FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of February, 2018
Commission File Number: 001-09531
Telefónica, S.A.
(Translation of registrants name into English)
Distrito Telefónica, Ronda de la Comunicación s/n,
28050 Madrid, Spain
3491-482-8700
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ☐ No ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ☐ No ☒
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ☐ No ☒
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
Telefónica, S.A.
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1. |
Quarterly Results of Telefónica Group: January-December 2017 | 3 |
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January - December 2017
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FINANCIAL HIGHLIGHTS
| Solid operating and financial results. |
| Growth in high-value accesses: LTE (1.5x y-o-y; quarterly net additions of 8.6m), smartphones (+8%; +2.2m), FTTx/cable (+20%; +450k) and pay TV (+2%; +92k). |
| In the quarter, revenues (13,162m) increased 4.8% y-o-y organic (-4.1% reported), highlighting service revenues (+4.3%; -4.9%, respectively) and mobile data revenues, which posted double-digit growth (+19.5%). In the twelve months, revenues (52,008m) grew 3.4% vs. 2016 (-0.1% reported). |
| OIBDA (3,913m in the quarter; 16,187m in 2017) increased 9.2% organic (+5.3% in 2017), with a positive contribution from all segments and OIBDA margin expansion (+1.4 p.p. y-o-y in October-December; +0.6 p.p. in 2017). In reported terms, OIBDA rose 22.8% in the quarter and 7.1% in the year. |
| Underlying OIBDA totalled 4,230m in the quarter (-5.2% y-o-y), excluding mainly restructuring costs (-219m), regulatory contingencies (-107m) and tower sales (6m); and 16,638m in the year (+0.7% y-o-y). |
| Operating cash flow (OIBDA-CapEx) (7,490m in January-December) maintained a strong pace of growth (+12.2% y-o-y organic), reflecting improved business performance and lower CapEx intensity (-1.2%). |
| Net income in 2017 reached 3,132m, +32.2% y-o-y, and earnings per share totalled 0.56, +33.9% (693m and 0.12, respectively in the quarter). |
| UBB network deployment acceleration; efficient resources allocation. |
| 44.4m premises passed with FTTx/cable (+13% y-o-y), on own network, and 72% LTE coverage (+10.5 p.p.). |
| Focus on digitalisation; cross selling, higher customer value and satisfaction, and improved efficiency. |
| Substantial debt reduction. |
| Net debt stood at 44,230m as of December, 9.0% lower y-o-y (-2,992m since September). |
| Free cash flow reached 4,947m in 2017 (+13.0% y-o-y). |
| T. España: service revenues accelerated (+0.7% year-on-year in the quarter), OIBDA returned to growth (+0.5%), and operating cash flow increased 3.1% vs. January-December 2016, excluding provisions and capital gains. |
| T. Brasil: Revenue and OIBDA y-o-y growth in the quarter (+0.9% and +3.7%) with margin expansion (+1.0 p.p.), underpinned by leadership in market share, efficiencies and integration synergies. |
| T. Deutschland: mobile service revenues ex-regulation returned to growth (+0.8% y-o-y in the quarter), and OIBDA growth accelerated to 6.3% (+2.1 p.p. OIBDA margin expansion). Cash flow increased 27.4% vs. 2016. |
| T. UK: solid y-o-y growth in the quarter in mobile service revenues (+1.1%) and OIBDA (+3.7%), driven by positive commercial performance with a sustained leadership in churn levels. |
| T. Hispanoamérica: solid growth in 2017 in revenues (12,552m), OIBDA (3,538m) and margin expansion; higher penetration in value and efficiency measures, despite competitive environment and regulatory drag. |
1
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January - December 2017
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| Telefónica announced guidance1 for 2018: |
| Revenues: growing around 1% vs. 2017 (despite the negative impact from regulation, approximately -0.9 p.p.). |
| OIBDA Margin: y-o-y expansion of around 0.5 p.p. (despite regulation dragging -1.6 p.p. to OIBDA y-o-y growth in 2018). |
| CapEx/Sales excluding spectrum: around 15%. |
| Telefónica confirms shareholder remuneration for 2017 and announces remuneration policy for 2018: |
| The second tranche of 2017 dividend (0.20 per share in cash) to be paid in June 2018. |
| Dividend for 2018 of 0.40 per share in cash, to be paid in December 2018 (0.20 per share) and in June 2019 (0.20 per share). |
1 | Guidance 2018: |
Guidance 2018:
| Assumes constant exchange rates (average in 2017), except for Venezuela (2017 and 2018 results converted at the closing synthetic exchange rate for each period) and considering a constant perimeter of consolidation. |
| Excludes: |
| Write-offs, capital gains/losses from the sale of companies, tower sales, restructuring costs and material non-recurring impacts are excluded. |
| CapEx excludes spectrum investments. |
2017 adjusted base: Revenues (52,037m) and OIBDA Margin (32.0%).
| Consider: |
| Reported figures for full year 2017. |
| Includes: |
| January-September results of Teleasociadas in Colombia. |
| Excludes: |
| Write-offs, capital gains/losses from the sale of companies, tower sales, restructuring costs and material non-recurring impacts. |
| CapEx excludes spectrum investments. |
2
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January - December 2017
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Comments from José María Álvarez-Pallete, Executive Chairman:
In 2017 we have delivered solid results, we have met the guidance set for 2017, which was upgraded in July. The highlights were the growth in revenues, OIBDA, OpCF, EPS and FCF, the 4.4 billion euro net debt reduction; and we achieved all this despite regulatory drags. Beyond financial results, we continued to make progress in the intensive process of digitalisation and we are advancing towards transforming into a platform Company. Thanks to the investments made during recent years we are in a strengthened position; we cover more than 90% of the population in Europe with LTE technology and we have surpassed the 70 million mark of premises passed with fibre.
We have entered 2018 with clear priorities to execute our strategy, with revenue growth, margin expansion for the third year in a row and lower capital intensity thanks to the efforts already undertaken. At the same time, we maintain our objective to continue strengthening our financial position, compatible with attractive shareholder remuneration.
3
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January - December 2017
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TELEFÓNICA
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - December | % Chg | October - December | % Chg | |||||||||||||||||||||
2017 | Reported | Organic | 2017 | Reported | Organic | |||||||||||||||||||
Revenues |
52,008 | (0.1 | ) | 3.4 | 13,162 | (4.1 | ) | 4.8 | ||||||||||||||||
Telefónica España |
12,653 | (1.3 | ) | (1.2 | ) | 3,243 | (0.1 | ) | (0.0 | ) | ||||||||||||||
Telefónica Deutschland |
7,296 | (2.8 | ) | (2.8 | ) | 1,904 | (1.6 | ) | (1.6 | ) | ||||||||||||||
Telefónica UK |
6,540 | (4.7 | ) | 2.2 | 1,730 | 0.5 | 3.2 | |||||||||||||||||
Telefónica Brasil |
12,019 | 8.4 | 1.4 | 2,892 | (5.4 | ) | 0.9 | |||||||||||||||||
Telefónica Hispanoamerica (1) |
12,552 | (0.2 | ) | 15.3 | 3,151 | (8.3 | ) | 19.9 | ||||||||||||||||
Other companies & eliminations |
947 | (20.3 | ) | (9.3 | ) | 241 | (26.4 | ) | (19.6 | ) | ||||||||||||||
Telxius |
730 | 13.1 | 6.1 | 183 | (1.6 | ) | 1.1 | |||||||||||||||||
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OIBDA |
16,187 | 7.1 | 5.3 | 3,913 | 22.8 | 9.2 | ||||||||||||||||||
Telefónica España |
4,952 | 12.5 | (1.8 | ) | 1,221 | 146.0 | 0.1 | |||||||||||||||||
Telefónica Deutschland |
1,821 | 2.8 | 2.9 | 503 | 6.6 | 6.3 | ||||||||||||||||||
Telefónica UK |
1,639 | (4.1 | ) | 0.7 | 377 | 13.1 | 3.7 | |||||||||||||||||
Telefónica Brasil |
4,191 | 13.2 | 6.0 | 1,028 | (4.9 | ) | 3.7 | |||||||||||||||||
Telefónica Hispanoamerica |
3,538 | 1.8 | 19.9 | 859 | 6.8 | 39.8 | ||||||||||||||||||
Other companies & eliminations |
47 | (21.4 | ) | (43.0 | ) | (76 | ) | n.m. | n.m. | |||||||||||||||
Telxius |
346 | 30.1 | 6.9 | 84 | (6.3 | ) | (4.4 | ) | ||||||||||||||||
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OIBDA margin |
31.1 | % | 2.1 p.p. | 0.6 p.p. | 29.7 | % | 6.5 p.p. | 1.4 p.p. | ||||||||||||||||
Telefónica España |
39.1 | % | 4.8 p.p. | (0.2 p.p. | ) | 37.6 | % | 22.4 p.p. | 0.0 p.p. | |||||||||||||||
Telefónica Deutschland |
25.0 | % | 1.4 p.p. | 1.4 p.p. | 26.4 | % | 2.0 p.p. | 2.1 p.p. | ||||||||||||||||
Telefónica UK |
25.1 | % | 0.1 p.p. | (0.4 p.p. | ) | 21.8 | % | 2.4 p.p. | 0.1 p.p. | |||||||||||||||
Telefónica Brasil |
34.9 | % | 1.5 p.p. | 1.5 p.p. | 35.6 | % | 0.2 p.p. | 1.0 p.p. | ||||||||||||||||
Telefónica Hispanoamerica |
28.2 | % | 0.6 p.p. | 1.2 p.p. | 27.3 | % | 3.8 p.p. | 5.3 p.p. | ||||||||||||||||
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Operating Income (OI) |
6,791 | 24.2 | 14.1 | 1,648 | 146.3 | 21.0 | ||||||||||||||||||
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Net income attributable to equity holders of the Parent |
3,132 | 32.2 | 693 | n.m. | ||||||||||||||||||||
Basic and diluted earnings per share (euros) |
0.56 | 33.9 | 0.12 | n.m. | ||||||||||||||||||||
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CapEx |
8,697 | (2.6 | ) | (1.2 | ) | 2,735 | (6.1 | ) | 1.2 | |||||||||||||||
Telefónica España |
1,683 | (9.1 | ) | (8.8 | ) | 586 | 4.2 | 4.2 | ||||||||||||||||
Telefónica Deutschland |
951 | (14.2 | ) | (13.7 | ) | 262 | (27.0 | ) | (26.7 | ) | ||||||||||||||
Telefónica UK |
827 | (11.2 | ) | (4.8 | ) | 223 | (19.6 | ) | (16.6 | ) | ||||||||||||||
Telefónica Brasil |
2,225 | 4.1 | (0.1 | ) | 712 | (7.3 | ) | (4.9 | ) | |||||||||||||||
Telefónica Hispanoamerica |
2,678 | 2.4 | 8.6 | 824 | 1.2 | 23.6 | ||||||||||||||||||
Other companies & eliminations |
334 | 16.8 | 22.4 | 127 | (2.2 | ) | 2.0 | |||||||||||||||||
Telxius |
203 | 70.5 | 71.5 | 68 | 22.7 | 29.0 | ||||||||||||||||||
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Spectrum |
538 | 55.7 | 55.9 | 35 | n.m. | n.m. | ||||||||||||||||||
Telefónica España |
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Telefónica Deutschland |
1 | (90.1 | ) | (90.1 | ) | | | | ||||||||||||||||
Telefónica UK |
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Telefónica Brasil |
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Telefónica Hispanoamerica |
537 | 89.3 | 89.6 | 35 | n.m. | n.m. | ||||||||||||||||||
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OpCF (OIBDA-CapEx) |
7,490 | 21.0 | 12.2 | 1,178 | 328.9 | 24.4 | ||||||||||||||||||
Telefónica España |
3,269 | 28.2 | 2.0 | 635 | c.s. | (3.0 | ) | |||||||||||||||||
Telefónica Deutschland |
870 | 31.1 | 27.4 | 241 | 114.5 | 88.7 | ||||||||||||||||||
Telefónica UK |
812 | 4.4 | 6.9 | 154 | 174.8 | 59.3 | ||||||||||||||||||
Telefónica Brasil |
1,966 | 25.5 | 13.6 | 316 | 1.1 | 24.7 | ||||||||||||||||||
Telefónica Hispanoamerica |
860 | 0.1 | 38.3 | 35 | c.s. | 88.5 | ||||||||||||||||||
Other companies & eliminations |
(287 | ) | 26.8 | 123.8 | (203 | ) | 56.1 | 185.1 | ||||||||||||||||
Telxius |
142 | (2.8 | ) | (30.9 | ) | 17 | (52.4 | ) | (53.8 | ) | ||||||||||||||
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| Reconciliation included in the excel spreadsheets. |
Notes:
| 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. España, T. Deutschland, T. Brasil and T. Hispanoamérica 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. España (since 1 January, 2016), T. Deutschland (since 1 May, 2016), T. Brasil (since 1 April, 2016) and T. Hispanoamérica (T. Perú 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. (1) Following the pre-payment of the debt derived from the operating agreement with PARAPAT in Colombia and after taking over its subsidiaries Telebucaramanga, Metrotel and Optecom, the consolidated results are included in the fixed business from 1 October 2017. Organic y-o-y comparison excludes these results. |
| Organic criteria : Assumes constant exchange rates (average in 2016), excluding hyperinflationary accounting in Venezuela in both years and considering a constant perimeter of consolidation. At OIBDA and OI levels, write-offs, capital gains/losses from the sale of companies, tower sales, restructuring costs and material non-recurring impacts are excluded. CapEx excludes spectrum investments. |
4
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January - December 2017
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Telxius |
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RESULTS BY BUSINESS UNITS |
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The financial information related to January-December 2017 contained in this document has been prepared under International Financial Reporting Standards (IFRS), as adopted by the European Union, which do not differ for the purposes of the Telefónica Group, from IFRS as issued by the International Accounting Standards Board (IASB).
Telefónicas management model, regional and integrated, means that the legal structure of the companies is not relevant for the release of Group financial information, and therefore, the operating results of each of these business units are presented independently, regardless of their legal structure. For the purpose of presenting information on a business unit basis, revenue and expenses arising from invoicing among companies within Telefónicas perimeter of consolidation for the use of the brand and management contracts have been excluded from the operating results for each business unit. This breakdown of the results does not affect Telefónicas consolidated earnings.
The English language translation of the consolidated financial statements originally issued in Spanish has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain omissions or approximations may subsist. Telefónica, its representatives and employees decline all responsibility in this regard. In the event of a discrepancy, the Spanish-language version prevails.
5
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January - December 2017
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Telefónica groups total accesses stood at 343.5m as of December 2017 and customer value continued to improve, with average revenue per customer growth accelerating to 5.4% y-o-y in organic terms in the fourth quarter (+1.2 p.p. vs. July-September) and stable churn.
This performance reflected a growing demand for data, speed and content driving the growth of high-value services:
i) LTE customers reached 97.5m (1.5x y-o-y), with quarterly net additions of 8.6m and a penetration of 38% (+13 p.p.
y-o-y);
ii) mobile contract accesses (115.9m; +5% y-o-y), with net additions of 1.8m (1.2x vs. July-September), represented 43% of the total (+3 p.p. y-o-y);
iii) smartphones (+8% y-o-y; 158.7m) reported quarterly net additions of 2.2m (1.6x vs. July-September) and reached a penetration of 63% (+6 p.p. y-o-y);
iv) fixed broadband customers (21.4m; +1% y-o-y) accelerated their quarterly net additions to 174k (+3k in July-September; -72k in the fourth quarter 2016);
v) FTTx/cable customers (11.0m) grew 20% vs. December 2016 (net additions of 450k in the quarter; +4% y-o-y) and represented 51% of total fixed broadband accesses (+8 p.p. y-o-y), with a coverage of 44.4m premises passed on own network (+13% y-o-y); and
vi) pay TV accesses (8.5m; +2% y-o-y) reported net quarterly additions of 92k (-108k in October-December 2016).
Exchange rate fluctuations in January-December had a negative impact on key financial indicators, mainly due to the strong devaluation of the Venezuelan bolivar and the depreciation of the Argentine peso and pound sterling against the euro. Thus, in 2017 currencies reduced the y-o-y growth of revenues by 3.2 p.p. and that of OIBDA by 4.7 p.p.
Nevertheless, it is important to highlight that the negative impact of FX evolution at OIBDA level has been significantly reduced in terms of cash generation, as it reduces the payment in euros of CapEx, taxes and other items.
