Telefónica (NYSE:TEF) (LSE:TDE):
Financial Highlights
- Revenues
amounted to €13,132M (+5% year on year; +1.5% in organic terms),
driven by service revenues (+1.7% organic growth). Mobile data
revenues services was particularly notable, maintaining its
double-digit growth.
- OIBDA
reached €4,021M (+4.8% year on year; +1.3% in organic terms) and
the margin remained stable.
- Free cash
flow totalled €599M in the quarter, and improved by €530M
versus January-March of 2016.
- Net income
reached €779M (+42.2% vs 1Q16) and earnings
per share stood at €0.14 (+48.8%).
- Improved quality of the customer base
reflects in LTE customers (1,7x year-on-year), in the number of
smartphones (+18%) and in the growth in FTTx and cable (+21%).
Total customer base stands at 347 million accesses.
José María Álvarez-Pallete, Executive Chairman of
Telefónica:
“First quarter results reflected a further step forward in our
business model, which is focused on the pursuit of sustainable
growth. The differential quality of our asset portfolio enables us
to offer differential services, which translated into improvements
in our results; in particular: i) the growth in main financial
metrics, including the positive impact of foreign exchange rates in
the quarter; ii) the savings obtained from synergy capture and
process simplification; and iii) the strengthening of our balance
sheet and the strong free cash flow growth, 9x higher vs.
January-March 2016. In addition, we have announced the launch of
AURA, a new, more innate and simple customer relationship model, a
pioneer in the area of cognitive intelligence. At the same time,
the results are aligned with our expectations and allow us to
reiterate the guidance set for 2017”.
Financial Results – January-March 2017
Telefónica presented today its results for the first quarter of
the year, which show growth in main financial and operational
metrics and a positive impact of exchange rates. With regard to
revenues for the quarter, the figure stands at 13,132 million
euros, a 5% increase year on year.
In organic terms, revenue has grown by 1.5%, driven by service
revenues (+1.7%). Mobile data revenues maintained double-digit
y-o-y growth (+13.5% in organic terms).
OIBDA amounted to 4,021 million euros between January and
March 2017, which was 4.8% y-o-y (+1,3% in organic terms). This
positive result reflects a positive revenue evolution, cost
containment efforts, and synergy capture and efficiencies from the
transformation process. The OIBDA margin stands at 30.6%, remaining
stable versus previous year.
Net income reached 779 million euros in the first quarter,
which represented a year-on-year increase of 42.2%, and earnings
per share stood at €0.14 (+48.8%).
The company remains committed to the Company’s
transformation with major progress made in the quarter, both in
infrastructure and LTE coverage. Regarding infrastructure, at the
end of the first quarter, Telefónica achieved nearly 40 million
premises passed with FTTX and cable (+14% vs 1Q16), of which 17.4
million are in Brazil (FTTH and cable) and 17.5 million in Spain
(FTTH). Moreover, LTE coverage increased by 64%, of which 88% is in
Europe. In addition, in February, Telefónica introduced a new
customer relationship model based on cognitive intelligence, which
was a pioneer in the industry.
In this context, the focus of CapEX for the first quarter
of 2017 was once again on the deployment of ultra-fast networks and
amounted to 1,621 million euros during the period, which was 4.4%
less than in the same period of 2016, reflecting integration
synergies, consolidation and network optimisation. Operating
cash flow (OIBDA-CAPEX), stood at 2,400 million euros
(+12%).
Free cash flow reached 599 million euros in the first three
months of the year, which was a year-on-year increase of 530
million euros, despite working capital seasonality. The effective
cost of interest payments in the past 12 months stood at 3.48% to
March, which was 128 b.p. lower than the first quarter of
2016.
Net financial debt at the end of the quarter stood at
48,766 million euros, 171 million euros higher compared to December
2016, which is the smallest debt increase in a first quarter of the
last three years, despite the seasonal peculiarities of the period.
In this regard, Telefónica’s financing activity amounted to
approximately €6,106m equivalent and focused on strengthening the
liquidity position, refinancing and extending debt maturities, in
an environment of very low rates. Therefore, at the end of March,
the company maintained a comfortable liquidity position, with gross
debt maturities covered beyond the next 24 month. The average debt
life, including the operations carried out since the end of the
first quarter, is 8.29 years.
The customer base amounted to 347 million accesses, which
remained stable year on year, and reflects its improved quality,
boosting the average revenue per user (+2.1% organic year-on-year
growth) and maintaining low levels of churn. The weight of
higher-value services continued to increase, as shown by the better
numbers of LTE customers (1,7 times), mobile contract accesses
(+5%), smartphones (+18%) and FTTx and cable customers (+21%).
The Company reiterates its guidance and dividend announced for
2017.
