Telefónica increases revenues in all its markets and earns 706 million euros until March

Telefónica increases revenues in all its markets and earns 706 million euros until March

Madrid, May 12, 2022. Telefónica has accelerated its growth in the first quarter of 2022, a period in which it has managed to increase revenues in all the markets in which it operates, in reported terms, and in which it has obtained a net profit of 706 million euros.

In the first three months of the year, the company has also made progress in the execution of its strategic plan, with the achievement of new milestones aimed at creating value. In this area, the closing of the acquisition of Oi’s mobile assets in Brazil stands out, which will generate synergies of around 1,000 million euros. The agreements reached in Spain with respect to broadcasting rights for LaLiga have also stood out, with a reduction in net costs of 15% after the agreement with DAZN; the improvement of the network in Germany; advances in the process of creating fiber vehicles in Spain and the United Kingdom; or the acquisition of the British company Incremental by Telefónica Tech, to which the purchase of BE-terna has subsequently been added.

“Telefónica’s solid start to the year in a scenario of inflationary tensions and geopolitical instability demonstrates the strength of the company to face the most adverse situations. Once again, it is confirmed that the Group’s strategic plan is correct and represents a valid and robust roadmap to be able to continue providing the best service to our customers”, underlines José María Álvarez-Pallete, president of Telefónica.

“During the first quarter we have continued to fulfill our strategy, aimed at creating value. The successful closing of Oi’s operation in Brazil or the agreement signed with DAZN for the rights to LaLiga demonstrate that Telefónica never rests in the execution of its strategic plan”, affirms the company’s CEO, Ángel Vilá. The General Director of Finance and Control for Telefónica and head of Latin America, Laura Abasolo, highlights “the robust start to the year, with generalized organic growth and a solid generation of free cash flow”.

In this same context of compliance and execution of the strategic plan, Telefónica has shown progress in relation to the digitization of the business model, whose processes are already 81% digitized, with the aim of continuing to leverage technology and efficiency to keep moving in this direction.

Revenue: growth in all countries

Revenues for the first quarter reached 10,883 million euros, including 50% of the joint venture created in the United Kingdom (VMO2), which represents a growth of 3.2% compared to the same period in 2021.

In reported terms, revenue growth has spread throughout all the markets in which the group operates, with double-digit increases in Brazil (+18.1%) and Hispam (+10.9%), for a total of 9,410 million. Of this revenue, 73% already comes from broadband connectivity and digital services, with an increase of 2.1 percentage points compared to the same period in 2021.

The operating result before amortization (OIBDA) has increased by 2.1%, to 3,753 million euros, considering 50% of VMO2. In reported terms, it stood at 3,199 million euros, again with double-digit increases in Brazil (+14.6%) and Hispam (+50.7%).

For the first time in recent years, the favorable evolution of exchange rates has had a positive effect on both revenues and OIBDA in the same quarter, with a contribution of 242 million in sales and 95 million in operating income before amortization.

By markets, Spain has represented 28% of the income obtained by the company; Hispam, 20%; Brazil, 18%; Germany, 18%; and the United Kingdom, 14%. Also by markets, 30% of OIBDA has come from Spain; 21% from Brazil; 16% from Germany; 16%, from Hispam; and 15% from the UK.

Results 2022 1Q - Revenues by geography

The growth of both revenues and OIBDA is on the path to meeting the financial objectives set by the company for the year as a whole, consisting of achieving low single-digit growth in both sections organically. The same occurs with the investment ratio (CapEx) over sales, which has stood at 12%, compared to the annual objective of reaching a proportion of up to 15%.

Telefónica Tech: growth of 80%

Telefónica Tech has accelerated its growth in the first three months of 2022. Its revenues have increased by 80.6% compared to the same period of the previous year, to 299 million euros, thanks to the good performance of all areas and the integration of operations throughout 2021.

With regard to Telefonica Infra, the company has made progress in the quarter in the process of creating fiber vehicles in Spain and the United Kingdom, holding talks with potential investors, and has closed the alliance with Pontegadea in Telxius, after the sale of KKR’s stake.

Free cash generation: 15.5 times more than in 2021

During the first three months of the year, Telefónica has reported a free cash generation of 513 million euros including leases, 15.5 times more than in the first quarter of 2021 due to the spectrum auctions carried out during the first months of last year .

Investment (CapEx) has fallen by 4.9% organically, to 1,320 million euros, including 50% of VMO2, while operating cash (OIBDA – CapEX) has grown by 6.4%, also from organically, up to 2,433 million euros.

Strong financial position: maturities covered beyond 2024

At the end of the first quarter, Telefónica has a solid financial situation that allows it to face the current scenario of inflationary tensions and increases in interest rates, a position that also benefits from the efficiencies derived from the new business model. Despite the pressure of inflation in all the regions in which the company operates, both revenues and OIBDA have grown sequentially in all of them, and 80% of revenues incorporate mechanisms in the rates that protect against this effect. In addition, Telefónica has decades of experience in markets with high inflation rates.

At the end of the first quarter, the net financial debt has been reduced to 27,453 million euros, 23.3% less than in March 2021. Of the total debt, more than 80% is at a fixed rate, with which The company is protected against the possible increase in financing costs, and the average life of the debt reaches 12.9 years.

In addition, Telefónica has an important liquidity position, which reaches 22,302 million euros, and has its maturities covered until beyond 2024.

More and better customers: access base of 368 million

The Telefónica group’s access base stood at 368.3 million at the end of March, 1.1% more than a year earlier. Fiber customers have grown by 20% and mobile contract customers have grown by 4.3% compared to March 2021.

The company continues to focus on the deployment of fiber and the development of sustainable, open and virtualized technologies. At the end of March, Telefónica maintained its leadership position by number of real estate units passed with fiber, increasing its presence by 6%, to a total of 162.9 million homes passed, of which nearly 85 million do so through through Telefónica’s own network.

Regarding 5G technology, Telefónica offers coverage in more than 400 British towns, around 250 German cities and 21 Brazilian cities, while in Spain it covers approximately 82% of the population. In addition, the implementation of stand-alone 5G technology continues after the acquisition of spectrum in Spain, the United Kingdom and Brazil in 2021.

ESG and solidarity with Ukraine

Telefónica’s Sustainability objectives, integrated into the company’s business strategy and aligned with the United Nations SDGs, have advanced in the quarter with milestones such as the boost given to the Innovation and Talent Hub by the inauguration of the new campus de Universitas, Telefónica’s firm commitment to employability and digital training, as well as the three WDA mentions received in recognition of transparency in the management of information regarding the company’s employees and the value chain.

Telefónica’s ESG objectives are tangible. The company aims to achieve net zero emissions in 2040, with the intermediate target of achieving it in the company’s main markets in 2025 (Scope 1+2), and being a Zero Waste company in 2030. It is also to achieve between 90-97 % of mobile broadband coverage in rural areas of Spain, Brazil and Germany in 2024; have 33% women managers in 2024; and eliminate the gross salary gap in 2050. And equally tangible is the objective of financing more than 10,000 million euros in the coming years under sustainability criteria; achieve gender parity in the main governing bodies of the company in 2030; and maintain a “zero tolerance” policy against corruption.

Telefónica and its Foundation have also shown their solidarity with Ukraine in the quarter with aid aimed at those who live in Ukraine, with people who have friends and relatives there and with all those who seek protection in other countries. The initiatives have been articulated through monetary donations and free telecommunications services (calls, roaming or SMS), and by the hand of employees, volunteers and organizations in the different countries in which the company operates.


Please enter your comment!
Please enter your name here