conscionable to punctual you is much than BRL1 cardinal rate that will travel done successful nan adjacent 5 years now.

So all-in-all, we spot an grow connected margins, and besides our maturation successful operating rate travel for nan adjacent twelvemonth aliases so, because nan CapEx has accrued I mentioned I mean, we are going to besides to person a 9 -- beneath 9 million.

Christian Gebara

And conscionable to compliment, for illustration nan 2nd is precisely what he said. And besides location is nan effect connected ostentation unit cost, that is peculiarly important parts of our costs of serving. So it's going to beryllium affirmative successful that measurement nan cognition that we person now related to personnel. Of course, location is nan changing operation that that we mentioned, Fred. So of course, now erstwhile we commencement besides trading much integer work that is costs of equipment sold that is different costs mix. But successful absolute numbers successful nan EBITDA, we are very affirmative astir our growth.

So -- and besides digitalization of expanding a batch nan digitalization and nan representativeness of our channels, some nan app and besides nan WhatsApp, if they usage nan artificial intelligence that we're expanding nan usability, particularly now pinch nan caller developers of artificial intelligence, that we're going to commencement impacting our measurement of serving customers done these channels.

And successful nan first mobility astir nan superior simplification is bully besides to carnivore successful mind that successful 2025, nan concession -- nan solution astir nan concession will beryllium there. So nan migration, that is what we expect. So successful this case, we were going to person overmuch much elasticity besides to superior reduction. So for 2 years, that's nan connection that we have.

Fred Mendes

Perfect. Very clear Christian and convey you. Just if I whitethorn do a follow-up connected nan concession idea. 2025 nan guidelines lawsuit successful your mind is to decorativeness nan concession without paying thing other for it, right? That's nan guidelines case.

Christian Gebara

Look, we are successful nan mediate of nan process. There is, as, location are 2 processes that are going parallel. First 1 is nan worth that an Anatel decided that would beryllium required for nan migration that is astatine nan infinitesimal is being analyzed by nan TCU, okay. That's, that's thing that is public. And there's a number of nan figure. We are you person our questions astir nan methodology and nan number. But that's thing that's going to beryllium discussed successful this way, no, betwixt TCU and Anatel.

There's a 2nd 1 that is our declare for nan sustainability and nan financial equilibrium of nan concession that is besides being discussed, we person an Anatel but astatine this astatine this time, nan arbitrage enclosure that we person for this topic. In this case, we are claiming for a worth that it's higher than nan worth that was firstly declared arsenic nan 1 that we request for immigration.

And we still successful nan opening of nan process, we had nan first proceeding nan extremity of nan year. And we are optimistic astir nan arguments and nan sustainability and nan deficiency of equilibrium of nan concession astatine nan moment, and for truthful galore years. So we request to specify what's going to beryllium nan result of these 2 processes. And nan thought is to travel to an statement that's going to beryllium beneficial to nan marketplace to nan country. And of people to Vivo.

Fred Mendes

Very clear, convey you, Christian

Operator

Our adjacent mobility comes from Luca Sari from UBS. Please. Mr. Lucas, your microphone is open.

Luca Sari

Hey, acknowledgment for having my question. And my mobility isn't particularly connected CapEx, David, you guided us. So wherever do you spot nan bulk of investments going to? I cognize you disclose astir 5G and fiber, but particularly connected fiber? Will you beryllium pursuing much customer connections aliases spot nan description ? And could you besides springiness much colour retired connected nan section betwixt 5G and fiber? Thank you very much.

Christian Gebara

Hi, Luca, this is Christian I tin commencement and David remark if you wants. Yes, it is successful fibre description is 1 of nan lines that we are going to summation investment. Here it's some successful connecting customers and expanding network. It's again, I deliberation our web is already adjacent to 24 cardinal location paths, we said that we would scope nan extremity of 2024 pinch 29.

So there's 5 cardinal homes to summation our footprint and but astir importantly, is to link customers. And if you've been doing that, successful a very accelerated pace, being nan starring institution successful that arsenic of nan market, now nan churn is were reduced, and past being capable to seizure astir of nan market, arsenic you could spot that almost 1 cardinal caller customers successful nan past year.

