Telefonica highlights organic revenue growth in 2014

26 Feb 2015

Despite Spanish telecoms giant Telefonica posting an 11.7% year-on-year drop in total turnover in reported currency terms for the year ended 31 December 2014, it highlighted what it termed a ‘widespread acceleration in organic growth in almost all countries’.

In the twelve-month period under review Telefonica generated total revenues of EUR50.377 billion (USD66.9 billion), with this representing a 2.6% y-o-y increase in organic terms, while the company also noted that organic revenue growth in the final quarter of the year was up 5.0% against 4Q13. With gains on sales of fixed assets totalling EUR327 million in 2014, operating income before depreciation and amortisation (OIBDA) stood at EUR15.515 billion in 2014, up 0.2% in organic terms, which the company said reflected ‘revenue growth and the benefits from the efficiency measures implemented and despite the higher commercial and network expenses’. However, in reported terms OIBDA actually fell 18.7% in 2014, impacted by exchange rate fluctuations, among other things.

Having last week warned that it expected the devaluation of the Venezuelan bolivar to impact net profit, such predictions proved true, and combined with other factors, such as losses booked following the classification of Telco, investment as an asset held for sale in the fourth quarter, consolidated net income in FY2014 totalled EUR3.001 million, down 34.7% year-on-year.

Meanwhile, having said it had ‘remained focused on network differentiation and modernisation’ in 2014, Telefonica noted that 75% of total investment in the year, excluding spectrum, had been devoted to transformation and growth. As a result, capital expenditure was up 16.9% (in organic terms) against the previous fiscal year at EUR9.448 billion, including EUR1.294 billion related to spectrum acquisition (primarily in Brazil, Argentina and Venezuela in 4Q14 and in Colombia and Central America in 1Q14).

In operational terms, at the end of December 2014 Telefonica had 341 million total accesses, up 6% year-on-year, with growth boosted by the incorporation of customers of E-Plus in Telefonica Deutschland, while the group’s Latin American division, Telefonica Brasil and Telefonica UK were also highlighted as reporting ‘solid’ gains. Mobile accesses numbered 274.5 million at end-2014, up 8% against the end of the previous year, with Telefonica calling the performance of its domestic unit Telefonica Espana ‘particularly noteworthy’ in the fourth quarter, with it posting mobile contract net additions for the third quarter in a row and for the first time in the full year since 2011. Retail broadband accesses meanwhile stood at 17.7 million at the end of the reporting period, with fibre accesses totalling 1.8 million.

Commenting on the group’s performance, Telefonica executive chairman Cesar Alierta said: ‘The results in the fourth quarter of 2014 represent the culmination of a period of intense transformation that has strengthened the Company, its growth potential and its financial position in just over two years. This transformation was carried out from the core of the business, thanks to an intense CAPEX effort that has allowed us to adapt to the evolution of our customers’ technological needs which are characterised by a booming data usage. For this reason, in 2014 alone, we have doubled the reach of our fibre network to 15 million premises passed and we have reached a 4G coverage of 60% in Europe, while in Latin America this service is already available in 10 countries.’

Spain, Telefonica