Revenues in the quarter (13,162m) decreased 4.1% y-o-y (52,008m in January-December; -0.1%). In organic terms, their growth accelerated to 4.8% (+3.4% in 2017) driven by mobile service revenues, which improved their y-o-y performance to 4.3% (+3.1% in January-December), while handset revenues maintained a strong pace of growth (+9.8% in the quarter; +6.5% in 2017).
Furthermore, this acceleration was underpinned by the growth in mobile data revenues, which increased by 19.5% y-o-y in organic terms (+16.8% in January-December) and represented 60% of mobile service revenues in the quarter (+6 p.p. y-o-y in organic terms).
Excluding the negative impact of regulation (-1.0 p.p. in the quarter; -1.1 p.p. in January-December), revenues would have risen by 5.9% y-o-y in organic terms in the fourth quarter (+4.5% in January-December).
Mobile data traffic continued to grow at very high rates (+65% y-o-y), driven by LTE customer traffic, which accounted for 57% of the total (+15 p.p. y-o-y), with higher average use (+74% in the quarter) and ARPU around 10% higher in January-December 2017. As such, the average traffic per customer reached 1.9GB per month (+65% y-o-y). Additionally, within fixed networks, fixed broadband traffic growth in 2017 (+34% y-o-y) was remarkable.
In the fourth quarter, provisions for restructuring costs amounted to 219m (mainly 102m in T. España, 98m in T. Hispanoamérica and 30m in T. Deutschland) and impacted personnel expenses by 197m and other net income (expense) by 22m. On the other hand, in the fourth quarter of 2016 provisions for restructuring costs amounted to 1,290m.
Operating expenses amounted to 9,478m in the quarter and decreased by 12.7% y-o-y in reported terms (36,758m; -3.4% in January-December).
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January - December 2017
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In organic terms, operating expenses increased by 2.7% y-o-y in the quarter (+2.2% in 2017) due to the increase in other operating expenses (+2.8% y-o-y in the quarter; on higher network and systems costs, inflationary pressures and appreciation of the USD against most Latin American currencies), higher personnel expenses (+5.2% y-o-y in the quarter due to inflationary pressures, despite the savings from redundancy programmes) and the increase in supplies (+1.5% y-o-y in the quarter; higher handset consumption and the impact of RLAH on European operations).
The average headcount in 2017 stood at 125,371 employees (-5.1% vs. 2016).
The gain on sale of fixed assets in the fourth quarter (75m) included mainly the impact on OIBDA of capital gains from the sale of real estate assets in Spain (27m) and the sale of assets in T. Deutschland (29m). In the fourth quarter of 2016 (266m), this item mainly included capital gains from the sale of Telefé (199m) and, in Spain, the sale of real estate assets (33m) and T. Personalizadas (29m).
Operating income before depreciation and amortization (OIBDA) reached 3,913m in the fourth quarter (+22.8% y-o-y) and 16,187m in January-December (+7.1% y-o-y).
In organic terms, OIBDA grew by 9.2% y-o-y in the quarter (+5.3% in 2017), reflecting the sustained revenue improvement and cost containment efforts, efficiencies from the transformation process and digitalisation, synergy capture and a lower regulatory impact. Excluding the impact of the regulation (-1.5 p.p. in the quarter), OIBDA would have increased by 10.8% y-o-y in organic terms in the quarter (+6.7% in January-December).
Underlying OIBDA amounted to 4,230m in October-December (-5.2% y-o-y) and 16,638m in January-December (+0.7% vs. 2016). In the fourth quarter, underlying OIBDA mainly excluded the following factors:
| Restructuring expenses (-219m) |
| Provisions to cover regulatory contingencies (-107m; Brazil -50m and Other Companies -57m) |
| Tower sales (6m) |
OIBDA margin stood at 29.7% in the fourth quarter, expanding 6.5 p.p. y-o-y (+1.4 p.p. organic). OIBDA margin reached 31.1% in January-December (+2.1 p.p. reported; +0.6 p.p. in organic terms).
Depreciation and amortisation stood at 2,265m in the quarter (-10.1% y-o-y) and 9,396m in January-December (-2.6%). In organic terms, depreciation and amortisation fell 1.1% vs. the fourth quarter of 2016 and 1.3% y-o-y in January-December, reflecting the lower CapEx intensity.
Thus, operating income (OI) reached 1,648m in October-December (2.5x y-o-y; +21.0% organic) and 6,791m in the twelve-month period, growing by 24.2% vs. 2016 (+14.1% in organic terms).
Net financial expenses in the quarter totalled 470m, 27.6% higher than the previous year due to the greater impact of inflation in Venezuela in 2016, despite the ongoing reduction of the cost of debt in European and Latin American currencies. In January-December (2,199m) net financial expenses decreased 0.9% y-o-y, mainly due to the reduction in the cost of debt.
Tax expenses in January-December amounted to 1,219m, which, over a profit before tax of 4,597m, placed the effective rate at 26.5%, in line with 2016 (26.1%).
Profit attributable to minority interests in the fourth quarter (132m) was higher than the same period last year (49m), mainly due to the higher profit attributed to minority shareholders of T. Colombia. This figure amounted to 246m in January-December vs. 30m in 2016, mainly due to the greater profit attributed to the minority interests of T. Brasil, T. Deutschland and T. Colombia.
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January - December 2017
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In this regard, the profit attributable to ordinary equity holders of the Parent in January-December reached 3,132m (4,085m in underlying terms), growing by 32.2% y-o-y (+1.2% underlying). In the fourth quarter it stood at 693m (1,012m underlying), 4.8x higher vs. October-December 2016 (-17.9% underlying).
Basic earnings per share totalled 0.56 in January-December and grew 33.9% y-o-y (0.75 in underlying terms, -0.3%). In the fourth quarter, basic earnings per share amounted to 0.12 and were 7.9x higher y-o-y (0.18 in underlying terms, -22.6%).
CapEx in the full year (8,697m; -2.6% reported; -1.2% in organic terms) continued to focus on expanding 4G and UBB networks and simplifying and digitalising processes and systems, reflected integration synergies and included 538m in spectrum and licences.
In January-December 2017, free cash flow reached 4,947m, increasing by 13.0% y-o-y:
i) Operating cash flow (OIBDA-CapEx) in the twelve months (7,490m) maintained a strong pace of growth (+21.0% y-o-y reported; +12.2% in organic terms), as a result of good business performance and lower CapEx intensity.
ii) Interest payments in 2017 (1,726m) decreased by 19.5% vs. the previous year (-417m), mainly due to the lower cost of the debt in European and Latin American currencies. The effective cost of interest payments in the last twelve months stood at 3.32% as of December, 62 b.p. less than the 3.94% as of December 2016.
iii) Tax payments totalled 1,005m, an increase of 356m vs. January-December 2016 due to the lower refund from final declarations from previous years and higher payments in advance. The effective cash tax rate stood at 21.9%.
iv) Working capital in 2017 positively contributed 434m to cash flow generation, driven by different management measures (extension of payment terms with suppliers or the factoring company where those had been discounted and factoring on receivables). Compared with January-December 2016, working capital contribution increased by 45m, mainly due to the impact from the extension of the VAT settlement period in Spain, partially offset by a greater consumption from restructuring and other provisions.
v) Operations with minority shareholders in 2017 (555m) increased by 8.7% y-o-y mainly due to the higher dividend payments at T. Brasil, associated with the Companys improved profit.
Net financial debt as of December 2017 (44,230m) decreased by 2,992m vs. September 2017, mainly due to free cash generation (1,721m), the closing of the 40% stake sale of Telxius (1,275m), the issuance of capital instruments (915m; net of coupon payments), the lower value in euros of net debt in foreign currencies (125m) and other factors (3m), which comfortably offset the payment of the first tranche of the dividend announced for 2017 (858m) and payment of labour-related commitments (189m).
Compared with December 2016, net financial debt was reduced by 4,365m, driven by strong free cash flow generation (4,947m), the closing of the 40% stake sale of Telxius (1,275m) and the lower value in euros of net debt in foreign currencies (639m). These factors were partially offset by shareholder remuneration (1,264m, including the issuance and coupon payments of capital instruments and the dividend), payment of labour-related commitments (696m) and other factors (536m, mainly the extension of payment terms with suppliers or the factoring company).
During 2017, Telefónicas financing activity amounted to approximately 10,501m equivalent (without considering the refinancing of commercial paper and short-term bank loans) and focused on maintaining a solid liquidity position and refinancing and extending debt maturities (in an environment of very low interest rates). Therefore, as of the end of December, the Group has covered debt maturities for the next two years. The average debt life stood at 8.08 years (vs. 6.35 years in December 2016).
8
|
January - December 2017
|
Among the main financial operations in the quarter, stood out in December the issuance of undated deeply subordinated securities guaranteed on a subordinated basis by Telefónica, S.A. for a nominal amount of 1,000m, callable after five and a half years from the issuance date. It should be noted that the strong demand from institutional investors enabled the annual coupon to be set at 2.625%, the lowest set by Telefónica for a hybrid issuance in euros in history. Also, loan transactions for an aggregated amount of 655m were closed at very attractive rates, maturing up to 12 years.
After the closing of the year, a senior debt issuance of 1,000m was closed in January, maturing in January 2027 with an annual coupon of 1.447%. On the other hand, Telefónica Deutschland Holding issued debt instruments in the local market (Schuldscheindarlehen and Namensschuldverschreibung) maturing up to 15 years and a target volume of 250m, including a tranche via Blockchain technology amounting to 75m with a maturity slightly longer than one year.
In 2017, the Telefónica Group obtained funding by means of extending payment terms with suppliers or the factoring company where those had been discounted, for a total of 691m equivalent (82m equivalent in the fourth quarter). In January-December 2016, this financing amounted to 982m equivalent (115m in October-December).
Moreover, Telefónica, S.A. and its holding companies continued the issuance activity under the Promissory notes and Commercial Paper Programmes (Domestic and European), maintaining an outstanding balance of approximately 2,054m at the end of December.
At year end, Telefónica maintained undrawn, committed credit lines with different credit institutions for an approximate amount of 13,531m (12,541m maturing in more than twelve months) which, combined with the cash equivalents position and current financial assets excluding Venezuela placed liquidity at 20,852m.
Definitions:
Organic growth: Assuming constant exchange rates (average in 2016), excluding hyperinflationary accounting in Venezuela in both years and considering a constant perimeter of consolidation. At OIBDA and OI levels, write-offs, capital gains/losses from the sale of companies, tower sales, restructuring costs and material non-recurring impacts are excluded. CapEx excludes spectrum investments.
Underlying growth: Reported figures excluding the impact on net profit of write-offs, capital gains/losses from companies disposals, tower sales, restructuring costs material non-recurring impacts, and depreciation and amortisation charges arising from purchase price allocation processes.
(y-o-y changes in organic terms)
The Digital Services area reflects the benefits which arise from the operating businesses alignment in key projects underpinned by networks and systems modernisation. In this regard, the commitment to position TV as a differential proposition within the customer offering has resulted in a continuous improvement in functionalities with services such as Movistar Play, while the focus on enriching home connectivity drove the implementation of the Smart WiFi service. Additionally, the development of the Novum platform will unify the customer relations model (more interactive and digital).
Digital revenues maintained solid growth in the last quarter of 2017 (+13.3% y-o-y) and totalled 1,377m, increasing the total volume in the year to 5.241m (+6.8%).
Video revenues reached 748m in the quarter (2,992m in 2017) with an accelerated growth rate (+7.0%; +5.8% in the year) due to the improved performance in Hispanoamérica. Pay TV accesses stood at 8.5m (+2% y-o-y), underscored by the IPTV base which grew 14%, driven by the growing adoption of fibre in Spain, Brazil and Chile, and which now represents 41% of the total TV base (+4 p.p. y-o-y). Meanwhile, the quality of functionalities and contents, driven by in-house productions or partnerships with producers, is reflected in the ARPU improvement across all regions (+8% y-o-y) and higher customer loyalty (churn -0.1 p.p.).
9
|
January - December 2017
|
Security revenues in October-December (110m; 343m in 2017) returned to growth, +14.5% y-o-y (+0.7% in 2017), driven by the B2B segment (+29.3% in the quarter and +24.3% in 2017). Telefónica continued to shore up comprehensive risk management for businesses with cybersecurity, with a special focus on managing vulnerabilities, unified cyberthreat management and incident response.
In the M2M area, revenues reached 74m in the quarter, +25.4% y-o-y, despite the impact of the different timelines of several relevant projects (+31.7% in January-December; 281m), backed by the accelerated deployment of IoT technologies in multiple sectors: automotive, retail, etc. For the latter, the global launch of a new customer experience at airport shops was particularly noteworthy.
Additionally, Telefónica was named as Leader for the fourth consecutive year in Gartners Magic Quadrant for Global Managed M2M Services.
Cloud revenues in October-December reached 148m (+13.9% y-o-y; 518m in 2017, +2.5%) and continued the positive growth trend seen in the previous quarter thanks to the continuous improvement in capacity (own data centres and third-party agreements), enabling an expansion of the portfolio of IaaS (VDC, Open Cloud) and SaaS (new online portal and bundles for SMEs) products.
Telefónica Global Resources continued to drive the Companys digital transformation, having unified the network technology and systems areas towards the end of the year for the purpose of reinforcing the global digitalisation strategy and their contribution to improving efficiency and growth.
Excellence in connectivity translated into a continual advance in UBB rollout. In this regard, FTTx/cable owned network coverage increased to 44m premises passed (+13% y-o-y) and connected premises increased to 11m. For the mobile network, 4G coverage increased to 72% (+11 p.p. y-o-y), LTE customers amounted to 38% of the total (+13 p.p. y-o-y) and LTE traffic in 2017 multiplied 2.5x representing 52% of total traffic.
On the other hand, the Company maintained its focus on network transformation with the introduction of the latest technology to optimise resources and customer experience; leading to highlights including advances in LTE (optimisation of spectrum usage and improvement in access speed) and in the portfolio of a single fixed access hardware for all operators which is the most advanced in the market (Home Gateway Units, wireless TV gateway ). This is supported by operational processes centred on the customer which are being progressively automated in line with the digitalisation programme.
Maintaining a mid-term technological outlook for 5G, it is worth mentioning that the first 5G pilots are underway in Spain, as well as the first 5G RAN technical implementation specification developed by the standardisation group 3GPP TSG, in which Telefónica participates. In parallel, the virtualisation of network platforms and services progressed rapidly with the rollout of standard UNICA architecture in 5 countries.
Telefónica continued its progress with the digitalisation programme, developing different projects with the goal of improving the various customer processes (direct and digital channels, invoicing and collection, technical assistance, provision and post-sales support).
Thus, the Full Stack systems transformation projects are particularly noteworthy. In this regard, they were being executed at 15 Group operating businesses, and 23% of the total customer base migrated to them (+10 p.p. vs. 2016; +4 p.p. vs. September).
10
|
January - December 2017
|
Moreover, consolidating systems towards a Single Online Charging System, with 62% of customers migrated, and the progressive development of mobile applications contributed to the simplification and digitalisation of the customer relationship. This permitted the reduction of servers by 6%, applications by 8% and data centres by 2% and a 2 p.p. increase in virtualisation in 2017 vs. 2016.
The results of these actions were reflected in the digital capabilities engagement indicator, which increased to 59% at year-end 2017 (+9 p.p. vs. 2016).
(y-o-y changes in organic terms)
Telxius delivered solid results in its first full year of operations, with 6.1% revenue growth vs. 2016, reaching 730m (416m cable; 314m towers).
Revenues totalled 183m in the fourth quarter (100m cable; 83m towers), 1.1% up y-o-y, impacted by seasonal revenues in the cable business in the fourth quarter of 2016.
OIBDA rose to 84m in October-December (346m in 2017) and OIBDA margin stood at 46.1% (47.4% in January-December), reflecting the operating efficiency of both businesses, despite being affected in the quarter by a regularisation of maintenance expenses in the tower business.
OIBDA y-o-y comparison does not reflect the actual business performance as it was affected by the progressive establishment of activities over the course of 2016, as well as the one time negative impacts associated with the formation of the company.
The tenancy ratio in the tower business increased to 1.33x as of December (+0.02x in the quarter and +0.05x in the year) given the increase in co-locations in all the geographies. Additionally, Telxius had a portfolio of 16,288 towers, with an increase of 68 towers in the quarter (mainly in Spain, Peru and Brazil) and 418 towers in the year.
In the cable business, managed international traffic maintained solid growth in capacity service bandwidth (+65% y-o-y in January-December) and IP traffic (+25%). The new MAREA cable (connecting the U.S. and northern Spain) was fully deployed and is expected to enter into service during the first quarter of 2018. The roll-out of BRUSA (connecting the U.S. with Brazil) continued to progress as scheduled and the cable is expected to enter into service in mid-2018.
