Telefonica Brasil: Small miss, high bar; Reiterating Underperform

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Telefonica Brasil: Small miss, high bar; Reiterating Underperform

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Telefonica Brasil

Small miss, high bar; Reiterating

Underperform

Reiterate Rating: UNDERPERFORM | PO: 39.00 BRL | Price: 36.02 BRL

Still cautious after 1Q26; trim PO to R$39/sh 12 May 2026

We reiterate our cautious view on Vivo after a slight 1Q26 miss, mainly on margins. Equity

While headline trends remained healthy – revenues +7.4% YoY and EBITDA +9% YoY –

core MSR dynamics were softer, with postpaid slowing to +7.8% YoY and missing BofAe

Key Changesby ~1%, while prepaid improved on tariff changes and WhatsApp monetization. This is

consistent with TIM’s 1Q26 (see our report: 1Q supports caution; Growth mix bears (BRL) Previous Current

watching; Reiterating Underperform), where client-generated and postpaid revenues also Price Obj. 41.00 39.00

decelerated, suggesting sector core mobile growth may be moderating. We lower our PO 2026E Rev (m) 62,905.8 63,879.4

to R$39/US$14 from R$41/US$15, reflecting higher costs, lower margin assumptions, 2027E Rev (m) 66,160.7 67,216.6

concession asset-sale spillover and slightly higher financial expenses. 2028E Rev (m) 68,983.3 70,191.3

2026E EPS 2.75 2.46

2027E EPS 3.31 3.09Call reinforced growth levers, but risks remain

Management reiterated several growth and cash flow levers, including annual repricing 2028E EPS 3.10 3.25

across fiber, Vivo Total, hybrid and postpaid, plus further prepaid monetization through 2026E DPS 2.89 2.53

monthly tariffs and WhatsApp. It also reaffirmed confidence in cost discipline. Still,

these positives look largely priced in and should be balanced against 1Q evidence of Rogerio Araujo >>

Research Analyst

underlying cost pressure, lower asset sale contribution – resumed by late April – and a Merrill Lynch (Brazil)