TIDMTDE
RNS Number : 8462F
Telefonica SA
31 October 2018
FINANCIAL HIGHLIGHTS
-- Improved growth trends.
(R) Focus on value: LTE (+25% y-o-y; quarterly net adds of
+4.9m), "smartphones" (+7%; +2.9m), FTTx and cable (+21%; +550k),
mobile contract (+7%; +1.9m), Pay TV (+6%; +109k).
(R) Third quarter revenues, EUR11,699m (-8.3% y-o-y),
accelerated their organic growth to +2.7% y-o-y.
(R) OIBDA, EUR4,038m (-1.4% vs. July-September 2017), increased
by 4.1% y-o-y in organic terms and OIBDA margin expanded by 0.4
p.p. (+2.4 p.p. reported). Reported OIBDA reflects the following
impacts in the quarter:
(R) an additional favourable court ruling (EUR307m) and contingencies in T. Brasil (-EUR110m).
(R) hyperinflation adjustment in Argentina (-EUR123m).
(R) restructuring costs (-EUR34m), capital gains from the sale
of towers (EUR24m) and digital companies (EUR21m), and the adoption
of IFRS 15 accounting standard (EUR15m).
(R) In the quarter, net income reached EUR1,139m, +35.8% growth
y-o-y (EUR0.21 per share; +39.8%).
-- Capacity optimisation for a sustainable digital future.
(R) 49.0m premises passed with proprietary FTTx/Cable (+15%
y-o-y) and 75% LTE coverage (+6 p.p.).
(R) Continued evolution towards smart networks and advanced position in Digitalisation.
-- Sustained deleveraging process.
(R) Free cash flow (EUR2,957m in January-September 2018) grew 0.9% y-o-y excluding spectrum.
(R) Net debt (EUR42,636m at September; -9.7% y-o-y) decreased
for the sixth consecutive quarter (-EUR957m).
-- The Company upgrades guidance and reiterates the dividend announced for 2018.
(R) Revenue guidance upgraded to growing around 2% (vs. around
1% previously), despite the negative impact from regulation
(approximately 0.9 p.p.).
(R) OIBDA margin guidance (y-o-y expansion of around 0.5 p.p.)
and CapEx/Sales excluding spectrum (around 15%) reiterated.
-- T. España; best commercial activity in at least 10 years,
focused on high-value customers. Net adds; +81k in Fusión, +370k
mobile contract; +79k broadband, +306k fibre (+155k retail and
+151k wholesale) and +101k in Pay TV. Revenues remained stable
(+0.1%) and OIBDA margin stood at 40.5% despite the outstanding
commercial success.
-- T. Brasil; solid OIBDA growth in the quarter (+5.5% in
organic terms), OIBDA margin expansion for the seventh consecutive
quarter (+2.3 p.p.), new record in fibre connections and 980k in
contract net adds.
-- T. Deutschland; strong momentum following "O2 Free" portfolio
update. Mobile service revenues ex-regulation remained stable and
OIBDA margin increased 0.3 p.p. y-o-y in organic terms in the
quarter.
-- T. UK; continued growth acceleration in revenues (+7.9% y-o-y
in organic terms) and OIBDA (+9.8%), while OIBDA margin expanded by
0.5 p.p., maintaining a market leading contract churn.
-- T. Hispam Sur maintained solid growth in revenues and OIBDA
in the quarter (+11.2% and +5.4% y-on-y in organic terms
respectively), with positive contract net adds for the fourth
consecutive quarter.
-- T. Hispam Norte; the strong commercial activity in value
customers enabled a return to growth in revenues (+0.4% y-o-y in
organic terms) and OIBDA stability, excluding regulation
(-0.6%).
Comments from José María Álvarez-Pallete, Executive
Chairman:
"Third quarter results reflect the solid execution of our
strategic priorities. To begin with, both high-value customers and
their average revenue continued increasing, with a strong level of
net additions in mobile contract (including the best figure for
Spain over the last ten years), LTE, fibre and Pay TV. More and
higher-value customers, coupled with stable churn rates, translates
into higher business sustainability. If we add to that the wider
coverage of our high-speed networks, the efficiencies we are
already achieving in digitalisation and simplification, and the
launch of Movistar Home via AURA, among others, we are further
strengthening our future positioning.
Additionally, revenues and operating cash flow accelerated their
organic annual growth, free cash flow reached 3 billion euros, up
0.9% versus the previous year excluding spectrum, and net debt
decreased for the sixth straight quarter.
Improved growth trends, robust and solid business third quarter
and our good operating positioning in key markets allow us to
upgrade our revenue growth guidance set for 2018."