Additionally, the nearly simultaneous roll-out of these two cables with the latest technology enabled the use of Wavelength Division Multiplexing (DWDM) equipment, which will lead to greater cost efficiency.
CapEx in January-December reached 203m, significantly affected by the deployment of new cables mentioned above. As a result, operating cash flow (OIBDA-CapEx) increased to 142m in the year.
11
|
January - December 2017
|
TELEFÓNICA
ACCESSES
Unaudited figures (thousands)
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Final Clients Accesses |
341,262.7 | 341,922.3 | 343,932.9 | 344,671.1 | 341,785.7 | 341,347.3 | 339,843.1 | 338,997.9 | (1.6 | ) | ||||||||||||||||||||||||||
Fixed telephony accesses (1) |
39,606.5 | 39,262.1 | 38,914.0 | 38,280.1 | 37,853.0 | 37,488.4 | 37,028.0 | 36,898.6 | (3.6 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
21,507.7 | 21,641.4 | 21,738.4 | 21,652.1 | 21,657.8 | 21,697.3 | 21,696.7 | 21,864.6 | 1.0 | |||||||||||||||||||||||||||
Broadband |
21,097.2 | 21,195.9 | 21,266.5 | 21,194.9 | 21,196.4 | 21,240.4 | 21,243.8 | 21,417.5 | 1.1 | |||||||||||||||||||||||||||
FTTx/Cable |
7,933.6 | 8,378.1 | 8,704.0 | 9,137.6 | 9,580.6 | 9,960.5 | 10,511.8 | 10,961.6 | 20.0 | |||||||||||||||||||||||||||
Mobile accesses |
271,783.2 | 272,596.8 | 274,883.7 | 276,450.0 | 274,055.6 | 273,886.6 | 272,742.7 | 271,766.9 | (1.7 | ) | ||||||||||||||||||||||||||
Prepay |
166,005.2 | 165,619.6 | 165,912.1 | 165,663.2 | 162,648.4 | 161,271.6 | 158,662.8 | 155,868.5 | (5.9 | ) | ||||||||||||||||||||||||||
Contract |
105,778.0 | 106,977.2 | 108,971.6 | 110,786.8 | 111,407.2 | 112,615.0 | 114,079.9 | 115,898.4 | 4.6 | |||||||||||||||||||||||||||
M2M |
12,583.9 | 12,988.2 | 13,591.7 | 14,002.0 | 14,488.0 | 15,009.9 | 15,572.9 | 16,137.2 | 15.2 | |||||||||||||||||||||||||||
Pay TV |
8,365.4 | 8,422.0 | 8,396.7 | 8,289.0 | 8,219.3 | 8,274.9 | 8,375.8 | 8,467.7 | 2.2 | |||||||||||||||||||||||||||
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Wholesale Accesses |
5,826.7 | 5,591.7 | 5,480.7 | 5,300.9 | 5,087.1 | 4,887.2 | 4,689.4 | 4,460.2 | (15.9 | ) | ||||||||||||||||||||||||||
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Total Accesses |
347,089.4 | 347,514.0 | 349,413.5 | 349,972.1 | 346,872.8 | 346,234.5 | 344,532.5 | 343,458.1 | (1.9 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
TELEFÓNICA
MOBILE ACCESSES
Unaudited figures
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Contract percentage (%) |
38.9 | % | 39.2 | % | 39.6 | % | 40.1 | % | 40.7 | % | 41.1 | % | 41.8 | % | 42.6 | % | 2.6 p.p. | |||||||||||||||||||
Smartphones (000) |
128,326.0 | 130,058.4 | 144,588.9 | 147,161.8 | 151,547.7 | 155,126.7 | 156,511.5 | 158,717.7 | 7.9 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
50.6 | % | 51.1 | % | 56.4 | % | 57.1 | % | 59.4 | % | 60.9 | % | 61.8 | % | 63.0 | % | 5.9 p.p. | |||||||||||||||||||
LTE (000) |
43,870.2 | 50,077.3 | 57,342.4 | 66,295.7 | 75,458.8 | 81,604.2 | 88,978.7 | 97,534.0 | 47.1 | |||||||||||||||||||||||||||
LTE penetration (%) |
16.9 | % | 19.3 | % | 22.1 | % | 25.3 | % | 29.1 | % | 31.5 | % | 34.6 | % | 38.2 | % | 12.9 p.p. |
TELEFÓNICA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - December | % Chg | October - December | % Chg | |||||||||||||||||||||||||||||
2017 | 2016 | Reported | Organic | 2017 | 2016 | Reported | Organic | |||||||||||||||||||||||||
Revenues |
52,008 | 52,036 | (0.1 | ) | 3.4 | 13,162 | 13,721 | (4.1 | ) | 4.8 | ||||||||||||||||||||||
Internal exp. capitalized in fixed assets |
863 | 867 | (0.5 | ) | (0.1 | ) | 219 | 231 | (5.2 | ) | (2.6 | ) | ||||||||||||||||||||
Operating expenses |
(36,758 | ) | (38,043 | ) | (3.4 | ) | 2.2 | (9,478 | ) | (10,852 | ) | (12.7 | ) | 2.7 | ||||||||||||||||||
Supplies |
(15,022 | ) | (15,242 | ) | (1.4 | ) | 0.6 | (4,004 | ) | (4,134 | ) | (3.2 | ) | 1.5 | ||||||||||||||||||
Personnel expenses |
(6,862 | ) | (8,098 | ) | (15.3 | ) | 3.0 | (1,772 | ) | (2,958 | ) | (40.1 | ) | 5.2 | ||||||||||||||||||
Other operating expenses |
(14,874 | ) | (14,703 | ) | 1.2 | 3.4 | (3,702 | ) | (3,760 | ) | (1.5 | ) | 2.8 | |||||||||||||||||||
Other net income (expense) |
(60 | ) | 186 | c.s. | (61.3 | ) | (85 | ) | 39 | c.s. | (52.0 | ) | ||||||||||||||||||||
Gain (loss) on sale of fixed assets |
111 | 296 | (62.6 | ) | 22.9 | 75 | 266 | (71.7 | ) | 74.1 | ||||||||||||||||||||||
Impairment of goodwill and other assets |
24 | (224 | ) | c.s. | c.s. | 20 | (219 | ) | c.s. | c.s. | ||||||||||||||||||||||
Underlying operating income before D&A (OIBDA) |
16,638 | 16,519 | 0.7 | 4,230 | 4,464 | (5.2 | ) | |||||||||||||||||||||||||
Operating income before D&A (OIBDA) |
16,187 | 15,118 | 7.1 | 5.3 | 3,913 | 3,187 | 22.8 | 9.2 | ||||||||||||||||||||||||
OIBDA Margin |
31.1 | % | 29.1 | % | 2.1 p.p. | 0.6 p.p. | 29.7 | % | 23.2 | % | 6.5 p.p. | 1.4 p.p. | ||||||||||||||||||||
Depreciation and amortization |
(9,396 | ) | (9,649 | ) | (2.6 | ) | (1.3 | ) | (2,265 | ) | (2,518 | ) | (10.1 | ) | (1.1 | ) | ||||||||||||||||
Operating income (OI) |
6,791 | 5,469 | 24.2 | 14.1 | 1,648 | 669 | 146.3 | 21.0 | ||||||||||||||||||||||||
Share of profit (loss) of investments accounted for by the equity method |
5 | (5 | ) | c.s. | (0 | ) | (2 | ) | (88.3 | ) | ||||||||||||||||||||||
Net financial income (expense) |
(2,199 | ) | (2,219 | ) | (0.9 | ) | (470 | ) | (369 | ) | 27.6 | |||||||||||||||||||||
Profit before taxes |
4,597 | 3,245 | 41.6 | 1,177 | 298 | n.m. | ||||||||||||||||||||||||||
Corporate income tax |
(1,219 | ) | (846 | ) | 44.1 | (352 | ) | (105 | ) | 236.3 | ||||||||||||||||||||||
Profit for the period |
3,378 | 2,399 | 40.8 | 825 | 193 | n.m. | ||||||||||||||||||||||||||
Attributable to equity holders of the Parent |
3,132 | 2,369 | 32.2 | 693 | 145 | n.m. | ||||||||||||||||||||||||||
Attributable to non-controlling interests |
246 | 30 | n.m. | 132 | 49 | 172.4 | ||||||||||||||||||||||||||
Weighted average number of ordinary shares outstanding during the period (millions) |
5,110 | 5,061 | 1.0 | 5,281 | 5,053 | 4.5 | ||||||||||||||||||||||||||
Basic and diluted earnings per share attributable to equity holders of the Parent (euros) |
0.56 | 0.42 | 33.9 | 0.12 | 0.01 | n.m. | ||||||||||||||||||||||||||
Underlying basic and diluted earnings per share attributable to equity holders of the Parent (euros) |
0.75 | 0.75 | (0.3 | ) | 0.18 | 0.23 | (22.6 | ) |
Notes:
| After considering Venezuela as a hyperinflationary country, P&L and CapEx from the operations in the country are to be accounted at the closing exchange rate Bolivar Fuerte/Euro. For the January-December 2017 period Telefónica uses a synthetic exchange rate of 36,115 Venezuelan bolivars fuertes per dollar at December 2017. |
| Basic and diluted earnings per share ratio is calculated dividing Profit for the period Attributable to equity holders of the Parent, adjusted for the net coupon corresponding to Other equity instruments (70m in October-December 17; 276m in January-December 17), by the weighted average number of ordinary shares outstanding during the period. |
| 2016 and 2017 reported figures include hyperinflationary adjustments in Venezuela in both years. |
TELEFÓNICA
GUIDANCE 2017
Original Operative 2017 Guidance | Upgraded Operative 2017 Guidance | 2017 | ||||||
2016 Base |
(Feb-2017) |
(Jul-2017) |
Jan-Dec | |||||
51,734 | Revenues (% Chg YoY) |
Stable (in spite of regulation: ~-1.2 p.p.) | Growth >1.5% (in spite of regulation: ~-1.2 p.p.) | 3.4% | ||||
31.8% | OIBDA margin (Chg YoY) |
Expansion up to 1 p.p. | Expansion up to 1 p.p. | 0.6 p.p. | ||||
16.5% | CapEx / Sales |
Around 16% | Around 16% | 15.8% |
| Organic criteria: Assumes constant exchange rates (average in 2016), excluding hyperinflationary accounting in Venezuela in both years and considering a constant perimeter of consolidation. At OIBDA and OI levels, write-offs, capital gains/losses from the sale of companies, tower sales, restructuring costs and material non-recurring impacts are excluded. CapEx excludes spectrum investments. |
2016 adjusted base excludes:
| The results of the companies sold in 2016 (Telefé, T. Personalizadas and Vocem) from 1 January, 2016 to the date of exiting the perimeter of consolidation. |
| OIBDA excludes additionally write-offs, capital gains/losses from the sale of companies, tower sales, material non-recurrent impacts and restructuring costs. |
| CapEx excludes additionally spectrum acquisition. |
12
|
January - December 2017
|
TELEFÓNICA
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited figures (Euros in millions)
December 2017 | December 2016 | % Chg | ||||||||||
Non-current assets |
95,135 | 103,667 | (8.2 | ) | ||||||||
Intangible assets |
18,005 | 20,518 | (12.2 | ) | ||||||||
Goodwill |
26,841 | 28,686 | (6.4 | ) | ||||||||
Property, plant and equipment and Investment properties |
34,225 | 36,393 | (6.0 | ) | ||||||||
Investments accounted for by the equity method |
77 | 76 | 1.4 | |||||||||
Non-current financial assets |
8,167 | 9,765 | (16.4 | ) | ||||||||
Deferred tax assets |
7,820 | 8,229 | (5.0 | ) | ||||||||
Current assets |
19,931 | 19,974 | (0.2 | ) | ||||||||
Inventories |
1,117 | 1,055 | 5.9 | |||||||||
Trade and other receivables |
10,093 | 10,675 | (5.5 | ) | ||||||||
Current financial assets |
2,154 | 2,954 | (27.1 | ) | ||||||||
Tax receivables |
1,375 | 1,533 | (10.3 | ) | ||||||||
Cash and cash equivalents |
5,192 | 3,736 | 39.0 | |||||||||
Non-current assets and disposal groups classified as held for sale |
0 | 21 | n.m. | |||||||||
Total Assets = Total Equity and Liabilities |
115,066 | 123,641 | (6.9 | ) | ||||||||
Equity |
26,618 | 28,385 | (6.2 | ) | ||||||||
Equity attributable to equity holders of the parent and other holders of equity instruments |
16,920 | 18,157 | (6.8 | ) | ||||||||
Non-controlling interests |
9,698 | 10,228 | (5.2 | ) | ||||||||
Non-current liabilities |
59,382 | 59,805 | (0.7 | ) | ||||||||
Non-current financial liabilities |
46,332 | 45,612 | 1.6 | |||||||||
Non-current trade and other payables |
1,687 | 1,925 | (12.4 | ) | ||||||||
Deferred tax liabilities |
2,145 | 2,395 | (10.4 | ) | ||||||||
Non-current provisions |
9,218 | 9,873 | (6.6 | ) | ||||||||
Current liabilities |
29,066 | 35,451 | (18.0 | ) | ||||||||
Current financial liabilities |
9,414 | 14,749 | (36.2 | ) | ||||||||
Current trade and other payables |
15,095 | 16,150 | (6.5 | ) | ||||||||
Current tax payables |
2,341 | 2,332 | 0.4 | |||||||||
Current provisions |
2,216 | 2,220 | (0.2 | ) | ||||||||
Liabilities associated with non-current assets and disposals groups held for sale |
| | | |||||||||
Financial Data |
||||||||||||
Net Financial debt |
44,230 | 48,595 | (9.0 | ) |
Notes:
| 2016 and 2017 reported figures include hyperinflationary adjustments in Venezuela in both years. |
TELEFÓNICA
NET FINANCIAL DEBT PLUS COMMITMENTS
Unaudited figures (Euros in millions)
December 2017 | ||||
Non-current financial liabilities |
46,332 | |||
Current financial liabilities |
9,414 | |||
Gross Financial Debt |
55,746 | |||
Cash and cash equivalents |
(5,192 | ) | ||
Current financial assets |
(2,154 | ) | ||
Positive mark-to-market value of long-term derivative instruments |
(2,812 | ) | ||
Other non-current liabilities included in Trade and other payables |
708 | |||
Other current liabilities included in Trade and other payables |
111 | |||
Other assets included in Non-current financial assets |
(1,516 | ) | ||
Other assets included in Current trade and other receivables |
(661 | ) | ||
Net Financial Debt (1) |
44,230 | |||
Gross commitments related to employee benefits |
6,578 | |||
Value of associated Long-term assets |
(749 | ) | ||
Tax benefits |
(1,533 | ) | ||
Net commitments related to employee benefits |
4,295 | |||
Net financial debt plus commitments |
48,526 | |||
Net Financial Debt / OIBDA |
2.66x |
Notes:
(1) | Net financial debt includes a positive value of the derivatives portfolio for a net amount of 505m, 3,152m included as financial liabilities and 3,657m included as financial assets. |
13
|
January - December 2017
|
TELEFÓNICA
CONSOLIDATED CASH FLOW STATEMENT
Unaudited figures (Euros in millions)
January - December | ||||||||||||
2017 | 2016 | % Var | ||||||||||
Cash received from operations |
63,456 | 63,514 | ||||||||||
Cash paid from operations |
(46,929 | ) | (47,384 | ) | ||||||||
Net payments of interest and other financial expenses net of dividens received |
(1,726 | ) | (2,143 | ) | ||||||||
Taxes paid |
(1,005 | ) | (649 | ) | ||||||||
Net cash flow provided by operating activities |
13,796 | 13,338 | 3.4 | |||||||||
(Payments on investments)/proceeds from the sale in property, plant and equipment and intangible assets, net |
(8,992 | ) | (9,187 | ) | ||||||||
Proceeds on disposals of companies, net of cash and cash equivalents disposed |
40 | 767 | ||||||||||
Payments on investments in companies, net of cash and cash equivalents acquired |
(128 | ) | (54 | ) | ||||||||
Proceeds on financial investments not included under cash equivalents |
296 | 489 | ||||||||||
Payments on financial investments not included under cash equivalents |
(1,106 | ) | (265 | ) | ||||||||
(Payments)/proceeds on placements of cash surpluses not included under cash equivalents, net |
(357 | ) | 42 | |||||||||
Government grants received |
2 | | ||||||||||
Net cash flow used in investing activities |
(10,245 | ) | (8,208 | ) | 24.8 | |||||||
Dividends paid |
(2,459 | ) | (2,906 | ) | ||||||||
Proceeds from issue of share capital increase |
2 | 0 | ||||||||||
(Payments)/proceeds of treasury shares and other operations with shareholders, net |
1,269 | (660 | ) | |||||||||
Operations with other equity holders (1) |
646 | 656 | ||||||||||
Proceeds on issue of debentures and bonds, and other debts |
8,390 | 5,693 | ||||||||||
Proceeds on loans, borrowings and promissory notes |
4,844 | 10,332 | ||||||||||
Cancellation of debentures and bonds, and other debts |
(6,687 | ) | (6,873 | ) | ||||||||
Repayments of loans, borrowings and promissory notes |
(6,711 | ) | (8,506 | ) | ||||||||
Financed operating payments and investments in property, plant and equipment and intangible assets payments |
(1,046 | ) | (1,956 | ) | ||||||||
Net cash used in financing activities |
(1,752 | ) | (4,220 | ) | (58.5 | ) | ||||||
Effect of changes in exchange rates |
(341 | ) | 185 | |||||||||
Effect of changes in consolidation methods and others |
(2 | ) | 26 | |||||||||
Net increase (decrease) in cash and cash equivalents during the year |
1,456 | 1,121 | 29.9 | |||||||||
