Vivo Is Starting to Benefit From Wireless Consolidation

We believe Telefonica Brasil (Vivo) is one of the strongest telecom carriers in Brazil, vying with America Movil to offer converged wireless and fixed-line services across much of the country. Recent consolidation has made the wireless industry much more attractive, with only three major carriers left in the country. However, the market still faces several challenges, including a legacy of low wireless pricing, and a fragmented fixed-line industry, coupled with economic and political instability. While results will likely remain volatile, we expect Vivo’s performance will generally improve over the next couple of years.