Basic earnings per share advanced 9% year-on-year to 1.23 euros
MADRID--(Business Wire)--
Figures for the third quarter of 2009 showed a marked rise in commercial
activity, with sharp growth in the customer base (+6.6%) to 268 million,
confirming the success of Telefónica`s strategy focused on increasing accesses
and improving efficiency and cash generation to foster use of its services
* Organic growth in revenue (+0.1%), OIBDA (+1.8%) and operating income (+2.1%)
underscore the strength of the Company`s diversification and execution skills in
changing conditions
* Operating cash flow (OIBDA-CapEx) through September jumped 10.1% year-on-year
in organic terms to 12,270 million euros
* Telefónica has reiterated its financial targets for 2009 and its commitment to
propose a dividend payment of 1.15 euros per share from 2009 earnings; the first
payment of 0.50 euros has already been distributed
* The Company remains in strong financial shape, as demonstrated by a net debt
plus commitments to OIBDA ratio of 2.0x
* The performance in reported terms of revenues (-3.3%), OIBDA (-2.2%),
operating income (-2%) and net profit (0.3%) was affected by exchange rates and
the capital gains from Airwave and Sogecable in 2008
* Latin America underlined its position as the Group`s growth engine, posting
5.8% organic revenue growth, while OIBDA rose 13.5% and operating cash flow
advanced 31.4%
* The businesses in Spain registered a marked increase in commercial activity
and solid cash flow generation to 6,113 million euros in the first nine months
* Telefónica Europe is reaping the benefits of improved efficiency and reported
sharp organic growth in revenues (+1.4%), OIBDA (+4.6%) and cash flow generation
(+16.1%)
In the first nine months of 2009 Telefónica (NYSE:TEF) (LSE:TDE) achieved solid
results, reflecting the success of the Company`s strategy, which is focused on
increasing the customer base and promoting the use of its services, while
working to maximise efficiency and increase cash flow.
The Company`s commercial approach, focused on capturing growth in its markets,
has resulted in the Telefónica Group`s total accesses increasing by 6.6%
compared to September 2008, to exceed 268 million. This increase was mainly
underpinned by the rise in wireless (+8.9%), fixed broadband (+9.8%) and pay TV
(+15.1%) accesses. By region, the growth rates reported by Telefónica Europe
(+8.0% year-on-year) and by Telefónica Latinoamérica (+6.9% year-on-year) must
be highlighted.
By type of access, the Telefónica Group had over 205 million wireless accesses
at the end of the third quarter, with net adds in January-September 2009 of
slightly over 10.0 million accesses. There was a significant rise in commercial
activity in the third quarter 2009, with net adds of around 5.0 million
accesses, in line with the figure for the first half and almost double the level
in the second quarter. Retail internet broadband accesses stood at 13.2 million,
a year-on-year increase of 9.8%, driven by the growing adoption of bundled
voice, ADSL and pay-TV service packages. In Spain over 87% of retail broadband
accesses are bundled as part of some kind of dual or triple service package,
while in Latin America almost 55% of broadband accesses are bundled as part of a
dual or triple package. Pay TV accesses stood at around 2.5 million at the end
of September, 15.1% up a year earlier. It is worth mentioning that the Company
now offers pay TV services in Spain, the Czech Republic, Peru, Chile, Colombia,
Brazil, Venezuela and Argentina.
As a result, despite the current economic context, the high diversification in
its operations, both in terms of businesses and geographies, enabled the Group
to achieve revenues of 41,721 million euros in the first nine months of 2009,
virtually in line (+0.1%) with the same period in 2008 in organic terms1, with
significant increases in revenues in Telefónica Latinoamérica, which contributed
2.2 percentage points to growth, and, to a lesser extent, Telefónica Europe,
which contributed 0.3 percentage points in the period. By service, connectivity
revenues from both wireline and mobile broadband, together with revenues from
applications and new services, are increasing their contribution to total Group
revenues.
Reported revenues fell by 3.3% compared to the first nine months of 2008.
However, this was mainly as a result of the negative impact from foreign
exchange rates, which reduced growth by 3.6 percentage points. Changes in the
consolidation perimeter added a further 0.2 percentage points to revenue growth.
