REG - Telefonica SA - TEF - Financial Highlights January-March2017 <Origin Href="QuoteRef">TEF.MC</Origin>

Telefonica SAAnnouncement

11/05/2017 09:25

RNS Number : 8482E
Telefonica SA
11 May 2017
FINANCIAL HIGHLIGHTS
 Main financial and operational metrics growing.
 Continued customer base quality improvement: LTE (1.7x y-o-y), smartphones (+18%), FTTx and cable (+21%) and mobile contract (+5%).
 Revenues (13,132m) were up 5.0% vs. January-March 16 (+1.5% organic driven by service revenues +1.7%).
 Mobile data revenues maintained double-digit growth (+13.5% y-o-y organic) and accounted for 58% of mobile service revenues (+5.4 p.p. y-o-y organic). 
 OIBDA (4,021m) grew 4.8% y-o-y in the quarter (+1.3% organic). OIBDA margin stood at 30.6% and remained stable y-o-y. 
 Underlying OIBDA excluded 88m in restructuring costs and reached 4,109m (+6.5% y-o-y). 
 Operating cash flow (OIBDA-CapEx excluding spectrum; 2,404m) growth accelerated in the quarter to 12.1% y-o-y (+15.0% in underlying terms to 2,492m).
 Netincome reached 779m (+42.2% y-o-y) and earnings per share stood at 0.14 (+48.8%). 
 Progress in the Company's transformation.
 Infrastructure 39.9m premises passed with FTTx and cable; LTE coverage 64% (88% in Europe).
 New customer relationship model based on cognitive intelligence, a pioneer in the sector.
 Focus on deleverage.
 Free cash flow totalled 599m, reflecting seasonality, and improved by 530m vs. January-March 2016.
 Net debt stood at 48,766m at the end of March 2017.
 The Company reiterates its guidance and dividend announced for 2017.
 T. Espaa: service revenues fell by 1.5% organic y-o-y and OIBDA by 2.4%; while operating cash flow
(OIBDA-CapEx) growth accelerated to +8.3%. 
 T. Brasil accelerated the growth rate of revenues (+1.6% y-o-y organic), OIBDA (+7.5%) and operating cash flow (+21.6%).
 In T. Deutschland, OIBDA growth (+1.4% y-o-y organic) and margin expansion (+1.4 p.p.) continued, while operating cash flow returned to grow (+7.7%), reflecting incremental synergies.
 T. UK reinforced its position as a leading mobile operator in the market (contract customers +2% y-o-y), with growth in revenues and OIBDA (+2.1% and +0.6% y-o-y organic, respectively).
 T. Hispanoamrica: solid revenue (+9.2% y-o-y organic) and OIBDA (+6.2%) pace of growth, with a significant operating cash flow increase (+23.6%). 
Comments from Jos Mara lvarez-Pallete, Executive Chairman:
"First quarter results reflected a further step forward in our business model, which is focused on the pursuit of sustainable growth. The differential quality of our asset portfolio enables us to offer differential services, which translated into improvements in our results; in particular: i) the growth in main financial metrics, including the positive impact of foreign exchange rates in the quarter; ii) the savings obtained from synergy capture and process simplification; and iii) the strengthening of our balance sheet and the strong free cash flow growth, 9x higher vs. January-March 2016. In addition, we have announced the launch of AURA, a new, more innate and simple customer relationship model, a pioneer in the area of cognitive intelligence.
At the same time, the results are aligned with our expectations and allow us to reiterate the guidance set for 2017".
TELEFNICA
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions) 
January-March
% Chg
2017 
Reported 
Organic 
Revenues
13,132 
5.0 
1.5 
Telefnica Espaa
3,066 
(2.6) 
(2.6) 
Telefnica Deutschland 
1,771 
(4.7) 
(4.7) 
Telefnica UK
1,601 
(8.6) 
2.1 
Telefnica Brasil 
3,165 
30.2 
1.6 
Telefnica Hispanoamerica 
3,285 
7.6 
9.2 
Other companies & eliminations
244 
(8.6) 
(3.3) 
Telxius 
188 
36.4 
5.4 
OIBDA
4,021 
4.8 
1.3 
Telefnica Espaa
1,143 
(8.6) 
(2.4) 
Telefnica Deutschland 
400 
2.0 
1.4 
Telefnica UK
416 
(9.8) 
0.6 
Telefnica Brasil 
1,104 
37.2 
7.5 
Telefnica Hispanoamerica 
904 
4.4 
6.2 
Other companies & eliminations 
53 
(15.8) 
(44.7) 
Telxius 
92 
n.m. 
14.3 
OIBDA margin
30.6%
(0.1 p.p.) 
(0.0 p.p.) 
Telefnica Espaa 
37.3%
(2.4 p.p.) 
0.1 p.p. 
Telefnica Deutschland 
22.6%
1.5 p.p. 
1.4 p.p. 
Telefnica UK
26.0%
(0.4 p.p.) 
(0.4 p.p.) 
Telefnica Brasil 
34.9%
1.8 p.p. 
1.9 p.p. 
Telefnica Hispanoamerica 
27.5%
(0.8 p.p.) 
(0.8 p.p.) 
Operating Income (OI)
1,570 
3.6 
5,2 
Net income attributable to equity holders of the Parent
779 
42.2 
Basic and diluted earnings per share (euros)
0.14 
48.8 
CapEx
1,621 
(4.4) 
(8.4)
Telefnica Espaa
333 
(22.7) 
(22.7) 
Telefnica Deutschland 
208 
(5.1) 
(4.2) 
Telefnica UK
225 
17.1 
30.8 
Telefnica Brasil 
397 
14.1 
(11.0) 
Telefnica Hispanoamerica 
430 
(6.8) 
(9.0) 
Other companies & eliminations 
28 
(36.6) 
(35.2) 
Telxius 
13 
(37.1) 
(41.6) 
Spectrum
4 
140.7 
161.3 
Telefnica Espaa 
- 
- 
- 
Telefnica Deutschland
0 
n.m. 
n.m. 
Telefnica UK
- 
- 
- 
Telefnica Brasil 
- 
- 
- 
Telefnica Hispanoamerica 
3 
n.m. 
n.m. 
OpCF (OIBDA-CapEx)
2,400 
12.0 
8.9 
Telefnica Espaa
810 
(1.2) 
8.3 
Telefnica Deutschland 
192 
11.0 
7.7 
Telefnica UK
191 
(29.1) 
(21.0) 
Telefnica Brasil 
707 
54.7 
21.6 
Telefnica Hispanoamerica 
474 
17.3 
23.6 
Other companies & eliminations 
26 
30.0 
(52.9) 
Telxius 
79 
n.m. 
35.0 
- Reconciliation included in the excel spreadsheets.
Notes: 
- Since the second quarter of 2016 Telefnica's operations in the United Kingdom are no longer reported as discontinued operations and all its assets and liabilities have ceased to be reported as "held for sale", and have been reclassified back into full consolidation, in compliance with International Financial Reporting Standards (IFRS). For comparative purposes, the results of Telefnica Group of the first quarter of 2016 are reported following the same criteria. 
- 2016 and 2017 reported figures include hyperinflationary adjustments in Venezuela in both years.
- OIBDA and OI are presented before brand fees and management fees.
- Telxius financials are fully reported in Other Companies & Eliminations in T. Group since 1 January, 2017, reflecting the final integration into Telxius of the mobile communications towers transferred from T. Espaa, T. Deutschland, T. Brasil and T. Hispanoamrica segments and the international submarine fiber optic cable (which was already being reported within Other Companies and Eliminations). As a consequence, 2017 reported figures for these segments follow the same criteria. In addition, 2016 segment results have been revised to reflect the different dates of asset integration into Telxius, affecting T. Espaa (since 1 January, 2016), T. Deutschland (since 1 May, 2016), T. Brasil (since 1 April, 2016) and T. Hispanoamrica (T. Per since 1 April 2016 and T. Chile since 1 May 2016). Organic y-o-y changes on segments reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of the segments do not include intra-group capital gains resulting from the transfer of towers to Telxius in 2016.
- Organic criteria: Assumes constant exchange rates as of 2016 (average FX in 2016), excludes the impact from hyperinflation in Venezuela in both years and considers constant perimeter of consolidation. In OIBDA and OI terms, excludes write-downs, capital gains/losses from the sale of companies, tower sales, material non-recurring impacts and restructuring costs. CapEx also excludes investment in spectrum.

