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Telefonica (BME:TEF) Brasil (NYSE:VIV) S.A. (B3: VIVT3; NYSE: VIV), a $14 billion market cap telecommunications leader with a solid 3.61% dividend yield, has announced the completion of its transition from a public concession to a private authorization regime for its Switched Fixed Telephone Service (STFC). The company, also known as Vivo, informed shareholders and the market that the definitive step was taken with the signing of the Single Term of Authorization before Brazil's National Telecommunications Agency (Anatel) on Monday. According to InvestingPro analysis, Telefonica Brasil maintains strong financial health with consistently profitable operations.
This move signifies the end of the adaptation process from the concession-based system, which was more rigidly controlled by the government, to a more flexible private authorization system. The change is expected to allow for greater business agility and efficiency in the provision of fixed telephone services, building on the company's impressive 7.19% revenue growth over the last twelve months.
The company initially disclosed its intentions to make this transition in a Material Fact released on December 16, 2024. The successful completion of this process marks a significant milestone for Telefonica Brasil in its efforts to adapt to the evolving telecommunications landscape.
David Melcon Sanchez-Friera, CFO and Investor Relations Officer of Telefonica Brasil, confirmed the completion of the agreement on April 11, 2025. The company has communicated its commitment to maintaining high-quality service standards and pursuing growth opportunities under the new regulatory framework.
Telefonica Brasil's strategic shift comes at a time when the telecommunications industry is experiencing rapid transformation, driven by technological advancements and changing regulatory environments. The transition to a private authorization regime is part of the company's broader efforts to streamline operations and enhance competitiveness in the market.
As per the regulatory filing, the details of the agreement with Anatel and the implications for Telefonica Brasil's operations and services are publicly available, underscoring the company's commitment to transparency with its shareholders and customers.
Investors and stakeholders are expected to closely monitor the company's performance and strategic initiatives following this regulatory change, as Telefonica Brasil continues to navigate the competitive telecommunications sector. With a conservative beta of 0.29 indicating lower price volatility and a P/E ratio of 14.98, the company presents an interesting investment case. For detailed valuation insights and additional financial metrics, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence.
In other recent news, Telefonica Brasil has announced its acquisition of Samauma Brands Comércio, Importação e Exportação de Eletro-eletrônicos Ltda. for up to R$80 million, contingent on certain operational and financial targets. This strategic move aims to expand Telefonica Brasil's footprint in the smartphone accessories and electronics sector, complementing its existing brand, OVVI. Additionally, Telefonica Brasil has embarked on a significant share restructuring initiative, approved at an Extraordinary Shareholders’ Meeting. The restructuring involves a reverse stock split followed by a forward split, designed to enhance share liquidity and optimize shareholder management.
The company has also declared a capital reduction payout, with a distribution of R$1.22651176012 per common share, effective from February 27th, 2025. This capital reduction process, approved in December 2024, will be completed with a single installment payment on July 15th, 2025. Meanwhile, Barclays (LON:BARC) has upgraded Telefonica (NYSE:TEF) S.A.'s stock rating from Equalweight to Overweight, despite a slight reduction in the price target to $11.50. The upgrade follows a review of the company's fourth-quarter results and adjustments in revenue forecasts for the coming years.
Barclays noted an increase in revenue estimates for 2025 and 2026, although EBITDA projections remain unchanged. The firm highlighted Telefonica's attractive valuation multiples and relatively low leverage compared to its peers. These developments reflect Telefonica Brasil's ongoing efforts to strengthen its market position and improve shareholder experience.
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