In absolute terms, Telefónica Latinoamérica contributed 39.8% (+2.0 percentage
points compared to the same period in 2008) to total Group revenues, while
Telefónica España and Telefónica Europe contributed 35.1% and 24.1% of overall
revenue respectively.
On the other hand, the Telefónica Group`s operating expenses in the period
January-September 2009 amounted to 25,776 million euros, down 5.2% compared to
the end of September 2008. Stripping out the impact of foreign exchange rates,
operating expenses fell by 1.2% year-on-year, as the higher expenses at
Telefónica Latinoamérica, mainly from network and systems costs, are offset by
lower expenses at Telefónica España (due to lower supply costs and lower
commercial costs, mostly related to advertising). In organic terms1, operating
expenses dropped by 1.3%.
Gains on sale of fixed assets to September amounted to 18 million euros compared
to 236 million euros in January-September 2008 (mainly due to capital gains on
the sale of Sogecable and Real Estate disposals by Telefónica España and
Telefónica O2 Czech Republic).
The Company`s focus on increasing efficiency and exploiting economies of scale
was reflected in 1.8% growth in operating income before depreciation and
amortisation (OIBDA) in organic terms1to 16,647 million euros in the first nine
months of 2009. This growth was mainly due to the contributions of Telefónica
Latinoamérica (+4.9 percentage points) and Telefónica Europe (+0.8 percentage
points), which offset Telefónica España`s lower contribution to OIBDA (-3.7
percentage points). In organic terms2, the Telefónica Group improved its OIBDA
margin by 0.7 percentage points to 39.9%, fuelled mainly by expanding margins at
Telefónica Latinoamérica (+2.7 percentage points) and Telefonica Europe (+0.9
percentage points year-on-year).
In reported terms, OIBDA fell by 2.2% year-on-year, although excluding the
impact derived from asset sales in 2008 (Airwave and Sogecable), OIBDA dropped
slightly (-0.7%) compared to the same period in the previous year. Excluding the
impact derived from disposals (Airwave and Sogecable) on 2008 earnings, the
Telefónica Group`s OIBDA margin increased by 1.0 percentage point compared to
the same period a year earlier.
OIBDA at Telefónica España accounted for 43.5% of total Group OIBDA, compared to
39.9% and 17.3% for Telefónica Latinoamérica and Telefónica Europe,
respectively.
Depreciation and amortisation in the first nine months of 2009 totalled 6,623
million euros, down 2.6% year-on-year. In organic terms2, this item increased by
1.4%, mainly due to higher depreciation and amortisation at Telefónica
Latinoamérica.
In the first nine months of the year, operating income (OI) amounted to 10,024
million euros, with 2.1% year-on-year growth in organic terms2 (-2.0% in
reported terms).
Profit from associated companies stood at 47 million euros to September (20
million euros in the same period in 2008), mainly as a result of higher profits
from the Company`s holdings in Portugal Telecom and reduced losses from the
participation in Telco, S.p.A..
Net financial results to September 2009 amounted to 2.058 million euros, down
2.0% vs. the same period of 2008.
Free cash flow generated by the Telefónica Group up to September 2009 amounted
to 6,733 million euros. Out of this figure 737 million euros were assigned to
Telefónica`s share buybacks, 2,277 million euros to Telefónica S.A. dividend
payment and 620 million euros to commitment cancellations derived mainly from
workforce adaptation plans. In addition there was a net payment of 834 million
euros due to financial investments and divestments. As a result, net financial
debt decreased by 2,265 million euros. On the other hand, net debt increased by
2,067 million euros because of the foreign exchange impact, changes in the
consolidation perimeter and other effects on financial accounts. All this led to
a decrease of 198 million euros with respect to the net financial debt at the
end of 2008 (42,733 million euros), leaving the final figure in September 2009
at 42,535 million euros.
As a result, the leverage ratio (net debt/OIBDA) stood at 1.9 times at September
2009, compared to 2.0 times at June 2009. This improvement is explained by a
reduction on the net financial debt amount together with an increase in the
OIBDA figure.