So we're going to proceed pinch this strategy now expanding footprint up to 29 that we already declared by extremity of 2024. And connecting much customers present is besides bully to item that we've been very beardown successful connecting customers pinch group to let our conversion to connection 70% of nan caller ads travel pinch nan Vivo building connection that besides protects our postpaid base. That's why we person besides a very reduced churn arsenic we presented earlier.

In nan 5G, we are up of nan responsibility of nan auction. So isolated from nan 27 capitals, we already person 26 cities supra 500,000 inhabitants. We are going to proceed expanding successful nan cities that we are already there. We request to grow besides immoderate different caller cities. But that's not what I'm going to stock here. But we're going to grow a small spot beyond what's required by nan auction. And we are going to do that successful a very intelligent way, pursuing nan penetration of 5G smartphones.

Today we person 18% of 5G smartphones, our customer base. So we're going to proceed to deploy web wherever we spot that location is simply a customer guidelines requiring 5G connection. So it's going to beryllium a very arsenic we did successful nan past america utilizing large information to beryllium very precise, and we're going to deploy our CapEx. So that's nan main lines of CapEx.

It's beneath is going to beryllium beneath nine. We don't person nan money that we spent to instrumentality 5G to commencement pinch nan exertion and we don't person besides this year, nan money that we spent to merge mobile customers, that is afloat integrated successful our customer base. And we are now wholly connected nan velocity proceed increasing customer base, some mobile and fiber.

Luca Sari

Thank you very much. That was very clear

Christian Gebara

Thank you, Luca.

Operator

Our adjacent mobility comes from Marcelo Santos from JPMorgan. Please. Mr. Marcelo, your microphone is open.

Marcelo Santos

Hi, bully greeting Christians, David and Pedro. Thanks for nan question. I person 2 questions. The first is if you could supply overview of really nan competitory situation is successful mobile, I saw that you precocious raised prices for nan astatine slightest connected nan website. And nan 2nd mobility is, regarding Vivo money, your portfolio is increasing a lot. Could you stock a spot much specifications astir EPRs NPLs really these loans behave? Thank you.

Christian Gebara

Hi, Marcelo. Let's talk astir nan mobile dynamics. Also, arsenic we presented, commercially speaking, it was a awesome twelvemonth for people, we proceed to grow our marketplace share. And we proceed to grow some successful prepaid and successful postpaid. No, truthful erstwhile we spot nan number that we person to woody pinch 980 cardinal entree compared to 83.9, already had 1 twelvemonth before, of course, you see that nan 12 cardinal that we sewage from oil, but nan 3.3 that we conscionable connected now. So successful existent numbers and absolute numbers was very, very, highly positive. And successful nett ads, we've worked a starring institution and portability arsenic well.

So that besides again an illustration of our perceived superior worth proposition and erstwhile we adhd that to nan fiber, 1 that nan group full that I mentioned earlier besides put america successful a unsocial position to beryllium nan starring institution of some technologies for 4G, 5G positive fiber. And our existent reflects that nan 1.05 of nan past 4th was nan lowest 1 and nan marketplace stock of almost 39%.

Having said that, we are very, very keen connected monetizing each nan finance I've been doing successful nan past years. So we are nan 1 expanding prices. We did that past year, we are doing again successful nan introduction plans for each our postpaid plans. So springiness you an example. Now successful January, our introduction readying for a hybrid was adjusted to BRL57, utilized to beryllium BRL50.99. So that was an important increase. And erstwhile I compared to others, we are supra them successful value and successful what we connection by this price.

So I deliberation it's a normal behaviour that we expect to beryllium followed by others, because we are going to springiness him backmost what ostentation is astatine nan moment. And besides giving backmost to customers, what was nan use that they sewage from nan ISMS reduction. We did nan aforesaid successful nan introduction constituent of our individual postpaid plan.

Today, our first scheme is BRL122 per month. And nan aforesaid we did successful a family scheme that is besides bully scheme for america that we accrued to BRL242. During nan aforesaid successful nan Vivo total, besides expanding our bundle that I said is responsible for 70% of our FTTH sales.

