Telefónica increases its turnover by almost 7% in the first quarter and exceeds 10,000 million euros

Telefónica billed 10,045 million euros in the first quarter of this year, 6.7% more than the 9,410 million euros reported in the same period of the previous year, as reported by the company on Thursday to the National Securities Market Commission (CNMV).

In this way, the firm chaired by José María Álvarez-Pallete placed its quarterly turnover above market forecasts, which estimated revenue for the period of between 9,700 and 9,800 million euros.

Thus, the operator has highlighted that these results consolidate the positive performance in the first three months of the year of its main subsidiaries. In Spain, its revenues increased by 0.3%, to 3,088 million euros, in Germany they grew by 8% (2,101 million euros) and in Brazil the turnover up to March stood at 2,282 million euros (+17.5% YoY).

Likewise, in the United Kingdom it improved its levels of organic growth, up to 2,947 million euros, and Hispam continued to evolve in its objective of achieving a modulated and sustainable exposure to the region.

In this context, the company also presented general increases in revenue in all segments and business units in the first quarter of the year “despite inflationary tensions.”

On the other hand, Telefónica's net profit was 298 million euros (-57.9% year-on-year), when the market consensus was between 300 and 305 million euros.

In this sense, three factors (none related to commercial and business activity) explain the decrease in net profit, as indicated by the company.

On the one hand, in the first quarter of 2022, a capital gain of 200 million was recorded for the sale of 60% of its fiber subsidiary in Colombia to KKR, while “financial factors” also had an influence, such as the update of the commissioning equivalent to Virgin Media O2, which this time subtracts 188 million euros, when in the first quarter of 2022 it added 72 million.

Added to this is a higher tax contribution, given that Telefónica paid more taxes in the first quarter of the year, specifically, 162 million euros, when in the same period of the previous year it paid 94 million euros.

We have started the year strong, despite the enormous challenge posed by the global economic environment”

Likewise, the operating result before amortizations (Oibda) stood at 3,121 million euros at the end of the first quarter (-2.4% year-on-year), “achieving a stable and constant level thanks to the growth in income and the focus on the efficiency,” the company said.

“We have started the year strong, despite the enormous challenge posed by the global economic environment. We continue executing our strategic plan and add another quarter of accelerated revenue growth in all the regions in which Telefónica is present”, highlighted Álvarez-Pallete.

In addition, he highlighted that the company is on the right track towards meeting its financial targets for the year as a whole. “We can also confirm the dividend planned for 2023. Telefónica continues to meet its debt reduction commitment and continues to strengthen its balance sheet thanks to its ability to anticipate,” added the company's chief executive officer.

Customer base

The operator closed the quarter with a customer base of 383.6 million, 4.15% more than a year earlier and with growth of 16% in fiber customers and 7% in mobile contract customers.

Likewise, the acceleration of fiber and 5G deployments is compounded by the closure of the copper plants in Spain, scheduled for April 2024.

The company has a total of 168.9 million real estate units passed at the end of March, 4% more than a year ago, of which a total of 66.6 million (+15%) run through the networks of Telefónica's own fiber.

Regarding 5G technology, already available in the four main markets, the company launched the 'stand-alone' version in Brazil during the quarter and plans to implement it in the United Kingdom, Germany and Spain throughout 2023.

At the end of March, 5G already covered more than 2,100 locations in the United Kingdom, more than 82% of the population in Germany, 85% of the population in Spain and 58 cities in Brazil.

Debt decreases

In the first quarter of the course, Telefónica's net debt stood at 26,443 million euros, 3.5% lower than that existing a year earlier, as a result of the “financial strength” of the company and the “cash generated for business”. In fact, as of March 31, free cash generation reached 454 million euros.

“Telefónica is facing the current scenario of inflationary pressures and interest rate rises with a solid financial and liquidity position. More than 80% of the debt is anchored at fixed rates, the company has maturities covered in the next three years, the average life of the debt is 13.2 years and the liquidity position is close to 21,400 million euros”, explained the company.

Telefonica Tech and Infra

As for Telefónica Tech, this business unit grew 43.5% in the first quarter, to 429 million euros, a rate “well above the market” which, according to the company, contributed to the growth of global revenues. of the B2B segment.

Precisely within the general increase in revenue registered in the first three months of 2023, the B2B segment has remained one of the main drivers of the company's growth, with an increase in sales of 9% organically compared to the first quarter of 2022.

Meanwhile, Telefónica Infra continued to strengthen Telefónica's position “thanks to the creation of value and its pioneering status in the implementation of new fiber infrastructure models.”

Telxius, Telefónica's submarine cable business, registered an increase in reported revenues of 8.4% and an increase in Oibda of 10.4%, thus growing for the fifth consecutive quarter.