During first nine months of 2009, the financing activity of Telefonica Group,
excluding short term Commercial Paper Programmes activity, rose up to roughly
11,000 million euros mainly focused on refinancing 2009 maturities and
pre-financing part of 2010 and 2011 debt at Telefonica, S.A. level. To highlight
the 5 years Euro-denominated bond issue for an amount of 2,000 million euros
raised in January, 1,000 million euros raised in March through a 7 years bond
issue, the re-opening of this last one in June for another 500 million euros and
a 6-years private issue of 400 million euros placed in the same month. In
addition, in June a US dollar-denominated issue was launched for 2,250 million
US dollars divided in 2 tranches of 5.5 and 10 years maturity. Thanks to these
transactions, the Group`s cash position amply exceeds 2009 and 2010 maturities.
In the first nine months of 2009 income taxes totalled 2,291 million euros,
implying a tax rate of 28.6%, which was not affected by any one-off
transactions.
Profit attributable to minority interests reduced net income to the end of
September by 111 million euros (-36.0% year-on-year), associated mainly to
minority interests in the profits of Telesp, Telefónica O2 Czech Republic and in
the losses of Telefónica Telecom.
As a result of the above, consolidated net income to September 2009 amounted to
5,610 million euros, up 6.4% on the same period of 2008, stripping out the
impact of capital gains from asset disposals (Airwave and Sogecable) booked in
the first nine months of 2008.
At the end of September, basic earnings per share rose by 9.0% year-on-year to
1.23 euros, excluding the impact of the asset sales in 2008 described above. In
reported terms, the year-on-year increase was 2.7%.
CapEx in the first nine months of 2009 amounted to 4,376 million euros, with
operating cash flow (OIBDA-CapEx) of 12,270 million euros, up 10.1% year-on-year
in organic terms3. This performance was driven by strong growth in Telefónica
Latinoamérica (+31.4% in organic terms3; 4,668 million euros) and Telefónica
Europe (+16.1% in organic terms3; 1,687 million euros), which offset the lower
cash flow generated by Telefónica España in comparable terms4 (-3.3% to 6,113
million euros). Reported operating cash flow increased 5.6% year-on-year.
Economies of scale and efficient management of operating expenses and CapEx
resulted in an efficiency ratio5 of 73.9%, a year-on-year improvement of 2.2
percentage points. As a result, it has been posted an acceleration in organic
growth6 rates across the various income statement items, from revenues (+0.1%)
to OIBDA (+1.8%) and OI (+2.1%), becoming more relevant at the operating cash
flow level, which exceeded revenue growth by 10.0 percentage points.
1 Assuming constant exchange rates and including the consolidation of Telemig in
January-March 2008. OIBDA and OI figures do not include the impact of capital
gains registered in Q2 08 from the sale of Airwave and Sogecable.
2 Assuming constant exchange rates and including the consolidation of Telemig in
January-March 2008. OIBDA and OI figures do not include the impact of capital
gains registered in the second quarter of 2008 from the sale of Airwave and
Sogecable.
3 Assuming constant exchange rates and including the consolidation of Telemig in
January-March 2008. OIBDA and OI figures do not include the impact of capital
gains registered in the second quarter of 2008 from the sale of Airwave and
Sogecable.
4 Comparable basis, excluding: Universal Service: 183 million euros in revenue
and 51 million euros in OIBDA in the third quarter of 2008 and 75 million euros
in revenues and 22 million euros in OIBDA in the first quarter of 2009; sale of
bad debt portfolios: 25 million euros in OIBDA in the first quarter of 2008;
real estate capital gains: 0.5 million euros in OIBDA January-September 2009 and
73 million euros in OIBDA in the same period in 2008; revision of the estimates
for the adjustment to workforce adaptation plans provided for in prior periods,
which has resulted in lower expenses of 90 million euros in the second quarter
of 2009 and sale of applications rights: 48 million euros in revenue and OIBDA
in the third quarter of 2009.
5 Defined as (Operating expenses + CapEx - Own work capitalised) / Revenues for
the last twelve months. The CapEx figure excludes spectrum acquisitions and the
Property Efficiency Programme in T. España.
6 Assuming constant exchange rates and including the consolidation of Telemig in
January-March 2008. OIBDA and OI figures do not include the impact of capital
gains registered in the second quarter of 2008 from the sale of Airwave and
Sogecable.
Dirección de Comunicación Corporativa
Press Office
Tel: +34 91 4823800
Fax: +34 91 7271498
e-mail: prensa@telefonica.es
http://www.telefonica.es/saladeprensa
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