27 Jul 2017 07:40
FINANCIAL HIGHLIGHTS
· Growth acceleration across the board in main financials and KPIs.
® Customer base quality improvement: LTE (1.6x y-o-y), smartphones (+19%), FTTx & cable (+19%) and mobile contract (+5%).
® Revenues totaled €12,960m in the quarter (+1.9% y-o-y reported) and increased 3.1% organic (+1.6 p.p. vs. the first quarter), accelerating service revenue growth (+2.9%; +1.2 p.p.) and handset sales (+5.2%; +6.8 p.p.).
® Double-digit growth in mobile data revenues continued (+17.8% y-o-y in organic terms).
® OIBDA (€4,158m; +6.1% y-o-y) growth accelerated to 7.2% y-o-y organic vs. 1.3% in the first quarter. The OIBDA margin stood at 32.1% (+1.2 p.p. y-o-y in organic terms).
® Underlying OIBDA in the quarter excluded €25m restructuring costs (€4,183m; +5.5% y-o-y).
® Operating Cash Flow excluding spectrum (€2,273m) improved its organic growth by 8.6 p.p. vs. the first quarter to reach 17.5% year-on-year.
® Net income totaled €821m (+18.4% y-o-y) and earnings per share €0.15 (+16.3%). In underlying terms, net income totaled €1,092m (+23.6%) and earnings per share €0.20 (+21.9%).
· Ongoing Company transformation.
® CapEx (€3,507m in January-June): mainly devoted to UBB network expansion, simplification, digitalisation and cognitive intelligence. As of June, 41.2m premises passed with FTTx & cable and LTE coverage of 68%.
· Progress in de-leveraging.
® Free cash flow in first the half year reached €1,620m (2x y-o-y).
® Net debt stood at €48,487m at the end of June and decreased €3,706m vs. June 2016.
· T. España improved service revenues (-0.8% y-o-y in organic terms in the quarter; +0.8 p.p. vs. the first quarter) and OIBDA (-1.5%; +0.9 p.p.); operating cash flow grew a solid 7.8%.
· T. Brasil accelerated revenue growth in the quarter (+1.8% y-o-y in organic terms) and maintained solid performance in OIBDA (+7.0%) and operating cash flow (+11.6%), levered on margin expansion.
· T. Deutschland posted in April-June solid commercial momentum, OIBDA growth acceleration (+3.8% y-o-y in organic terms) and margin expansion (+1.9 p.p.).
· T. UK; revenues and OIBDA accelerated their pace of growth in April-June (+2.6% and +3.9% y-o-y in organic terms respectively) and the operating cash flow returned to growth (+5.3%).
· T. Hispanoamérica in the quarter reported strong growth acceleration in revenues (+15.5% y-o-y in organic terms) and OIBDA (+20.9%) and a significant operating cash flow evolution (+71.8%).
· The Company upgrades guidance and reiterates the dividend announced for 2017.
® Revenue guidance upgraded to growth >1.5% (vs. stable previously), despite the negative impact from regulation (approximately 1.2 p.p.).
® OIBDA margin guidance (y-o-y expansion up to 1 p.p.) and CapEx/Sales excluding spectrum (around 16%) reiterated.
Comments from José María Álvarez-Pallete, Executive Chairman:
"During the second quarter of the year we have accelerated organic growth through the execution of our structural quality-based strategy, which was reflected in the strong competitive positioning in our main markets. Moreover, we continued to make progress in our transformation towards becoming a platform Company, with CapEx devoted to UBB networks, underpinning E2E digitalization and cognitive intelligence, with a differential value proposition for customers. All this, with a stronger balance sheet, after doubling Free Cash Flow in the last twelve months and reducing net debt by 5 billion euros, when considering the sale of the stake in Telxius.
The strength and better business trends in the first half of the year, as well as being well-positioned to continue capturing sustainable growth in the coming quarters, allow us to upgrade our guidance for 2017".
