Thursday, July 25, 2013

Telefónica Cuts Debt Through Asset Sales

Telefónica Group’s  revenue for the first half of 2013 totalled 28,563 million euros, marking a return to growth in organic terms for the first time since the first quarter of 2012, as revenues increased 0.5% year-on-year during the second quarter of 2013.  The results were driven by a strong acceleration in Latin America, which grew by double-digits in the same period (+10.4% yoy in organic terms), and improving trends in Europe. At the end of June, OIBDA reached 9,421 million euros (-0.4%) and the company maintained high levels of profitability with an OIBDA margin of 33%.

The company said these results are in line with its internal estimates, allowing it to reaffirm annual operating and financial targets.

Telefónica has reduced net debt by 10 billion euros from June 2012, including the recently announced disposals of 40% in Central America, 100% in Ireland and Inversis. The company's net debt now totals 48,614 million euros. This represents a leverage ratio of 2.36 times net debt over OIBDA and places the Group’s net debt very near its objective of <47 2013.="" euros="" in="" million="" nbsp="" p="">
Some other highlights:

  • At the end of June, the Telefónica Group’s customer base reached 317.3 million accesses (+2%) out of which more than 78% are mobile accesses (249.5 million).
  • 2.1 million net mobile contract customer additions in Q2, resulting in mobile contract customers already amounting to 85 million (+8.1%).
  • The company added 8.2 million smartphones in Q2
  • Smartphones already reached a penetration rate of 24% of mobile accesses.
  • During Q2, Telefónica launched its first Firefox handsets.
  • Between January and June 2013, the company invested 3,903 million euros, including 834 million euros for purchasing spectrum in the United Kingdom, Uruguay, Spain and Brazil. 84% of the total investment effort was allocated to growth and transformation activities.
  • Mobile accesses stood at 249.5 million, up 2% compared with June 2012, driven by the contract segment, which accelerated its growth to 8% year-on-year and now accounts for 34% of total mobile accesses The Company strengthened its position in this high value segment and during the second quarter ramped up its pace of customer capture and commercial activity, particularly in smartphones, with net contract additions of 2.1 million, the highest since the third quarter of 2011.
  • Mobile broadband accesses stood at 63.3 million at the end of June, posting the largest year-on-year growth since the second quarter of 2012 (+41%), almost 7 percentage points higher than the first quarter and increasing its penetration rate up to 25% of mobile accesses (+7 percentage points year-on-year). This strong commercial activity continued to be underpinned by the significant increase in smartphones, with a record of 8.2 million net additions in the quarter, three-fold the figure in the first quarter and more than double the figure in the same period of previous year. The smartphone penetration rate stood at 24% of mobile accesses in June 2013.
  • Retail broadband accesses totalled 18.3 million at the end of June and improved its growth up to 2% excluding the impact of the sale of the assets of the fixed business in the UK. Net additions in the quarter stood at 165 thousand customers, 4.4 times more than in the first quarter and 1.9 times more than in the same period of 2012.
  • The acceleration in commercial activity in the quarter was mainly driven by Telefónica Latinoamérica, with mobile contract net adds rising by 44% compared with the first quarter of 2013 and by 64% compared with the second quarter of 2012, reflecting the focus on high-value customers, especially on smartphones. There was also a marked improvement in the operating performance of the fixed business, mainly driven by broadband, with net adds in the quarter 1.6 times higher than in the January-March period, to reach 214 thousand accesses.
  • By region, Telefónica Latinoamérica is the Group's growth engine, accounting for 51.4% of consolidated revenues in the first half of the year while Telefónica Europe and Telefónica España's contributions fell to 46.9% and 23.0%,respectively.
  • Mobile data revenues rose 9.8% year-on-year in organic terms (+9.6% in the first half) and accounted for 36.4% of mobile service revenues in the year (up 3 percentage points compared with the first half of 2012).
  • Non-SMS data revenues growth ramped up sequentially to 22.1% year-on-year in organic terms (+22.0% in the half year) and now account for 63% of total data revenues.
  • The average headcount was 131,882 employees, down slightly compared with the first half of 2012 (-3.5%).
  • CapEx in the first half totalled 3,903 million euros (+6.7% year-on-year) and included 834 million euros relating to the acquisition of spectrum; in the UK (671 million euros) and Uruguay (24 million euros) in the first quarter and in Spain (65 million euros), the UK (47 million euros) and Brazil (28 million euros) in the second quarter.

See also