Telefônica Brasil Reports 17% Net Income Increase in 2Q26 Driven by Mobile and Fiber Growth

Revenue Growth Fueled by Postpaid Mobile and Fiber Expansion

In 2Q26, Telefônica Brasil's net operating revenue totaled R$15,757.4 million, reflecting a 7.6% increase compared to 2Q25. This growth was driven by strong performance across core segments. Postpaid mobile services generated R$10,183.0 million in revenue, up 6.6% year-over-year, remaining the largest contributor to total net operating revenue.

Fiber-to-the-home (FTTH) services showed notable strength, delivering R$2,147.0 million in revenue, a 10.7% year-over-year increase. Corporate Data, ICT, and Digital Services contributed R$1,467.0 million, growing 7.8% YoY, highlighting the company’s expansion into higher-margin enterprise offerings. Revenue from Handsets and Electronics surged 27.8% YoY to R$1,048.0 million, though this segment remains a smaller portion of total revenue. For the first half of 2026, net operating revenue reached R$31,214.0 million, up 7.5% from the prior year.

Postpaid Subscriber Base Hits New Highs

The postpaid mobile subscriber base expanded by 3.6 million net additions over the past twelve months, reaching 52.4 million accesses—a 7.3% year-over-year increase. This growth underscores strong demand and effective customer acquisition strategies. Postpaid revenue grew 7.9% YoY, outpacing overall mobile services growth and indicating a favorable shift toward higher-value customers.

Average revenue per user (ARPU) in the postpaid segment rose to R$53.9, up 0.8% year-over-year, reflecting effective pricing and monetization. Churn remained low at 1.0% in 2Q26, demonstrating strong customer retention and service quality. These metrics highlight a maturing mobile customer base with stable unit economics and reduced competitive pressures.

Fiber Network Infrastructure Expands Significantly

Telefônica Brasil’s FTTH footprint grew substantially, with homes passed increasing to 32.0 million, a 6.4% increase year-over-year. Homes connected—actual subscribers using fiber services—rose 11.3% YoY to 8.2 million, indicating accelerating adoption within the service area. The take-up rate improved to 25.6% in 2Q26, up 1.1 percentage points from the previous year.

Fiber subscribers contributed increasing returns, with ARPU rising 0.7% quarter-over-quarter and churn declining to 1.4% during the quarter. The company’s 5G infrastructure now covers 978 municipalities across Brazil, while the FTTH network serves 453 cities. These figures emphasize Telefônica Brasil’s focus on network modernization and suggest further fiber penetration could boost revenue and margins going forward.

EBITDA Growth Hits Highest Level Since 3Q23

EBITDA reached R$6,581.0 million in 2Q26, marking a 10.9% year-over-year increase—the strongest growth since 3Q23. The EBITDA margin expanded by 1.3 percentage points to 41.8%, indicating revenue growth outpacing cost inflation and benefiting from operational leverage.

EBITDA after leases (EBITDA AL), which adjusts for IFRS 16 lease accounting, rose 11.6% YoY to R$5,139.0 million, with margin expanding 1.2 percentage points to 32.6%. For the first half of 2026, EBITDA totaled R$12,790.0 million, up 9.9% YoY with a 41.0% margin. Total costs grew 5.3% YoY in 2Q26 and 5.9% in the first half, slower than revenue growth, supporting margin expansion.

Disciplined Capital Expenditure Supports Network Growth

Capital expenditures (excluding IFRS 16 leases) reached R$2,588.5 million in 2Q26, a 6.1% YoY increase but slower than the 9.6% growth in 1Q26. Capex as a percentage of net revenue declined 0.2 percentage points to 16.4%, indicating improved capital efficiency as network infrastructure matures. For the first half of 2026, capex totaled R$4,636.0 million, up 7.6% YoY and representing 14.9% of net revenue.

Investments remain focused on expanding 5G and FTTH infrastructure. The company’s ability to grow EBITDA faster than capex while extending network coverage suggests effective management of the transition from build-out to operational maturity. Investors will watch capex intensity to assess ongoing margin expansion potential amid network modernization.

Operating Cash Flow Strengthens with Margin Expansion

Operating cash flow (EBITDA less capex, excluding IFRS 16 and license effects) reached R$3,992.3 million in 2Q26, up 14.3% YoY and exceeding EBITDA growth. The operating cash flow margin expanded 1.5 percentage points to 25.3%, showing efficient conversion of EBITDA gains into cash. Operating cash flow after leases rose 17.7% YoY to R$2,551.0 million with margin up 1.4 percentage points to 16.2%.

For the first half of 2026, operating cash flow totaled R$8,154.0 million, a rise of 11.3% YoY, confirming consistent cash generation. Free cash flow (operating cash flow less capex) was R$2,661.0 million in 2Q26, down 10.7% YoY from R$2,979.0 million in 2Q25, mainly due to capex growth outpacing cash flow on a quarterly basis. However, first-half 2026 free cash flow declined only 4.8% YoY to R$4,861.0 million, indicating moderate headwinds over six months.

Shareholder Returns Accelerate with Buyback Program

During the first seven months of 2026, Telefônica Brasil increased shareholder distributions by 31.6% YoY to R$6,990.0 million. This total includes R$2,990.0 million in interest on capital declared in 2025 and R$4,000.0 million from capital reduction. Additionally, interest on capital declared as of July 2026 amounted to R$2,220.0 million, a 34.5% increase YoY for the period.

The Board approved a Share Buyback Program of up to R$1.0 billion, authorized through February 2027. The company reiterated its commitment to distribute at least 100% of full-year 2026 net income to shareholders, supported by strong cash flow. Earnings per share (EPS) rose 18.5% YoY to R$0.49 in 2Q26 and 19.6% YoY to R$0.89 for the first half of 2026, reflecting net income growth and capital reduction effects.

Total Subscriber Growth and Market Position

Telefônica Brasil’s total accesses across all services reached approximately 118.8 million as of 2Q26, a 2.3% year-over-year increase. This figure includes postpaid and prepaid mobile subscribers, fixed-line voice customers, FTTH subscribers, xDSL users, FTTC connections, and IPTV customers. The modest growth reflects market maturity, though the company’s segment mix is shifting toward higher-margin postpaid and fiber services.

The company did not disclose market share or competitive positioning data in this release. Nonetheless, consistent revenue growth, EBITDA margin expansion, and accelerating postpaid additions suggest Telefônica Brasil is maintaining or improving its competitive stance in Brazil. Strong fiber and corporate data performance highlights the company’s success in addressing industry trends such as the shift from legacy fixed-line to broadband and enterprise solutions.

Outlook and Financial Guidance for 2026

Although no formal full-year 2026 financial guidance was provided, management signaled a commitment to distribute at least 100% of full-year net income to shareholders. First-half 2026 net income of R$2,834.0 million, up 17.9% YoY, combined with accelerating shareholder distributions, indicates confidence in full-year earnings.

The company’s ability to grow EBITDA faster than costs, maintain disciplined capex, and expand fiber penetration suggests positive momentum heading into the second half of 2026. The announced R$1.0 billion Share Buyback Program further reflects management’s confidence in the financial position and valuation, though timing and pace of repurchases remain unspecified.