Results by geographies:(y-o-y changes in organic
terms)
Spain. Telefónica España's results continued to reflect
the strategy focused on increasing customer value, which resulted
in the growing penetration of high-value services. However, the
y-o-y changes in the first quarter were affected by the different
phasing of tariffs and promotion upgrades. Revenues in
January-March came to €3,066m and decreased 2.6% both due to lower
service revenues (-1.5%) and lower handset sales (-29.9%).
OIBDA, excluding an additional restructuring provision of €76M,
totalled €1,219m in the quarter, decreasing 2.4% y-o-y; and OIBDA
margin grew 0.1 p.p. y-o-y to 39.8%. CapEx in January-March stood
at €333m, and operating cash flow grew solidly by 8.3% to
€886m.
Germany. Telefónica Deutschland maintained solid
operational momentum in the first quarter of 2017, leveraging a
continued strong performance of partners while the competitive
environment showed further signs of improvement across segments.
The Company also benefited from continued successful execution on
the integration milestones. Results were in line with the full-year
outlook, reflecting significant regulatory impacts (the reduction
in mobile termination rates since December 2016 and the glidepath
of the European roaming legislation) that weighed both on revenue
and OIBDA performance.
In the first quarter, revenues reached €1,771m (-4.7% y-o-y,
improving vs. -6.0% in the fourth quarter of 2016). OIBDA totaled
€400m in the quarter and grew 1.4% y-o-y, despite the negative
effect from the above mentioned regulatory changes, and reflected
incremental synergies totaling €35m more (vs. €55m in the first
quarter of 2016), as well as investments in “O2 Free” positioning.
The OIBDA margin was 22.6%, up 1.4 p.p. y-o-y.
CapEx benefited from savings related with network consolidation
and the rollout of a single LTE network and fell 4.2% y-o-y to
€208m in the quarter. Operating cash flow (OIBDA-CapEx) totaled
€192m; up 7.7% y-o-y.
United Kingdom. In the first quarter of 2017 Telefónica
UK continued to reinforce its position as a leading mobile operator
in the UK with increasing users on its network and y-o-y growth in
both revenues and OIBDA, underpinned by increasing ARPU and leading
levels of loyalty.
Revenues in the first quarter totalled €1,601m and grew 2.1%
y-o-y (+2.4% in the fourth quarter 2016). OIBDA grew 0.6% y-o-y to
€416m in the quarter, driven by continuing revenue growth, and
OIBDA margin stood at 26.0%, slightly decreasing y-o-y (-0.4
p.p.).
CapEx amounted to €225m in January-March, an increase of 30.8%
y-o-y, principally dedicated to furthering the LTE rollout. Thus,
operating cash flow (OIBDA-CapEx) totalled €191m in the quarter
(-21.0% y-o-y).
Brazil. In the first quarter of 2017, Telefónica Brasil
recorded an acceleration in revenues mainly driven by the positive
performance of mobile service revenues that, together with the
reduction in operating expenses (synergies and efficiency
measures), enabled it to maintain the solid y-o-y expansion of
margins and the strong growth of operating cash flow. Revenues in
the first quarter totalled €3,165m and increased by 1.6% y-o-y,
underpinned by ARPU growth across the main services. OIBDA totalled
€1,104m and increased by 7.5% y-o-y, while the OIBDA margin
increased to 34.9% (+1.9 p.p. y-o-y). Over the three first months
of the year, the company generated synergies of €107m, €46m of
which had a positive impact on revenues from cross-selling and €61m
in expenses from renegotiations with suppliers and lower commercial
and personnel expenses.
CapEx in this quarter (€397m) was mainly dedicated to expansion
of the 4G network, the IP backbone and expansion of the fibre
network, reflecting optimisation thanks to the use of big data and
synergies. As such, operating cash flow (OIBDA-CapEx) totalled
€707m in the quarter and maintained solid growth (+21.6%).
Hispanoamérica. Telefónica Hispanoamérica recorded a
solid set of financial results in the first quarter of the year,
which was reflected in the positive y-o-y performance in revenues
and OIBDA, thanks to the strategic focus on capturing value that
translated into a strong increase in the average revenue per user
(+9.3% y-o-y).
Revenues in the first quarter increased to €3,285m and grew by
9.2%. OIBDA in the first three months increased to €904m and
increased 6.2% y-o-y, while the OIBDA margin stood at 27.5% (-0.8
p.p. y-o-y). The CapEx totalled €430m and decreased 9.0% y-o-y, and
was mainly allocated to the rollout of 4G and fibre networks and to
improve and increase the capacity of 2G and 3G mobile networks.
Thus, the operating cash flow (OIBDA-CapEx) rose to €474m, with
y-o-y growth of 23.6%.
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version on businesswire.com: http://www.businesswire.com/news/home/20170510006810/en/
TelefónicaFiona Maharg, Tel:
+34.91.482.38.00prensatelefonica@telefonica.com
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