Abstract

Telefonica Brasil SA will report its quarterly results on February 23, 2026 Pre-Market, and this preview outlines consensus expectations for revenue, margins, profitability, EPS, and the segment dynamics investors are prioritizing ahead of the print.

Market Forecast

Consensus for the current quarter points to revenue of $2.79 billion, implying 14.22% year-over-year growth, with EPS estimated at $0.15, representing an 11.04% year-over-year decline; EBIT is forecast at $464.39 million, up 21.62% year over year. Forecast disclosure does not include margin guidance; the setup therefore emphasizes top-line acceleration and operating profit growth despite EPS pressure.

Services remained the primary revenue engine last quarter and are expected to do the heavy lifting again this quarter, with monetization of higher-value plans, digital add-ons, and convergent bundles supporting the outlook. Within the portfolio, fiber broadband and higher-tier mobile data plans appear to offer the greatest runway for incremental growth; last quarter, services contributed about $2.56 billion of revenue (93.28% of total), while goods sales contributed approximately $0.18 billion (6.72%), setting a base for ongoing cross-sell and upsell efforts.

Last Quarter Review

In the last reported quarter, Telefonica Brasil SA delivered revenue of $2.74 billion, a gross profit margin of 48.94%, GAAP net profit attributable to shareholders of approximately $346.51 million (net profit margin 12.63%), and adjusted EPS of $0.22, up 17.94% year over year; revenue grew 8.38% year over year. Operationally, EBIT of $508.00 million rose 23.09% year over year and exceeded consensus by $33.77 million, reflecting tight operating discipline and scale benefits in the core franchise. By business mix, services accounted for 93.28% of last quarter’s revenue (approximately $2.56 billion), while goods sales represented 6.72% (about $0.18 billion), with services-led growth underpinned by premium plan adoption and stronger value-added service attachment.

Current Quarter Outlook (with major analytical insights)

Core Service Revenue and Commercial Momentum

The forecast calls for a continuation of the services-driven expansion that characterized recent quarters. Revenue is projected to rise 14.22% year over year to $2.79 billion, a step up from last quarter’s 8.38% year-over-year growth, suggesting that price, mix, and cross-sell are still carrying through. The structure of last quarter’s results—nearly half of revenue translating into gross profit and a 12.63% net margin—indicates that the current base of operating efficiency can accommodate volume and value growth without a significant deterioration in underlying economics.

Commercial mix should remain favorable. The base is tilting toward higher-value plans, data-centric usage, and convergence, all of which typically support better average revenue per user and lower churn than purely transactional relationships. With services comprising roughly 93% of revenue, relatively small gains in upsell penetration can materially influence quarterly growth rates. Early signs embedded in the revenue estimate suggest that the core engine continues to scale, even as equipment volumes and hardware margins are likely to remain a smaller, less predictable contributor on a quarter-to-quarter basis.

Another supportive factor is operating leverage tied to network utilization. After meaningful network and IT investments over the past reporting periods, the benefit of scaling that asset base often arrives in the form of lower unit costs and improved reliability, which can reinforce customer retention. That dynamic has historically shown up in EBIT expansion; this quarter, the 21.62% year-over-year EBIT growth forecast versus revenue growth of 14.22% implies some incremental operating leverage remains available, provided cost inflation and promotional intensity are contained.

High-Potential Growth Engine: Fiber and 5G Upsell

Within services, fiber broadband and higher-tier mobile data plans present the clearest route to incremental growth, both by elevating ARPU and by anchoring multi-product relationships. Last quarter’s mix indicates that services contributed approximately $2.56 billion; extending this into the current quarter, the revenue estimate implies broader momentum in the overall services base. While formal segment-level year-over-year rates are not disclosed, operationally the broadband and premium mobile layers tend to move with the same demand drivers that are lifting the consolidated top line.

The fiber franchise is critical for lifetime value and long-term monetization, because each incremental fiber connection tends to pull through additional products, reduces churn, and raises the ceiling on usage-based spend. Customers migrating to higher data allowances or 5G premium plans commonly exhibit higher stickiness, and their attach rates to digital services (cloud backup, security, media bundles, productivity) often increase as well. The result is a richer revenue stack per customer that compounds over time, particularly in markets where the gap in user experience between legacy and next-generation plans is meaningful.

From a near-term earnings cadence perspective, the important balancing act is the relationship between growth investments and profitability. The IBIT forecast suggests that Telefonica Brasil SA is expected to expand operating profit faster than revenue this quarter, a pattern consistent with both maturing fiber cohorts and scaling 5G usage. However, EPS is projected to decline year over year by 11.04%, a signal that below-EBIT line items—such as depreciation and amortization, interest, and taxes—could be heavier than last year. That is consistent with a business absorbing depreciation from recent capital programs and navigating periodic variation in financing and tax expense even as operating income advances.

Key Stock Price Swing Factors This Quarter

The first swing factor is the degree of conversion from top-line growth to earnings per share. With revenue and EBIT both forecast to rise double-digit year over year, investors will focus on whether gross margin remains resilient near recent levels and whether opex control allows EBIT flow-through at or above expectations. Any deviation in depreciation, interest costs, or tax rates can tilt EPS, and the consensus decline in EPS year over year makes this a focal point in the print.

The second swing factor is cash generation and discipline around investment. While quarterly P&L trends carry weight, the equity narrative is increasingly influenced by how growth translates into sustainable free cash flow. A demonstration that operating improvements are landing in cash, net of capital requirements, often reshapes valuation discussions. Conversely, if investment timing or working-capital seasonality pushes cash conversion below what investors expect, sentiment may pause even if the revenue line meets or beats.

