Unifique Telecomunicações (FIQE3) Q2 2024 earnings summary

Executive summary

• Q2 2024 was marked by operational challenges due to severe flooding in Rio Grande do Sul, impacting infrastructure and requiring significant recovery efforts, but operational and financial results showed resilience with positive trends in revenue, net subscriber additions, and churn reduction.

• Gross revenue reached BRL 315.5 million, up 17.2% year-over-year, and net income rose to BRL 41.1 million, a 37.5% increase versus Q2 2023.

• Recurring/adjusted EBITDA was BRL 122.0 million, up 17.8% year-over-year, with margins around 47.8%-50.8%.

• Strategic investments in 5G and workforce expansion aimed at improving service quality and supporting future growth.

• Dividends of BRL 30 million and interest on equity of BRL 25 million were paid in June 2024.

Financial highlights

• Gross operational revenue rose 17.2% year-over-year to BRL 315.5 million; B2C up 16.4%, B2B up 20.5%.

• Net operational revenue increased 18.3% year-over-year to BRL 255.1 million.

• EBITDA reached BRL 122 million, up 17.2%-17.8% year-over-year; EBITDA margin at 47.8%-50.8%.

• Net profit was BRL 41.1 million, a 37.5% increase compared to Q2 2023.

• Gross profit rose 32.1% year-over-year to BRL 128.4 million, with gross margin improving by 5.2 p.p. to 50.3%.

Outlook and guidance

• Management expects continued organic growth in Q3 and Q4, targeting 3,500 net adds per month.

• 5G rollout to accelerate, with major impact expected by 2026 as device compatibility improves.

• CapEx for 5G deployment estimated at BRL 150 million over the next 12 months, with 300-500 sites planned.

• Authorization received for 700 MHz frequency in 565 cities, with 18 months to build out mobile infrastructure.

• Corporate rating affirmed at "brAA-" with stable outlook by S&P Global.