Wednesday, November 9, 2011

Telefónica Swings to a Loss, Reaches 231.9 Million Mobile Users

Telefónica reported a 5.4% increase in revenues for the first nine months of 2011, reaching 46,672 million euros it total revenues at the end of the
third quarter, due mainly to the higher growth in revenues from mobile data services (up almost 20% in organic terms) and the sound performance of its business in Latin America, where reported revenues climbed 18%.

In organic terms, revenues rose 0.3% in the first nine months of 2011, negatively impacted by mobile termination rate cuts across all regions, which dragged 632 million euros to consolidated revenues. Excluding this impact, organic revenue growth would have reached 1.6% (+6.8% in reported terms). In organic terms, OIBDA fell by 4.6% year-on-year (-30.0% in reported terms), mainly due to the lower contribution by Telefónica España (-4.3 percentage points), not being offset by the higher contribution from Telefónica Europe (+0.2 percentage points).

Telefónica Latinoamérica dragged 0.4 percentage points from consolidated OIBDA organic growth, reflecting the negative impact of the Mexican business, lower revenues from regional initiatives with respect to 2010 and strong commercial activity.

Despite intense commercial activity and the negative impact from regulation, the organic OIBDA margin in the first nine months of the year stood at 35.8%, posting a limited erosion of 1.8 percentage points year-on-year, in line with the Company's expectations.

By region, Telefónica Latinoamérica accounted for 46% of underlying OIBDA (+4 percentage points year-on-year), rising to 65% including also the contribution by Telefónica Europe.

Some notes:

Total accesses managed by Telefónica increased by 6% in reported terms to 299.7 million at the end of September 2011.

Telefónica's mobile accesses reached 231.9 million by the end of September 2011, up 8% year-on-year in reported terms, underpinned by the sustained increase in the contract segment (+12% year-on-year), which now accounts for 32% of the total mobile access base (+1.2 percentage points year-on-year).

Mobile broadband accesses -accesses with a data rate attached and therefore active users of the service- exceeded 34 million at the end of September 2011 (+76% year-on-year). This figure represents a penetration rate of 15% of Telefónica's total mobile access base (+4
percentage points versus December 2010). Telefónica Europe reached a penetration rate of 29%, followed by Telefónica España (27%). Meanwhile, there is huge scope for increasing penetration at Telefónica Latinoamérica (9% at the end of September 2011).

Retail fixed broadband accesses reached a total of 17.8 million (+7% year-on-year).

At the end of September 2011 Telefónica managed a total of 194.9 million accesses in Latin America, with growth accelerating versus prior quarters to 9% year-on-year. Telefónica's mobile accesses rose by 10% year-on-year to 159.8 million. Telefónica managed 35.1 million fixed-line accesses in the region at the end of September 2011 (+2% year-on-year).

CapEx in the first nine months of the year stood at 6,625 million euros (-8.5% year-on-year) and includes the cost of the spectrum in Spain, Brazil and Costa Rica. In organic terms, CapEx rose by 5.0% with respect to January-September 2010.

The average number of employees at the end of September 2011 was 285,063 (20,395more than at the end of September 2010), mainly due to the larger workforce at Atento.

See also