Net debt cut but writedowns and domestic woes hit Telefonica

28 Feb 2013

Spanish giant Telefonica has posted revenues of EUR62.4 billion (USD81.6 billion) for 2012, down 0.8% year-on-year. Sales growth of 5.5% from its Latin America unit failed to offset a 6.5% decline in turnover from European operations. Revenues in the company’s home market of Spain were hardest hit, with Telefonica losing subscribers for several quarters. Spanish wireline revenues slipped 10.2% while sales from Spanish wireless services dropped 16.6%.

EBITDA for the group, however, grew 5.1% to EUR21.2 billion, equivalent to a margin of 34% (up 1.9% percentage points year-on-year), thanks partly to a 22.7% decline in personnel expenses. Telefonica’s writedown of Telefonica Ireland by EUR513 million, an impairment charge on its Telecom Italia stake worth EUR949 million, and an EUR417 million hit following the devaluation of Venezuela’s currency, all contributed negatively to the company’s bottom line; net income for 2012 fell 27.3% to EUR3.9 billion.

More encouragingly, Telefonica was able to reduce its net debt, a key focus of concern, by 9% to EUR51.2 billion, following a series of asset disposals. The company says it aims to reduce net debt further in 2013 to below EUR47 billion. Also, Telefonica revealed that it raised EUR15 billion on the market in 2012, and that consequently its debt redemptions are covered beyond 2014.

In terms of operational metrics, the group had 310 million accesses at the end of the 2012, up from 301 million one year ago. Of the total, more than 247 million are mobile subscribers, 40 million are fixed line voice telephony customers, 18.6 million are broadband subscribers, with the remainder accounted for by wholesale accesses, Pay-TV customers and dial-up users. More than 68% of the group’s subscribers are in Latin America.

Spain, Telefonica