Telefonica SA Financial Highlights January-September 2016 (6044N)

TIDMTDE

RNS Number : 6044N

Telefonica SA

27 October 2016

FINANCIAL HIGHLIGHTS

-- Commercial activity focused on high value customers: LTE (1.9x year-on-year), smartphones (+20%), fibre + VDSL (+26%), mobile contract (+6%) and pay TV (+3%).

(R) Differential infrastructure; 33.7 million homes passed with fibre (+11% year-on-year); LTE coverage of 58% (86% in Europe).

   --           Revenues for the quarter totalled 13,080 million euros (-0.2% organic year-on-year). 

(R) Solid growth in service revenues (+1.4% organic year-on-year), stable vs. the previous quarter.

-- Acceleration of organic growth of OIBDA year-on-year (+3.1%) and operating cash flow (+10.8%).

(R) OIBDA margin expansion (31.9%; +1.0 percentage points organic year-on-year) due to synergies and efficiencies.

(R) CapEx in the quarter (-3.8% organic year-on-year) continued to focus on growth and transformation.

-- Significant improvement in reported OIBDA (4,175 million euros; -1.0% year-on-year; +6.1 p.p. vs. the previous quarter)

-- Free cash flow of 1,500 million euros in the quarter (+7.1% year-on-year) and 2,315 million euros in

January-September (+91.9% year-on-year), 0.47 euros per share.

   --           Net income for the first nine months stood at 2,225 million euros. 

(R) Strong progress in quarterly net income (+38.5% year-on-year) and earnings per share (+44.8%).

-- Net financial debt decreased by 2,584 million euros in the quarter and stood at 49,984 million euros.

-- T. España; solid performance of service revenues, OIBDA and operating cash flow (+0.6%, +1.8%, and +7.1%

year-on-year respectively, excluding non-recurrents). The success of Movistar "Fusión" is reflected in the strong growth of 10.8% year-on-year of quarterly ARPU and the low level of churn (1.3%).

-- T. Brasil maintained its leadership in mobile contract and UBB and progressed in synergies and efficiencies, translating into accelerated revenue, OIBDA and operating cash flow growth in July-September (+1.1%, +9.5% y +37.9%, respectively) with strong expansion of margins (OIBDA +2.5 percentage points; OpCF +4.0 percentage points).

-- T. Deutschland; acceleration of year-on-year OIBDA growth in the quarter (+3.6% organic and excluding non-recurrents) and expansion of OIBDA margin thanks to the capture of incremental synergies (+2.2 percentage points excluding non-recurrents).

-- T. UK maintained a solid commercial momentum and improved year-on-year trends in the main metrics (revenues +0.1% ex "O2 Refresh"; OIBDA +1.6% and margin +1.0 percentage points).

-- T. Hispanoamérica; sequential improvement in quarterly revenue growth in the quarter (+0.5 percentage points) and returned to OIBDA and margin growth (+6.3% and +0.6 percentage points, respectively), as a result of the higher penetration of high-value services, cost efficiencies and the lower impact of currency depreciations vs. the USD in 2015 on the business.

Comments from José María Álvarez-Pallete, Executive Chairman:

"Third quarter results showed growth acceleration in the main operational metrics, driven by a broad improvement across different business units, and reflected the success of our transformation strategy, inititated before most of our competitors, focused on network diferentiation as a way to capture and monetise the growing demand for data, and on efficiencies, cost optimisation and sinergy capture.

All this translated into an acceleration in deleverage in the quarter, mainly due to the significant improvement in free cash flow generation. In this context, the Company has decided to modify the dividend in order to strengthen the balance sheet and intensify organic deleverage, maintaining an attractive shareholder remuneration".

 
 TELEFÓNICA 
 SELECTED FINANCIAL 
 DATA 
  Unaudited figures (Euros 
  in millions) 
                           January-September                     %Chg              July-September           % Chg 
 
                                          2016              Reported     Organic             2016    Reported     Organic 
 
 
 Revenues                               38,315                 (6.7)         0.8           13,080       (5.9)       (0.2) 
 Telefónica 
  España (1)                        9,497                   3.4       (0.1)            3,169       (0.4)       (0.4) 
 Telefónica 
  Deutschland                            5,567                 (4.5)       (4.5)            1,876       (5.2)       (5.2) 
 Telefónica UK                      5,140                (11.8)       (2.8)            1,676      (17.1)       (2.1) 
 Telefónica 
  Brasil (2)                             8,039                 (5.1)         0.9            2,952         7.9         1.1 
 Telefónica 
  Hispanoamérica                    9,144                (15.1)         6.4            3,129      (13.9)         4.1 
 Other companies & 
  eliminations                             928                 (5.1)                          279      (20.8) 
 
 
 OIBDA                                  11,931                 (4.6)         3.1            4,175       (1.0)         3.1 
 Telefónica 
  España (1)                        3,955                 (0.3)         0.8            1,372       (0.6)       (0.6) 
 Telefónica 
  Deutschland                            1,314                   3.3         2.6              464        15.1         4.2 
 Telefónica UK                      1,375                 (8.5)         1.0              458      (14.0)         1.6 
 Telefónica 
  Brasil (2)                             2,629                   1.5         7.8              982        18.1         9.5 
 Telefónica 
  Hispanoamérica                    2,672                (17.3)         1.2              970      (10.1)         6.3 
 Other companies & 
  eliminations                            (14)                (75.2)                         (71)        n.m. 
 