TELEFÓNICA |
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SELECTED FINANCIAL DATA |
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Unaudited figures (Euros in millions) |
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| January-June |
| % Chg |
| April-June |
| % Chg | ||
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| 2017 |
| Reported | Organic |
| 2017 |
| Reported | Organic |
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Revenues | 26,091 |
| 3.4 | 2.3 |
| 12,960 |
| 1.9 | 3.1 |
Telefónica España | 6,226 |
| (2.3) | (2.3) |
| 3,160 |
| (2.0) | (1.9) |
Telefónica Deutschland | 3,542 |
| (4.1) | (4.1) |
| 1,771 |
| (3.4) | (3.4) |
Telefónica UK | 3,208 |
| (7.4) | 2.3 |
| 1,607 |
| (6.2) | 2.6 |
Telefónica Brasil | 6,193 |
| 21.8 | 1.7 |
| 3,028 |
| 14.1 | 1.8 |
Telefónica Hispanoamerica | 6,419 |
| 6.7 | 12.3 |
| 3,134 |
| 5.9 | 15.5 |
Other companies & eliminations | 504 |
| (16.9) | (8.5) |
| 259 |
| (23.5) | (12.9) |
Telxius | 370 |
| 27.1 | 8.3 |
| 182 |
| 18.7 | 11.4 |
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OIBDA | 8,179 |
| 5.5 | 4.3 |
| 4,158 |
| 6.1 | 7.2 |
Telefónica España | 2,425 |
| (5.0) | (1.9) |
| 1,282 |
| (1.6) | (1.5) |
Telefónica Deutschland | 861 |
| 2.1 | 2.7 |
| 461 |
| 2.2 | 3.8 |
Telefónica UK | 849 |
| (7.4) | 2.2 |
| 433 |
| (5.0) | 3.9 |
Telefónica Brasil | 2,138 |
| 30.1 | 7.2 |
| 1,034 |
| 23.3 | 7.0 |
Telefónica Hispanoamerica | 1,796 |
| 5.7 | 13.5 |
| 892 |
| 6.9 | 20.9 |
Other companies & eliminations | 110 |
| 10.2 | (7.7) |
| 56 |
| 55.4 | 108.5 |
Telxius | 179 |
| 78.0 | 11.1 |
| 87 |
| 17.8 | 7.9 |
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OIBDA margin | 31.3% |
| 0.6 p.p. | 0.6 p.p. |
| 32.1% |
| 1.3 p.p. | 1.2 p.p. |
Telefónica España | 38.9% |
| (1.1 p.p.) | 0.1 p.p. |
| 40.6% |
| 0.2 p.p. | 0.2 p.p. |
Telefónica Deutschland | 24.3% |
| 1.5 p.p. | 1.6 p.p. |
| 26.1% |
| 1.4 p.p. | 1.9 p.p. |
Telefónica UK | 26.5% |
| (0.0 p.p.) | (0.0 p.p.) |
| 27.0% |
| 0.3 p.p. | 0.3 p.p. |
Telefónica Brasil | 34.5% |
| 2.2 p.p. | 1.8 p.p. |
| 34.1% |
| 2.5 p.p. | 1.7 p.p. |
Telefónica Hispanoamerica | 28.0% |
| (0.3 p.p.) | 0.3 p.p. |
| 28.5% |
| 0.3 p.p. | 1.3 p.p. |
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Operating Income (OI) | 3,370 |
| 9.3 | 12.2 |
| 1,800 |
| 14.9 | 19.0 |
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Net income attributable to equity holders of the Parent | 1,600 |
| 28.9 |
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| 821 |
| 18.4 |
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Basic and diluted earnings per share (euros) | 0.29 |
| 30.3 |
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| 0.15 |
| 16.3 |
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CapEx | 3,507 |
| (4.0) | (5.7) |
| 1,886 |
| (3.7) | (3.3) |
Telefónica España | 704 |
| (21.2) | (20.6) |
| 371 |
| (19.8) | (18.6) |
Telefónica Deutschland | 435 |
| 0.5 | 1.3 |
| 226 |
| 6.3 | 6.9 |
Telefónica UK | 434 |
| 4.4 | 15.4 |
| 209 |
| (6.5) | 2.4 |
Telefónica Brasil | 915 |
| 15.5 | (3.6) |
| 518 |
| 16.6 | 2.7 |
Telefónica Hispanoamerica | 923 |
| (9.4) | (6.2) |
| 493 |
| (11.5) | (3.9) |
Other companies & eliminations | 96 |
| (5.7) | (2.6) |
| 68 |
| 17.4 | 22.4 |
Telxius | 56 |
| 29.2 | 24.8 |
| 44 |
| 85.7 | 86.0 |
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Spectrum | 4 |
| (57.9) | (56.3) |
| 1 |
| (93.8) | (95.8) |
Telefónica España | - |
| - | - |
| - |
| - | - |
Telefónica Deutschland | 1 |
| (79.8) | (79.8) |
| 0 |
| (78.7) | (78.7) |
Telefónica UK | - |
| - | - |
| - |
| - | - |
Telefónica Brasil | - |
| - | - |
| - |
| - | - |
Telefónica Hispanoamerica | 4 |
| n.m. | n.m. |
| 0 |
| n.m. | n.m. |
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OpCF (OIBDA-CapEx) | 4,672 |
| 13.9 | 13.0 |
| 2,272 |
| 16.0 | 17.5 |
Telefónica España | 1,720 |
| 3.7 | 8.0 |
| 910 |
| 8.5 | 7.8 |
Telefónica Deutschland | 426 |