Cash and cash equivalents at the beginning of the period |
3,736 | 2,615 | ||||||||||
Cash and cash equivalents at the end of the period |
5,192 | 3,736 |
Notes:
| After considering Venezuela as a hyperinflationary country, P&L and CapEx from the operations in the country are to be accounted at the closing exchange rate Bolivar Fuerte/Euro. For the January-December 2017 period Telefónica uses a synthetic exchange rate of 36,115 Venezuelan bolivars fuertes per dollar at December 2017. |
| 2016 and 2017 reported figures include the hyperinflationary adjustments in Venezuela in both years. |
1) | Includes issuance and coupons of undated deeply subordinated securities. |
14
|
January - December 2017
|
TELEFÓNICA
FREE CASH FLOW AND CHANGE IN DEBT
Unaudited figures (Euros in millions)
January - December | ||||||||||||||
2017 | 2016 | % Chg | ||||||||||||
I |
Cash flow from operations | 16,530 | 16,130 | 2.5 | ||||||||||
II |
Net interest payment (1) | (1,726 | ) | (2,143 | ) | |||||||||
III |
Payment for income tax | (1,005 | ) | (649 | ) | |||||||||
A=I+II+III |
Net cash provided by operating activities | 13,799 | 13,338 | 3.5 | ||||||||||
B |
Net payment for investment in fixed and intangible assets (2) | (8,992 | ) | (9,187 | ) | |||||||||
Spectrum (3) | (352 | ) | (349 | ) | ||||||||||
C=A+B |
Net free cash flow after CapEx | 4,807 | 4,151 | 15.8 | ||||||||||
D |
Net payment for financial investment | (899 | ) | 927 | ||||||||||
E |
Net payment for operations with minority shareholders and treasury stock (4) | (543 | ) | (2,899 | ) | |||||||||
F=C+D+E |
Free cash flow after dividends | 3,365 | 2,178 | 54.5 | ||||||||||
G |
Effects of exchange rate changes on net financial debt | (639 | ) | (91 | ) | |||||||||
H |
Effects on net financial debt of changes in consolid. and others | (361 | ) | 1,703 | ||||||||||
I |
Net financial debt at beginning of period | 48,595 | 49,161 | |||||||||||
J=I-F+G+H |
Net financial debt at end of period | 44,230 | 48,595 | (9.0 | ) |
TELEFÓNICA
RECONCILIATIONS OF CASH FLOW AND OIBDA MINUS CAPEX
Unaudited figures (Euros in millions)
January - December | ||||||||||||
2017 | 2016 | % Chg | ||||||||||
OIBDA |
16,187 | 15,118 | 7.1 | |||||||||
- CapEx accrued during the period |
(8,697 | ) | (8,928 | ) | ||||||||
- Payments related to cancellation of commitments |
(696 | ) | (738 | ) | ||||||||
- Net interest payment |
(1,726 | ) | (2,143 | ) | ||||||||
- Payment for tax |
(1,005 | ) | (649 | ) | ||||||||
- Gain (loss) on sale of fixed assets and impairment of goodwill and other assets |
(27 | ) | 16 | |||||||||
- Investment In working capital and other deferred income and expenses and Others (2)(5) |
771 | 1,474 | ||||||||||
= Net Free Cash Flow after CapEx |
4,807 | 4,151 | 15.8 | |||||||||
+ Payments related to cancellation of commitments |
696 | 738 | ||||||||||
- Dividends paid to minority shareholders |
(555 | ) | (511 | ) | ||||||||
= Free Cash Flow |
4,947 | 4,378 | 13.0 | |||||||||
Weighted average number of ordinary shares outstanding during the period (millions) |
5,110 | 5,061 | ||||||||||
= Free Cash Flow per share (euros) |
0.97 | 0.87 | 11.9 |
Notes:
| 2016 and 2017 reported figures include hyperinflationary adjustments in Venezuela in both years. |
(1) | Includes cash received from dividends paid by subsidiaries that are not fully consolidated. |
(2) | Includes Net Cash received from sale of Real Estate. |
(3) | Figures in m. 2017 includes mainly: 322 in Colombia mainly associated to the Arbitration Award, 4 in Spain, 4 in UK, 2 in Mexico, 5 in Uruguay and 15 in El Salvador. In 2016 mainly: 4 in Spain, 4 in Germany, 5 in UK, 48 in Brazil, 5 in Colombia and 283 in Peru. |
(4) | Dividends paid by Telefónica S.A., operations with treasury stock, issuance of shares, issuance and coupons of undated deeply subordinated securities, issuance of mandatorily convertible bonds into Telefónica S.A. shares and operations with minority shareholders from subsidiaries that are consolidated through the equity method. |
(5) | Other deferred expenses include 76m in Q1 17, 108m in Q4 17 and 1,085m in Q4 16 related to commitments associated with long-term restructuring plans in Spain. Includes 153m in Q3 17 associated to the assumption of a portion of Coltels indebtedness by the Colombian Government. |
15
|
January - December 2017
|
TELEFÓNICA
EXCHANGES RATES APPLIED
P&L and CapEx (1) | Statement of Financial Position (2) | |||||||||||||||
Currency units per Euro |
Jan - Dec 2017 | Jan - Dec 2016 | December 2017 | December 2016 | ||||||||||||
USA (US Dollar) |
1.127 | 1.106 | 1.199 | 1.054 | ||||||||||||
United Kingdom (Sterling) |
0.876 | 0.817 | 0.888 | 0.855 | ||||||||||||
Argentina (Argentine Peso) |
18.560 | 16.314 | 22.518 | 16.706 | ||||||||||||
Brazil (Brazilian Real) |
3.595 | 3.833 | 3.968 | 3.435 | ||||||||||||
Chile (Chilean Peso) |
731.283 | 747.496 | 737.333 | 705.622 | ||||||||||||
Colombia (Colombian Peso) |
3,324.369 | 3,369.057 | 3,579.008 | 3,162.745 | ||||||||||||
Costa Rica (Colon) |
644.745 | 609.385 | 686.813 | 591.366 | ||||||||||||
Guatemala (Quetzal) |
8.285 | 8.406 | 8.809 | 7.928 | ||||||||||||
Mexico (Mexican Peso) |
21.288 | 20.629 | 23.584 | 21.733 | ||||||||||||
Nicaragua (Cordoba) |
33.840 | 31.657 | 36.921 | 30.904 | ||||||||||||
Peru (Peruvian Nuevo Sol) |
3.675 | 3.733 | 3.888 | 3.537 | ||||||||||||
Uruguay (Uruguayan Peso) |
32.302 | 33.266 | 34.551 | 30.924 | ||||||||||||
Venezuela (Bolivar Fuerte) (3) |
43,316.682 | 710.227 | 43,316.682 | 710.227 |
(1) | Average exchange rate for the period. |
(2) | Exchange rates as of 31/12/17 and 31/12/16. |
(3) | After considering Venezuela as a hyperinflationary country, P&L and CapEx from the operations in the country are to be accounted at the closing exchange rate Bolivar Fuerte/Euro. For the January-December 2017 period Telefónica uses a synthetic exchange rate of 36,115 Venezuelan bolivars fuertes per dollar at December 2017. |
NET FINANCIAL DEBT STRUCTURE BY CURRENCY
Unaudited figures
December 2017 | ||||||||||||||||
EUR | LATAM | GBP | USD | |||||||||||||
Net financial debt structure by currency |
82 | % | 10 | % | 7 | % | 1 | % |
TOTAL FINANCIAL LIABILITIES BREAKDOWN
Unaudited figures
December 2017 | ||||||||||||
Bonds and commercial paper |
Debt with financial institutions |
Other financial debt (including governments) and net derivatives |
||||||||||
Total financial liabilities (1) |
83 | % | 15 | % | 2 | % |
(1) | Includes positive value of derivatives and other financial debt. |
CREDIT RATINGS
Long-Term | Short-Term | Perspective | Date of last rating change | |||||||||||||
Moodys1 |
Baa3 | P-3 | Stable | 07/11/2016 | ||||||||||||
Fitch1 |
BBB | F-3 | Stable | 05/09/2016 | ||||||||||||
S&P1 |
BBB | A-2 | Stable | 17/05/2016 |
(1) | The rating is issued by a credit rating agency established in the EU and registered under Regulation (EC) 1060/2009. |
16
|
January - December 2017
|
02
(y-o-y changes in organic terms)
Telefónica Españas results for 2017 acknowledged a progressive improvement in revenue and OIBDA trend and solid growth in cash flow generation. Service revenue growth accelerated to 0.7% y-o-y in the quarter, OIBDA returned to growth (+0.5%, excluding provisions and capital gains) and operating cash flow increased by 3.1% in the year.
The greater commercial activity, in particular the solid performance of gross additions, in a quarter characterised by strong promotional activity, resulted in net additions in fixed broadband, solid progress in TV and a positive balance in total mobile portability (contract + prepaid, for the first time since the second quarter of 2008).
Total Movistar Fusión accesses reached a new record of 20.3m after growing by 10% in 2017, driven by the strong growth in additional mobile lines (+1.1m mobile accesses) and pay TV (over 400k new accesses). At the same time, Movistar Fusión customers continued to increase (+2% y-o-y; +41k in the quarter), each one incorporating at least three services (traditional fixed line, broadband fixed line and mobile line), and reached 4.4m (with a penetration of 87% in consumer TV base, 86% in broadband and 79% in mobile contract).
The improved value mix was reflected in the increased base of Fusión customers with ultrafast fibre (38%), with TV (76% vs. 68% in 2016) and in the higher average of mobile lines per customer (1.8 mobile lines vs. 1.6 in 2016).
All this translated into a continuous increase in ARPU (+6% y-o-y) to 86.1 in the quarter, on the tariff updates and the better customer mix and despite the new low-end proposal launched in July. Churn stood at 1.6% (+0.2 p.p. y-o-y, +0.1 p.p. q-o-q), affected by the calendar of tariff upgrades and promotions.
Net additions in mobile accesses accelerated again in the quarter (+157k accesses), reflecting the success of the totalisation strategy and the positive portability balance driven by the improved associated offer. Contract accesses increased by 6% y-o-y (269k net additions in the quarter, the highest level since the third quarter of 2010), an incorporation of 875k accesses in 2017, the highest figure in the last seven years.
The fixed broadband base grew in the quarter (+3k accesses) fostered by the higher volume of gross additions in Fusión and fibre accesses increased by 14%, representing 57% of broadband accesses (+7 p.p. y-o-y), of which almost two-thirds were high-speed. Premises passed with fiber to the home reached 19.2m at the end of 2017 (+646k in the quarter, +2.1m in the year). Fixed telephony accesses (-4% y-o-y) posted a net quarterly loss of 83k, less than the average of the previous quarters in 2017.
Pay TV accesses stood at 3.8m and accelerated their growth (+5% y-o-y) with quarterly net additions of 81k, driven by the repositioning of the convergent offer (with TV in all bundles) and the improved quality and segmentation of content. The commitment to producing quality in-house content yielded very positive results; as such, the recently launched show La Peste, primarily viewed on-demand, registered the largest audience of any other series broadcasted by Movistar+ to date, and the #0 channel had the largest audience amongst non-sports pay channels included in the platform.
Wholesale accesses amounted to 4.2m (-7% y-o-y) and the quarterly loss was reduced to 75k accesses, due to the acceleration of NEBA Fibre growth (178k new accesses vs. 132k in the previous quarter) to reach 850k accesses; 20% of the total wholesale base (+13 p.p. y-o-y; +4 p.p. q-o-q).
17
|
January - December 2017
|
The Company also continued to upgrade the offering, adapting it to increasing customer demand with the More for More strategy, with highlights in 2018:
i) | Fusión+ mid- and high-value bundles; speed increase (x2) in the fibre line and data increase (+2GB) in main mobile lines (+5/month since February). |
ii) | Fusión #0; speed increase (x2) in fibre and data increase (+1GB) in the main mobile line (+3/month since from March). |
iii) | Non-convergent contract tariffs; data increase (+1-5GB) (+2-3/month) and the launch of a new portfolio at the end of January with two new tariffs of 1.5GB and 4GB (14 and 22). |
iv) | Non-convergent broadband tariffs; speed increase (x2; +2/months since January). |
Revenues in the fourth quarter stood at 3,243m (stable y-o-y) and their performance improved vs. the previous quarter (+0.3 p.p.) on the back of service revenues (3,123m; +0.7% y-o-y, +0.3 p.p. q-o-q) and handset sales (-15.6%, +3.3 p.p. q-o-q). Total revenues in 2017 amounted to 12,653m (-1.2% y-o-y) and service revenues, 12,274m, remained virtually stable y-o-y (-0.3%, after the growth reported in the last two quarters of the year).
Consumer revenues in the quarter (1,651m) continued to grow (+1.3% y-o-y), with a sequential deceleration (-0.8 p.p.) explained primarily by the higher seasonal consumption of data in the summer. Fusión revenues continued to grow at an elevated rate (+7.9% y-o-y; +9.1% in the year) and the trend in non-convergent revenues improved (-10.9% in the quarter; -12.6% in the year). Consumer revenues in 2017 increased to 6,602m and grew by 1.0% y-o-y.
Business revenues (866m) decreased by 2.6% y-o-y, with a sustained downward trend in communication revenues (-4.2%) partly offset by the continued growth in IT revenues (+2.5%). Business revenues in 2017 stood at 3,401m (-1.3% y-o-y).
Other revenues (606m) returned to y-o-y growth (+4.2%), substantially improving their performance for several reasons: i) TV wholesale and MVNO activity were more comparable in the period; and ii) the strong growth of wholesale fibre. Other revenues in 2017 stood at 2,271m (-2.5% y-o-y).
Operating expenses reached 2,131m in the quarter (+0.7% y-o-y), affected by the restructuring provision of 89m, associated with a greater-than-expected acceptance of the employment suspension plan extended to 2018, which will generate additional savings in direct expenses. Operating expenses in 2017 totalled 8,066m and decreased by 0.9% y-o-y.
Supplies (942m in October-November) increased by 3.6% y-o-y, improving sequentially and reflecting a better comparison in content costs. The content cost net of wholesale TV revenue remained stable y-o-y in the quarter and grew 10% in 2017.
Personnel expenses (587m) were affected by the restructuring provision and decreased by 5.2% in the quarter, impacted by the y-o-y savings from the employment suspension plan (29m). In January-December, these expenses decreased by 6.3%, thus increasing savings from the plan to 158m, in addition to the savings achieved in previous years. Headcount at the end of December totalled 27,291 employees (-5% y-o-y).
Other operating expenses (602m) increased by 1.4% y-o-y (+2.6 p.p. q-o-q) due to higher commercial costs associated with greater commercial activity.
OIBDA amounted to 1,221m in October-December; though it would have reached 1,295m in the quarter and 5,094m in 2017 excluding 102m in restructuring provisions in the fourth quarter (for both personnel 89m, and the distribution channel 13m) and in the first quarter (personnel: 76m) and capital gains on the sale of real estate (27m in the fourth quarter and 8m in the second).
18
|
January - December 2017
|
Thus, excluding those provisions and capital gains in 2017 and the ones recorded in 2016, quarterly OIBDA returned to growth increasing 0.5% y-o-y (+1.2 p.p. compared to the previous quarter) due to the improved revenue performance. OIBDA margin stood at 39.9% in the quarter (+0.2 p.p. y-o-y) and 40.3% in the year (stable vs. 2016).
