Telefonica Brasil (NYSE: VIV) delivered a 17.9% year-over-year rise in net income to R$2.8 billion for the first half of 2026, driven by double-digit EBITDA growth and expanding margins.

The Brazilian telecom operator reported total revenue growth of 7.6% year-over-year in the second quarter of 2026. Mobile service revenues advanced 6.6%, while fixed revenues grew 6%, supported by fiber and B2B operations. The company declared R$2.2 billion in interest on capital for the period, marking a 34.5% increase compared to the previous year.

Financial Performance

Profitability outpaced top-line growth, with EBITDA rising 10.9% year-over-year to achieve a margin of 41.8%. This represents an expansion of 1.3 percentage points from the prior year. Total costs increased by 5.3%, primarily driven by a 10.2% rise in costs of services and goods sold due to handset sales and digital solutions. Operating expenses grew more modestly at 3.2%.

Capital expenditure totaled R$2.6 billion in the quarter, equivalent to 16.4% of revenues. Investments focused on fiber network expansion and 5G coverage, which now reaches 978 cities, covering more than 73% of the Brazilian population. The net debt-to-EBITDA ratio remained stable at 0.4 times.

Operational Highlights

Vivo expanded its customer base across key segments. Postpaid mobile accesses reached 73.2 million, up 6.9% year-over-year. Fiber connections grew 11.3% to 8.2 million homes, with the footprint expanding to 32 million homes passed. Convergence remains a key driver, with Vivo Total customers reaching 3.8 million, a 29.4% increase.

Mobile ARPU hit a record high of R$32.5, while postpaid churn remained stable at 1%. Nearly one-third of the mobile base now uses 5G daily. In the B2B segment, revenues reached R$13.9 billion on a last-12-month basis, up 9.2%, with cloud services growing 20.9%.

What the Numbers Show

New business revenues surged 33.6%, contributing significantly to the diversified ecosystem strategy. Consumer electronics revenues jumped 63.8%, while health and wellness services advanced 58.2%. These non-connectivity streams now represent 3.4% of total revenues, indicating a successful shift toward higher-margin digital services and hardware sales alongside traditional connectivity.

Shareholder Returns and ESG

The company disbursed R$7 billion to shareholders in the first half of 2026, a 32% increase year-over-year. Management reaffirmed its commitment to distributing at least 100% of 2026 net income. On the ESG front, Vivo achieved maximum scores in FTSE Russell’s assessment and surpassed its 2025 diversity targets under the UN Global Compact.

Telefonica Brasil reported second-quarter earnings per share (EPS) of $0.19, missing the analyst consensus estimate of $0.23 by 17.39 percent. The company’s quarterly sales totaled $3.116 billion, falling short of the $3.120 billion estimate by 0.13 percent. Despite missing near-term expectations, both metrics showed significant year-over-year growth, with EPS rising 26.67 percent from $0.15 in the same period last year and sales increasing 22.10 percent from $2.552 billion.

The results highlight a divergence between top-line momentum and bottom-line execution against market expectations. While revenue growth accelerated significantly compared to the prior year, the inability to meet the tighter EPS target suggests margin pressures or higher-than-anticipated costs during the quarter. The narrow miss on sales indicates that operational volume was largely in line with forecasts, yet profitability fell short of the consensus view.

Financial Performance

Year-Over-Year Growth

What the Numbers Show

The data reveals a strong recovery trajectory for Telefonica Brasil, with double-digit growth in both revenue and earnings compared to the previous year. However, the significant miss on EPS relative to the minimal miss on sales suggests that the market had priced in higher efficiency or lower costs than what was delivered. Investors should note that while the absolute figures are robust and growing, the gap between actual performance and analyst expectations remains a key risk factor for valuation.