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
Jan-Sept % Chg Jan-Sep* July-Sept % Chg Jul-Sep*
2018 Reported Organic 2018 (IAS 2018 Reported Organic 2018 (IAS
18) 18)
Revenues 35,776 (7.9) 2.2 35,826 11,699 (8.3) 2.7 11,722
Telefónica
España 9,453 0.5 0.5 9,457 3,188 0.1 0.1 3,188
Telefónica
Deutschland 5,355 (0.7) (1.0) 5,337 1,830 (1.1) (1.5) 1,823
Telefónica
UK 4,945 2.8 5.5 5,006 1,721 7.4 7.9 1,737
Telefónica
Brasil 7,572 (17.0) 0.2 7,567 2,345 (20.1) (1.0) 2,348
Telefónica
Hispam Sur (1) 4,689 (23.8) 9.1 4,698 1,315 (32.3) 11.2 1,326
Telefónica
Hispam Norte
(2)(3) 3,038 (6.5) (0.7) 3,041 1,041 0.3 0.4 1,042
Other companies
& eliminations 725 2.5 8.4 721 259 27.3 25.6 258
Telxius 597 9.1 13.6 592 231 30.6 33.6 230
-------------------
OIBDA 12,035 (2.0) 3.8 11,999 4,038 (1.4) 4.1 4,024
Telefónica
España 3,797 1.8 (0.2) 3,800 1,290 (1.2) (1.3) 1,290
Telefónica
Deutschland 1,352 2.6 0.2 1,325 470 2.9 (0.5) 461
Telefónica
UK 1,343 6.5 8.1 1,345 464 12.6 9.8 455
Telefónica
Brasil 3,332 5.4 5.7 3,317 1,075 5.0 5.5 1,072
Telefónica
Hispam Sur (1) 1,236 (29.3) 8.4 1,237 311 (45.1) 5.4 317
Telefónica
Hispam Norte
(2)(3) 748 (19.5) (6.1) 751 314 (0.6) (8.0) 316
Other companies
& eliminations 227 85.1 100.1 223 114 n.m. n.m. 113
Telxius 280 6.9 11.5 276 107 29.1 30.9 105
-------------------
2.0 0.5 2.4 0.4
OIBDA margin 33.6% p.p. p.p. 34.5% p.p. p.p.
Telefónica 0.5 (0.3 (0.5 (0.6
España 40.2% p.p. p.p.) 40.5% p.p.) p.p.)
Telefónica 0.8 0.3 1.0 0.3
Deutschland 25.2% p.p. p.p. 25.7% p.p. p.p.
Telefónica 0.9 0.6 1.2 0.5
UK 27.2% p.p. p.p. 26.9% p.p. p.p.
Telefónica 9.4 1.9 10.9 2.3
Brasil 44.0% p.p. p.p. 45.9% p.p. p.p.
Telefónica (2.1 (0.2 (5.5 (1.5
Hispam Sur (1) 26.4% p.p.) p.p.) 23.7% p.p.) p.p.)
Telefónica
Hispam Norte (4.0 (1.5 (0.3 (2.6
(2)(3) 24.6% p.p.) p.p.) 30.2% p.p.) p.p.)
Other companies 4.9 7.0
& eliminations 31.3% n.m. p.p. 43.9% n.m. p.p.
(0.9 (0.9 (0.5 (0.9
Telxius 46.8% p.p.) p.p.) 46.0% p.p.) p.p.)
Operating Income
(OI) 5,454 6.0 11.1 1,926 8.6 12.6
Net income
attributable
to equity holders
of the Parent 2,721 11.6 1,139 35.8
Basic and diluted
earnings per
share (euros) 0.46 6.1 0.21 39.8
CapEx 5,680 (4.7) 5.0 1,795 (26.9) 4.2
Telefónica
España 1,157 5.4 4.8 379 (3.4) (5.2)
Telefónica
Deutschland 740 7.5 7.6 316 24.5 24.5
Telefónica
UK 1,202 99.1 3.0 215 26.7 25.0
Telefónica
Brasil 1,422 (6.0) 14.0 530 (11.3) 9.4
Telefónica
Hispam Sur (1) 685 (26.9) 10.8 178 (39.1) 18.0
Telefónica
Hispam Norte
(2)(3) 297 (67.5) (30.5) 133 (79.2) (21.6)
Other companies
& eliminations 178 (13.8) (9.5) 45 (59.8) (62.1)
Telxius 132 (2.7) 4.6 34 (56.7) (58.3)
-------------------
Spectrum 612 21.9 26.5 19 (96.3) (92.5)
Telefónica
España 7 - - 7 - -
Telefónica - - - - - -
Deutschland
Telefónica 588 - - - - -
UK
Telefónica - - - - - -
Brasil
Telefónica
Hispam Sur (1) 17 (40.6) 41.6 11 (59.3) 7.0
Telefónica - - - - - -
Hispam Norte
(2)(3)
OpCF (OIBDA-CapEx) 6,354 0.7 2.9 2,243 36.8 4.0
Telefónica
España 2,641 0.2 (2.2) 911 (0.3) 0.4
Telefónica
Deutschland 612 (2.8) (7.3) 154 (24.0) (28.8)
Telefónica
UK 141 (78.5) 12.8 249 2.8 (0.9)
Telefónica
Brasil 1,910 15.8 (1.9) 545 27.8 0.2
Telefónica
Hispam Sur (1) 551 (32.1) 5.7 133 (51.6) (5.5)
Telefónica
Hispam Norte
(2)(3) 451 n.m. 16.8 181 c.s. 8.4
Other companies
& eliminations 48 c.s. c.s. 69 c.s. c.s.
