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Introduction & Market Context
Portuguese telecommunications company NOS SGPS SA (NOS) presented its second-quarter 2025 results on July 22, showcasing revenue growth and improved operational performance despite ongoing competitive pressures in the telecommunications sector. The company’s stock closed at €3.745 on October 14, 2025, down 0.27% and hovering near its 52-week low of €3.235, indicating investor caution despite the company’s operational improvements.
NOS reported consolidated revenue of €458.2 million for Q2 2025, representing a 3.2% year-over-year increase, while EBITDA grew by 5.9% to €202.9 million. The company highlighted its recurring net income growth of 16% to €57.4 million, though reported net income showed a decline compared to the previous year due to extraordinary items.
Quarterly Performance Highlights
NOS delivered solid operational and financial performance in the second quarter of 2025, with improvements across most key metrics. The company reported growth in total revenue generating units (RGUs) and continued expansion of its fiber network coverage.
As shown in the following comprehensive overview of key financial and operational indicators:
The company’s operational metrics showed positive momentum, with total RGUs increasing by 57.8k quarter-over-quarter to reach 10,739k. This represents a significant improvement compared to both the previous quarter (-40.1k) and the same period last year. The growth was primarily driven by mobile and fixed segments, while the wireless segment experienced a slight decline.
The following chart illustrates this RGU growth across segments:
In the fixed network segment, NOS continued to expand its coverage, reaching 5,879.7k households with its gigabit fixed network by the end of Q2 2025, an increase of 5.6% year-over-year. More importantly, the company has been upgrading its network technology, with FttH (Fiber-to-the-Home) coverage increasing to 86.3% of its fixed NGN coverage, up 8.3 percentage points year-over-year.
Strategic Initiatives
A central focus of NOS’s presentation was its strategic expansion into the IT services market through the acquisition of Claranet Portugal. This move positions NOS to capture a larger share of Portugal’s B2B technology market, with the company highlighting that the IT market (€4.6 billion) is approximately four times larger than the telco market (€1.1 billion) and growing at a faster rate.
The following chart illustrates this market opportunity:
NOS outlined three key growth levers for its IT business: expanding its sales footprint in enterprise and mid-market segments, scaling high-potential practices like Cloud, Cybersecurity, and Data/AI, and leveraging its Strategic Cooperation Agreement with Claranet Group.
The company also highlighted its strong IT capabilities, including over 900 full-time employees, a large engineering team, and more than 200 cloud certifications. NOS has established partnerships with major technology providers including Microsoft, Hewlett Packard Enterprise, AWS, Adobe, Cisco, and Google, strengthening its position in the competitive IT services market.
Detailed Financial Analysis
NOS’s revenue growth was driven by strong performance in its telecommunications and audiovisual & cinemas (A&C) segments, while the IT segment experienced a slight decline. Telco revenue increased by 2.3% to €392.3 million, and A&C revenue surged by 31.0% to €25.8 million, offsetting the 0.8% decrease in IT revenue to €49.3 million.
The following chart breaks down the consolidated revenue growth by segment:
Despite the slight decline in IT segment revenue, EBITDA margins improved across all business segments. Consolidated EBITDA margin increased by 1.2 percentage points to 44.3%, with the IT segment showing the most significant margin improvement of 2.2 percentage points to reach 13.2%.
The following chart details EBITDA growth and margin expansion across segments:
The company’s cinema business showed strong recovery, with attendance increasing by 43.8% year-over-year to 1,901.8k tickets sold in Q2 2025. This growth was driven by successful movie releases, including "Lilo & Stitch" which sold 553.6k tickets during the quarter.
NOS maintained disciplined capital expenditure, with CAPEX decreasing by 1.9% to €91.7 million. This, combined with strong EBITDA performance, resulted in a 22.1% increase in EBITDA AL - CAPEX to €77.4 million.
The company also reported solid free cash flow generation of €57.4 million, an 8.8% increase year-over-year, driven by improved operational cash flow, reduced capital expenditure, and positive contributions from working capital and non-cash items.
Forward-Looking Statements
NOS emphasized its strong financial position, with leverage below reference levels and a solid liquidity position of €278 million as of June 30, 2025. The company’s average cost of debt stands at 3.0%, reflecting its stable financial foundation.
Looking ahead, NOS is focused on leveraging its Claranet Portugal acquisition to expand its presence in the larger IT market. The company noted that under IFRS 15 accounting standards, Claranet Portugal’s 2024 revenue is reported at €130 million on a net basis, compared to €216 million gross revenue under Portuguese GAAP.
While NOS faces competitive pressures in the consumer telecommunications market, its strategic pivot toward higher-growth IT segments and continued network expansion positions the company for sustainable growth. The positive trends in customer acquisition and improved operational metrics suggest that NOS’s strategy is gaining traction despite the challenging competitive landscape.
Investors will be watching closely to see if NOS can maintain its operational momentum and successfully integrate Claranet Portugal to capitalize on the larger IT services market opportunity, which could be key to the company’s long-term growth prospects in an increasingly competitive telecommunications environment.
Full presentation:
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