Again, here, we summation price. Now, nan first 1 is simply a BRL200. So we're putting nan marketplace successful a different value point, anticipation that our peers travel this activity because we are wanting to triumph present is passing done inflation. The aforesaid successful nan fibre successful FTTH 50% of our customer guidelines will beryllium accrued successful price. So we person now nan introduction value of BRL120, pinch 300 megabits arsenic nan velocity for nan fibre service.

In prepaid, would for illustration to do nan aforesaid -- successful nan prepaid value has been nan aforesaid level for galore years. Now we conscionable person nan use of nan ISMS simplification pinch much information that is offered to nan customers, we request to move this value up, particularly erstwhile you move nan hybrid value up. If you don't do that successful your prepaid will beryllium difficult to proceed pinch nan successful strategy we are being each falling of migrating prepaid to hybrid. So present again, we expect marketplace to move up successful prepaid arsenic well. I deliberation that was nan first mobility nan 2nd 1 was--

Marcelo Santos

In Vivo Money?

Christian Gebara

We will compliment Vivo Money. We are very -- sorry, do you want successful first 1 Marcelo? Should I move to nan second?

Marcelo Santos

No, no. The first 1 is perfect. Just reminding nan Vivo Money question. Thank you.

Christian Gebara

Okay. The Vivo Money we are we are highlighting present cognize that our indebtedness portfolio, it reached BRL183 cardinal is for illustration 7 times higher than it was 1 twelvemonth before, it's almost six times higher successful number of contracts. And that's a operation of manufacturers that that we could springiness you much ray connected that.

And we are very satisfied pinch nan capacity of these loans. No. So I deliberation Vivo has been investing a batch successful models and in installments models not only for money, but besides for our ain customer base. And that's been successful for nan bad indebtedness number that we have. And besides for nan for nan capacity of nan money that is growing, we are increasing that besides combining much services, we person adjacent salary our integer wallet, we are trading much and much insurance. We are entering -- we person this co-branded scheme paper -- sorry, pinch Ito that's besides been very successful, expanding income of smartphones and different devices utilizing this card.

And we now arsenic I said we invested successful a consortium institution because we are launching thing here. So we spot that our capacity expertise of trading different services combining our customer base, our debased customer acquisition costs, our brands are building capability, our in installments capacity is giving impervious that nan imaginable that we person expanding not only successful financial services, but beyond that. So that's why we besides going to do much successful health, pinch our work much successful acquisition and different lines that we want to springiness much a colour successful nan adjacent calls arsenic we are doing now pinch money. I don't cognize if David, if you want to add.

David Melcon

Hey, Marcelo. Now, conscionable to adhd that I mean, we are very affirmative and optimistic astir nan improvement of this of this business that's increasing very fast. So we are monitoring very carefully, ever nan top calling to make judge that I mean nan bad indebtedness is nether power pinch very low, very debased levels. So affirmative to support these trends that we person seen complete nan past 12 months to support for illustration this for nan future.

Christian Gebara

Anything else, Marcelo?

Marcelo Santos

Thank you very much.

Christian Gebara

Thank you.

David Melcon

Thank you.

Operator

Our adjacent mobility comes from Feni Kanamori from HSBC. Please Ms. Feni. Your microphones open?

Feni Kanamori

Yes. Thank you for taking my question. My first mobility is regarding nan dividends. So typically, you person stated earlier that you administer 100% of nan nett income students, but nan caller pinch nan yesterday's announcement of requesting anterior consent from Anatel, do you spot that you will beryllium expanding that dividend payout ratio arsenic your target dividend payout ratio?

The 2nd mobility is regarding nan consequence of concession. So if you cannot scope an statement pinch Anatel by 2025. Do you spot a script wherever you will suffer nan concession statement and what could beryllium nan imaginable impacts connected your operations because of that? Thank you

Christian Gebara

I'll spell to nan 2nd one, we are very optimistic that we're going to find a solution for nan concession. And I deliberation it's going to beryllium affirmative for everyone. Especially, because we're talking astir nan concession of much than 20 years that is related to why services and nationalist telephony that we each work together that is simply a astonishment that is not demanded anymore.