CapEx in 2017 reached 1,683m (-8.8% y-o-y), reflecting the reduced rollout pace of fiber and 4G networks compared to 2016, as well as the capture of efficiencies, and operating cash flow grew solidly to 3,411m (+3.1% y-o-y) excluding provisions and capital gains.
19
|
January - December 2017
|
TELEFÓNICA ESPAÑA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - December | % Chg | October - December | % Chg | |||||||||||||||||||||||||||||
2017 | 2016 | Reported | Organic | 2017 | 2016 | Reported | Organic | |||||||||||||||||||||||||
Revenues |
12,653 | 12,815 | (1.3 | ) | (1.2 | ) | 3,243 | 3,246 | (0.1 | ) | (0.0 | ) | ||||||||||||||||||||
Mobile handset revenues |
379 | 497 | (23.7 | ) | (23.7 | ) | 120 | 142 | (15.6 | ) | (15.6 | ) | ||||||||||||||||||||
Revenues ex-mobile handset revenues |
12,274 | 12,318 | (0.4 | ) | (0.3 | ) | 3,123 | 3,104 | 0.6 | 0.7 | ||||||||||||||||||||||
Consumer (1) |
6,602 | 6,536 | 1.0 | 1.0 | 1,651 | 1,631 | 1.3 | 1.3 | ||||||||||||||||||||||||
Fusión |
4,470 | 4,096 | 9.1 | 9.1 | 1,137 | 1,053 | 7.9 | 7.9 | ||||||||||||||||||||||||
Non-Fusión |
2,132 | 2,440 | (12.6 | ) | (12.6 | ) | 515 | 578 | (10.9 | ) | (10.9 | ) | ||||||||||||||||||||
Business |
3,401 | 3,445 | (1.3 | ) | (1.3 | ) | 866 | 889 | (2.6 | ) | (2.6 | ) | ||||||||||||||||||||
Communications |
2,631 | 2,721 | (3.3 | ) | (3.3 | ) | 649 | 678 | (4.2 | ) | (4.2 | ) | ||||||||||||||||||||
IT |
771 | 724 | 6.4 | 6.4 | 216 | 211 | 2.5 | 2.5 | ||||||||||||||||||||||||
Other (2) |
2,271 | 2,337 | (2.8 | ) | (2.5 | ) | 606 | 584 | 3.8 | 4.2 | ||||||||||||||||||||||
Internal expenditure capitalized in fixed assets |
310 | 324 | (4.4 | ) | (4.4 | ) | 81 | 81 | (0.5 | ) | (0.5 | ) | ||||||||||||||||||||
Operating expenses |
(8,066 | ) | (8,813 | ) | (8.5 | ) | (0.9 | ) | (2,131 | ) | (2,865 | ) | (25.6 | ) | 0.7 | |||||||||||||||||
Supplies |
(3,481 | ) | (3,406 | ) | 2.2 | 2.2 | (942 | ) | (909 | ) | 3.6 | 3.6 | ||||||||||||||||||||
Personnel expenses |
(2,212 | ) | (3,022 | ) | (26.8 | ) | (6.3 | ) | (587 | ) | (1,363 | ) | (56.9 | ) | (5.2 | ) | ||||||||||||||||
Other operating expenses |
(2,373 | ) | (2,384 | ) | (0.5 | ) | (0.5 | ) | (602 | ) | (594 | ) | 1.4 | 1.4 | ||||||||||||||||||
Other net income (expense) |
(10 | ) | (30 | ) | (68.2 | ) | c.s. | (10 | ) | (28 | ) | (65.4 | ) | c.s. | ||||||||||||||||||
Gain (loss) on sale of fixed assets |
70 | 111 | (37.1 | ) | (15.4 | ) | 37 | 64 | (41.8 | ) | 4.8 | |||||||||||||||||||||
Impairment of goodwill and other assets |
(5 | ) | (4 | ) | 28.2 | 28.2 | (0 | ) | (2 | ) | (87.9 | ) | (87.9 | ) | ||||||||||||||||||
Operating income before D&A (OIBDA) |
4,952 | 4,403 | 12.5 | (1.8 | ) | 1,221 | 496 | 146.0 | 0.1 | |||||||||||||||||||||||
OIBDA Margin |
39.1 | % | 34.4 | % | 4.8 p.p. | (0.2 p.p. | ) | 37.6 | % | 15.3 | % | 22.4 p.p. | 0.0 p.p. | |||||||||||||||||||
CapEx |
1,683 | 1,852 | (9.1 | ) | (8.8 | ) | 586 | 563 | 4.2 | 4.2 | ||||||||||||||||||||||
Spectrum |
| 7 | | | | | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
3,269 | 2,551 | 28.2 | 2.0 | 635 | (66 | ) | c.s. | (3.0 | ) |
Notes:
| Since 1 January, 2016, T. España reflects all the charges related to the towers transferred to Telxius, which are now presented in Telxius (Other Companies & Eliminations), and includes the results of the data center business, of T. Studios and of T. Servicios Audiovisuales, which where before presented in Other Companies & Eliminations. |
| The results of T. España do not include intra-group capital gains resulting from the transfer of towers to Telxius. |
| T. Personalizadas has been deconsolidated since 1 January, 2017. |
| OIBDA before management and brand fees. |
(1) | Consumer revenues include residential and SOHO revenues. |
(2) | Other revenues include wholesale, subsidiaries and other revenues. |
TELEFÓNICA ESPAÑA
ACCESSES
Unaudited figures (Thousands)
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Final Clients Accesses |
36,791.3 | 36,765.2 | 36,769.8 | 36,709.4 | 36,537.3 | 36,464.3 | 36,614.6 | 36,768.5 | 0.2 | |||||||||||||||||||||||||||
Fixed telephony accesses (1) |
9,910.6 | 9,854.2 | 9,783.7 | 9,720.2 | 9,584.2 | 9,463.3 | 9,387.4 | 9,304.7 | (4.3 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
6,012.8 | 6,061.6 | 6,076.6 | 6,094.5 | 6,075.9 | 6,044.4 | 6,040.7 | 6,039.6 | (0.9 | ) | ||||||||||||||||||||||||||
Broadband |
5,978.6 | 6,030.2 | 6,045.3 | 6,067.3 | 6,050.9 | 6,020.1 | 6,017.6 | 6,020.3 | (0.8 | ) | ||||||||||||||||||||||||||
FTTH |
2,458.3 | 2,675.7 | 2,830.7 | 2,998.3 | 3,127.8 | 3,213.5 | 3,309.3 | 3,423.7 | 14.2 | |||||||||||||||||||||||||||
Mobile accesses |
17,140.1 | 17,094.4 | 17,198.2 | 17,237.7 | 17,261.7 | 17,289.8 | 17,419.6 | 17,576.5 | 2.0 | |||||||||||||||||||||||||||
Prepay |
2,675.7 | 2,579.7 | 2,466.1 | 2,329.3 | 2,135.9 | 2,000.4 | 1,905.4 | 1,793.4 | (23.0 | ) | ||||||||||||||||||||||||||
Contract |
14,464.5 | 14,514.7 | 14,732.1 | 14,908.4 | 15,125.7 | 15,289.4 | 15,514.1 | 15,783.1 | 5.9 | |||||||||||||||||||||||||||
M2M |
1,827.2 | 1,890.5 | 1,968.8 | 2,006.3 | 2,015.6 | 1,974.7 | 2,020.9 | 2,015.6 | 0.5 | |||||||||||||||||||||||||||
Pay TV (2) |
3,727.8 | 3,755.0 | 3,711.4 | 3,657.0 | 3,615.6 | 3,666.8 | 3,766.9 | 3,847.6 | 5.2 | |||||||||||||||||||||||||||
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Wholesale Accesses |
4,866.9 | 4,693.3 | 4,589.3 | 4,525.5 | 4,442.3 | 4,377.8 | 4,295.7 | 4,221.1 | (6.7 | ) | ||||||||||||||||||||||||||
Fibre |
176.6 | 210.3 | 259.7 | 324.9 | 426.2 | 539.7 | 671.7 | 849.5 | 161.5 | |||||||||||||||||||||||||||
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Total Accesses |
41,658.2 | 41,458.6 | 41,359.2 | 41,234.9 | 40,979.6 | 40,842.1 | 40,910.3 | 40,989.6 | (0.6 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
20
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January - December 2017
|
TELEFÓNICA ESPAÑA
CONSUMER ACCESSES (Fusión + non-Fusión) |
2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Fixed telephony accesses |
7,428.5 | 7,382.1 | 7,319.0 | 7,260.4 | 7,146.2 | 7,041.5 | 6,972.1 | 6,895.4 | (5.0 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
5,145.4 | 5,186.4 | 5,195.5 | 5,207.8 | 5,195.3 | 5,174.0 | 5,178.0 | 5,181.9 | (0.5 | ) | ||||||||||||||||||||||||||
Mobile accesses |
11,759.7 | 11,676.5 | 11,691.5 | 11,732.3 | 11,754.9 | 11,813.6 | 11,885.8 | 12,024.8 | 2.5 | |||||||||||||||||||||||||||
Prepay |
2,675.7 | 2,579.7 | 2,466.1 | 2,329.3 | 2,135.9 | 2,000.4 | 1,905.4 | 1,793.4 | (23.0 | ) | ||||||||||||||||||||||||||
Contract |
9,084.0 | 9,096.8 | 9,225.4 | 9,403.0 | 9,618.9 | 9,813.2 | 9,980.3 | 10,231.4 | 8.8 | |||||||||||||||||||||||||||
Pay TV |
3,727.8 | 3,755.0 | 3,711.4 | 3,657.0 | 3,615.6 | 3,666.8 | 3,766.9 | 3,847.6 | 5.2 | |||||||||||||||||||||||||||
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Total Consumer Accesses |
28,061.4 | 28,000.0 | 27,917.4 | 27,857.6 | 27,711.8 | 27,695.9 | 27,802.7 | 27,949.7 | 0.3 | |||||||||||||||||||||||||||
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TOTAL MOBILE ACCESSES | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Contract percentage (%) |
84.4 | % | 84.9 | % | 85.7 | % | 86.5 | % | 87.6 | % | 88.4 | % | 89.1 | % | 89.8 | % | 3.3 p.p. | |||||||||||||||||||
Smartphones (000) |
10,200.2 | 10,295.8 | 10,500.3 | 10,715.8 | 10,800.7 | 11,240.4 | 11,473.6 | 11,857.7 | 10.7 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
67.2 | % | 68.3 | % | 69.5 | % | 70.9 | % | 71.3 | % | 73.8 | % | 74.8 | % | 76.4 | % | 5.6 p.p. | |||||||||||||||||||
LTE (000) |
4,520.7 | 5,050.0 | 5,444.0 | 6,073.0 | 6,589.6 | 6,976.3 | 7,322.8 | 7,686.2 | 26.6 | |||||||||||||||||||||||||||
LTE penetration (%) |
29.5 | % | 33.2 | % | 35.7 | % | 39.9 | % | 43.2 | % | 45.6 | % | 47.6 | % | 49.4 | % | 9.5 p.p. |
CONSUMER FUSIÓN | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Fusión Customers |
4,209.1 | 4,268.8 | 4,286.1 | 4,333.2 | 4,379.0 | 4,374.7 | 4,384.7 | 4,426.2 | 2.1 | |||||||||||||||||||||||||||
Fibre 100/300 |
1,267.4 | 1,345.9 | 1,491.0 | 1,593.5 | 1,669.1 | 1,677.9 | 1,691.3 | 1,701.8 | 6.8 | |||||||||||||||||||||||||||
IPTV/Satellite |
2,768.6 | 2,873.6 | 2,914.9 | 2,943.1 | 2,970.9 | 3,071.9 | 3,218.7 | 3,347.8 | 13.7 | |||||||||||||||||||||||||||
Mobile add-ons |
2,023.3 | 2,084.1 | 2,302.7 | 2,542.0 | 2,861.6 | 3,138.5 | 3,365.9 | 3,690.9 | 45.2 | |||||||||||||||||||||||||||
Fusión Accesses |
17,419.3 | 17,764.2 | 18,075.9 | 18,484.6 | 18,969.5 | 19,334.6 | 19,738.7 | 20,317.2 | 9.9 |
CONSUMER FUSIÓN | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures | Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | % Chg | |||||||||||||||||||||||||||
Fusión ARPU (EUR) |
78.2 | 79.8 | 81.8 | 81.6 | 81.6 | 84.8 | 87.6 | 86.1 | 5.5 | |||||||||||||||||||||||||||
Fusión churn |
1.3 | % | 1.1 | % | 1.3 | % | 1.4 | % | 1.4 | % | 1.3 | % | 1.5 | % | 1.6 | % | 0.2 p.p. |
Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | % Chg | ||||||||||||||||||||||||||||
Fusión ARPU (EUR) |
78.2 | 79.0 | 79.9 | 80.4 | 81.6 | 83.2 | 84.7 | 85.1 | 5.8 | |||||||||||||||||||||||||||
Fusión churn |
1.3 | % | 1.2 | % | 1.2 | % | 1.3 | % | 1.4 | % | 1.4 | % | 1.4 | % | 1.5 | % | 0.2 p.p. |
SELECTED OPERATIONAL DATA | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | % Chg | |||||||||||||||||||||||||||
Total data traffic (TB) |
1,333,989 | 2,697,613 | 4,140,131 | 5,690,140 | 1,473,501 | 3,166,713 | 4,860,008 | 6,863,956 | 20.6 | |||||||||||||||||||||||||||
Fixed data traffic |
1,291,860 | 2,610,901 | 3,991,793 | 5,479,375 | 1,406,556 | 3,009,891 | 4,581,394 | 6,466,074 | 18.0 | |||||||||||||||||||||||||||
Mobile data traffic |
42,129 | 86,712 | 148,338 | 210,765 | 66,944 | 156,821 | 278,614 | 397,882 | 88.8 |
Notes:
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
21
|
January - December 2017
|
03
(y-o-y changes in organic terms)
Telefónica Deutschland delivered solid results and met 2017 guidance, with cumulated OpCF synergies reaching 670m (75% of 2019 target). In a dynamic yet rational competitive environment, the Company continued to show solid operational momentum with a clear focus on future profitable growth. Supported by the positive take-up of the new O2 Free portfolio (launched in September), data usage again showed significant growth (+17% q-o-q).
Contract mobile customers (21.3m; +4% y-o-y) posted solid net additions in the quarter (+186k) on the back of strong partner trading (58% of gross additions; 53% in July-September) and an increasing demand for tariffs with large data volumes. Prepay customers (21.9m; -8% y-o-y) saw 1.9m net disconnections in the quarter, mainly due to a technical base adjustment driven by IT-harmonisation and regulatory changes (legitimation check for prepay SIM-cards plus the RLAH regulation impacts on demand from European travellers). Smartphone penetration continued to grow (+2 p.p. vs. September to 61%) and LTE accesses (15.8m) were up 31% y-o-y while LTE penetration reached 37% (+10 p.p. y-o-y). The average data usage for O2 contract LTE customers was up 68% y-o-y to 2.8 GB. Customers in the new O2 Free portfolio showed an even higher average usage of >7GB, reflecting the successful approach to stimulate data usage while generating ARPU-up potential. Retail broadband accesses remained broadly stable y-o-y at 2.1m, while VDSL (1.2m; +43% y-o-y) increased its quarterly net additions (89k) by 21% y-o-y. Wholesale DSL (188k accesses) registered 110k net disconnections in the quarter due to the planned dismantling of the legacy infrastructure.
Revenues totalled 1,904m in October-December and fell 1.6% y-o-y (-2.8% to 7,296m in 2017). Mobile service revenues ex-regulation continued with its trend of improvement and posted growth in the quarter (+0.8% y-o-y; +1.0 p.p. vs. July-September) supported by inbound roaming trends and operational momentum. Reported MSR reflected this enhanced performance (-1.2% y-o-y in October-December; -2.8% in 2017), but continued to decline due to regulatory headwinds (termination rate cuts and RLAH) and the ongoing legacy base rotation. Handset revenues amounted to 356m in the quarter, up 4.4% y-o-y (1,128m and +6.4% in 2017). Fixed revenues (208m) decreased 12.7% y-o-y (862m and -12.2% in 2017).
Operating expenses reached 1,456m in the quarter and decreased 3.6% y-o-y (5,579m in 2017; -4.9% y-o-y). Supplies totalled 637m (-5.5% y-o-y; -2.6% in 2017) and benefited from lower interconnection costs, despite the impact of usage elasticity effects from outbound roaming. Personnel expenses (171m) increased 0.3% y-o-y (-0.3% in 2017) mainly due to the insourcing of external employees (e.g. in customer service) that offset savings from the employee restructuring programme. Other operating expenses reached 649m in the quarter and were down 2.6% y-o-y (-8.0% in 2017) on the back of successful synergy capture mainly driven by network consolidation and FTE restructuring. Restructuring costs amounted to 30m in October-December (82m in 2017).