Telxius 148 17.3 18.9 72 n.m. n.m.
------------------- --------- --------- -------- ---------- --------- --------
- Reconciliation included in the excel spreadsheets.
Notes:
- January-September and July-September 2018 results reported under accounting
standards IFRS 15 & 9, effective since January 2018.
(*) For comparative purpose only, January-September 2018 results reported
under prior accounting IAS 18.
- OIBDA and OI are presented before brand fees and management fees.
(1) Telefónica Hispam Sur includes Argentina, Chile, Peru and Uruguay
(2) Telefónica Hispam Norte includes Colombia, Mexico, Venezuela,
Central America and Ecuador.
(3) Following the pre-payment of the debt derived from the operating
agreement with PARAPAT in Colombia and after taking over its subsidiaries
Telebucaramanga, Metrotel and Optecom, the consolidated results are included
in the fixed business of T. Colombia from 1 October 2017. For organic
comparative purposes, the results of these subsidiaries are included since
1 January 2017.
- Organic growth: Assumes average constant foreign exchange rates of 2017,
except for Venezuela (2017 and 2018 results converted at the closing synthetic
exchange rate for each period) and excludes in 2018 the hyperinflation
adjustment in Argentina. Considers constant perimeter of consolidation.
Excludes the effects of the accounting change to IFRS 15 in 2018, write-downs,
capital gains/losses from the sale of companies, tower sales, restructuring
costs and material non-recurring impacts. CapEx excludes spectrum investments.
DISCLAIMER
This document may contain forward-looking statements and
information (hereinafter, the "Statements") relating to the
Telefónica Group (hereinafter, the "Company" or "Telefónica") or
otherwise. These Statements may include financial forecasts and
estimates based on assumptions or statements regarding plans,
objectives and expectations that make reference to different
matters, such as the customer base and its evolution, growth of the
different business lines and of the global business, market share,
possible acquisitions, divestitures or other transactions,
Company's results and other aspects related to the activity and
situation of the Company.
The Statements can be identified, in certain cases, through the
use of words such as "forecast", "expectation", "anticipation",
"aspiration", "purpose", "belief" or similar expressions or
variations of such expressions. These Statements reflect the
current views of Telefónica with respect to future events, do not
represent, by their own nature, any guarantee of future fulfilment,
and are subject to risks and uncertainties that could cause the
final developments and results to materially differ from those
expressed or implied by such Statements. These risks and
uncertainties include those identified in the documents containing
more comprehensive information filed by Telefónica before the
different supervisory authorities of the securities markets in
which its shares are listed and, in particular, the Spanish
National Securities Market Commission.
Except as required by applicable law, Telefónica does not assume
any obligation to publicly update the Statements to adapt them to
events or circumstances taking place after the date hereof,
including changes in the Company's business, in its business
development strategy or any other unexpected circumstance.
This document may contain summarized, non-audited or non-GAAP
financial information. The information contained herein should
therefore be considered as a whole and in conjunction with all the
public information regarding the Company available, including, if
any, other documents released by the Company that may contain more
detailed information.
In October 2015, the European Securities Markets Authority
(ESMA) published guidelines on Alternative Performance Measures
(APM), applicable to regulated information published from July 3,
2016. Information related to APM used in the present document are
included in the Appendix "Alternative performance measures", page
46 of this document. Moreover, recipients of this document are
invited to read our condensed consolidated interim financial
statements and consolidated interim management report for the
six-month period ended Jun 30, 2018 submitted to the Spanish
National Securities Market Commission (CNMV), in Note 2, page 13,
of the pdf filed.
Neither this document nor any of its contents constitute an
offer to purchase, sale or exchange any security, a solicitation of
any offer to purchase, sale or exchange any security, or a
recommendation or advice regarding any security.
For further information please refer to the information on 2018
third quarter financial results filed by the Company and also
available on the Company's website: www.telefonica.com
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END
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