So we activity successful a very optimistic script that it reached an agreement. And I deliberation nan different parts are very reasonable astir nan result that we are pursuing here. So astatine nan infinitesimal is what nan only point that I tin share. And it's important besides to spot arsenic we telephone know, nan halfway revenues and non-core revenues, we're talking astir a work that has a very debased fearfulness successful our gross mix.

So nan effect is going to beryllium moreover lower, if we talk astir 2 years from now. So again, optimistic astir nan solution we are moving connected that successful different fronts. And let's hold for nan adjacent quarters to spot nan result of that. I springiness it to nan dividends to nan David.

David Melcon

Hi, Feni. Just signaling nan first -- nan first question. If you look backmost nan past 2 years, Telefonica Brasil we make much than BRL7 cardinal free rate travel per twelvemonth successful 2021, 2022, however, nan nett income is simply a little magnitude because immoderate of nan elements peculiarly investments person already been paid, but it's still being depreciated now, peculiarly typical location and truthful on.

So nan superior reduction, successful lawsuit it's approved, will allowed america to person a higher number of dividends salary higher than nan nett income. So that intends that that nan payout will beryllium your correct supra 100% successful nan future.

Feni Kanamori

Thank you. That's very clear.

David Melcon

Thank you.

Operator

Our adjacent mobility comes from Sumit Datta from New Street Research. Your microphone is open.

Sumit Datta

Yes. Hi, there. Thanks very much. Couple of questions, please. One connected nan free rate travel location was a very favorable moving superior activity successful Q4, and again, successful 2022. I conscionable wondered, what was driving that and tin you springiness immoderate steer arsenic to nan early guidance of moving capitalism? It was benignant of rather a large constituent of nan BRL7.3 cardinal free rate flow. That would beryllium helpful. Thank you.

And then, secondly, connected nan rate return policy, you mentioned, you thought your shares were undervalued. There is simply a buyback of BRL500 million, but it's comparatively mini compared to nan presumed wide dividend and IOC payment. I wonder, really did you benignant of deliberation astir forming nan operation of buyback and dividend could location beryllium a higher buyback component? And conscionable finally, sorry, connected that buyback, is Telefonica participating successful nan buyback Telefonica genitor participating successful that? Thank you.

David Melcon

Okay. So, fto maine return nan question. So first of all, nan affirmative moving capital, I mean, you're correct nan first 4th we person BRL268 cardinal for nan afloat twelvemonth BRL3 billion, nan erstwhile twelvemonth was besides affirmative now. So nan main drivers for having this affirmative moving superior first is simply a affirmative taxation plus nickname that we had successful erstwhile years. So, this is simply a affirmative effect that will not beryllium reversed successful nan future. So will not beryllium reversed successful nan future, because successful three, 4 years ago, we person a affirmative successful nan nett income that we didn't bring cash.

Now, we are seeing nan rate coming from that effect. Also, different 1 is nan effect of fishtail. So fishtail, we person eliminated we person a decision, determination not to salary fishtail complete nan past 3 years. So this is BRL700 cardinal per year. So this is besides thing that is benefiting not only Telefonica Brasil, but each nan assemblage successful Brazil, nan moving capital.

Then, I mean, nan 2nd mobility regarding nan stock buyback, I mean, we person been having complete nan past peculiarly nan past twelvemonth BRL600 million. We believe, I mean, this is nan correct number that we put much liquidity to our share. So, looking for 2023, we judge that BRL500 will reside nan strategy that we had successful nan erstwhile year.

And regarding stock Telefonica share, I mean, we cognize that we are not alert of anything. So we are conscionable by connected nan -- connected nan marketplace by BRL100 cardinal per twelvemonth arsenic we did past year.

Sumit Datta

Okay. Thank you.

Operator

Our adjacent mobility comes from Felipe Cheng from Santander. Please, Mr. Cheng, your microphones open.

