Comparative Analysis of Brazilian Telecommunications Enterprise Valuation Using Discounted Cash Flow and Monte Carlo Simulation

The purpose of the article is to analyze whether embedding Monte Carlo simulation in a conventional Discounted Cash‑Flow (DCF) model produces a more risk‑aware valuation of a Brazilian telecommunications enterprise. The article describes a hybrid valuation technique that overlays a stochastic engine based on triangular probability distributions for revenue growth, Earnings Before Interest and Taxes (EBIT) margin and cash‑flow conversion onto the deterministic DCF, enabling analysts to generate a full probability spectrum instead of a single point estimate. Using a spreadsheet/Python implementation that runs 10 000 random scenarios, the authors compare the traditional baseline valuation with the simulated distribution and obtain three key results: (i) the deterministic model indicated a 71 % upside, while the mean simulated fair value suggests a more modest 41 % appreciation; (ii) the Monte Carlo overlay uncovers a 11 % probability of the share being worth less than the recent 12‑month low; and (iii) value‑at‑risk metrics and purchase/stop‑loss zones become observable. As an example, we illustrate the proposed technique on a mid‑cap Brazilian telecom operator. Our approach lowers upside bias by 17.7 % and quantifies downside risk, thereby improving decision‑relevant indicators. The new effectiveness evaluation is confirmed by the consistency of the simulated distribution with historical market prices. New research results enrich valuation practice and can be used by both retail and professional investors who rely only on publicly available data and open‑source tools. This paper is novel because it bridges qualitative and quantitative paradigms, showing how a lightweight Monte Carlo layer can materially enhance DCF‑based equity appraisal in emerging markets. Keywords: Valuation; Discounted Cash Flow (DCF); Monte Carlo Simulation (MCS); Stock Market; Value Investing.