| 3.8 | 4.0 |
| 235 |
| (1.4) | 1.2 |
Telefónica UK | 415 |
| (17.3) | (8.7) |
| 224 |
| (3.6) | 5.3 |
Telefónica Brasil | 1,223 |
| 43.7 | 17.0 |
| 515 |
| 30.9 | 11.6 |
Telefónica Hispanoamerica | 873 |
| 28.2 | 43.2 |
| 399 |
| 44.0 | 71.8 |
Other companies & eliminations | 14 |
| c.s. | (30.5) |
| (12) |
| (45.1) | (71.5) |
Telxius | 123 |
| 115.5 | 5.7 |
| 43 |
| (14.0) | (23.9) |
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- Reconciliation included in the excel spreadsheets. |
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Notes: |
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- 2016 and 2017 reported figures include hyperinflationary adjustments in Venezuela in both years. | |||||||||
- OIBDA and OI are presented before brand fees and management fees. |
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- Telxius financials are fully reported in Other Companies & Eliminations in T. Group since 1 January, 2017, reflecting the final integration into Telxius of the mobile communications towers transferred from T. España, T. Deutschland, T. Brasil and T. Hispanoamérica segments and the international submarine fiber optic cable (which was already being reported within Other Companies and Eliminations). As a consequence, 2017 reported figures for these segments follow the same criteria. In addition, 2016 segment results have been revised to reflect the different dates of asset integration into Telxius, affecting T. España (since 1 January, 2016), T. Deutschland (since 1 May, 2016), T. Brasil (since 1 April, 2016) and T. Hispanoamérica (T. Perú since 1 April 2016 and T. Chile since 1 May 2016). Organic y-o-y changes on segments reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of the segments do not include intra-group capital gains resulting from the transfer of towers to Telxius in 2016. | |||||||||
- Organic criteria: Assumes constant exchange rates as of 2016 (average FX in 2016), excludes the impact from hyperinflation in Venezuela in both years and considers constant perimeter of consolidation. In OIBDA and OI terms, excludes write-downs, capital gains/losses from the sale of companies, tower sales, material non-recurring impacts and restructuring costs. CapEx also excludes investment in spectrum. | |||||||||
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DISCLAIMER
This document may contain forward-looking statements regarding intentions, expectations or forecasts related to the Telefónica Group (hereinafter, the "Company" or "Telefónica"). 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, the market share, possible acquisitions, divestitures or other transactions, Company results and other aspects related to the activity and situation of the Company.
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Except as required by applicable laws, Telefónica does not assume any obligation to publicly update these statements to adapt them to events or circumstances taking place after this document, 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 the regulated information published from July 3, 2016. Information and disclosure related to APM used in the present document are included in the Appendix. 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, 2017 submitted to the Spanish National Securities Market Commission.
Finally, it is hereby stated that neither this document or any of its contents constitutes an offer to purchase, sale or exchange any securities, a solicitation of any offer to purchase, sale or exchange of securities, or a recommendation or advice regarding any security.
Investor Relations
Distrito Telefónica - Ronda de la Comunicación, s/n
28050 Madrid (Spain)
Telephone: +34 91 482 87 00
Pablo Eguirón (pablo.eguiron@telefonica.com)
Isabel Beltrán (i.beltran@telefonica.com)
Gonzalo Borja (gonzalo.borjadelsur@telefonica.com)
ir@telefonica.com
www.telefonica.com/accionistaseinversores