26 Feb 2010 09:08
TELEFÓNICA GROUP
Financial Highlights
·; Telefónica recorded solid results in 2009, meeting all its financial targets for the seventh consecutive year despite the challenging economic and operating environment, reflecting the value of its highly diversified business portfolio.
Under the criteria used to establish 20091 guidance:
o Revenues advanced 0.3%, in line with the Company's positive growth forecast;
o OIBDA increased by 1.1%, within the announced range of 1%-3%;
o CapEx totalled 7,459 million euros vs. a target of less than 7,500 million euros;
o Operating Cash Flow (OIBDA-CapEx) increased by 8.4%, in line with the range of 8%-11%.
·; The Company's strategy allowed it to strengthen the bases for future growth while sustaining an outstanding operating efficiency. This is reflected in Telefónica's OIBDA margin and its high cash flow generation. As a result, there was acceleration from revenues to operating cash flow in year-on-year organic2 growth rates.
o Total accesses increased by 5.1%3, to around 265 million, with sharp rises in mobile3 (+7.4%), fixed broadband (+8.2%) and pay TV (+9.8%) accesses. Mobile broadband accesses also registered significant growth, topping 15 million at the end of December (vs. 9 million accesses in 2008).
o There was a ramp-up in commercial activity across all areas of operation in the fourth quarter, with mobile net adds3,4exceeding 6.8 million (around 15.0 million in the full year).
o Revenues reached 56,731 million euros (+0.2% in organic2 terms) while OIBDA advanced 0.9% year-on-year in organic2terms to 22,603 million euros.
o The OIBDA margin stood at 39.8%, a 0.3 percentage points year-on-year improvement in organic2 terms.
o Operating cash flow (OIBDA-CapEx) totalled 15,346 million euros, representing solid year-on-year growth of 8.0% in organic2 terms thanks to the 1.4 percentage points improvement in the efficiency ratio5 versus 2008, to 74.1%.
·; Telefónica España consolidated its leadership position, built the foundations for future growth and maintained a substantial cash flow generation against a challenging economic backdrop:
o Noteworthy is the slowdown in the pace of year-on-year revenue decline for the second consecutive quarter, both at the wireline and wireless businesses. In the fourth quarter this improvement stood at 2.1 percentage points versus the third quarter on comparable6 basis.
o The Company remains a sector benchmark for efficiency with an OIBDA margin of 48.0% in 2009 on comparable basis6.
·; Telefónica Latinoamérica delivered a solid operating and financial performance in a region with significant growth potential:
o The number of accesses managed in the region advanced by 6.5% to close to 169 million, and commercial activity increased sharply in the fourth quarter, which saw the first positive year-on-year growth in net adds in 2009.
o Particularly noteworthy is the acceleration in year-on-year organic growth7 from revenues (+5.3%) to operating cash flow (OIBDA-CapEx +29.8%), being Mexico the main contributor to operating cash flow growth in 2009.
·; Telefónica Europa's 2009 results reflect the benefits of its increased business diversification and ongoing efficiency improvements:
o Telefónica Europa strengthened its competitive position in its main markets, outperforming market revenue growth.
o Revenue growth, excluding the impact of mobile termination rates cuts and foreign exchange rates, improved on a sequential basis, underpinned by the increase in wireless accesses (+6.9% year-on-year); operating cash flow jumped 21.7% year-on-year in organic8 terms.
·; Net income reached 7,776 million euros in 2009 and earnings per share amounted to 1.71 euros, up 2.4% and 4.5% year-on-year in reported terms, respectively.
·; The ratio of net debt + commitments to OIBDA stood at 2.1 times in 2009, reflecting the Company's financial strength.
·; The Company announces its guidance9 for 2010, which reflect a strategy focused on capturing the growth in its markets while maintaining high cash flow generation. Telefónica forecasts:
o Consolidated year-on-year revenue growth in the range of +1%/+4%;
o Consolidated year-on-year OIBDA growth in the range of +1%/+3%;
o CapEx in the range of 7,450/7,650 million euros.
·; 2009 bases9 for financial targets:
o Consolidated revenues:56,407 million euros
o Consolidated OIBDA: 22,344 million euros
o Consolidate CapEx: 7,262 million euros
·; The Company also reiterates its 2010 EPS10 target of 2.10 euros and its medium-term guidance.
·; Telefónica confirms its dividend targets through 2012 (1.15 euros per share in 2009, 1.40 euros per share11 in 2010 and a minimum of 1.75 euros per share11 in 2012).
Note 1: Base guidance 2009: 2008 adjusted figures for guidance excludes Sogecable capital gain (143 million euros) and the application of provisions made in T. Europe in respect of potential contingencies deriving from the past disposal of shareholdings, one these risks had dissipated or had not materialized (174 million euros), includes 9 months of consolidation of Telemig in T. Latam. 2009 figures for guidance assume 2008 constant FX (average FX in 2008) and exclude the impact of the hyperinflationary accounting in Venezuela. In terms of guidance calculation, OIBDA exclude capital gains and losses from sale of companies and write-offs. Group CapEx excludes Real Estate Efficiency Program of T. España and spectrum licenses.
