Vivo and TIM face stock pressure amid rising Brazilian telecom competition

Shares of Brazilian telecommunications companies Vivo (VIVT3) and TIM (TIMS3) have faced significant downward pressure, dropping approximately 18% and 16% respectively since the release of second-quarter results. According to analysis from Itaú BBA, this decline is driven by intensifying competition in the mobile market rather than changes in profit projections.

In the critical post-paid segment, Claro has gained market share in nine of Brazil's ten largest states. In contrast, TIM has lost ground across all these major regions, while Vivo has only managed to increase its share in São Paulo.

Itaú BBA has maintained a neutral recommendation for both companies but reduced its target price for Vivo from R$ 38 to R$ 35. The bank identified three primary risk factors: the rise of new competitors such as NuCel (linked to Nubank), which has surpassed 1 million users, potential long-term pressure from Starlink initiatives, and aggressive promotional pricing that threatens profit margins.