1Q17 Results: Telefonica Brasil S.A.

SAO PAULO, May 9, 2017

Consolidated in R$ million	1Q17	% y-o-y
Net Operating Revenues	10,590.1	1.5 ARIVA.DE Börsen-Geflüster Kurse Telefonica Brasil ADR 9,39 $ 0,00%
Net Operating Services Revenues	10,334.2	2.0
Net mobile services revenues	6,208.0	5.0
Net fixed revenues	4,126.2	(2.2)
Net handset revenues	255.9	(15.2)
Recurring Operating costs	(7,076.2)	(1.1)
Operating costs*	(7,076.2)	6.5
Recurring EBITDA	3,513.9	7.3
Recurring EBITDA Margin %	33.2%	1.8 p.p.
EBITDA*	3,513.9	(7.2)
EBITDA Margin %*	33.2%	(3.1 p.p.)
Recurring Net income	996.2	13.3
Number of accesses (thousand)	97,236	0.0
Mobile accesses	73,997	1.0
Fixed accesses	23,239	(3.0)
* Adjusted for the towers sale in 1Q16 in the amount of R$ 513.5 million

Market share expansion, reaching 30.5% in March 2017 (+2.1 p.p. y-o-y).

Mobile ARPU recorded y-o-y growth of 4.1% in 1Q17, fueled by a higher share of postpaid clients in the mix and increased data usage. Data ARPU grew 35.8% y-o-y in 1Q17, corresponding to 68.6% of total ARPU.

Broadband accesses totaled 7.3 million customers in 1Q17 (+1.7% y-o-y), with FTTx¹ connections accounting for 57.6% of the base, accompanied by y-o-y growth of 6.9%. Broadband ARPU increased 9.2% in 1Q17 over 1Q16, influenced by the evolution of the ultra-broadband customer base.

Net operating service revenue grew 2.0% in 1Q17 over 1Q16 (4.2% up y-o-y excluding regulatory effects), maintaining the positive trajectory observed in the last quarters.

Mobile services revenue rose 5.0% y-o-y in 1Q17. Excluding the effect from MTR reductions in 2017, this line increased 7.3% over 1Q16. Data and digital services revenue increased 37.0% y-o-y in 1Q17, accounting for 68.6% of mobile services revenue.

Recurring Operating costs fell 1.1% in 1Q17 over 1Q16 (LTM IPCA +4.6%), demonstrating the continued efforts and focus on synergy delivery, pursuit of efficiencies and end-to-end digitalization. Including the non-recurring effect of the towers sale in 1Q16, costs increased 6.5%.

Recurring EBITDA totaled R$3.5 billion in 1Q17, 7.3% up on 1Q16, accompanied by an EBITDA margin of 33.2% (+1.8 p.p. y-o-y) fueled by the acceleration of mobile service revenues and efficiency measures adopted by the Company.

CAPEX amounted to R$1.3 billion in 1Q17, focused on 4G coverage (304 new cities added in the quarter) and FTTH expansion.

Recurring EBITDA - Capex grew 22.6% in 1Q17 over 1Q16, reaching R$2.2 billion

Recurring Net income totaled R$996.2 million in 1Q17 (+13.3% y-o-y), with IOC for the fiscal year amounting to R$530.0 million.

TELEFONICA BRASIL – Investor Relations
Eduardo Navarro
David Melcon
Luis Plaster
Joao Pedro Carneiro
+55 11 3430-3687 / ir.br@telefonica.com

To download the complete version of the Company's earnings release, please visit our website: http://www.telefonica.com.br/ir

¹ FTTx includes FTTH (Fiber to the home), FTTC (Fiber to the cabinet) and cable customers

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/1q17-results-telefonica-brasil-sa-300454747.html

SOURCE Telefonica Brasil S.A.