This article first appeared on GuruFocus .
-
Total Revenue Growth:7.4% year-over-year increase.
-
Mobile Service Revenue Growth:6.6% increase.
-
Fixed Revenue Growth:5.1% increase.
-
EBITDA Growth:8.9% year-over-year increase, with margins at 40.2%.
-
Operating Cash Flow:BRL4.2 billion, an 8.5% improvement.
-
Net Income:Expanded 19.2% to BRL1.3 billion.
-
Free Cash Flow Generation:BRL2.2 billion during the quarter.
-
Postpaid Base Growth:6.9% year-over-year, reaching 72.1 million access.
-
Fiber Connections:Reached 8 million, advancing 11.5% year-over-year.
-
Homes Passed with Fiber:31.5 million, up 6.2% year-over-year.
-
Postpaid Revenue Growth:7.8% year-over-year.
-
Handsets and Electronics Revenue Growth:26.6% year-over-year.
-
B2B Revenue Growth:11.8% year-over-year, reaching BRL13.7 billion.
-
Digital B2B Revenue Growth:23.8%, reaching BRL5.4 billion over the last 12 months.
-
Net Debt Over EBITDA:Improved to 0.4 times in the last 12 months.
-
Shareholder Distribution:BRL7 billion allocated for distribution in 2026.
Release Date: May 11, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Telefonica Brasil SA ( NYSE:VIV ) reported a 7.4% year-over-year increase in total revenue, driven by strong performance in both mobile and fixed services.
-
The company's postpaid base grew by 6.9% year-over-year, reaching 72.1 million accesses, which represents 69.5% of their mobile base.
-
EBITDA rose by 8.9% year-over-year, lifting margins to 40.2%, indicating improved profitability.
-
Free cash flow generation totaled BRL2.2 billion during the quarter, showcasing strong cash generation capabilities.
-
The company has committed to distributing at least BRL7 billion to shareholders in 2026, reflecting a strong focus on shareholder returns.
Negative Points
-
Prepaid revenue showed a year-over-year decline of 1%, although this is an improvement from previous declines.
-
The competitive landscape in the broadband segment remains challenging, with intense competition affecting pricing strategies.
-
There was a temporary halt in copper sales due to tax changes, which impacted revenue from this segment.
-
The company faces challenges in maintaining cost growth below revenue growth, particularly with increasing costs linked to revenue-generating activities.
-
Concerns were raised about the potential impact of lower net income on dividend payouts, despite strong free cash flow generation.
Q & A Highlights
Q: How do you see competition in the broadband segment, and is there room to increase prices in fiber? Also, what's your goal for Vivo Total's penetration in your FTTH base over the next three years? A: We increased around 25% of our customer base price in the back book of fiber in January and had a Vivo Total price increase in April. We believe there is room for price increases in prepaid as well. Our strategy is to have more Vivo Total customers, with current penetration at 45% of our fiber base. The market is competitive, but we are the number one player with a 19.2% market share, up from 18.4% a year ago.
Q: With B2B and other lower-margin revenues growing, how do you see dividends increasing proportionate to free cash flow? A: Our net income increased by 19.2%, and we have committed to distributing BRL7 billion this year, which is above last year's distribution. We have also declared another tranche of interest on capital and a new share buyback program. Our cost structure is well-managed, with costs linked to revenue expansion, and our bad debt remains stable.
Q: Could you provide a recap of last year's and this year's back book price increases for each product? Also, what is the CapEx outlook for this year? A: Last year, we increased hybrid prices in April and August, and this year, around 76% of our hybrid customer base saw increases in April, with the rest expected in August. Postpaid and fiber followed similar patterns. Our CapEx intensity remains in line with last year, focusing on mobile network enhancement and fiber expansion. We are committed to improving CapEx intensity over the year.
Q: Regarding asset sales from concession migration, what level should we expect for the remaining quarters of 2026? Also, is the BRL7 billion shareholder remuneration a minimum? A: We resumed copper sales in April, and you can expect increased sales throughout the year. The BRL7 billion is at least the amount we plan to distribute, with a commitment to distribute at least 100% of net income.
Q: Can you elaborate on AI initiatives and their impact on revenue and costs? A: AI is in the early stages, but we are leveraging our cloud relationships to explore opportunities. We are launching an AI agent project in our call centers to handle calls more efficiently, aiming to retain over 60% of calls with AI agents. This will help in cost reduction and efficiency.
Q: Are you seeing any impact from higher oil prices on your operations, and can you maintain costs below revenue growth? A: There is no direct impact from higher oil prices on our operations. We are confident in maintaining our cost evolution trend, with no concerns about costs growing above revenues.
Q: How is the competitive landscape, and are there plans to increase front book prices in the control plan? A: The market remains competitive, but Vivo stands out with strong net adds and low churn. We have increased some front book prices and are considering others, maintaining a strong value proposition.
Q: What are the dynamics of cell phone sales, and can you expect this level going forward? A: We had a strong quarter for smartphones and consumer electronics, with the latter growing 56%. We are expanding our portfolio and retail footprint, and we expect to maintain this trend with a strong commercial start to the second quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
