César Alierta, Executive Chairman, has stressed the “significant progress” made in Telefónica’s (NYSE:TEF) (LSE:TDE) on-going process of transformation during the second quarter of 2013. A programme which places the company in “a strong position both in terms of business and financial performance” and has allowed Telefónica to take an important step towards “forming a leading operator in Europe’s largest market”. The results of the first six months are in line with internal estimates allowing the company to reaffirm annual operating and financial targets.
- Telefónica Group’s revenue returned to growth in organic terms for the first time since the first quarter of 2012. Revenues increased 0.5% year-on-year during the second quarter of 2013 driven by a strong acceleration in Latin America, which grew by double-digits in the same period (+10.4% yoy in organic terms), and improving trends in Europe. As a result, between January and June, Telefónica’s revenue totalled 28,563 million euros and remained virtually stable in organic terms (-0.5%).
- For the third consecutive quarter, and as a result of the solid execution of the transformation strategy implemented over the last year as well as appropriate cost saving and efficiency boosting measures, OIBDA and OIBDA margin remained virtually stable in organic terms. At the end of June, OIBDA reached 9,421 million euros (-0.4%) and the company maintained high levels of profitability with an OIBDA margin of 33%.
- In reported terms, the evolution of the aforementioned items were particularly affected by exchange rate fluctuations, mostly by devaluation in Venezuela and depreciation of the Brazilian real and the Argentinian peso, which subtracted more than five percentage points from revenue and OIBDA performance.
- Latin America accounts for 51.4% of the group's consolidated revenue with all of the countries in the region making a positive contribution to this item in the second quarter of the year.
- Including the disposals of 40% in Central America, 100% in Ireland and Inversis, carried out after closing the second quarter, Telefonica´s net debt totals 48,614 million euros. This represents a leverage ratio of 2.36 times net debt over OIBDA and places the Group’s net debt very near its objective of <47,000 million euros in 2013. To add to this significant progress in financial flexibility the cash flow generation reached over 1,900 million euros in the second quarter of the year.
- Telefónica’s financing activity amounted to approximately 7,800 million euros in the first quarter of the year. Therefore, as of June 30th the Company maintains a debt maturity profile that thanks to its liquidity position is covered for the next 2 years.
- At the end of June, the Telefónica Group’s customer base reached 317.3 million accesses (+2%) out of which more than 78% are mobile accesses (249.5 million). The second quarter saw 2.1 million net mobile contract customer additions resulting in mobile contract customers already amounting to 85 million (+8.1%). Noteworthy is the considerable increase in smartphones, with a record net gain in the quarter of 8.2 million or three-times the figure for the first quarter of the year. Smartphones already reached a penetration rate of 24% of mobile accesses.
- Telefónica Group continues to progress, via its Telefónica Digital and Telefónica Global Resources units, on its transformation process towards becoming a Digital Telco with a completely global business model. The launch of the first handsets running Firefox in Spain and their arrival in Colombia and Venezuela, expected during this quarter, is further evidence of the continuing success of this programme.
- In Spain, Telefónica continues to successfully execute the transformation needed to improve its competitive positioning and business parameters. In this respect, at the end of June, Movistar Fusión reached 2.2 million customers and is fostering new customer acquisition and the incorporation of new services, which already account for 56% of the gross additions for the quarter. At the same time, the performance of total revenue is improving (excluding handset sales) and Spain is continuing to show profitability levels which are a benchmark in the sector, with OIBDA margin growth of four percentage points at the end of June.
- Brazil improved revenue trends during the second quarter (+3.1% and +4.8% excluding regulatory impacts) and strengthened its position in the higher value segments with contract accesses growing 20% yoy in the semester. In this regard, particularly noteworthy was the 58% share of net contract additions achieved by the Company in the second quarter which also saw a strong acceleration in net fixed broadband additions.
- Between January and June 2013, the company invested 3,903 million euros, including 834 million euros for purchasing spectrum in the United Kingdom, Uruguay, Spain and Brazil. 84% of the total investment effort was allocated to growth and transformation activities.
Telefónica presented its results for the first quarter of the year today. During this period, the company´s net profit was 2,056 million euros, virtually unchanged versus the same period the previous year (-0.9%). During the second quarter of 2013, Telefónica made significant progress in the transformation process that the company is implementing. The return to organic revenue growth in the quarter, the stabilisation of high levels of profitability, and the significant progress made in financial flexibility (net debt reduced by 10 billion euros since June 2012) demonstrate that the transformation programme is starting to have a reflection in the improved evolution of both operating and financial variables.
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