OIBDA totalled 503m in the last three months and growth accelerated to 6.3% y-o-y (1,821m in 2017; +2.9% y-o-y) mainly due to higher incremental synergy-related savings (~45m in October-December; ~160m in 2017) and capital gains on the sale of assets (29m), while the regulatory drag was -10m in October-December (-28m in July-September) and the Company continued to invest in the market to drive future MSR growth with the new O2 Free portfolio and O2 brand positioning. OIBDA margin stood at 26.4% in the quarter (+2.1 p.p. y-o-y) and at 25.0% in 2017 (+1.4 p.p.).
CapEx amounted to 951m, 13.7% lower vs. 2016 benefitting from incremental CapEx synergies (~80m) and being focused on network integration, LTE network rollout and getting 5G ready by bringing fibre to the backhaul.
As such, Operating cash flow (OIBDA-CapEx) increased 27.4% y-o-y to 870m in 2017.
22
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January - December 2017
|
TELEFÓNICA DEUTSCHLAND
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - December | % Chg | October - December | % Chg | |||||||||||||||||||||||||||||
2017 | 2016 | Reported | Organic | 2017 | 2016 | Reported | Organic | |||||||||||||||||||||||||
Revenues |
7,296 | 7,503 | (2.8 | ) | (2.8 | ) | 1,904 | 1,936 | (1.6 | ) | (1.6 | ) | ||||||||||||||||||||
Mobile Business |
6,415 | 6,498 | (1.3 | ) | (1.3 | ) | 1,688 | 1,690 | (0.1 | ) | (0.1 | ) | ||||||||||||||||||||
Mobile service revenues |
5,287 | 5,437 | (2.8 | ) | (2.8 | ) | 1,332 | 1,349 | (1.2 | ) | (0.0 | ) | ||||||||||||||||||||
Data revenues |
2,985 | 2,992 | (0.2 | ) | (0.2 | ) | 747 | 746 | 0.1 | 0.1 | ||||||||||||||||||||||
Handset revenues |
1,128 | 1,061 | 6.4 | 6.4 | 356 | 341 | 4.4 | 4.4 | ||||||||||||||||||||||||
Fixed Business |
862 | 981 | (12.2 | ) | (12.2 | ) | 208 | 238 | (12.7 | ) | (12.7 | ) | ||||||||||||||||||||
FBB and new services (1) |
667 | 748 | (10.9 | ) | (10.9 | ) | 160 | 182 | (12.0 | ) | (12.0 | ) | ||||||||||||||||||||
Voice & access revenues |
195 | 233 | (16.3 | ) | (16.3 | ) | 48 | 56 | (15.0 | ) | (15.0 | ) | ||||||||||||||||||||
Internal expenditure capitalized in fixed assets |
102 | 104 | (2.6 | ) | (2.6 | ) | 26 | 25 | 4.4 | 4.4 | ||||||||||||||||||||||
Operating expenses |
(5,579 | ) | (5,859 | ) | (4.8 | ) | (4.9 | ) | (1,456 | ) | (1,497 | ) | (2.7 | ) | (3.6 | ) | ||||||||||||||||
Supplies |
(2,396 | ) | (2,452 | ) | (2.3 | ) | (2.6 | ) | (637 | ) | (674 | ) | (5.5 | ) | (5.5 | ) | ||||||||||||||||
Personnel expenses |
(642 | ) | (646 | ) | (0.6 | ) | (0.3 | ) | (171 | ) | (157 | ) | 8.5 | 0.3 | ||||||||||||||||||
Other operating expenses |
(2,541 | ) | (2,761 | ) | (8.0 | ) | (8.0 | ) | (649 | ) | (666 | ) | (2.6 | ) | (2.6 | ) | ||||||||||||||||
Other net income (expense) |
(28 | ) | 23 | c.s. | (84.1 | ) | 1 | 9 | (92.6 | ) | (68.8 | ) | ||||||||||||||||||||
Gain (loss) on sale of fixed assets |
30 | (0 | ) | c.s. | c.s. | 29 | (0 | ) | c.s. | c.s. | ||||||||||||||||||||||
Impairment of goodwill and other assets |
| | | | | | | | ||||||||||||||||||||||||
Operating income before D&A (OIBDA) |
1,821 | 1,771 | 2.8 | 2.9 | 503 | 472 | 6.6 | 6.3 | ||||||||||||||||||||||||
OIBDA Margin |
25.0 | % | 23.6 | % | 1.4 p.p. | 1.4 p.p. | 26.4 | % | 24.4 | % | 2.0 p.p. | 2.1 p.p. | ||||||||||||||||||||
CapEx |
951 | 1,107 | (14.2 | ) | (13.7 | ) | 262 | 360 | (27.0 | ) | (26.7 | ) | ||||||||||||||||||||
Spectrum |
1 | 6 | (90.1 | ) | (90.1 | ) | | 1 | | | ||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
870 | 664 | 31.1 | 27.4 | 241 | 112 | 114.5 | 88.7 |
Notes:
| Since 1 May, 2016, T. Deutschland reflects all the charges related to the towers transferred to Telxius, which are now presented in Telxius (Other Companies & Eliminations) |
| Organic y-o-y changes reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of T. Deutschland do not include intra-group capital gains resulting from the transfer of towers to Telxius. |
| OIBDA before management and brand fees. |
(1) | Includes broadband connectivity services (retail and wholesale), including value added services, data and ICT revenues, other services over connectivity and FBB equipment. |
TELEFÓNICA DEUTSCHLAND
ACCESSES
Unaudited figures (Thousands)
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Final Clients Accesses |
47,341.7 | 47,754.9 | 48,404.8 | 48,655.5 | 48,988.0 | 49,478.7 | 49,105.1 | 47,415.8 | (2.5 | ) | ||||||||||||||||||||||||||
Fixed telephony accesses (1) |
2,002.8 | 2,007.4 | 2,006.5 | 2,010.3 | 2,000.1 | 1,987.9 | 1,979.3 | 1,979.6 | (1.5 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
2,330.9 | 2,329.8 | 2,324.8 | 2,324.5 | 2,312.5 | 2,297.2 | 2,284.2 | 2,281.5 | (1.9 | ) | ||||||||||||||||||||||||||
Broadband |
2,101.5 | 2,103.9 | 2,101.6 | 2,104.0 | 2,095.3 | 2,082.4 | 2,072.5 | 2,072.2 | (1.5 | ) | ||||||||||||||||||||||||||
FTTx |
593.0 | 669.3 | 731.8 | 805.5 | 872.2 | 959.9 | 1,062.5 | 1,151.6 | 43.0 | |||||||||||||||||||||||||||
Mobile accesses |
43,008.0 | 43,417.8 | 44,073.5 | 44,320.7 | 44,675.3 | 45,193.6 | 44,841.6 | 43,154.7 | (2.6 | ) | ||||||||||||||||||||||||||
Prepay |
23,743.5 | 23,814.2 | 23,872.8 | 23,784.0 | 23,967.0 | 24,288.6 | 23,753.8 | 21,880.9 | (8.0 | ) | ||||||||||||||||||||||||||
Contract |
19,264.4 | 19,603.6 | 20,200.7 | 20,536.6 | 20,708.4 | 20,905.0 | 21,087.8 | 21,273.8 | 3.6 | |||||||||||||||||||||||||||
M2M |
682.2 | 704.3 | 748.0 | 787.8 | 830.1 | 896.8 | 969.4 | 1,027.0 | 30.4 | |||||||||||||||||||||||||||
Wholesale Accesses |
910.5 | 850.1 | 790.8 | 691.0 | 561.8 | 428.0 | 297.9 | 188.1 | (72.8 | ) | ||||||||||||||||||||||||||
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Total Accesses |
48,252.2 | 48,605.0 | 49,195.6 | 49,346.4 | 49,549.8 | 49,906.7 | 49,402.9 | 47,603.9 | (3.5 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Contract percentage (%) |
44.8 | % | 45.2 | % | 45.8 | % | 46.3 | % | 46.4 | % | 46.3 | % | 47.0 | % | 49.3 | % | 3.0 p.p. | |||||||||||||||||||
Smartphones (000) |
23,083.0 | 23,707.1 | 25,353.5 | 25,623.1 | 24,781.1 | 25,227.4 | 25,554.2 | 25,466.1 | (0.6 | ) | ||||||||||||||||||||||||||
Smartphone penetration (%) |
55.4 | % | 56.2 | % | 59.2 | % | 59.5 | % | 57.0 | % | 57.4 | % | 58.7 | % | 60.9 | % | 1.4 p.p. | |||||||||||||||||||
LTE (000) |
8,690.5 | 9,399.8 | 10,566.3 | 12,063.1 | 13,967.6 | 14,422.0 | 15,679.2 | 15,759.1 | 30.6 | |||||||||||||||||||||||||||
LTE penetration (%) |
20.5 | % | 22.0 | % | 24.4 | % | 27.7 | % | 31.9 | % | 32.6 | % | 35.7 | % | 37.4 | % | 9.7 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
2.5 | % | 2.1 | % | 2.1 | % | 2.3 | % | 1.9 | % | 1.9 | % | 2.1 | % | 3.1 | % | 0.8 p.p. | |||||||||||||||||||
Contract (1) |
1.8 | % | 1.6 | % | 1.5 | % | 1.6 | % | 1.6 | % | 1.5 | % | 1.6 | % | 1.7 | % | 0.1 p.p. | |||||||||||||||||||
Mobile churn (cumulative YTD) |
2.5 | % | 2.3 | % | 2.2 | % | 2.3 | % | 1.9 | % | 1.9 | % | 2.0 | % | 2.2 | % | (0.0 p.p. | ) | ||||||||||||||||||
Contract (1) |
1.8 | % | 1.7 | % | 1.5 | % | 1.6 | % | 1.6 | % | 1.6 | % | 1.6 | % | 1.6 | % | 0.1 p.p. | |||||||||||||||||||
Mobile ARPU (EUR)(cumulative YTD) |
10.3 | 10.3 | 10.4 | 10.3 | 9.6 | 9.6 | 9.7 | 9.7 | (5.7 | ) | ||||||||||||||||||||||||||
Prepay |
5.7 | 5.7 | 5.8 | 5.7 | 5.0 | 5.1 | 5.1 | 5.2 | (8.5 | ) | ||||||||||||||||||||||||||
Contract (1) |
16.6 | 16.6 | 16.6 | 16.5 | 15.5 | 15.5 | 15.6 | 15.5 | (6.0 | ) | ||||||||||||||||||||||||||
Fixed data traffic (TB) (cumulative YTD) |
612,603 | 1,216,470 | 1,811,886 | 2,518,545 | 709,516 | 1,399,083 | 2,063,429 | 2,794,399 | 11.0 | |||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
51,599 | 113,324 | 187,685 | 269,326 | 86,423 | 185,036 | 295,720 | 418,086 | 55.2 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
23
|
January - December 2017
|
04
(y-o-y changes in organic terms)
Telefónica UK delivered another solid performance in the fourth quarter of 2017. The Company continued to demonstrate the success of its customer-led, mobile-first strategy with increased customer spend, sustained leading levels of loyalty, improved customer metrics and robust revenue and OIBDA growth (+3.2% and +3.7% y-o-y respectively). This was despite significant regulatory impacts, especially in the second half of the year.
Total mobile accesses were broadly stable y-o-y at 25.0m (32.2m including partners on Telefónica UKs network). Contract net additions reached 70k excluding M2M (32k in the third quarter), reflecting the success of new tariffs and propositions (e.g. Oops, Yo-Yo flexible tariffs, Family Plans) introduced in the second half of the year. The total contract base remained broadly stable at 15.8m, +0.2% y-o-y (63% of the total, +1.3 p.p. y-o-y), while churn remained stable y-o-y at 1.0%. Furthermore, the LTE base grew 7% y-o-y to 12.9m accesses with a penetration of 60% (+5 p.p. y-o-y). In prepay, net quarterly losses were 274k, in line with industry trends, although customers with frequent top-ups were stable q-o-q.
Revenues continued to grow this quarter, up 3.2% y-o-y to 1,730m, with positive growth in both MSR and other revenues more than offsetting regulatory impacts (-1.2 p.p.). For the full year, revenues totalled 6,540m, up 2.2% y-o-y (+3.6% excluding regulation).
Mobile service revenues reached 1,262m, up 1.1% y-o-y (+2.7% excluding the regulatory impacts from roaming and MTRs), on the continuing uptake of higher average subscriptions with larger data bundles as well as further growth in Telefónica UKs MVNO revenues. For the full year mobile service revenues totalled 5,050m, up 1.0% y-o-y (+2.7% excluding regulatory impacts).
Handset & other revenues increased by 9.4% y-o-y to 468m (+6.7% for the full year), driven by increased sales of new flagship devices together with contributions from the smart metering programme (SMIP) and IT solutions for business customers.
Operating expenses were up 3.1% y-o-y in the quarter to 1,386m (5,024m; +2.9% for the full year). Supplies (879m) grew 5.6% y-o-y in the quarter mainly due to increasing handset costs and sales volumes reflecting the introduction of new flagship models and also higher roaming costs following regulatory changes and associated y-o-y usage growth. Personnel expenses were 2.7% up y-o-y to 110m and other expenses were 2.0% down, totalling 397m, reflecting cost base control.
OIBDA totalled 377m in the quarter, up 3.7% y-o-y as a result of solid revenue growth and despite the impact of regulatory changes to European roaming charges (-25m in the quarter). Full year OIBDA grew 0.7% y-o-y to reach 1,639m.
Thus, OIBDA margin stood at 21.8% in the quarter (+0.1 p.p. y-o-y) and 25.1% for the full year (-0.4 p.p.).
CapEx amounted to 827m for the 12 months (-4.8% y-o-y) due to ongoing network investments, as well as the further rollout of LTE which enabled T. UK to meet their year-end coverage target of 98% indoor population coverage (99% outdoor coverage, +4 p.p. y-o-y), and helped drive the LTE base growth.
Operating cash flow (OIBDA-CapEx) increased by 6.9% y-o-y in the full year to December to reach 812m.
