Sabesp Investor Day: Post-Privatization Investment Surge Targets Universal Water and Sewage by 2029
by Michael Walen · The Markets DailyExecutives from Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS) outlined the company’s transformation following its July 2024 privatization, highlighting a sharp increase in investment, changes to workforce and management systems, and major projects aimed at achieving universal access to water and sewage services by 2029.
Privatization: early operational and regulatory changes
Chief Executive Officer Carlos Piani said Sabesp has been operating under the new structure for about 18 months, noting that the handover took 70 days because the privatization was conducted through the stock exchange. He said the company made board changes on “the very first day,” then faced an ARSESP tariff-related deliberation that affected operations.
Piani also pointed to a voluntary separation program launched at year-end, emphasizing, “If you want to be here, you have to want to be here.” He said roughly 2,000 employees opted into the first program, out of an 11,000-person workforce at the time, with phased departures depending on role criticality.
He cited a February policy change tied to Tarifa Social Paulista that affected results, and said Sabesp chose to support BRL 150 million “out of our own pockets.” Piani added that the company collected BRL 15 billion by late December and began major construction, while also changing internal processes to improve working capital and execution.
Investment ramp and universal access plan
Piani said that at the time of privatization, Sabesp referenced a BRL 70 billion plan, but only had project visibility for about 15 months. He said the company geo-referenced needed connections to reach universal access by 2029 and developed a new investment plan that is still being discussed with ARSESP before market communication.
Head of Engineering Roberval Tavares said Sabesp invested BRL 15 billion in 2025—describing it as a historical level—and characterized universal access as the company’s top challenge. He said Sabesp exceeded concession contract goals in 2025 for water and sewage collection in urban, informal, and rural areas, and that treatment expansion was running above target, including progress that pulled forward portions of 2026 goals into 2025.
Tavares outlined several 2025 projects, including expansion of the Parque Novo Mundo treatment facility and a new plant in Perus, which he described as “the only district in São Paulo that had no treatment facilities whatsoever.” He also cited more than 279,000 new connections in informal areas and highlighted progress under the Integra Tietê program, including BRL 17 billion under contract and expansion of sewage treatment capacity from 23 to 42 cubic meters per second.
Hydrology, resilience, and contingency planning
Piani described heightened hydrological risk in the São Paulo metropolitan area and referenced a dry-period crisis last year after a third year of weak rainfall. He said the Cantareira system reached 20.2 and noted that below 20 would trigger federal involvement. He added that reservoir conditions improved earlier this year, citing February as “a very good month.”
Water Operations Director Andre Gois reviewed system changes since the 2014 crisis, describing expanded transfer capacity between water sources and improved flexibility to shift supply between systems. He said Sabesp managed last year’s extended dry season through existing infrastructure, continued resilience works, and pressure reductions mid-year, and presented scenarios indicating that if rainfall aligns with historical averages the system would not reach zero.
Regulatory Department Director Luciane Godinho Domingues said the concession contract provides a structured risk allocation and triggers for extreme weather events, including formal declarations by SP Águas and technical reporting against the Water Safety Index. She said Sabesp has presented long-term and contingency plans to ARSESP and has been executing its contingency plan since August of last year, with weekly coordination meetings involving SP Águas and ARSESP.
Financial and operating shifts: workforce, systems, and funding
Chief Financial Officer Daniel Szlak said the company’s overarching goal is “to keep on growing with discipline, with sustainability.” He described a “before-and-after” shift across people, systems, and operations, including workforce changes and new performance tools. Szlak said headcount moved from about 11,000 to roughly 9,000, with 3,600 employees joining a severance program and 2,000 hires over the same period. He said Sabesp lowered the average employee tenure from 22 years to 14 years and introduced merit-based compensation with fixed pay plus short- and long-term incentives.
Szlak said the company shifted from a cash-based approach to accrual (“competence”), implemented bottom-up budgeting, and worked on liability management to reduce leverage and extend maturities, alongside hedging to reduce exposure to foreign exchange and other risks. He also said Sabesp is investing in infrastructure and cybersecurity and planned to go live with a new SAP S/4HANA system “tomorrow.”
On funding, Szlak said Sabesp raised about BRL 36 billion, with BRL 14 billion in 2026 alone, and described a diversified debt profile across development finance institutions, international capital markets, and the local market. He said the company issued a blue bond linked to a loss-reduction smart metering initiative and cited operating metrics including a 60% EBITDA margin in the first year following privatization and an improvement in return on invested capital versus 2023.
Technology and customer initiatives: smart meters and digital service
Executive Director for Technology Denis Maia detailed Sabesp’s smart metering program, stating the company plans to replace 4.4 million meters and characterized the mandate as larger than prior global benchmark deployments. Maia said Sabesp chose NB-IoT connectivity with embedded modules and eSIMs to reduce failure points and avoid dependence on a dedicated radio network, while designing the program to support a 10-year battery life. He said Vivo won the contract as a single vendor responsible for supplying meters and service levels through 2039, including a 99% connectivity target.
Maia said the scale of the project helped drive down the unit cost of ultrasound meters from about BRL 1,300 to BRL 380, and described expected benefits including remote reading, leak notification, and fraud detection. He said Sabesp increased meter replacement activity, which he linked to BRL 220 million in revenue, and described “Operação Gato Molhado,” reporting 55,000 fraud cases detected, 177 police reports, 27 arrests, and BRL 86 million in additional revenue.
Maia also highlighted improvements in billing and digital channels, stating billed-versus-revenue performance improved from 98.1% in 2024 to 101.7% in 2025, which he said generated BRL 800 million of additional cash. He said digital payments through the app, website, and WhatsApp have expanded, with a run rate he described at about BRL 3 billion and nearly 15% of revenue coming through Sabesp’s own digital channels.
In the Q&A, executives pointed to supplier capacity and labor as key bottlenecks for universal access execution. Piani said the company mapped constraints starting in 2024 and pursued mitigation actions, while Executive Director Gustavo Fehlberg said Sabesp mapped 140 categories of inputs and identified eight as most troublesome, mitigating seven of them. Institutional Relations and Sustainability Director Samanta Souza said Sabesp monitors environmental licensing weekly with agencies and expressed optimism tied to an updated environmental legal framework effective in February, pending state-level implementation.
Management also addressed longer-term considerations, including potential inorganic growth. Piani said Sabesp is evaluating opportunities case-by-case but emphasized that capital allocation must meet return requirements, adding, “If it does not make financial sense, we’re not taking it. We’re not doing it.”
About Companhia de saneamento Basico Do Estado De Sao Paulo – Sabesp (NYSE:SBS)
Companhia de Saneamento Básico do Estado de São Paulo (SABESP) is a Brazilian utility that provides water supply and wastewater collection and treatment services. As the principal sanitation company serving the state of São Paulo, SABESP operates a wide range of infrastructure spanning water capture, treatment plants, distribution networks and sewage systems. The company’s activities support residential, commercial and industrial customers and are focused on delivering potable water, ensuring water quality and expanding access to sanitation services.
SABESP’s service offering includes the operation and maintenance of water treatment and sewage treatment facilities, network expansion and rehabilitation, meter reading and billing, customer service and environmental programs aimed at improving sewage treatment rates and protecting water resources.