DIN-CUBE-RED-w2 Profiled in Dynamic Intelligence Network (DIN)

Telefónica ends 2012 with net profit of 3,928 million euros after write-off totalling 2,536 million

telefonica-FEATSource Telefonica

Extract: The fourth quarter is the best in the whole year, discounting exceptional impacts: the pace of growth increased in Latin America and consolidated OIBDA stabilised, after three successive quarters of sequential growth and increase in margins


The Executive Chairman of the company, César Alierta, highlighted the progressive improvement in results quarter by quarter, which reflects the implementation of a deep transformation in Telefónica, aimed at regaining sustainable growth of organic revenue and a continued increase in margins.

Telefónica announces its guidance for 2013 and reiterates the shareholder remuneration policy for 2013, of paying a cash dividend of 0.75 euros per share.

  • The behaviour of net profit in 2012 compared to 2011 (-27.3%) is affected by a number of extraordinary impacts, which last year reduced this item by 2,536million euros. These included the adjustment of the value of the stakes in Telecom Italia and Telefónica Ireland, and the effect of the devaluation of the Venezuelan Bolivar. Without these effects, the consolidated net profit stood at 6,465 million euros.
  • Between January and December, the free cash flow totalled 6,951 million euros, which guarantees ample coverage of the dividends announced for 2013.
  • Revenues stood at 62,356 million euros at the end of December (-0.8% year on year, +0.7% excluding the impact of regulation). Particularly notable is the solid growth of mobile data revenues (+12.8% year on year) and the evolution of this item in Latin America (+5.5%), which accelerated in the fourth term to grow by +7.5% in organic terms.
  • Latin America consolidated its position as the region that contributes most to the Group’s revenue (more than 50% in the fourth quarter), which demonstrates the value of the company’s high degree of diversification; this is key to guarantee sustainable levels of differential growth in the future.
  • Over the year as a whole, Telefónica’s consolidated OIBDA grew by +5.1% in reported terms to 21,231 million euros, which places the OIBDA margin at 34% (+1.9 p.p.).
  • Between January and December, Telefónica reduced its financial debt by over 5,000 million euros to 51,259 million euros, which means that the net financial debt to OIBDA ratio is 2.36 times. In addition, thanks to an active financing policy (€15,000M between January and December), the profile of Telefónica’s debt maturities is now covered beyond 2014. All of this is compatible with the envisaged investments in areas of greater growth and the acquisition of spectrum.
  • During financial year 2012, Telefónica invested 9,458 million euros, i.e. 14.2% of its revenue (excluding investments in spectrum). 81% of that investment was earmarked for growth and transformation projects.
  • With regard to operations, Telefónica ended the year with a customer base that grew by +3% to 316 million accesses and the recovery of commercial momentum in Europe. Mobile customers totalled 247 million accesses at close of 2012 (+4%), with growth rates of +7% in the contract segment. At the end of December, Telefónica had 52.8 million mobile broadband customers (+38%) and had 18.6 million retail fixed broadband accesses (+3%).
  • The business in Spain has become the paradigm of the transformation of the Group towards a sustainable model of growth and profitability, which in the fourth quarter was translated into positive results, in both the financial and operating spheres. Thus:
    o Thanks to the new commercial strategy and the higher levels of efficiency and optimisation of resources, in the fourth quarter the OIBDA margin in Spain grew, year on year, by 5 p.p. , and for the first time in the last four years the quarterly operating cash flow increased (+7.7% year on year).
  • Movistar Fusión – which already has 1.5 million customers –marked a turning point in the Company’s evolution in the country, boosting the growth of value services, as almost a third of the customers of Movistar Fusión have incorporated new mobile or broadband services. In addition, thanks to this service, in the fourth quarter the net gain in fibre customers accelerated (66,000 accesses), double that recorded in the third quarter, and in just one quarter the Company regained practically all the broadband accesses lost since the start of 2011.

O2 UK ends 2012 with 22.9 million mobile customers
Telefonica UK ended 2012 with a total of 23.8 million accesses, up 4 percent year-on-year, driven by the higher contract mobile base. The mobile customer base was up 3 percent year-on-year to reach 22.9 million at end-2012, mainly driven by the mobile contract customer base (up 9% year-on-year). Contract customers accounted for 52 percent of the total mobile customer base at end-2012, up 3 percentage points from 2011. Contract net additions reached 282,000 in Q4 2012, up 61 percent year-on-year and up 37 percent quarter-on-quarter, to reach 961,000 for the year, up 118 percent from 2011. Prepay net additions turned positive in Q4 (+99,000 versus net loss in Q4 2011), boosted by the success of the new Pay and Go Go Go tariffs. Total prepay net additions for 2012 reached 697,000, of which 55 percent or 381,000 were in Q4.

Contract churn was 1 percent for the year and 1.1 percent for Q4, with prepay churn reaching 3.8 percent in Q4. Total churn improved 1.0 percentage points year-on-year in Q4 to reach 2.4 percent and 2.7 percent in 2012. Smartphone penetration reached 45 percent at end-2012, with more than 88 percent of contract handset sales in Q4 being smartphones. Tesco Mobile registered 174,000 net additions in Q4 to reach 3.5 million customers, up 19 percent from end-2011, of which 1.2 million are contract customers.

Revenue totalled EUR 7.04 billion for 2012, down 5 percent year-on-year, with mobile service revenues reaching EUR 6.06 million, down 8.6 percent. Excluding the impact of mobile termination rate cuts and new roaming regulations, mobile service revenues would have declined 4.7 percent in the year (-4.2% in Q4). O2 UK also had 377,400 fixed telephony customers at end-2012, up from 216,100 a year earlier, and 560,100 broadband customers, down from 620,300.

Download the Full Statement; Nota Resultados FY2012 (eng).


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