Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Thursday, July 26, 2018

Telefónica maintains the goals for 2018 after second quarter results

Alvarez-Pallete assured that the company will reiterate the goals and the dividend set for 2018, after its debt was reduced and Oibda improved.

Telefónica reported profits for € 902 million in the second quarter, with 9.9% year-on-year growth. The operator's revenues reached € 12.144 billion, which means a year-on-year reduction of 6.3% but a 2% increase at organic values.

In the quarterly report, Telefónica assures that the results are affected by positive net impacts in Oibda (€ 225 million) and negative impacts in net profit (- € 60 million) mainly due to the favorable court ruling in Brazil (due to the calculation basis of the contributions of the Campaign to PIS and Cofins) and the partial deterioration of goodwill and reversal of fiscal assets in Mexico.

Mobile data revenues increased by 6.4% (organic) in the quarter and now account for 62% of mobile service revenues.

In the Hispam Norte subsidiary, revenues fell 0.4% (organic) to € 1.027 billion and the Oibda, 2.8% to € 176 million. In Hispam Sur, there were sales for € 1.798 billion, an organic increase of 8.7%, and Oibda rose 8.8% to € 507 million. In Brazil, revenues increased 0.5% (€ 2.522 billion).

Grupo Telefónica access base stood at 357.5 million as of the end of June, a reduction of 1% year-on-year. It reported 21.9 million broadband customers (+1%) and 271 million mobile customers (-0.7%). During this period, access to high-speed networks grew: access to FTTx increased 23% to 12.2 million and LTE penetration was 42%, reaching 106.6 million customers.

"The results of the second quarter improve organic year-on-year revenue growth, OIBDA and expansion of the OIBDA margin. Debt is reduced for the fifth consecutive quarter thanks to the strong cash generation (€ 998 million), which grows 55% excluding the payment of spectrum in the United Kingdom. These figures allow us to reiterate the objectives and the dividend set for 2018", said José María Álvarez-Pallete, CEO of Telefónica. The goals involve increasing revenues by around 1% compared to 2017 and paying € 0.40 per share. Net financial debt as of June was € 43.593 billion.

In the second quarter, investment was € 2.441 billion, 29.4% more than that recorded one year ago.

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