Thursday, November 13, 2008

Telefónica Reports Solid Q3 and Confirms 2009 Guidance

Citing its strong diversification geographically and across wired and wireless networks, Telefónica reported solid financial results for Q3 2008 and a sharp growth in the total number of access accounts across all businesses and regions. As of 30-September-2008, the Telefónica Group was serving 252 million accesses (up 15.2% on the first nine months of 2007). The growth in mobile telephony (+19.0%), broadband (+24.5%) and Pay TV (+54.0%) accesses was particularly

Telefónica's organic revenue growth accelerated to 7.0% in the first nine months of 2008 (up from 6.7% in the first half), driven by solid growth at Telefónica Latinoamérica, which increased its contribution to the Group's organic growth (contributing 4.6 percentage points in the first nine months, up from 4.3 percentage points in the first half).

Operating cash flow (OIBDA-CapEx) amounted to 11,621 million euros in January-September 2008. The healthy cash flow generation in Europe (7,995 million euros including Spain) was boosted by the growing contribution from the Latin American operations (3,626 million euros). Net income rose 23.5% on January-September 2007 on like-for-like terms2 to 5,596 million

Some additional highlights from the financial report:


  • In its home market, Telefónica maintained its competitive strength with 47.2 million accesses (an increase of 3.3% year-on-year)

  • Telefónica holds an estimated market share of over 57%. Retail broadband Internet accesses stood at over 5.1 million (+16.8% year-on-year), with solid performance in broadband ARPU (-3.4% year-on-year).

  • Pay TV customers reached more than 589,000, up 25.7% vs. September 2007.

  • In a market characterised by a high rate of penetration, Telefónica's mobile contract customer base grew by 9.0% year-on-year, which drove the total customer base to more than 23.4 million lines (an increase of 4.5% from a year earlier).


  • Telefónica Latinoamérica significantly boosted its customer base to more than 150 million subscribers at the end of September (+21.1% vs. September 2007)

  • The mobile telephony business continued to grow strongly, at 26.7% year-on-year, with organic net adds5 for the nine-month period rising by 20.4% on the previous year, driven by the higher number of gross adds and contained churn, to a total of 118.3 million accesses.

  • The company boosted outgoing ARPU by 1.2% in organic terms6 in constant euros in the first nine months of 2008, despite rapid growth in the customer base.

  • Retail broadband Internet accesses were close to 5.9 million (+24.9% year-on-year), with a strong ramp-up in net adds in the third quarter (+21.2% compared to the second quarter of 2008) to 839,830 in the nine-month period. Pay TV customers reached 1.5 million (+66.0% vs. September 2007) and the number of fixed telephony accesses7 grew 1.4% year-on-year.

  • The average revenue per fixed telephone access rose 5.5% in constant euros, on the back of
    a greater penetration of bundled products.

  • Telefónica Latinoamérica consolidated its role as the Group's key growth driver. Organic revenue growth8 ramped-up to 12.9% in January-September 2008 (vs. +12.2% in the first half of 2008) while the OIBDA showed an outstanding growth, which in organic8 terms was up 15.6% year-on-year

  • Wireless revenues continued to post year-on-year growth exceeding 20% in local currency in the majority of markets, thanks to the good performance of outgoing revenues.

  • The third quarter saw a significant acceleration in wireline revenues growth rates, helped by the growing contribution of Internet and Pay TV revenues (18.3% of the total at the end of September; +3.1 percentage points on September 2007) and improved performance among traditional services.


  • During the first nine months of the year, mobile had net adds of 2.2 million customers (+8.3% year-on-year), to reach 44.9 million total accesses at September 2008 (+9.9% year-on-year).

  • Telefonica O2 UK recorded its best ever third quarter with 278,000 contract net adds, mainly leveraged on customer propositions such as Simplicity, iPhone and improvements in churn, leading to a best-in-class 1.3% rate.

  • Telefonica O2 Germany added 402,405 mobile customers in the quarter, with an improved mix of higher value customers on contract, bringing the total mobile customer base to 14.0 million (+14.9% year-on-year).

See also