Telefónica’s Net Profit Up 2% To 1,656 Million Euros In 1Q10

In the first quarter Telefónica focused on capturing growth in all markets with intense commercial activity. This triggered an acceleration of Group revenue performance (+1,7% year on year, vs -2,1% for FY2009) and net adds of 8.6 million accesses in the first quarter. Both trends lay the foundations to continue growing in the coming months

• Value customers : The Company now has nearly 273 million accesses worldwide (+4.6% year-on-year). Of its 206 million wireless customers, 30% are contract holders (+12%); while broadband accesses now total over 35 million with year-on-year growth of 25.2% (fixed) and 97.5% (mobile)
• Growth : Quarterly revenue totals 13,932 million euros. While this line was significantly higher in Europe (+7.4%) and Latin America (+4.2%), Spain consolidates its trends of progressive improvement on a like-for-like basis
• Profitability: Telefónica maintains high levels of operating profit and cash generation although these were affected by commercial activities and non re-current effects in the quarter. OIBDA totalled 5,114 million euros (-4.1%), the OIBDA margin was 36.7%, and operating cash flow (OIBDA-CapEx) amounted to 3,923 million euros
• Diversification : Nearly two thirds of Group revenue and 58.1% of OIBDA were generated outside Spain while the contribution from Latin America (1,577 million euros) and Europe (583 million euros) to operating cash flow increased
• Financial strength: The ratio of debt + commitments to OIBDA stands at 2.3 times. The company has sufficient cash to meet its debt obligations for 2010 and its financial activity this quarter was aimed at pre-financing part of its 2011 debt maturities
• CapEx commitment: A total of 1,191 million euros in the quarter dedicated to transformation and growth projects (fixed and mobile broadband)
• Regions: Commercial activity in Spain yielded 247,000 new customers in the first quarter. Latin America obtained 3.7 million new accesses (three times the prior year figure) and cemented its status as the largest contributor to Group revenues in terms of organic growth (2.1pp). The UK and Germany led the way in terms of revenue growth in Europe (+5.4% in organic terms and excluding regulatory effects), where over half a million new wireless customers were added in the quarter

The results for the first quarter of the year reflect the strategic priorities established by the Company for 2010, which are focused on capturing the growth opportunities in its markets to boost revenue, reinvesting efficiency gains to foster revenue expansion, while maintaining high profitability and strong cash flow generation.