Telefonica SA Financial Highlights Jan-Sep 2017 (6805U)

TIDMTDE

RNS Number : 6805U

Telefonica SA

26 October 2017

FINANCIAL HIGHLIGHTS

   --        Sustained and profitable organic growth. 
   (R)     LTE (1.6x y-o-y), smartphones (+8%) and FTTx & cable (+21%). 

(R) Revenues in the quarter (EUR12,754m) grew 4.0% y-o-y in organic terms (+0.9 p.p. vs. the previous quarter), with service revenues acceleration (+3.3%; +0.4 p.p). Mobile data revenues double-digit growth continued (+16.3% y-o-y in organic terms).

(R) In the quarter, OIBDA (EUR4,095m) grew 2.8% in organic terms y-o-y. OIBDA margin stood at 32.1% (-0.4 p.p. y-o-y organic). RLAH impact dragged -1.7 p.p. to OIBDA growth y-o-y.

   (R)     Underlying OIBDA totalled EUR4,116m (-2.7% y-o-y) and excluded EUR21m restructuring costs. 

(R) Operating cash flow (OIBDA-CapEx) excluding the spectrum (EUR6,815m in January-September) maintained a strong pace of growth (+9.2% y-o-y organic), reflecting lower CapEx intensity (-2.3%).

(R) Net income in the first nine months reached EUR2,439m, +9.6% year-on-year, and earnings per share totalled EUR0.44, +8.7% (EUR839m and EUR0.15, respectively in the quarter).

   --        Company transformation continued. 
   (R)     42.8m premises passed with FTTx & cable and 69% LTE coverage at September 2017. 

(R) The focus on E2E digitalisation of processes offers an unprecedent opportunity to transform the business, already delivering tangible benefits.

   --        Reinforced balanced position. 
   (R)     Free cash flow in the first nine months reached EUR3,226m (+39.2% y-o-y). 

(R) Net debt in September stood at EUR47,222m, less 4.8% y-o-y (-EUR1,265m vs. June 2017). Debt will be further reduced by an additional EUR1,275m in the fourth quarter, following the closing of Telxius 40% stake sale.

-- T. España returned to growth in service revenues in the quarter (+0.4% y-o-y; EUR3,089m). OIBDA reached EUR1,306m (-0.6% y-o-y excluding capital gains from real estate sales). Operating cash flow grew 4.7% in January-September.

-- T. Brasil widened its quality gap and posted sustained y-o-y growth in revenues (+1.2% organic; EUR2,935m) and OIBDA (+6.0%; EUR1,024m), and posted 3 quarters in a row of OIBDA margin expansion.

-- T. Deutschland maintained a solid commercial momentum in July-September, revenues reached EUR1,850m (-1.3% organic) and OIBDA EUR457m in the quarter, while OIBDA margin expanded (+0.3 p.p. organic) despite the regulatory impact.

-- T. UK; sustained revenue growth (+1.1% organic; EUR1,602m), despite the strong roaming impact in the quarter, which was reflected in a EUR412m OIBDA (-4.7% organic).

-- T. Hispanoamérica maintained solid growth in revenues (+16.1% organic; EUR2,981m) and OIBDA (+9.3%; EUR883m) due to increased penetration of value accesses and efficiency measures.

   --        The Company reiterated its guidance and the dividend announced for 2017. 

Comments from José María Álvarez-Pallete, Chairman and CEO:

"Third quarter results reflected the solid execution of the main strategic priorities set for the year. Thus, our organic growth is consistent and sustainable, highlighting the improvement in revenue growth trends and the increased OIBDA, despite the negative impact of the new regulation in Europe. Additionally, transformation remained key and the focus on digitalisation amongst the Company's different operating areas has contributed to increase our differentiation and become more efficient, and will enable us to pave a new way to interact with our customers through cognitive intelligence while improving resource allocation. Finally, we continued strengthening our balance sheet position with a clear advance in de-leveraging the Company thanks to growing cash-flow generation".

 
 TELEFÓNICA 
 SELECTED FINANCIAL DATA 
  Unaudited figures (Euros in 
  millions) 
                                        Jan-Sept            % Chg            July-Sept            %Chg 
 
                                            2017     Reported      Organic        2017     Reported      Organic 
 
 
 Revenues                                 38,846          1.4          2.9      12,754        (2.5)          4.0 
 Telefónica España               9,410        (1.7)        (1.6)       3,184        (0.3)        (0.3) 
 Telefónica Deutschland               5,392        (3.1)        (3.1)       1,850        (1.3)        (1.3) 
 Telefónica UK                        4,810        (6.4)          1.9       1,602        (4.4)          1.1 
 Telefónica Brasil                    9,128         13.6          1.5       2,935        (0.5)          1.2 
 Telefónica Hispanoamerica            9,400          2.8         13.6       2,981        (4.7)         16.1 
 Other companies & eliminations              706       (18.0)        (5.0)         202       (20.7)          4.5 
   Telxius                                   547         19.1          8.0         177          5.3          7.5 
------------------------------------- 
 