24
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January - December 2017
|
TELEFÓNICA UK
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - December | % Chg | October - December | % Var | |||||||||||||||||||||||||||||
2017 | 2016 | Reported | Organic | 2017 | 2016 | Reported | Organic | |||||||||||||||||||||||||
Revenues |
6,540 | 6,861 | (4.7 | ) | 2.2 | 1,730 | 1,721 | 0.5 | 3.2 | |||||||||||||||||||||||
Mobile service revenues (1) |
5,050 | 5,363 | (5.8 | ) | 1.0 | 1,262 | 1,278 | (1.3 | ) | 1.1 | ||||||||||||||||||||||
Data revenues |
2,912 | 3,094 | (5.9 | ) | 0.9 | 725 | 738 | (1.7 | ) | 0.6 | ||||||||||||||||||||||
Handset revenues and other (1) |
1,490 | 1,497 | (0.5 | ) | 6.7 | 468 | 443 | 5.7 | 9.4 | |||||||||||||||||||||||
Internal expenditure capitalized in fixed assets |
116 | 141 | (17.3 | ) | (11.2 | ) | 31 | 34 | (10.3 | ) | (8.2 | ) | ||||||||||||||||||||
Operating expenses |
(5,024 | ) | (5,276 | ) | (4.8 | ) | 2.9 | (1,386 | ) | (1,421 | ) | (2.4 | ) | 3.1 | ||||||||||||||||||
Supplies |
(3,125 | ) | (3,226 | ) | (3.1 | ) | 3.9 | (879 | ) | (858 | ) | 2.5 | 5.6 | |||||||||||||||||||
Personnel expenses |
(442 | ) | (528 | ) | (16.2 | ) | (3.4 | ) | (110 | ) | (145 | ) | (23.9 | ) | 2.7 | |||||||||||||||||
Other operating expenses |
(1,456 | ) | (1,522 | ) | (4.3 | ) | 2.6 | (397 | ) | (418 | ) | (5.1 | ) | (2.0 | ) | |||||||||||||||||
Other net income (expense) |
4 | (16 | ) | c.s. | c.s. | 4 | (2 | ) | c.s. | c.s. | ||||||||||||||||||||||
Gain (loss) on sale of fixed assets |
3 | (1 | ) | c.s. | c.s. | 1 | 1 | (44.4 | ) | (37.5 | ) | |||||||||||||||||||||
Impairment of goodwill and other assets |
(1 | ) | | | | (1 | ) | | | | ||||||||||||||||||||||
Operating income before D&A (OIBDA) |
1,639 | 1,709 | (4.1 | ) | 0.7 | 377 | 334 | 13.1 | 3.7 | |||||||||||||||||||||||
OIBDA Margin |
25.1 | % | 24.9 | % | 0.1 p.p. | (0.4 p.p. | ) | 21.8 | % | 19.4 | % | 2.4 p.p. | 0.1 p.p. | |||||||||||||||||||
CapEx |
827 | 931 | (11.2 | ) | (4.8 | ) | 223 | 278 | (19.6 | ) | (16.6 | ) | ||||||||||||||||||||
Spectrum |
| | | | | | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
812 | 778 | 4.4 | 6.9 | 154 | 56 | 174.8 | 59.3 |
Notes:
(1) | T. UK mobile service revenues include revenues from MVNOs since 1 January 2017, which were previously accounted as Handset revenues and others; these criteria are applied across T. Group. For comparative purposes, mobile service revenues and handset revenues for 2016 are reported using the same criteria. |
| OIBDA before management and brand fees. |
TELEFÓNICA UK
ACCESSES
Unaudited figures (Thousands)
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Fixed telephony accesses (1) |
249.8 | 257.7 | 264.7 | 272.6 | 277.2 | 281.3 | 281.9 | 283.9 | 4.1 | |||||||||||||||||||||||||||
Internet and data accesses |
21.5 | 22.3 | 23.1 | 23.7 | 24.0 | 24.7 | 24.8 | 25.3 | 6.6 | |||||||||||||||||||||||||||
Broadband |
21.5 | 22.3 | 23.1 | 23.7 | 24.0 | 24.7 | 24.8 | 25.3 | 6.6 | |||||||||||||||||||||||||||
Mobile accesses |
24,933.0 | 25,172.5 | 25,404.2 | 25,462.7 | 25,009.3 | 25,139.7 | 25,283.0 | 25,003.9 | (1.8 | ) | ||||||||||||||||||||||||||
Prepay |
9,640.1 | 9,745.8 | 9,778.0 | 9,701.4 | 9,375.4 | 9,427.4 | 9,477.4 | 9,203.7 | (5.1 | ) | ||||||||||||||||||||||||||
Contract (2) |
15,292.8 | 15,426.7 | 15,626.2 | 15,761.3 | 15,633.9 | 15,712.3 | 15,805.6 | 15,800.2 | 0.2 | |||||||||||||||||||||||||||
M2M |
3,143.4 | 3,176.8 | 3,250.9 | 3,266.9 | 3,330.3 | 3,373.1 | 3,434.4 | 3,358.9 | 2.8 | |||||||||||||||||||||||||||
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Total Accesses |
25,204.2 | 25,452.6 | 25,692.0 | 25,759.0 | 25,310.5 | 25,445.6 | 25,589.7 | 25,313.1 | (1.7 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
(2) | Includes the disconnection of 228 thousand inactive contract accesses in the first quarter 2017. |
SELECTED OPERATIONAL DATA
Unaudited figures
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Contract percentage (%) |
61.3 | % | 61.3 | % | 61.5 | % | 61.9 | % | 62.5 | % | 62.5 | % | 62.5 | % | 63.2 | % | 1.3 p.p. | |||||||||||||||||||
Smartphones (000) |
13,267.7 | 13,301.8 | 14,130.8 | 14,680.8 | 14,910.2 | 15,514.3 | 15,667.9 | 15,961.0 | 8.7 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
62.8 | % | 62.4 | % | 65.9 | % | 68.4 | % | 71.2 | % | 73.8 | % | 74.3 | % | 76.5 | % | 8.1 p.p. | |||||||||||||||||||
LTE (000) (1) |
9,460.3 | 10,783.4 | 11,530.3 | 12,092.4 | 12,438.0 | 12,592.0 | 12,611.0 | 12,891.1 | 6.6 | |||||||||||||||||||||||||||
LTE penetration (%) |
43.4 | % | 49.0 | % | 52.0 | % | 54.5 | % | 57.4 | % | 57.8 | % | 57.7 | % | 59.6 | % | 5.1 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
2.0 | % | 1.5 | % | 1.8 | % | 2.1 | % | 2.2 | % | 1.5 | % | 1.7 | % | 2.2 | % | 0.2 p.p. | |||||||||||||||||||
Contract (2)(3) |
0.9 | % | 0.8 | % | 0.9 | % | 1.0 | % | 1.5 | % | 1.0 | % | 1.0 | % | 1.0 | % | 0.1 p.p. | |||||||||||||||||||
Mobile churn (cumulative YTD) |
2.0 | % | 1.8 | % | 1.8 | % | 1.9 | % | 2.2 | % | 1.9 | % | 1.8 | % | 1.9 | % | 0.1 p.p. | |||||||||||||||||||
Contract (2)(3) |
0.9 | % | 0.9 | % | 0.9 | % | 0.9 | % | 1.5 | % | 1.2 | % | 1.1 | % | 1.1 | % | 0.2 p.p. | |||||||||||||||||||
Mobile ARPU (EUR)(cumulative YTD) |
17.9 | 17.7 | 17.3 | 17.0 | 16.1 | 16.1 | 16.0 | 15.9 | 0.3 | |||||||||||||||||||||||||||
Prepay |
7.8 | 7.7 | 7.5 | 7.5 | 7.3 | 7.1 | 7.0 | 6.9 | 0.3 | |||||||||||||||||||||||||||
Contract (2)(3) |
30.1 | 29.9 | 29.3 | 28.8 | 26.6 | 27.0 | 26.8 | 26.8 | 0.2 | |||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
49,648 | 105,368 | 170,977 | 244,957 | 79,926 | 173,446 | 280,109 | 401,489 | 63.9 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Giffgaff accesses included since 1 January 2017, and also given for comparative purposes since January 2016. |
(2) | Excludes M2M. |
(3) | Includes the disconnection of 228 thousand inactive contract accesses in the first quarter 2017. |
25
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January - December 2017
|
05
(y-o-y changes in organic terms)
In the fourth quarter of 2017, Telefónica Brasil once again posted solid growth in revenues and OIBDA, and a sustained expansion of the OIBDA margin, that, along with similar investments to 2016, translated into strong growth in the operating cash flow.
Commercial performance was particularly noteworthy after consolidating the company´s leadership in higher value segments, with greater contract net adds in the last three years and a progressive improvement in the quality of broadband and pay TV customers. At the same time, acceleration in FTTx deployment continued (18.4m premises passed; 16 new cities passed with FTTH in 2017).
Thus, contract mobile accesses (+10% y-o-y) posted net adds in the quarter of 1.1m (3.4m in the year) with a positive trend in gross additions and churn (1.7%, stable y-o-y). LTE accesses rose by 58% y-o-y (51% penetration, +19 p.p. y-o-y) and smartphones by 8% (80% penetration, +5 p.p. y-o-y). This level of quality resulted in total ARPU growth (+1.0% in the quarter; +2.6% in the year).
Retail broadband accesses (7.5m as of December) grew by 2% y-o-y, significantly increasing quality as reflected in the 11.3% y-o-y ARPU growth in the year thanks to the progressive adoption of FTTx accesses (+10% y-o-y, with net adds of 69k accesses in the quarter, 395k in the year). Likewise, the strategy in pay TV (-7% accesses y-o-y) continued to focus on IPTV expansion, with 32 new cities covered throughout 2017, boosting y-o-y growth of IPTV accesses to 51% (net adds of 30k in the quarter, 128k in the year), and pay TV y-o-y ARPU growth to 6.1% in the year.
Revenues in the fourth quarter (2,892m) increased by 0.9% y-o-y (12,019m; +1.4% in the year) despite the regulatory impacts (-2.2 p.p. and -2.0 p.p. in the y-o-y change for the quarter and for full year).
Mobile service revenues (1,719m in October-December) increased by 3.9% y-o-y (+4.4% in the year) driven by data revenues (+24.9%, +30.2% in 2017). Fixed revenues decreased by 3.8% in the quarter (-2.1% in the twelve months) as a result of the negative impact of regulation and the greater fall in voice revenues. There was continued noteworthy solid growth in broadband and new service revenues (+8.2% in the quarter; +8.3% in the year) due to the growth in fibre revenues (+29.8% in the quarter; +23.0% January-December).
Handset revenues increased by 7.4% y-o-y in the quarter, reverting the negative trend in the previous quarters (-10.5% y-o-y in the year), mainly due to greater commercial activity in contract.
Operating expenses (1,879m in the quarter) decreased for the eighth consecutive quarter (-0.2% y-o-y, -0.6% in 2017) due to efficiency measures and the generation of synergies after the acquisition of GVT in 2015. Supplies (544m) decreased by 3.4% y-o-y in the quarter (-6.2% in the year) due to the lower interconnection expenses and synergies achieved in content costs. Personnel expenses (293m) decreased by 0.8% y-o-y in the quarter (-1.2% in the year) due to the headcount restructuring programme. Other operating expenses (1,042m) increased by 1.8% y-o-y in the quarter (+2.6% in the year) on the back of greater commercial activity in high value partially offset by the efficiency initiatives. Moreover, a provision of 50m was booked in the fourth quarter for regulatory contingencies.
Thus, OIBDA was 1,028m and increased by 3.7% in the quarter (4,191m, +6.0% in the year) with OIBDA margin expanding by 1.0 p.p. y-o-y to 35.6% (34.9% in the full year; +1.5 p.p.).
CapEx amounted to 2,225m in 2017 (-0.1% y-o-y) and was mainly allocated to the 4G network, which attained a population coverage of 84% after covering 2,084 new cities in the year (2,600 cities already covered) and the development of fixed networks (expansion of fibre and pay TV). Thus, operating cash flow (OIBDA-CapEx) reached 1,966m in 2017 (+13.6% y-o-y). In this period, the synergies from the purchase of GVT had a positive impact on operating cash flow of approximately 657m (1,204m since the second quarter of 2015).
26
|
January - December 2017
|
TELEFÓNICA BRASIL
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - December | % Chg | October -December | % Chg | |||||||||||||||||||||||||||||
2017 | 2016 | Reported | Organic | 2017 | 2016 | Reported | Organic | |||||||||||||||||||||||||
Revenues |
12,019 | 11,090 | 8.4 | 1.4 | 2,892 | 3,055 | (5.4 | ) | 0.9 | |||||||||||||||||||||||
Mobile Business |
7,360 | 6,663 | 10.5 | 3.7 | 1,797 | 1,851 | (2.9 | ) | 4.1 | |||||||||||||||||||||||
Mobile service revenues |
7,062 | 6,351 | 11.2 | 4.4 | 1,719 | 1,772 | (3.0 | ) | 3.9 | |||||||||||||||||||||||
Data revenues |
5,084 | 3,667 | 38.6 | 30.2 | 1,288 | 1,096 | 17.5 | 24.9 | ||||||||||||||||||||||||
Handset revenues |
298 | 312 | (4.5 | ) | (10.5 | ) | 78 | 79 | (0.2 | ) | 7.4 | |||||||||||||||||||||
Fixed Business |
4,659 | 4,428 | 5.2 | (2.1 | ) | 1,094 | 1,205 | (9.1 | ) | (3.8 | ) | |||||||||||||||||||||
FBB and new services (1) |
1,999 | 1,695 | 18.0 | 8.3 | 498 | 473 | 5.4 | 8.2 | ||||||||||||||||||||||||
Pay TV |
531 | 504 | 5.4 | (1.2 | ) | 124 | 137 | (9.7 | ) | (2.7 | ) | |||||||||||||||||||||
Voice & access revenues |
2,128 | 2,229 | (4.5 | ) | (10.4 | ) | 473 | 595 | (20.6 | ) | (14.0 | ) | ||||||||||||||||||||
Internal expenditure capitalized in fixed assets |
140 | 114 | 23.6 | 15.9 | 33 | 32 | 3.3 | 10.5 | ||||||||||||||||||||||||
Operating expenses |
(7,927 | ) | (7,504 | ) | 5.6 | (0.6 | ) | (1,879 | ) | (2,031 | ) | (7.5 | ) | (0.2 | ) | |||||||||||||||||
Supplies |
(2,268 | ) | (2,260 | ) | 0.4 | (6.2 | ) | (544 | ) | (603 | ) | (9.8 | ) | (3.4 | ) | |||||||||||||||||
Personnel expenses |
(1,196 | ) | (1,165 | ) | 2.6 | (1.2 | ) | (293 | ) | (325 | ) | (9.8 | ) | (0.8 | ) | |||||||||||||||||
Other operating expenses |
(4,463 | ) | (4,079 | ) | 9.4 | 2.6 | (1,042 | ) | (1,102 | ) | (5.5 | ) | 1.8 | |||||||||||||||||||
Other net income (expense) |
(79 | ) | 2 | c.s. | c.s. | (56 | ) | 24 | c.s. | c.s. | ||||||||||||||||||||||
Gain (loss) on sale of fixed assets |
1 | (1 | ) | c.s. | c.s. | 13 | (2 | ) | c.s. | c.s. | ||||||||||||||||||||||
Impairment of goodwill and other assets |
36 | 1 | n.m. | n.m. | 25 | 3 | n.m. | n.m. | ||||||||||||||||||||||||
Operating income before D&A (OIBDA) |
4,191 | 3,702 | 13.2 | 6.0 | 1,028 | 1,081 | (4.9 | ) | 3.7 | |||||||||||||||||||||||
OIBDA Margin |
34.9 | % | 33.4 | % | 1.5 p.p. | 1.5 p.p. | 35.6 | % | 35.4 | % | 0.2 p.p. | 1.0 p.p. | ||||||||||||||||||||
CapEx |
2,225 | 2,137 | 4.1 | (0.1 | ) | 712 | 768 | (7.3 | ) | (4.9 | ) | |||||||||||||||||||||
Spectrum |
| 48 | | | | 1 | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
1,966 | 1,566 | 25.5 | 13.6 | 316 | 313 | 1.1 | 24.7 |
Notes:
| Since 1 July 2017 T. Brasil includes the results of Terra. For organic comparative purposes Terras results are included since 1 July 2016. |
| Since 1 April 2016, T. Brasil reflects all the charges related to the towers transferred to Telxius, which are now presented in Telxius (Other Companies & Eliminations) |
| Organic y-o-y changes reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of T. Brasil do not include intra-group capital gains resulting from the transfer of towers to Telxius. |
| OIBDA before management and brand fees. |
(1) | Includes broadband connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
TELEFÓNICA BRASIL
ACCESSES
Unaudited figures (thousands)
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Final Clients Accesses |
97,283.7 | 97,121.4 | 97,276.6 | 97,204.2 | 97,331.7 | 97,679.1 | 97,732.9 | 97,890.8 | 0.7 | |||||||||||||||||||||||||||
Fixed telephony accesses (1) |
14,945.4 | 14,742.1 | 14,629.9 | 14,338.4 | 14,242.0 | 14,167.6 | 14,007.3 | 13,837.3 | (3.5 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
7,294.2 | 7,321.8 | 7,397.5 | 7,383.2 | 7,439.6 | 7,537.2 | 7,554.0 | 7,534.5 | 2.0 | |||||||||||||||||||||||||||
Broadband |
7,229.2 | 7,263.5 | 7,325.3 | 7,311.0 | 7,369.5 | 7,468.6 | 7,485.5 | 7,466.1 | 2.1 | |||||||||||||||||||||||||||
FTTx/Cable |
3,954.5 | 4,023.2 | 4,115.4 | 4,145.8 | 4,226.8 | 4,365.9 | 4,472.2 | 4,541.0 | 9.5 | |||||||||||||||||||||||||||
Mobile accesses |
73,257.4 | 73,296.1 | 73,486.9 | 73,769.8 | 73,988.8 | 74,327.1 | 74,553.6 | 74,931.3 | 1.6 | |||||||||||||||||||||||||||
Prepay |
42,011.5 | 41,669.4 | 40,995.6 | 40,387.2 | 40,171.5 | 39,652.1 | 38,897.4 | 38,168.1 | (5.5 | ) | ||||||||||||||||||||||||||
Contract |
31,245.8 | 31,626.7 | 32,491.3 | 33,382.6 | 33,817.3 | 34,675.0 | 35,656.2 | 36,763.2 | 10.1 | |||||||||||||||||||||||||||
M2M |
4,390.0 | 4,590.3 | 4,770.4 | 5,005.1 | 5,271.5 | 5,590.8 | 5,845.3 | 6,312.5 | 26.1 | |||||||||||||||||||||||||||
Pay TV |
1,786.7 | 1,761.4 | 1,762.2 | 1,712.7 | 1,661.3 | 1,647.2 | 1,618.0 | 1,587.7 | (7.3 | ) | ||||||||||||||||||||||||||
Wholesale Accesses |
21.0 | 20.7 | 18.7 | 17.9 | 17.5 | 17.0 | 16.9 | 14.3 | (20.4 | ) | ||||||||||||||||||||||||||
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Total Accesses T. Brasil |
97,304.7 | 97,142.1 | 97,295.4 | 97,222.2 | 97,349.2 | 97,696.1 | 97,749.8 | 97,905.1 | 0.7 | |||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Contract percentage (%) |
42.7 | % | 43.1 | % | 44.2 | % | 45.3 | % | 45.7 | % | 46.7 | % | 47.8 | % | 49.1 | % | 3.8 p.p. | |||||||||||||||||||
Smartphones (000) |
40,327.0 | 39,670.8 | 49,573.1 | 50,008.2 | 50,647.3 | 52,687.8 | 53,323.6 | 54,077.9 | 8.1 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
61.0 | % | 60.0 | % | 74.8 | % | 75.2 | % | 76.0 | % | 78.8 | % | 79.5 | % | 80.5 | % | 5.3 p.p. | |||||||||||||||||||
LTE (000) |
12,498.3 | 15,115.2 | 18,295.7 | 22,240.9 | 25,422.1 | 28,645.5 | 31,645.4 | 35,042.6 | 57.6 | |||||||||||||||||||||||||||
LTE penetration (%) |
18.1 | % | 22.0 | % | 26.6 | % | 32.3 | % | 37.0 | % | 41.7 | % | 46.1 | % | 51.1 | % | 18.7 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
3.3 | % | 3.1 | % | 3.4 | % | 3.5 | % | 3.3 | % | 3.3 | % | 3.4 | % | 3.3 | % | (0.2 p.p. | ) | ||||||||||||||||||
Contract (1) |
1.8 | % | 1.9 | % | 1.8 | % | 1.7 | % | 1.6 | % | 1.8 | % | 1.9 | % | 1.7 | % | (0.0 p.p. | ) | ||||||||||||||||||
Mobile churn (cumulative YTD) |
3.3 | % | 3.2 | % | 3.3 | % | 3.4 | % | 3.3 | % | 3.3 | % | 3.4 | % | 3.3 | % | (0.0 p.p. | ) | ||||||||||||||||||
Contract (1) |
1.8 | % | 1.8 | % | 1.8 | % | 1.8 | % | 1.6 | % | 1.7 | % | 1.8 | % | 1.8 | % | (0.0 p.p. | ) | ||||||||||||||||||
Mobile ARPU (EUR)(cumulative YTD) |
6.1 | 6.4 | 6.8 | 7.1 | 8.2 | 8.0 | 7.8 | 7.7 | 2.6 | |||||||||||||||||||||||||||
Prepay |
3.2 | 3.3 | 3.5 | 3.4 | 4.1 | 3.9 | 3.8 | 3.7 | (3.4 | ) | ||||||||||||||||||||||||||
Contract (1) |
11.5 | 12.1 | 12.9 | 12.9 | 15.4 | 15.1 | 14.6 | 14.4 | 1.5 | |||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
79,146 | 164,803 | 265,603 | 379,541 | 129,160 | 286,854 | 471,023 | 676,538 | 78.3 | |||||||||||||||||||||||||||
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Fixed telephony ARPU (EUR) (cumulative YTD) |
11.3 | 11.7 | 12.2 | 12.3 | 13.7 | 13.3 | 12.7 | 12.3 | (6.9 | ) | ||||||||||||||||||||||||||
Pay TV ARPU (EUR) (cumulative YTD) |
20.6 | 21.6 | 23.0 | 23.8 | 28.2 | 27.5 | 27.3 | 26.9 | 6.1 | |||||||||||||||||||||||||||
Broadband ARPU (EUR) (cumulative YTD) |
10.3 | 10.8 | 11.3 | 11.7 | 14.5 | 14.2 | 13.9 | 13.9 | 11.3 | |||||||||||||||||||||||||||
Fixed data traffic (TB) (cumulative YTD) |
2,485,715 | 5,215,363 | 8,031,104 | 11,164,483 | 3,428,917 | 7,379,965 | 11,808,743 | 16,467,417 | 47.5 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
27
|
January - December 2017
|
06
(y-o-y changes in organic terms)
Telefónica Hispanoamérica closed 2017 with strong organic growth that more than offset the negative impact of the depreciation of some currencies in the region, achieving a solid y-o-y growth in 2017 in reported terms in OIBDA (+1.8%) and operating cash flow (+22.3%, excluding spectrum); due to the greater penetration of value services (mobile contract, LTE, FTTx, pay TV), higher consumption per user and the ongoing implementation of efficiency measures.
