Telefónica Brasil Profit Rose 30 Percent and Beat Forecasts on Postpaid and Fiber Growth

Telefónica Brasil reported third-quarter net income of R$2.46 billion on Tuesday, up 30.1 percent and well above the R$2.14 billion forecast in a poll compiled by LSEG.

Telefónica Brasil, which operates in Brazil under the Vivo brand, released results for the three months ended September 30, 2026, after the New York close on Tuesday.

EBITDA, or earnings before interest, taxes, depreciation and amortization, rose 10.0 percent to R$7.14 billion.

That figure also beat the poll, which expected R$6.96 billion; a TickerGrove calculation puts the EBITDA beat at about 2.5 percent.

Net operating revenue rose 7.2 percent to R$16.02 billion, in line with the average of analyst forecasts, according to the poll report.

The net income beat works out to about 14.8 percent above the poll figure, a TickerGrove calculation from the two printed numbers.

Chief Executive Christian Gebara said in the company's Portuguese release that the results show a Vivo evolving consistently while still transforming its business.

He said a solid operation lets Vivo keep investing in connectivity technology and its digital-services ecosystem.

Postpaid growth carried mobile, with fiber close behind

Mobile services revenue rose 7.4 percent to R$10.44 billion, and postpaid revenue rose 9.1 percent to R$9.1 billion.

The human postpaid base reached 53.4 million accesses, up 7.0 percent, after 3.5 million net additions over the last twelve months.

Total postpaid accesses, a broader count that includes non-human lines, stood at 74.7 million, up 7.1 percent.

Postpaid ARPU, the average revenue collected per user, was R$53.8, up 0.6 percent.

Postpaid churn stayed at 1.0 percent, a historically low level, the company said.

Mobile accesses overall reached 106.4 million, up 3.4 percent, and total accesses reached 120.2 million, up 3.0 percent.

Fiber revenue rose 5.7 percent to R$2.09 billion as homes passed reached 32.4 million, up 6.4 percent.

Homes connected rose 10.8 percent to 8.4 million, lifting take-up, the share of passed homes that subscribe, to 26.0 percent.

Fiber churn was flat at 1.4 percent, and fixed revenue overall rose 2.7 percent to R$4.5 billion.

Convergent offers and business services added steady growth

The convergent base, customers combining mobile and fixed services, reached 5.6 million accesses.

Within it, Vivo Total, the bundle pairing postpaid with fiber, reached 4.0 million customers, up 27.8 percent.

Vivo Total now covers 48.0 percent of the fiber base.

Revenue from Corporate Data, ICT and Digital Services rose 4.9 percent to R$1.45 billion.

The business-to-business digital verticals, including cloud and cybersecurity services, reached R$5.6 billion over the last twelve months, up 10.9 percent.

Handsets and electronics revenue jumped 26.6 percent to R$1.11 billion, while other revenues fell 6.2 percent to R$928 million.

The company's 5G network reached 1,012 municipalities covering 73 percent of Brazil's population, with a 39.6 percent market share in September, the company said.

Vivo also recently launched Vivo Satelite with Starlink, a direct-to-device service the company describes as the first nationwide satellite coverage offered by a Brazilian operator.

More than 50 million customers are eligible for the service, according to the company.

Costs rose more slowly than revenue, widening margins

Total costs rose 5.0 percent to R$8.89 billion, slower than revenue, and the EBITDA margin widened 1.1 percentage points to 44.5 percent.

EBITDA after leases rose 10.8 percent to R$5.69 billion, with its margin up 1.2 percentage points to 35.5 percent.

Capital spending, excluding IFRS 16 lease-accounting effects, fell 1.6 percent to R$2.56 billion, or 16.0 percent of revenue.

Operating cash flow rose 17.8 percent to R$4.58 billion, a margin of 28.6 percent that the company called one of its highest on record.

Free cash flow rose 37.7 percent to R$2.43 billion, and earnings per share on local shares rose 31.0 percent to R$0.77.

Net income for the first nine months rose 23.3 percent to R$5.29 billion, and the third quarter's profit was the highest since the fourth quarter of 2023, the company said.

Finance chief Rodrigo Monari said in the Portuguese release that profitable growth and strong cash generation reflected financial discipline and operating efficiency.

The payout pledge reaches R$7.32 billion for 2026

Shareholder remuneration paid in the first nine months reached R$6.99 billion, already 9.6 percent above the full-year 2025 total.

That sum combines R$2.99 billion of interest on capital, a Brazilian payout similar to a dividend, declared in 2025, with a R$4 billion capital reduction.

On Tuesday the board set December 15, 2026, as the payment date for a further R$325 million of interest on capital declared in February.

That payment lifts 2026 remuneration to R$7.32 billion, and the company committed to distributing at least 100 percent of full-year 2026 net income.

A further R$1 billion remains available under the buyback plan, alongside R$3.2 billion of interest on capital declared in 2026 with payment dates still to be set.

Those remaining payments fall due by an April 30, 2027 deadline.

The release landed after the close, so Wednesday gives the first verdict

Telefónica Brasil's American depositary receipts closed at $11.66 in New York on Tuesday, up 0.43 percent from $11.61.

The results were released after that close, so the closing price is a pre-release line, not a reaction.

Brazil is the Spanish parent Telefónica's largest operation by customers, according to the poll report, and the parent reports its own results on Thursday.

The call, the parent results and the payout dates are next

What to watch: management discusses the quarter on a call at 9:00 AM Eastern on Wednesday, and Wednesday trading gives the first market verdict on the beat.

Investors will also weigh the parent company's results on Thursday, November 12, and any analyst revisions that follow the print.

The next payout tests are the December 15 payment and the dates still to come for the remaining R$3.2 billion of interest on capital.

The closing quarter will show whether postpaid and fiber growth can fund a payout of at least the full year's profit.

What remains unknown

The release stated no change to guidance, and it did not set payment dates for the remaining R$3.2 billion of interest on capital declared in 2026.

How fourth-quarter spending and cash flow track against the commitment to pay out at least 100 percent of 2026 net income also remains open.