DISCLAIMER
This document may contain forward-looking statements regarding intentions, expectations or forecasts related to the Telefnica Group (hereinafter, the "Company" or "Telefnica"). These statements may include financial forecasts and estimates based on assumptions or statements regarding plans, objectives and expectations that make reference to different matters, such as the customer base and its evolution, growth of the different business lines and of the global business, the market share, possible acquisitions, divestitures or other transactions, Company results and other aspects related to the activity and situation of the Company.
The forward-looking statements can be identified, in certain cases, through the use of words such as "expectation", "anticipation", "purpose", "belief" or similar expressions, or the corresponding negative forms, or through the own predictive nature of all issues referring to strategies, plans or intentions. These forward-looking statements or forecasts reflect the current views of Telefnica with respect to future events, do not represent, by their own nature, any guarantee of future fulfilment, and are subject to risks and uncertainties that could cause the final developments and results to differ substantially from the ones put forward through these intentions, expectations or forecasts. These risks and uncertainties include those identified in the documents containing more comprehensive information filed by Telefnica before the different supervisory Authorities of the securities markets in which its shares are listed and, in particular, the Spanish National Securities Market Commission.
Except as required by applicable laws, Telefnica does not assume any obligation to publicly update these statements to adapt them to events or circumstances taking place after this document, including changes in the Company's business, in its business development strategy or any other unexpected circumstance. 
This document may contain summarized, non-audited or Non-GAAP financial information. The information contained herein should therefore be considered as a whole and inconjunction with all the public information regarding the Company available, including, if any, other documents released by the Company that may contain more detailed information.
In October 2015, the European Securities Markets Authority (ESMA) published guidelines on Alternative Performance Measures (APM), applicable to the regulated information published from July 3, 2016. Information and disclosure related to APM used in the present document are included in the Appendix. Moreover, recipients of this document are invited to read our consolidated financial statements and consolidated management report for 2016 submitted to the Spanish National Securities Market Commission. 
Finally, it is hereby stated that neither this document or any of its contents constitutes an offer to purchase, sale or exchange any securities, a solicitation of any offer to purchase, sale or exchange of securities, or a recommendation or advice regarding any security.
For further information please refer to the information on 2017 first quarter financial results filed by the Company and also available on the Company's website: www.telefonica.com 

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