Telefonica records 8.5% revenue drop in 2013

27 Feb 2014

Spanish telecoms giant Telefonica has reported a 8.5% drop in total turnover for the year ended 31 December 2013, though in organic terms the company was keen to stress that it had actually recorded year-on-year growth of 0.7%, or 2.3% when excluding the negative impact of regulation.

In the twelve month period under review Telefonica generated revenues of EUR57.061 billion (USD75.8 billion), down from the EUR62.356 billion it reported for FY2012. In terms of growth drivers, the group’s Telefonica Latinoamerica unit saw revenues increases by 9.6% in organic terms, though turnover was down by 4.3% y-o-y on a reported basis. By comparison, Telefonica’s European division fared less well, registering a 8.6% drop in revenue on an organic basis, and with that decline even steeper on a reported basis at -10.6%. Pointing to the fact that the revenue structure reflected its diversification, the company noted that Telefonica Latinoamerica now accounts for more than half of the group’s revenues; in FY13 the division’s turnover was 51% of total revenues, up 2.2% from the previous financial year. Turnover from European operations fell 1.1 percentage points year-on-year to around 47% of the total, while Telefonica’s domestic unit’s contribution to consolidated revenues declined by 1.3 percentage points (less than 23%). In terms of revenues by service, mobile data turnover was the group’s growth driver, rising by 9.3% y-o-y in organic terms, and now accounting for 37% of all mobile service revenues, up from 34% in FY12. In addition, Telefonica said that strong growth in non-SMS data revenues, which grew by 22.2% in FY13, was ‘especially noteworthy’.

Operating income before depreciation and amortisation (OIBDA) for the 2013 fiscal year stood at EUR19.077 billion, stable in organic terms but down 10.1% year-on-year on a reported basis. Meanwhile, profit attributable to minority interests reduced net income in 2013 by EUR376 million, Telefonica said, mainly due to the lower profit attributed to minority interests in Brazil, affected by the exchange rate. As a result, consolidated net income in FY13 totalled EUR4.593 billion, representing a 16.9% increase from EUR3.928 in the previous financial year. Capital expenditures for 2013 amounted to EUR9.395 billion, down from EUR9.458 billion in FY12, which included EUR1.224 billion related to acquisition of spectrum, primarily in the UK, Brazil, Peru, Colombia, Spain and Uruguay.

In operational terms, as at end-December 2013 Telefonica reported total mobile accesses of 254.717 million, up from 247.346 million a year earlier, of which almost 65% were pre-paid. Fixed voice lines totalled 316.759 million at the end of the reporting period, up from 310.088 million at end-December 2012. With the group reporting a total broadband subscriber base of 18.447 million, this represented a fall of almost 1% compared to the end of the previous year. However, Telefonica noted that this figure had been impacted by the disconnection of more than half a million accesses as a result of its disposal of the assets of the fixed business in UK.

Commenting on the group’s performance, Telefonica’s executive chairman Cesar Alierta noted: ‘In 2013, Telefonica has advanced significantly in its transformation process, achieving the targets set for the year; return to organic revenue growth, progressive margin stabilisation and improvement in financial flexibility compatible with the strengthening of the Company’s growth potential. We will accelerate this transformation in 2014. Among our targets, we will continue accelerating revenue growth while generating synergies to advance in margin stabilisation. At the same time, we will increase investments to anticipate to the growing demand from the increasingly intensive data service usage, as well as the recovery of demand expected in some of our main markets.’

Spain, Telefonica