 
 OIBDA margin                            31.1%              0.7 p.p.    0.7 p.p.            31.9%    1.6 p.p.    1.0 p.p. 
 Telefónica                                                                                         (0.1        (0.1 
  España (1)                        41.6%            (1.6 p.p.)    0.4 p.p.            43.3%       p.p.)       p.p.) 
 Telefónica 
  Deutschland                            23.6%              1.8 p.p.    1.7 p.p.            24.7%    4.4 p.p.    2.3 p.p. 
 Telefónica UK                      26.8%              1.0 p.p.    1.0 p.p.            27.3%    1.0 p.p.    1.0 p.p. 
 Telefónica 
  Brasil (2)                             32.7%              2.1 p.p.    2.1 p.p.            33.3%    2.9 p.p.    2.5 p.p. 
 Telefónica                                                            (1.5 
  Hispanoamérica                    29.2%            (0.8 p.p.)       p.p.)            31.0%    1.3 p.p.    0.6 p.p. 
 
 
 Operating Income (OI)                   4,800                 (9.0)         2.8            1,718       (5.5)       (0.4) 
 
 
 Net income                              2,225                (22.0)                          983        38.5 
 Basic earnings per 
  share (euros)                           0.41                (23.6)                         0.19        44.8 
 
 
 CapEx                                   6,016                (22.4)         0.5            2,362         5.3       (3.8) 
 Telefónica 
  España (1)                        1,283                 (3.0)       (0.4)              393       (9.1)       (9.1) 
 Telefónica 
  Deutschland                              748                (60.6)         5.7              316        30.2        30.4 
 Telefónica UK                        654                   0.3        10.5              238         0.8        18.0 
 Telefónica 
  Brasil (2)                             1,369                 (8.8)      (10.3)              577         6.8       (6.6) 
 Telefónica 
  Hispanoamérica                    1,798                (18.4)         5.7              782         7.3      (17.2) 
 Other companies & 
  eliminations                             164                 (6.5)                           56      (11.8) 
 
 
 Spectrum                                  341                (78.5)        n.m.              331        c.s.        n.m. 
 Telefónica 
  España (1)                            7                (85.0)        n.m.                -           -           - 
 Telefónica 
  Deutschland                                4                (99.6)        n.m.                2         6.9        n.m. 
 Telefónica UK                          -                     -           -                -           -           - 
 Telefónica 
  Brasil (2)                                47                  n.m.        n.m.               47        n.m.        n.m. 
 Telefónica 
  Hispanoamérica                      282                (17.5)        n.m.              282        c.s.        n.m. 
 
 
 OpCF (OIBDA-CapEx)                      5,915                  24.4         5.7            1,814       (8.2)        10.8 
 Telefónica 
  España (1)                        2,672                   1.0         1.3              979         3.2         3.3 
 Telefónica 
  Deutschland                              566                  c.s.       (0.9)              148       (7.7)      (23.8) 
 Telefónica UK                        721                (15.2)       (6.3)              219      (25.8)      (11.4) 
 Telefónica 
  Brasil (2)                             1,260                  15.7        34.9              405        39.2        37.9 
 Telefónica 
  Hispanoamérica                      874                (15.1)       (4.8)              188      (46.4)        55.4 
 Other companies & 
  eliminations                           (178)                (22.8)                        (125)        76.8 
 
 

 - Reconciliation included 
  in the excel 
  spreadsheets. 
 Notes: 
 - Since the second quarter of 2016 Telefónica's operations in the United Kingdom are 
  no longer reported as discontinued operations within Telefónica Group and all its assets 
  and liabilities have ceased to be reported as "held for sale", and have been reclassified 
  back into full consolidation within Telefónica Group financial statements, in compliance 
  with International Financial Reporting Standards (IFRS). For comparative purposes, the results 
  of Grupo Telefónica of 2015 and the first quarter of 2016 are reported following the 
  same criteria. 
 - 2015 and 2016 reported figures include hyperinflationary adjustments in Venezuela in both 
  years. 
 - Organic criteria: Assumes constant exchange rates as of 2015 (average FX in 2015) 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. 
 - OIBDA and OI are presented before brand fees and management fees. 
 - OIBDA margin calculated as OIBDA over revenues. 
  (1) DTS has been consolidated since 1 May 2015. 
  (2) GVT has been consolidated since 1 May 2015. 
 
 

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.

The forward-looking statements can be identified, in certain cases, through the use of words such as "expectation", "anticipation", "purpose", "belief" or similar expressions, or the corresponding negative forms, or through the own predictive nature of all issues referring to strategies, plans or intentions. These forward-looking statements or forecasts reflect the current views of Telefónica with respect to future events, do not represent, by their own nature, any guarantee of future fulfilment, and are subject to risks and uncertainties that could cause the final developments and results to differ substantially from the ones put forward through these intentions, expectations or forecasts. These risks and uncertainties include those identified in the documents containing more comprehensive information filed by Telefónica before the different supervisory Authorities of the securities markets in which its shares are listed and, in particular, the Spanish National Securities Market Commission.

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 conjuction with all the public information regarding the Company available, including, if any, other documents released by the Company that may contain more detailed information.

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.

For further information please refer to the information on 2016 third quarter financial results filed by the Company and also available on the Company's website: www.telefonica.com

This information is provided by RNS

The company news service from the London Stock Exchange

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October 27, 2016 03:13 ET (07:13 GMT)