Here's Why You Should Hold Onto Telefonica Brasil SA (VIV)

On Jun 2, 2017, Brazilian telecom carrier Telefonica (MC:TEF) Brasil SA (NYSE:VIV) was downgraded by a notch to Zacks Rank 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The price performance of Telefonica Brasil was depressing for the last three months. The stock witnessed a loss of 2.51% while the Zacks categorized Diversified Communication Services industry gained 5.48%.

Telefonica Brasil is a subsidiary of Spanish telecom giant Telefonica SA (NYSE:T) . The company continues to rule the Brazilian wireless market following the establishment of Vivo as a commercial brand for all services. The company’s increased investments in technology upgrades and broadband network infrastructure has helped it to sustain in a competitive and rapidly changing market. Telefonica Brasil continues to fortify its leadership in data and post-paid segments through attractive data plans and intends to launch more such schemes.

The company’s efforts have been attracting customers leading to subscriber growth and higher data usage. In the last reported first quarter of 2017, the company’s total mobile subscriber base touched 73.997 million (up 1% year over year). Post-paid subscriber count increased 8.2% year over year to 33.825 million, while the prepaid customer count fell 4.4% year over year to 40.171 million. As of Mar 31, 2017, the company added a net 435,000 postpaid mobile subscribers. We expect to see the similar uptrend in the upcoming quarters also.

On the flip side, Telefonica Brasil continues to face numerous hurdles in its fixed line voice business and wireless business. The company’s fixed line voice business is facing competition from alternative service offerings like wireless telephony, VoIP (voice over Internet Protocol) and cable services (voice, video and broadband). Customers in the wireless segment are opting for discounted calling rates offered by national wireless operators. The combined company operates in a highly-regulated industry and is subject to changes in regulatory measures.

Further, the company shares competitive space with the likes of America Movil SAB (NYSE:AMX) in Brazil. U.S. telecom giant AT&T Inc. (NYSE:T) may also enter in the Brazilian market in future and intensify the competition.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>