Telefónica's results crudely showed the impact of the pandemic. The Spanish revenue fell 14.8% year-on-year to € 10.34 billion between April and June due to an impact associated with the Covid-19 of € 729 million and unfavorable movements in exchange rates (here the impact is estimated at € 791 million), among other reasons. OIBDA decreased 25.3% year-on-year to € 3.315 billion and net profit, 50.7%, to € 425 million.
Among the measures taken by Telefónica to mitigate the negative effects of the pandemic, a drop in operating expenses of 4.9% year-on-year stands out. The operator refers in its balance to “signs of recovery observed in the month of June”, for which reason it predicts that “Telefónica is on the way to achieving the objectives set for 2020”. In effect, the company confirmed the dividend announced for this year, at € 0.4 per share, to be paid in the first stage (€ 0.20) in December (using the voluntary flexible dividend modality), and in the second (€ 0.20) in June 2021 (the adoption of the appropriate corporate agreements will be proposed).
Concerning the lag in Latin America, stated in the roadmap announced last November, it was specified in the results report that “Telefónica is reviewing different options to further reduce its exposure to the region and is making progress in preparing a potential operational and financial spin-off ”. Among the priorities set in the short term is the “reduction of non-key exposure in the Latin American portfolio”, based on: stabilizing the generation of organic cash to mitigate the impact of the coronavirus; close the sales operations of Costa Rica and El Salvador; and “continue analyzing all the strategic options.”
The Hispam unit was impacted in two ways by the pandemic: a sharp reduction in commercial activity, which translates into a 32.3% collapse in terminal sales; and a 7.3% decrease in service revenues due to lower rate increases, prepaid recharges and contract accesses. Thus, Hispam's revenues between April and June were € 1.881 billion, a 10.8% decrease year-on-year.
OIBDA fell 14.5% to € 361 million due to this reduction in income, although it was partially offset by lower commercial expenses.
The mobile business corresponding to Hispam reported sales of US$ 1.661 billion (-13.7%). The mobile access base totaled 88.8 million at the end of June, a contraction of 6.4% compared to the same month of 2019. The IoT segment showed the best performance, reaching 3.6 million accesses (+11.1%).
As for the fixed segment, sales amounted to € 692 million (-5.8%). Ultra-broadband accesses reached 3.4 million (+8%) after acceleration in deployment (12 million UUII passed, an expansion of 1.4 million in the last twelve months).