Telefonica Q2 sales slip 0.9%, although improve 3.7% in local currencies

26 Jul 2019

Spain’s Telefonica has reported consolidated group revenues of EUR12.142 billion (USD13.527 billion) in the second quarter of 2019, growing 3.7% year-on-year organically in local currencies but slipping 0.9% in reported currency, mainly due to currency exchange effects – chiefly depreciation of the Brazilian real and the Argentine peso against the euro. Group operating income before depreciation and amortisation (OIBDA) increased by 4.7% y-o-y to EUR4.438 billion in April-June 2019, while quarterly net income stood at EUR862 million, decreasing 4.5% y-o-y on factors including tax litigations, hyperinflation in Argentina and adoption of IFRS 16 accounting standards.

In Spain, revenues in the quarter totalled EUR3.175 billion, growing 0.3% y-o-y, attributed to growth in service revenues (up 0.3% to EUR3.086 billion) and mobile handset revenues (up 0.5%). In Germany, Telefonica Deutschland’s 2Q19 revenues grew 1.6% to EUR1.785 billion due to solid mobile service revenue performance and ongoing strong demand for handsets, while Telefonica UK (O2) sales were up 5.1% to EUR1.720 billion mainly driven by ‘strong demand for higher value handsets supported by the success of the flexible Custom Plans, continued growth in the Smart Metering Implementation Programme (SMIP) as well as MVNO revenues.’

Telefonica Brasil’s revenues in 2Q19 reached EUR2.467 billion, down 2.2% in reported currency although up 0.4% organically thanks to mobile service revenues and handset sales, with growth in mobile contracts and fibre accesses also highlighted as positive factors. The Telefonica HispAm Sur division (Argentina, Chile, Peru and Uruguay) earned revenues for April-June of EUR1.743 billion, down 3.1% in reported currency but climbing 17.6% in organic terms, mainly due to improved mobile service revenues in Argentina and Peru. Q2 sales for the Telefonica HispAm Norte division (Colombia, Mexico, Central America, Ecuador and Venezuela) fell 0.2% in reported currency to EUR1.014 billion, while improving by 0.2% in organic terms, with growth in mobile contracts, LTE accesses and fibre-to-the-home (FTTH) take-up.

Group-wide, Telefonica reported that its FTTx/cable access coverage passed 121 million premises at end-June 2019 (including 53.2 million in ‘own network’: 22.2 million in Spain, 20.3 million in Brazil and 10.6 million in HispAm markets). LTE mobile networks reached 78% population coverage group-wide (up four percentage points y-o-y), including 95% across European markets and 73% in Latin America, with LTE traffic now accounting for 73% of the mobile network total.

Telefonica also this week completed the sale of nine data centres in Spain, Brazil, Mexico, Peru, Chile and Argentina to a unit of investment fund Asterion for EUR472 million. Two other data centres are set to be sold under a total EUR550 million deal with Asterion pending final authorisations.