Note 2: Organic growth rates: Assuming constant exchange rates, excluding the impact of the hyperinflationary accounting in Venezuela, and including the consolidation of Telemig in January-March 2008. OIBDA and OI exclude the impacts of the capital gains from the sale of Airwave and Sogecable, registered in 2008, and the impact of the capital gains from the disposal of Medi Telecom in the fourth quarter of 2009.
Note 3: Accesses growth criteria: Excluding Medi Telecom's customers from the 2008 and 2009 bases, after its disposal in the fourth quarter of 2009.
Note 4: Net adds calculation criteria: For comparison purposes, net customer additions exclude the disconnection of inactive customers in December 2008 and December 2009.
Note 5: Efficiency ratio definition: Last twelve months (OpEx+CapEx-Internal expenses capitalized in fixed assets)/Revenues. CapEx excludes the acquisition of spectrum and Efficiency Program at T. España.
Note 6: Comparable basis in T. España: Exclude the following effects: Universal Service Obligation: 183 million euros in revenues and 51 million euros in OIBDA in the third quarter of 2008, 75 million euros in revenues and 22 million euros in OIBDA in the first quarter of 2009 and 148 million euros in revenues and 47 million euros in OIBDA in the fourth quarter of 2009; bad debt recovery: 25 million euros in OIBDA in the first quarter of 2008; real estate capital gains: 6 million euros in OIBDA in 2009 and 74 million euros in 2008; revision of the estimates for the adjustment to workforce provision provided for in prior periods, which has resulted in lower expenses of 90 million euros in the second quarter of 2009; sale of application rights: 48 million euros in revenues and OIBDA in the third quarter of 2009; and 220 million euros in OIBDA from capital gains on the disposal of Medi Telecom in the fourth quarter of 2009.
Note 7: Organic growth in T. Latinoamerica: Assuming constant exchange rates, excluding the impact of the hyperinflationary accounting in Venezuela, and including the consolidation of Telemig in January-March 2008.
Note 8: Organic growth in T. Europe: Assuming constant exchange rates and excluding the impacts of the capital gains from the sale of Airwave.
Note 9: Base guidance 2010: 2009 adjusted figures for guidance exclude Telyco Morocco results in T. España, Medi Telecom capital gain and write-offs. 2010 guidance assumes constant exchange rates as of 2009 (average FX in 2009) and excludes hyperinflationary accounting in Venezuela in both years. It also includes 10 months of consolidation of Hansenet and Jajah in T. Europe. In terms of guidance calculation, OIBDA excludes capital gains and losses from sale of companies and write-offs. Group CapEx excludes Real Estate Efficiency Program of T. España and spectrum licenses.
Note 10: Earnings per share criteria: Reported EPS.
Note 11: Dividend's considerations: Targeted under current guidance hypothesis.
| TELEFÓNICA GROUP |
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| SELECTED FINANCIAL DATA |
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| Unaudited figures (Euros in millions) |
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| January - December |
| % Chg | |||
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| 2009 | 2008 |
| Reported | Organic | Guidance Criteria |
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| Revenues | 56,731 | 57,946 |
| (2.1) | 0.2 | 0.3 |
| Telefónica España (1) | 19,703 | 20,838 |
| (5.4) | (5.4) |
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| Telefónica Latinoamérica | 22,983 | 22,174 |
| 3.7 | 5.3 |
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| Telefónica Europe | 13,533 | 14,308 |
| (5.4) | 1.1 |
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| OIBDA (2)(3)(4) | 22,603 | 22,919 |
| (1.4) | 0.9 | 1.1 |
| Telefónica España (1)(4) | 9,757 | 10,285 |
| (5.1) | (7.3) |
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| Telefónica Latinoamérica | 9,143 | 8,445 |
| 8.3 | 10.1 |
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| Telefónica Europe (2) | 3,910 | 4,180 |
| (6.4) | 4.1 |
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| OIBDA margin (2)(3)(4) | 39.8% | 39.6% |
| 0.3 p.p. | 0.3 p.p. |
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| Telefónica España (4) | 49.5% | 49.4% |
| 0.2 p.p. | (1.0 p.p.) |
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| Telefónica Latinoamérica | 39.8% | 38.1% |
| 1.7 p.p. | 1.7 p.p. |
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| Telefónica Europe (2) | 28.9% | 29.2% |
| (0.3 p.p.) | 0.8 p.p. |
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| Operating Income (OI) (2)(3)(4) | 13,647 | 13,873 |
| (1.6) | 0.7 |
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| Telefónica España (4) | 7,617 | 8,046 |
| (5.3) | (8.1) |
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| Telefónica Latinoamérica | 5,350 | 4,800 |
| 11.5 | 13.9 |
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| Telefónica Europe (2) | 1,015 | 1,144 |
| (11.3) | 14.3 |
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| Net income (2)(3)(4) | 7,776 | 7,592 |
| 2.4 |
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| Basic earnings per share (euros) (2)(3)(4) | 1.71 | 1.63 |
| 4.5 |
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| Free Cash Flow per share (euros) | 2.00 | 1.97 |
| 1.5 |
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| OpCF (OIBDA-CapEx) (2)(3)(4) | 15,346 | 14,519 |
| 5.7 | 8.0 | 8.4 |
| Telefónica España (1)(4) | 7,893 | 8,077 |