The third swing factor is commercial quality: churn, mix, and receivables health. A modest improvement in churn, coupled with steady premium-mix progress, usually correlates with more durable revenue growth and lower acquisition costs over time. Receivables quality and collections efficiency are also watched as telltales for the health of the growth—strong receivables discipline alongside accelerating revenue tends to support confidence that growth is not being “bought” at the expense of balance-sheet risk.

Margin Trajectory and Cost Discipline

Last quarter’s 48.94% gross margin sets an important benchmark. If product mix further tilts toward higher-value services, and if device volumes remain a smaller component, consolidation around higher gross margin is plausible. Investors will parse whether service revenue growth is achieved without meaningful dilution from promotional activity, especially in holiday- and back-to-school–adjacent periods that can raise marketing and subsidy line items. Cost programs that kept last quarter’s opex efficient will be scrutinized for durability and scalability.

EBIT momentum remains a key data point this quarter. With EBIT expected to climb 21.62% year over year, management execution on cost rationalization, automation, and network efficiency will be in the spotlight. Achieving EBIT growth ahead of revenue growth typically strengthens the case for operating leverage and supports valuation frameworks that emphasize earnings power more than purely top-line scale. That said, investors may remain sensitive to the balance between maintaining service quality and cost initiatives, given the importance of customer experience to long-term value creation.

Below the operating line, the forecast EPS decline year over year suggests that depreciation and amortization, financing costs, or tax rate dynamics may offset part of the EBIT gain. This is not unusual in periods following significant investment, as new assets roll fully into depreciation schedules and financing arrangements reflect recent rate environments. The print will likely be assessed on whether these below-the-line effects are transient or indicative of a new run-rate that moderates the pace at which operating improvements reach EPS.

Revenue Quality and Mix

The composition of service revenue growth matters as much as the headline number. Growth led by premium plan adoption and fiber penetration tends to be higher quality, with better retention characteristics and ancillary revenue potential. Cross-selling digital services, enterprise solutions, and security or cloud add-ons can deepen relationships while spreading fixed costs over a broader base, supporting margin integrity. Conversely, if growth were to lean heavily on low-margin hardware or short-term promotions, the near-term revenue upside would carry less appeal to the market.

Goods sales contributed about $0.18 billion last quarter, reflecting the smaller role of equipment in the current mix. A stable or lower share of goods sales is typically margin-friendly, assuming service growth keeps pace, because equipment margins are generally thinner and more volatile. The current-quarter forecast implicitly assumes the services momentum persists; if achieved, that should be supportive for gross margin resilience even without explicit margin guidance.

The sustainability of mix improvements is often tied to the breadth and depth of bundles. As customers migrate to integrated offerings that combine connectivity with digital products, the stickiness of the relationship increases and price sensitivity decreases. This quarter’s commentary will be watched for evidence of bundle penetration, the attach rate of value-added services, and their contribution to both revenue and churn containment.

Earnings Cadence and Guidance Qualities

Given that EPS is forecast to contract year over year while EBIT expands, qualitative guidance on the bridge from operating income to net income could be as impactful as the reported numbers. Clarity on depreciation trajectories, any refinancing outcomes affecting interest expense, and tax planning can help investors calibrate the path from EBIT to EPS over the next few quarters. If the bridge dynamics appear more seasonal or timing-related, the market may be prepared to look through a softer EPS print so long as revenue and EBIT align with expectations.

Investors will also look for signals on the pace of capital intensity relative to the revenue trajectory. If capital allocation is framed against a backdrop of stable or improving returns, commentary may alleviate concerns about free cash flow conversion even as growth investments continue. Conversely, incremental capital commitments without a clear revenue or cost offset could put near-term pressure on valuation multiples.

Finally, consistency in commercial strategy is a touchstone for sentiment. Keeping the focus on higher-value customers and deepening existing relationships can sustain growth without over-reliance on promotional spend. The narrative that ties together premium mix progress, disciplined cost control, and prudent investment is likely to resonate, especially in a quarter where top-line and operating income growth are forecast to outpace EPS.

Analyst Opinions

Among previews and consensus indications available in the period, the majority view skews constructive, emphasizing revenue acceleration and operating-profit expansion even as EPS faces near-term headwinds from below-the-line items. The reasoning centers on three pillars: first, the revenue estimate of $2.79 billion implies 14.22% year-over-year growth, which, if delivered, would represent a notable step-up from the prior quarter’s 8.38%; second, the EBIT forecast of $464.39 million suggests 21.62% year-over-year growth, pointing to additional operating leverage; and third, the mix trajectory remains oriented to services, which historically supports margin stability. This perspective views a near-term EPS decline of 11.04% year over year as a function of timing and accounting headwinds rather than a weakening of the operating engine.

Supporters of this view highlight that last quarter’s EBIT beat of $33.77 million and 23.09% year-over-year growth established a pattern of cost control and scale benefits, raising confidence that operating execution is continuing into the current quarter. They also point to the durability inherent in a services-heavy revenue base, where incremental gains in higher-tier plans, fiber penetration, and digital add-ons amplify both ARPU and lifetime value while lowering churn. Under this framework, investors are expected to weigh the quality of revenue—favoring services-led, premium-mix growth—more heavily than temporary EPS compression caused by depreciation, financing, or tax timing.

The constructive stance also treats the estimate trajectory as a sentiment proxy. Consensus implies that revenue, EBIT, and service mix are tracking positively, suggesting that the balance of opinions entering the print leans more bullish than bearish. From an investment narrative standpoint, the anticipated combination of double-digit top-line and operating-income growth provides room for confidence to build if reported results align with these expectations and if management details a credible bridge from EBIT to EPS for the remainder of the year. In that scenario, attention could shift quickly from near-term EPS pressure to the consistency of cash conversion and the sustainability of premium-mix momentum.