 OIBDA                                    12,274          2.9          3.8       4,095        (1.9)          2.8 
 Telefónica España               3,731        (4.5)        (2.4)       1,306        (3.5)        (3.4) 
 Telefónica Deutschland               1,318          1.4          1.7         457          0.1        (0.1) 
 Telefónica UK                        1,261        (8.3)        (0.2)         412       (10.0)        (4.7) 
 Telefónica Brasil                    3,162         20.6          6.8       1,024          4.7          6.0 
 Telefónica Hispanoamerica            2,679          0.4         12.0         883        (9.0)          9.3 
 Other companies & eliminations              123        105.8         32.5          13         c.s.      (177.1) 
   Telxius                                   261         48.7         11.4          82          9.6         12.1 
------------------------------------- 
 
 OIBDA margin                              31.6%     0.5 p.p.     0.3 p.p.       32.1%     0.2 p.p.   (0.4 p.p.) 
 Telefónica España               39.7%   (1.2 p.p.)   (0.3 p.p.)       41.0%   (1.3 p.p.)   (1.3 p.p.) 
 Telefónica Deutschland               24.4%     1.1 p.p.     1.2 p.p.       24.7%     0.4 p.p.     0.3 p.p. 
 Telefónica UK                        26.2%   (0.5 p.p.)   (0.6 p.p.)       25.7%   (1.6 p.p.)   (1.6 p.p.) 
 Telefónica Brasil                    34.6%     2.0 p.p.     1.7 p.p.       34.9%     1.7 p.p.     1.6 p.p. 
 Telefónica Hispanoamerica            28.5%   (0.7 p.p.)   (0.4 p.p.)       29.6%   (1.4 p.p.)   (1.8 p.p.) 
 
 
 Operating Income (OI)                     5,143          7.1         11.2       1,773          3.2          9.4 
 
 
 Net income attributable to equity 
  holders of the Parent                    2,439          9.6                      839       (14.7) 
 Basic and diluted earnings per share 
  (euros)                                   0.44          8.7                     0.15       (17.5) 
 
 
 CapEx                                     5,962        (0.9)        (2.3)       2,455          3.9          3.7 
 Telefónica España               1,097       (14.9)       (14.5)         392        (0.8)        (0.7) 
 Telefónica Deutschland                 688        (8.0)        (7.4)         254       (19.6)       (19.2) 
 Telefónica UK                          604        (7.7)          0.6         170       (28.7)       (23.4) 
 Telefónica Brasil                    1,513         10.6          2.5         598          3.7         12.6 
 Telefónica Hispanoamerica            1,853          2.9          0.8         931         19.0         15.7 
 Other companies & eliminations              207         32.6         40.2         111        104.5        123.4 
   Telxius                                   136        111.8        107.5          79         n.m.         n.m. 
------------------------------------- 
 
 Spectrum                                    502         47.5         46.9         498         50.6         50.0 
 Telefónica España                   -            -            -           -            -            - 
 Telefónica Deutschland                   1       (86.7)       (86.7)           -            -            - 
 Telefónica UK                            -            -            -           -            -            - 
 Telefónica Brasil                        -            -            -           -            -            - 
 Telefónica Hispanoamerica              502         78.1         77.4         498         76.8         76.0 
 
 
 OpCF (OIBDA-CapEx)                        6,312          6.7          9.2       1,640        (9.6)          2.0 
 Telefónica España               2,634          0.7          3.5         914        (4.6)        (4.5) 
 Telefónica Deutschland                 630         14.1         12.9         203         44.4         36.6 
 Telefónica UK                          658        (8.9)        (0.9)         242         10.4         15.2 
 Telefónica Brasil                    1,649         31.7         11.1         426          6.2        (1.8) 
 Telefónica Hispanoamerica              825        (5.0)         26.8        (48)         c.s.          2.7 
 Other companies & eliminations             (84)       (13.0)         54.9        (97)          3.6         29.1 
   Telxius                                   126         12.6       (25.8)           3       (94.1)       (91.1) 
-------------------------------------  ---------  -----------  -----------  ----------  -----------  ----------- 
 
 - Reconciliation included in the 
  excel spreadsheets. 
 Notes: 
 - 2016 and 2017 reported figures include hyperinflationary adjustments in Venezuela in both 
  years. 
 - OIBDA and OI are presented before brand fees and management fees. 
 - 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. 
 - 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. 
 

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 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 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 June 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.

For further information please refer to the information on 2017 third quarter financial results filed by the Company and also available on the Company's web site: www.telefonica.com

This information is provided by RNS

The company news service from the London Stock Exchange

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October 26, 2017 02:33 ET (06:33 GMT)