Telefonica cites success of its transformation strategy in Q3 results

27 Oct 2016

Spain’s Telefonica has published its financials for the three months ended 30 September 2016, with its executive chairman Jose Maria Alvarez-Pallete saying that the results ‘showed growth acceleration in the main operational metrics, driven by a broad improvement across different business units, and reflected the success of [the company’s] transformation strategy’.

In the quarter under review Telefonica generated a total turnover of EUR13.080 billion (USD14.6 billion), roughly unchanged in organic terms, but representing a year-on-year decline of 5.9% on a reported basis. Service revenues meanwhile totalled EUR12.148 billion, and while this again represented a reported decline of 4.1%, it was 1.4% annual organic increase. Notably, Telefonica highlighted the continued decline in turnover from handset sales, pointing to ‘the widespread extension of handset lifecycles’. In terms of regional contributions to sales, the group’s domestic unit, Telefonica Espana, accounted for 24.8% of consolidated revenues, followed by its Latin American division Telefonica Hispanoamerica (23.9%) and Telefonica Brasil (21.0%). Major European arms Telefonica Deutschland and Telefonica UK meanwhile represented 14.5% and 13.4% of total turnover, respectively. By service, broadband connectivity revenues continue to account for a larger slice of the total, increasing to 35.2% of consolidated revenues, up by four percentage points year-on-year. By comparison, voice and access revenues declined to 42.6% of the total (Q3 15: 47.1%).

Operating income before depreciation and amortisation (OIBDA) increased 3.1% y-o-y in organic terms to EUR4.175 billion, with consolidated net income increasing significantly (up 38.5% y-o-y on a reported basis) at EUR983 million.

In operational terms, at the end of September 2016 Telefonica had a total of 349.413 million accesses on its books, down by just under a percentage point against the same date a year earlier, but up marginally from the 347.514 million reported at end-June 2016. Mobile access accounted for the largest proportion of the total – 274.883 million – with the number of LTE customers surging to 57.342 million, an almost 90% year-on-year increase. Fixed broadband accesses continued to climb, reaching 21.266 million at end-September 2016, up from 20.966 million a year earlier, with a fibre and VDSL connections representing an increasing proportion of that figure (8.705 million such connections at the end the reporting period, up from 6.935 million in Q3 2015). Fixed telephony connections continued to decline, however, falling to 38.914 million at 30 September 2016, down from 40.218 million a year earlier.

Spain, Telefonica