Brazil ISPs: Higher capex, limited visibility on returns- Downgrade FIQE to Neutral

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Brazil ISPs: Higher capex, limited visibility on returns- Downgrade FIQE to Neutral

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Brazil TMT

Brazil ISPs: Higher capex, limited visibility

on returns– Downgrade FIQE to Neutral

Rating Change

Broadband headwinds persist and mobile capex ramps up 09 July 2026

We are turning more cautious on Brazilian ISPs, as negative broadband dynamics appear Equity

likely to persist while mobile expansion adds capex intensity. Competition in broadband Brazil

remains intense, with limited pricing power, high churn and rising network overlap. On Telecommunications, Media and

Technologytop of that, Unifique and Brisanet face significant 5G-related investment needs through

2030, which should keep capex elevated and constrain free cash flow generation over Lucca R Brendim >>

the coming years. While mobile may create attractive long-term opportunities, visibility Research Analyst

Merrill Lynch (Brazil)

on returns remains limited, particularly as the sector is moving into a more capital- +55 11 2188 4100

intensive phase before the benefits are fully proven. We thus downgrade Unifique from lucca.brendim@bofa.com

Buy to Neutral and reiterate our Underperform rating on Brisanet. Rogerio Araujo >>

Research Analyst

+55 11 2188 4255FIQE: Cashflow to remain pressured in the coming years rogerio.araujo@bofa.com

We downgrade Unifique to Neutral, as we expect FCF generation to remain pressured in

the short term (~3% yield 27e), given new mobile investments add capex pressure. On

the positive side, broadband continues to outperform peers in terms of churn at Exhibit 1: Downgrade Unifique to Neutral

~1.5%/month vs >2% for most peers, but we believe this is largely priced in. At the Summary table

same time, the company is entering a period of higher capital intensity driven by its