Felipe Cheng

Hi, Christian, David and Joao. Thank you very overmuch for taking my questions. So 2 connected my side. The first 1 regarding if you guys could supply a small spot much specifications connected nan opportunity for further maturation successful B2B integer services. This is decidedly 1 of nan gross lines, which has been increasing astatine a faster gait and quality, a batch of attention. So if you could supply a small spot much item wherever nan early opportunities are, really large nan addressable marketplace is, and if you proceed to spot room to turn astatine this precocious double digit gait that you person been increasing successful nan past fewer quarters.

And nan 2nd mobility regarding M&A, if you tin talk a small spot astir imaginable M&A opportunities successful nan short term, wherever would they beryllium concentrated successful which segments truthful immoderate colour connected that would beryllium great? Thank you truthful much.

Christian Gebara

Let's spell to M&A you mention to fibre M&A?

Felipe Cheng

Fiber aliases integer services wherever do you spot much opportunities for M&A?

Christian Gebara

So location are different ways of seeing M&A, and besides for illustration successful nan B2C integer services, what we are doing is fundamentally investing done our firm task superior fund. That is simply a activity of task now that I said that we made 2 investments successful FinTech. And location we person BRL320 cardinal to do to spend, past we envision investing successful 12 companies on nan years now, that's going to beryllium a number liking is not an acquisition.

We're besides looking for imaginable acquisitions successful nan aforesaid areas that we are considering for nan venture, our firm task capital. So we were talking astir B2C. We are talking astir really fintech, education, power and immoderate caller areas that we are now researching and to spot really do we could leverage again, knowing nan attributes that we judge are unsocial successful Vivo, that is nan superior brand, nan customer base, nan billing capability, nan transmission capillarity online and offline, and different attributes that we usually discuss.

So we are very unfastened and we are talking to different companies. And we're going to beryllium bringing a news, I deliberation on nan quarters successful nan B2B is nan same. We acquired a institution called Vita IT past year. It's a web integrator, 1 of nan cardinal partners of Cisco successful Brazil. It's been a very soft integration and we are very affirmative astir nan returns that we're going to seizure pinch this acquisition.

The aforesaid way, Telefonica is acquiring companies globally. Telefonica tech is nan inaugural that Telefonica has for B2B integer services. They are creating independent business for that it focuses successful nan merchandise improvement and merchandise business is not successful nan sales, nan income is done by nan usability successful our case, but we person conscionable 3 companies successful Brazil, 1 attraction successful cyber, different 1 attraction successful clouds, and nan 3rd 1 attraction successful large information and IoT. So these 3 companies, we person established nan aforesaid 3 companies that Telefonica has successful Spain, present successful Brazil, and we are moving very intimately to them.

So going forward, erstwhile you talk astir B2B integer work that we said, location 2.7 cardinal and location is simply a maturation of 29%, we proceed to spot a very, very optimistic maturation for nan adjacent quarters, particularly because we are nan only 1 pinch nan transmission capillarity among not only our sector, but each sectors, moreover nan large players of this industry, they request our capillarity. And present are conscionable I'm not talking conscionable astir nan ample companies of nan country. The anticipation that we foresee present arsenic nan maturation is because we scope moreover nan mini companies of nan country.

So pinch this capability, and we've each nan companies now searching for digitalize successful their operation, and that I deliberation was accelerated by nan pandemic. Everyone wants to beryllium successful cloud, everyone is worried astir cybersecurity. Everyone wants to person caller notebooks, and nary realizing successful desktops and each these caller ideas not counting connected nan IoT that we've -- we besides spot processing very, very powerfully pinch nan presence of 5G. We spot ourselves prepared because we person nan teams to create nan product, leveraging connected nan Telefonica’s group capability. And we person nan transmission already successful spot to respond to this demand.

So nan maturation here, we don't springiness trends. But we only spot affirmative successful each lines of nan services successful B2B and besides B2C. We talked astir money, but we're going to talk astir galore different services that we spot besides increasing here, not only increasing revenue, but besides protecting and reducing churn that we spot entertainment, for instance. We are I think, 1 of nan largest seller of OTT video services successful Brazil. And we -- what we spot present is it summation ARPU, but astatine nan aforesaid clip it reduced churn because nan customer gets committed to Vivo successful much than 1 service, 2 services astatine Vivo’s total, 3 services, we has a integer work pinch Vivo arsenic well. So nan imagination is clear. And we only spot upside successful some B2B and B2C. No, nary for reply you capable it because long, because location are tons of things to opportunity here.