| (2.3) | (5.0) |
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| Telefónica Latinoamérica | 5,693 | 4,410 |
| 29.1 | 29.8 |
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| Telefónica Europe (2) | 2,183 | 2,108 |
| 3.5 | 21.7 |
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| - Reconciliation included in the excel spreadsheets. | ||||||
| (1) In comparable terms revenues of Telefónica España would decline by 5.9%, OIBDA would decrease by 8.0% and OpCF would drop 5.9%. Comparable terms exclude Universal Service: 183 million euros in revenue and 51 million euros in OIBDA in the third quarter of 2008, 75 million euros in revenues and 22 million euros in OIBDA in the first quarter of 2009, and 148 million euros in revenues and 47 million euros in OIBDA in the fourth quarter of 2009; bad debt recovery: 25 million euros in OIBDA in the first quarter of 2008; real estate capital gains: 6 million euros in OIBDA in January-December 2009 and 74 million euros in OIBDA in the same period in 2008; revision of the estimates for the adjustment to workforce adaptation plans provided for in prior periods, which resulted in lower expenses of 90 million euros in the second quarter of 2009; sale of applications rights: 48 million euros in revenue and OIBDA in the third quarter of 2009 and capital gain from the disposal of Medi Telecom of 220 million in OIBDA in the fourth quarter of 2009. | ||||||
| (2) 2008 includes a positive impact of 174 million euros derived from Airwave disposal. OIBDA and OI include 44 million euros from restructuring costs registered in 2009. | ||||||
| (3) Sogecable capital gain amounting 143 million euros is recorded in the second quarter of 2008. | ||||||
| (4) Medi Telecom capital gain amounting 220 million euros is recorded in the fourth quarter of 2009. | ||||||
| Notes: | ||||||
| -OIBDA and OI are presented before brand fees and management fees. | ||||||
| -OIBDA margin calculated as OIBDA over revenues. | ||||||
| - Starting April 2008, Vivo consolidates Telemig. | ||||||
| - Organic criteria: Assuming constant exchange rates, excluding the impact of the hyperinflationary accounting in Venezuela, and including the consolidation of Telemig in January-March 2008. OIBDA and OI exclude the impacts of the capital gains from the sale of Airwave and Sogecable, registered in the second quarter of 2008, and the impact of the capital gain from the disposal of Medi Telecom in the fourth quarter of 2009. | ||||||
| - Guidance criteria: 2008 adjusted figures for guidance excludes Sogecable capital gain (143 million euros) and the application of provisions made in T. Europe in respect of potential contingencies deriving from the past disposal of shareholdings, one these risks had dissipated or had not materialized (174 million euros), includes 9 months of consolidation of Telemig in T. Latam. 2009 figures for guidance assume 2008 constant FX (average FX in 2008) and exclude the impact of the hyperinflation in Venezuela. In terms of guidance calculation, OIBDA exclude capital gains and losses from sale of companies and write-offs. Group CapEx excludes Real Estate Efficiency Program of T. España and spectrum licenses. | ||||||
| -2009 figures impacted by the hyperinflation in Venezuela. | ||||||
DISCLAIMER
This document contains statements that constitute forward looking statements about the Company including financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations which refer to the intent, belief or current prospects of the customer base, estimates regarding, among others, future growth in the different business lines and the global business, market share, financial results and other aspects of the activity and situation relating to the Company.
The forward-looking statements in this document can be identified, in some instances, by the use of words such as "expects", "anticipates", "intends", "believes", and similar language or the negative thereof or by forward-looking nature of discussions of strategy, plans or intentions.
Such forward-looking statements, by their nature, are not guarantees of future performance and involve risks and uncertainties, and other important factors that could cause actual developments or results to differ from those expressed in our forward looking statements. These risks and uncertainties include those discussed or identified in fuller disclosure documents filed by Telefónica with the relevant Securities Markets Regulators, and in particular, with the Spanish Market Regulator.
Analysts and investors, and any other person or entity that may need to take decisions, or prepare or release opinions about the securities issued by the Company, are cautioned not to place undue reliance on those forward looking statements, which speak only as of the date of this presentation. Except as required by applicable law, Telefónica undertakes no obligation to release publicly the results of any revisions to these forward looking statements which may be made to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telefónica's business or acquisition strategy or to reflect the occurrence of unanticipated events.
Neither this presentation nor any of the information contained herein constitutes an offer of purchase, sale or exchange, nor a request for an offer of purchase, sale or exchange of securities, or any advice or recommendation with respect to such securities.
Finally, this document may contain summarized information or information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by Telefónica.
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