Telefonica Brasil: A Solid Strategy To Hold And Grow

Summary

• Telefônica Brasil leads Brazil’s telecom market with strong postpaid, fiber, and digital solutions, driving the country’s digital transformation and expanding its B2B and fintech ecosystem.
• Q1 2025 showed solid growth: 116M+ total accesses, 7.7% postpaid increase, nearly tripled 5G coverage, 8.1% EBITDA growth, and net profit up 18.1% YoY.
• Attractive valuation with EV/EBITDA FWD at 4.5x versus the sector average of 8.1x, strong margins (EBITDA 31.3%, net 10.1%), and projected EPS growth above 20% in coming years.
• Risks include fierce competition, regulatory uncertainty, technology adoption pace, cybersecurity challenges, and macroeconomic volatility in Brazil; yet, Telefônica Brasil maintains financial discipline and dividend growth.

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Investment Thesis

Telefônica Brasil, or Vivo (NYSE:VIV), as it is known, is a solid, profitable and well-positioned company in the Brazilian market. Its leadership in postpay, fiber optics and digital solutions, combined with above-average operating margins, low debt and a generous dividend policy

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.