Vivo's Net Income Jumps 30% as Brazil Telecom Leader Leverages Mobile and Fiber Growth

Telefonica Brasil (NYSE:VIV), operating under the Vivo brand, reported a 30.1% surge in third-quarter net income to BRL 2.5 billion, driven by subscriber growth in mobile and fiber segments alongside gains from asset disposals. Revenue rose 7.2% year-over-year to BRL 16 billion, while EBITDA (earnings before interest, taxes, depreciation, and amortization) climbed 10% to BRL 7.1 billion. The EBITDA margin expanded by 1.1 percentage points to 44.5%.

For the first nine months of 2026, net income rose 23.3% to BRL 5.3 billion, and free cash flow increased 6.1% to BRL 7.3 billion, reflecting sustained operational momentum across the company's core business lines.

What Drove the Revenue Growth?

CEO Christian Gebara attributed the top-line expansion primarily to mobile services, which grew 7.4% in the quarter. Postpaid revenue—the higher-value segment where customers pay monthly bills—rose 9.1%. Total mobile accesses reached 106.4 million, up 3.4% year-over-year, while the postpaid base excluding machine-to-machine connections and dongles hit 53.4 million after adding more than 900,000 net new subscribers.

Fiber-to-the-home connections, the broadband segment delivering high-speed internet directly to residences, increased 10.8% to 8.4 million homes, with 213,000 net additions in the quarter. The network now covers 32.4 million homes, and the take-up rate improved by one percentage point to 26%.

Gebara highlighted the performance of Vivo Total, the bundled mobile-and-fiber offering that reached 4 million accesses, a 27.8% increase year-over-year. Fiber churn—the rate at which customers cancel service—stood at 1.4%, and Gebara noted that churn among Vivo Total fiber customers ran one percentage point lower than among standalone fiber subscribers, suggesting the bundle improves retention.

The company also revised how it allocates Vivo Total revenue between mobile and fiber units during the quarter, shifting more revenue to mobile to better reflect market pricing. Gebara confirmed the change did not affect total service revenue, which rose 6% year-over-year, but did alter the reported split between the two business lines.

How Are Costs and Cash Flow Trending?

CFO Rodrigo Monari reported that total costs increased 5%, below the pace of revenue growth, supporting margin expansion. Commercial and infrastructure expenses declined 0.9%, while costs of services and goods sold rose 15.6%, reflecting shifts in the company's business mix.

Other revenue included BRL 352 million in gains from copper sales and BRL 14 million from real estate transactions, Monari said. Gebara added that the migration from a concession to an authorization regulatory regime has generated savings, with additional benefits expected in coming quarters.

Capital expenditure totaled BRL 7.2 billion for the first nine months, or 15.2% of revenue, down from 15.7% a year earlier. Operating cash flow before lease payments increased 13.5% to BRL 12.7 billion over the same period.

The balance sheet remains solid. Vivo held net cash of BRL 2.4 billion excluding leases at the end of September. Including lease obligations, net debt stood at BRL 13.8 billion, equivalent to 0.5 times EBITDA—a conservative leverage level by telecom industry standards.

What About Shareholder Returns and Future Plans?

Monari disclosed that the company has disbursed BRL 7 billion to investors, with another BRL 325 million in interest on capital scheduled for payment in December. An additional BRL 1 billion remains available under the current share buyback program through February 27, 2027. Monari reaffirmed full-year 2026 guidance without detailing specific targets on the call.

On pricing strategy, Vivo recently launched a prepaid offer starting at BRL 35 for 30 days, bundling drugstore discounts and Google cloud storage. Gebara said it was too early to assess the offer's full impact, though prepaid average revenue per user, recharge frequency, and recharge amounts have all increased. He confirmed Vivo can continue raising prices for existing customers in real terms but declined to specify future increases, adding that the strategy keeps pricing aligned between new and existing subscribers.

Vivo's satellite service, developed in partnership with Starlink, is now available to more than 50 million eligible business and consumer customers, with roughly 10 million having already used it. Gebara said the company intends to monetize the service after free trial periods—three months for businesses and twelve months for consumers—though commercial pricing plans have not yet been announced.

Regarding potential acquisitions, Gebara said Vivo is evaluating targets and has held preliminary talks with an internet service provider, though no near-term purchase conclusions have been reached. The company is also preparing for Brazil's broader tax reform, which Gebara expects to have a neutral bottom-line impact, while acknowledging that some implementing rules remain undefined.

Telefonica Brasil, part of the Spanish Telefonica Group, traces its origins to the 1998 privatization of Brazil's telecommunications sector, when Telefonica acquired Telesp, the former state-controlled operator in Sao Paulo.