By Brazil Stock Guide – In its third-quarter 2025 earnings call, Sabesp executives outlined a strategy that blends financial discipline, social inclusion, and expansion potential. CEO Carlos Piani and CFO Daniel Szlak said the company will continue to follow and honor its dividend policy, consistent with the framework established after privatization, while investing heavily in universalization and studying new opportunities in Brazil’s sanitation market.
Social tariff expands to 1.8 million families
Sabesp’s social tariff program now benefits 1.8 million families, almost twice the number prior to privatization. The initiative ensures affordable water and sewage services for low-income households and caused a temporary R$117 million reduction in revenue during the third quarter. Szlak emphasized that the shortfall will be recovered in the 2027 tariff adjustment, as outlined in the concession contract. “We’re expanding access without compromising financial sustainability,” he said.
The Paulista Tariff broadens inclusion
The new Paulista Tariff, formalized in July 2025, allows vulnerable families not registered in federal welfare programs to receive discounted rates. Piani said the expansion reinforces Sabesp’s dual mission: “We are not just a private utility pursuing efficiency — we are a public service provider creating economic, social, and environmental value for São Paulo.”
Dividend policy remains steady
Although analysts questioned whether higher profits might prompt a larger payout, Szlak reaffirmed that Sabesp will continue to apply its dividend policy as planned, ensuring regular distributions while maintaining investment capacity. “Our board-approved policy remains valid. We are committed to rewarding shareholders responsibly, in line with our capital structure and long-term investment needs,” he said.
Financial strength underpins flexibility
The CFO noted that Sabesp’s balance sheet remains solid, with R$11.6 billion in cash and R$7.2 billion in net debt, 59% of which matures after 2030. “Our financial position allows us to sustain and distribute dividends consistently, even while funding major projects,” he said. The company aims to preserve flexibility for both capital expenditures and potential acquisitions.
M&A radar: Copasa and São Paulo regional blocks
Piani confirmed that Sabesp is monitoring the Copasa privatization in Minas Gerais and regional water and sewage blocks in São Paulo, expected to move forward in 2026. “We have the duty to evaluate every opportunity that makes strategic sense,” he said. “The São Paulo blocks are within our natural area of operation, where we enjoy synergies, while Copasa is a valuable asset that could expand our national footprint.”
Path toward sector consolidation
With privatization complete, Sabesp is positioning itself as a potential consolidator in Brazil’s sanitation sector. The company’s investment backlog totals R$39 billion through 2029, and R$13 billion have already been invested in 2025. “The sector is moving toward integration, and Sabesp is ready to lead that transformation with financial discipline and operational excellence,” Piani said.
CapEx acceleration and operational efficiency
Sabesp invested R$4 billion in CapEx during the quarter, focusing on sewage treatment expansion and smart meter installations — 500,000 new units in Q3 alone. Adjusted EBITDA grew 15% to R$3.2 billion, and EBITDA margin reached 59%, supported by improved collection (101%) and automation tools such as WhatsApp billing and PIX-based payments.
Tariff review and FAUSP adjustment
Szlak said the company is finalizing its extraordinary tariff review, which will define the updated regulatory asset base. He also detailed the R$108 million FAUSP rate adjustment — from 3.28% to 3.78% — which increases the fund that offsets future tariff hikes. “It’s a technical correction that strengthens our regulatory framework without altering operational performance,” he explained.
Efficiency and workforce optimization
Following two voluntary dismissal programs involving about 4,000 employees, personnel costs fell 6.6% year over year, even with selective rehiring to maintain service quality. Sabesp has streamlined procurement, logistics, and digital operations. “We’re simplifying the structure and creating value through technology and process redesign,” Szlak said.
Decarbonization roadmap to 2035
Sabesp’s 2035 Decarbonization Roadmap targets a 15% cut in total emissions, a 41% reduction in intensity, and a 43% drop in Scope 2 emissions via renewable energy generation and clean power procurement. “We aim to grow, universalize, and decarbonize at the same time,” Piani said, framing sustainability as a driver of long-term competitiveness.
Universalization ahead of schedule
The company reiterated that it expects to achieve universal access to water and sewage earlier than planned. “We are delivering faster than expected thanks to solid execution and a robust investment pipeline,” said Piani. The CEO added that the company’s progress validates the privatization model and positions Sabesp as a reference for operational excellence and social impact in Brazil’s utilities sector.
Sabesp’s new identity: consistent, inclusive, and investment-ready
Serving over 28 million people across 375 municipalities, Sabesp is emerging as a symbol of Brazil’s post-privatization infrastructure model — combining private-sector efficiency with public purpose. “Privatization was not an endpoint,” said Piani. “It was the beginning of a new cycle — one guided by inclusion, sustainability, and disciplined growth.”
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