Felipe Cheng

Perfect. If I whitethorn conscionable make 1 speedy follow-up connected nan M&A side, if you could possibly talk a small spot astir consolidation prospects present for nan FTTH segments? How progressive do you scheme to beryllium if you spot this markets starting to consolidate a small spot quicker successful 2023? So conscionable get your wide cognition regarding this topic? Thank you.

Christian Gebara

I deliberation nan marketplace needs to beryllium consolidated now. I deliberation that's clear for everyone. We started pinch fibre earlier everyone. We besides we now person 24 cardinal location passed. We person 5.5 cardinal customers and we are nan 1 -- nan only 1 capable to connection it pinch nan size of operations convergent offer. So we are successful a very unsocial and starring position.

Having said that, we judge that there's nary consciousness of having 3 fibre networks successful nan aforesaid city. So we request to beryllium overmuch much rational. And I deliberation that was successful nan past successful nan market, nan emotion that everyone could build a fibre web and each 1 will beryllium successful, I don't deliberation that's going to hap anymore. And I deliberation nan numbers that we spot of nan marketplace are full nett adds of nan marketplace is making what they say, real.

No, we don't spot nan marketplace turn successful nan aforesaid way. And erstwhile we spot nan starring one, successful that adds of nan marketplace stock of nett adds, we spot Vivo is opinionated out. So it's besides a business that requires CapEx, it's not only CapEx of deploying nan network, but it's besides CapEx to connecting nan customers. It needs a batch of things to make it hap a successful way.

And we talk astir nutra networks, nan anchor tenants, and personification that is really capable to inhabit this web successful a bully percentage. So having said each that, I judge that consolidation needs to hap and whitethorn happen, particularly successful nan discourse of precocious liking rate. In our case, we make cash. So arsenic we said before, now we our free rate travel is very beardown arsenic you each could spot successful our presentation. But others whitethorn beryllium they person a different situation. So pinch a caller request finance to proceed to grow, and pinch liking rates are astatine that level, nan costs of superior is not going to beryllium that debased arsenic it utilized to beryllium successful nan past.

So we're unfastened to see, what's nan opportunity. We person 24 cardinal location passed. We whitethorn person a batch of overlap pinch astir of nan players. So that could beryllium a logic not to bargain pinch nan overlap is very high. So that's thing is 1 of nan criteria that we person successful M&A. And nan 2nd and nan 3rd that are very important is nan value of nan web that we are acquiring. We are not going to springiness up nan champion value web that we have, hopefully, mobile and fiber. So if you determine to bargain something, it needs to beryllium successful nan level of value that we expect to connection to our customers, not only nan network, but besides nan CPE could that's important portion of nan inverse.

And of course, finally, we only look for companies that has each nan fiscal labour and each nan different assets that we judge are correct to put successful spot successful a owed diligence that would fresh nan measurement we negociate our company. So again, unfastened to see, we haven't recovered anyone truthful far. But I deliberation nan markets it's a small spot much unfastened to chat that it was 1 twelvemonth ago.

Felipe Cheng

Perfect. Very clear. Thank you Christian.

Christian Gebara

Thank you, Felipe.

Operator

The question-and-answer convention is over. We’d for illustration to manus nan level backmost to Mr. Christian Gebara for nan company's last remarks. Please, Mr. Christian.

Christian Gebara

Okay. So convey you everyone for participating our call. As you could see, we person for illustration a partial, a very beardown results successful each nan lines. We person a very home and beardown position for nan year. We person galore different things going on, that we described here, coming from caller businesses for illustration description of nan existent business and besides our superior building that we person caller things coming up. We are present each nan squad astatine your disposal to talk successful much item immoderate mobility that you must have. And again, we person a affirmative position for nan adjacent quarters. Okay, truthful convey you each for participating.

Operator

Vivo’s convention telephone is now closed. We convey you for your information and wish you a very bully day.