Mobile accesses increased to 110.6m as of December 2017 (-4% y-o-y) after reporting positive quarterly net additions in contract (227k new accesses; strong commercial activity: +14% y-o-y) and in prepay (increase in commercial activity and strong reduction in churn, mainly in Mexico). Thus, it is worth highlighting the stronger performance in Mexico (positive net adds in contract and prepay), in Peru (significant improvement in both segments) and Chile (mainly in contract). The quality of these accesses continued to improve thanks to the increase in smartphones (48% penetration, +7 p.p. y-o-y; accesses +11% y-o-y) and LTE (24% penetration, +11 p.p. y-o-y; accesses +69% y-o-y) after reaching a population coverage of 56% (+6 p.p. y-o-y).
The fixed business continued with the selective expansion of FTTx and cable networks (6.8m passed premises as of December; +2.0m y-o-y) and bundled services (45% of the fixed accesses as of December are bundled). Within retail broadband accesses (+3% y-o-y) it is worth highlighting the migration towards FTTx and cable, which represented 31% of total accesses (+11 p.p. y-o-y) after connecting 182k accesses in the quarter (674k in the year). Likewise, pay TV accesses increased by 4% vs. December 2016, with net additions of 41k accesses in the quarter (113k in the year), highlighting net additions in Peru.
Revenues in 2017 totalled 12,552m (3,151m in the fourth quarter) and posted a strong y-o-y organic increase (+15.3% in the year, +19.9% in the fourth quarter) that offset the negative impact in the year of the depreciation of some currencies in the region (-0.2% y-o-y in reported terms in the year; -8.3% in the quarter). In the mobile business, data revenues continued to be the main lever of growth (+35.0% y-o-y in 2017) and represented 56% of mobile service revenues (+7 p.p. y-o-y). On the other hand, the fixed business continued to be boosted by both broadband and new services revenues (+12.2% y-o-y in 2017) and pay TV revenues (+12.8%).
Operating expenses in 2017 totalled 9,251m and, in organic terms, increased 12.9% y-o-y in 2017 and 9.9% in the quarter impacted by the inflation in some countries in the region. In reported terms, they increased 1.2% in 2017 (-5.5% y-o-y in the quarter) and included 103m of headcount restructuring costs in the year, 98m booked in the quarter (84m in 2016, 81m in the fourth quarter of 2016).
OIBDA reached 3,538m in 2017 (+19.9% y-o-y organic) and 859m in the quarter (+39.8%), posting a reported growth of 1.8% in 2018 and 6.8% in the quarter. OIBDA margin stood at 28.2% in 2017 (+1.2 p.p. y-o-y) and 27.3% in the quarter (+5.3 p.p. y-o-y).
CapEx amounted to 2,678m in 2017 (+8.6% y-o-y organic; -8.2% in reported terms excluding spectrum) and was allocated towards expanding and improving fixed and mobile networks. Thus, operating cash flow (OIBDA-CapEx) amounted to 860m (+38.3% y-o-y organic; +22.3% in reported terms excluding spectrum) highlighting Argentina, Chile and Peru as main contributors.
28
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January - December 2017
|
TELEFÓNICA HISPANOAMÉRICA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - December | % Chg | October - December | % Chg | |||||||||||||||||||||||||||||
2017 | 2016 | Reported | Organic | 2017 | 2016 | Reported | Organic | |||||||||||||||||||||||||
Revenues |
12,552 | 12,579 | (0.2 | ) | 15.3 | 3,151 | 3,435 | (8.3 | ) | 19.9 | ||||||||||||||||||||||
Mobile Business |
8,588 | 8,580 | 0.1 | 19.0 | 2,149 | 2,378 | (9.7 | ) | 22.7 | |||||||||||||||||||||||
Mobile service revenues |
7,408 | 7,627 | (2.9 | ) | 17.4 | 1,797 | 2,074 | (13.4 | ) | 21.7 | ||||||||||||||||||||||
Data revenues |
4,119 | 3,721 | 10.7 | 35.0 | 1,015 | 1,000 | 1.5 | 43.4 | ||||||||||||||||||||||||
Handset revenues |
1,179 | 953 | 23.8 | 31.9 | 352 | 304 | 15.8 | 29.9 | ||||||||||||||||||||||||
Fixed Business |
3,964 | 3,999 | (0.9 | ) | 7.5 | 1,003 | 1,057 | (5.1 | ) | 14.0 | ||||||||||||||||||||||
FBB and new services revenues (1) (2) |
2,084 | 2,070 | 0.7 | 12.2 | 523 | 559 | (6.5 | ) | 20.2 | |||||||||||||||||||||||
Pay TV revenues |
655 | 610 | 7.3 | 12.8 | 161 | 161 | 0.2 | 15.9 | ||||||||||||||||||||||||
Voice & access revenues (2) |
1,226 | 1,319 | (7.1 | ) | (2.5 | ) | 319 | 337 | (5.3 | ) | 2.7 | |||||||||||||||||||||
Internal expenditure capitalized in fixed assets |
138 | 126 | 9.4 | 12.0 | 32 | 42 | (22.1 | ) | (15.9 | ) | ||||||||||||||||||||||
Operating expenses |
(9,251 | ) | (9,137 | ) | 1.2 | 12.9 | (2,368 | ) | (2,505 | ) | (5.5 | ) | 9.9 | |||||||||||||||||||
Supplies |
(3,664 | ) | (3,718 | ) | (1.5 | ) | 4.3 | (944 | ) | (995 | ) | (5.2 | ) | 8.8 | ||||||||||||||||||
Personnel expenses |
(1,647 | ) | (1,587 | ) | 3.7 | 28.1 | (450 | ) | (482 | ) | (6.8 | ) | 35.4 | |||||||||||||||||||
Other operating expenses |
(3,940 | ) | (3,832 | ) | 2.8 | 15.3 | (975 | ) | (1,028 | ) | (5.2 | ) | 1.0 | |||||||||||||||||||
Other net income (expense) |
75 | 104 | (28.0 | ) | (32.7 | ) | 34 | 28 | 22.4 | 12.3 | ||||||||||||||||||||||
Gain (loss) on sale of fixed assets |
24 | 18 | 33.9 | n.m. | 9 | 20 | (56.5 | ) | (68.2 | ) | ||||||||||||||||||||||
Impairment of goodwill and other assets (3) |
| (215 | ) | | | | (215 | ) | | | ||||||||||||||||||||||
Operating income before D&A (OIBDA) |
3,538 | 3,474 | 1.8 | 19.9 | 859 | 804 | 6.8 | 39.8 | ||||||||||||||||||||||||
OIBDA Margin |
28.2 | % | 27.6 | % | 0.6 p.p. | 1.2 p.p. | 27.3 | % | 23.4 | % | 3.8 p.p. | 5.3 p.p. | ||||||||||||||||||||
CapEx |
2,678 | 2,615 | 2.4 | 8.6 | 824 | 815 | 1.2 | 23.6 | ||||||||||||||||||||||||
Spectrum (4) |
537 | 284 | 89.3 | 89.6 | 35 | 2 | n.m. | n.m. | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
860 | 859 | 0.1 | 38.3 | 35 | (10 | ) | c.s. | 88.5 |
Notes:
| After considering Venezuela as a hyperinflationary country, P&L and CapEx from the operations in the country are to be accounted at the closing exchange rate Bolivar Fuerte/Euro. For the January-December 2017 period Telefónica uses a synthetic exchange rate of 36,115 Venezuelan bolivars fuertes per dollar at December 2017. |
| OIBDA before management and brand fees. |
| 2016 and 2017 reported figures include the hyperinflationary adjustments in Venezuela in both years. |
(1) | Includes broadband connectivity services (retail and wholesale), including value added services, data and ICT revenues, other services over connectivity and FBB equipment. |
(2) | Following the pre-payment of the debt derived from the operating agreement with PARAPAT in Colombia and after taking over its subsidiaries Telebucaramanga, Metrotel and Optecom, the consolidated results are included in the fixed business from 1 October 2017. Organic y-o-y comparison excludes these results. |
(3) | Includes goodwill impairments of 91m in Mexico and 124m in Venezuela in October-December 2016. |
(4) | Spectrum includes 470m in Q3 17 related to the cost of licenses associated with the arbitration award in Colombia, in connection with the reversion of certain assets earmarked for the provisions of services under former concessions. |
| T. Hispanoamérica results reflects all the charges related to the towers transferred to Telxius (T. Perú since 1 April 2016 and T. Chile since 1 May 2016), which are now presented in Telxius (Other Companies & Eliminations). Likewise, since 1 January 2016, T. Chile includes the results of the data center business which were before presented in Other Companies & Eliminations of T. Group. |
| Organic y-o-y changes reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of T. Hispam do not include intra-group capital gains resulting from the transfer of towers to Telxius. |
| Since 1 January 2016 Mobile revenues and Fixed revenues have been revised due to different allocation criteria. This change does not affect total revenue figure reported for 2016. |
| Also since 1 January 2016 Mobile Data revenues have been revised due to different allocation criteria between Mobile Data revenues and Other Mobile Service revenues. This change does not affect total Mobile Service revenue figure reported for 2016. |
ACCESSES
Unaudited figures (thousands)
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Final Clients Accesses |
134,274.3 | 134,422.4 | 135,343.0 | 135,850.3 | 133,093.4 | 131,707.4 | 130,196.8 | 130,974.6 | (3.6 | ) | ||||||||||||||||||||||||||
Fixed telephony accesses (1) (2) |
12,497.9 | 12,400.6 | 12,229.2 | 11,938.6 | 11,749.5 | 11,588.3 | 11,372.1 | 11,493.1 | (3.7 | ) | ||||||||||||||||||||||||||
Internet and data accesses (2) |
5,706.8 | 5,772.1 | 5,791.0 | 5,707.9 | 5,693.9 | 5,687.3 | 5,691.0 | 5,885.3 | 3.1 | |||||||||||||||||||||||||||
Broadband |
5,624.8 | 5,642.2 | 5,645.8 | 5,570.7 | 5,544.8 | 5,538.0 | 5,541.4 | 5,735.2 | 3.0 | |||||||||||||||||||||||||||
FTTx/Cable |
835.4 | 923.8 | 946.2 | 1,109.1 | 1,279.9 | 1,351.9 | 1,601.2 | 1,783.0 | 60.8 | |||||||||||||||||||||||||||
Mobile accesses |
113,218.7 | 113,344.0 | 114,399.7 | 115,284.5 | 112,707.5 | 111,470.8 | 110,142.7 | 110,563.7 | (4.1 | ) | ||||||||||||||||||||||||||
Prepay |
87,934.3 | 87,810.5 | 88,799.5 | 89,461.2 | 86,998.6 | 85,903.0 | 84,628.7 | 84,822.4 | (5.2 | ) | ||||||||||||||||||||||||||
Contract (3) |
25,284.4 | 25,533.6 | 25,600.2 | 25,823.3 | 25,709.0 | 25,567.8 | 25,514.0 | 25,741.3 | (0.3 | ) | ||||||||||||||||||||||||||
M2M |
2,315.1 | 2,354.3 | 2,532.4 | 2,561.3 | 2,627.4 | 2,709.0 | 2,800.7 | 2,886.5 | 12.7 | |||||||||||||||||||||||||||
Pay TV |
2,850.9 | 2,905.6 | 2,923.1 | 2,919.2 | 2,942.5 | 2,961.0 | 2,991.0 | 3,032.4 | 3.9 | |||||||||||||||||||||||||||
Wholesale Accesses |
28.2 | 27.5 | 81.8 | 66.5 | 65.5 | 64.5 | 79.0 | 36.7 | (44.8 | ) | ||||||||||||||||||||||||||
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Total Accesses T. Hispanoamerica |
134,302.5 | 134,449.9 | 135,424.8 | 135,916.8 | 133,158.9 | 131,771.9 | 130,275.7 | 131,011.3 | (3.6 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
(2) | Following the pre-payment of the debt derived from the operating agreement with PARAPAT in Colombia and after taking over its subsidiaries Telebucaramanga, Metrotel and Optecom, the consolidated results are included in the fixed business from 1 October 2017. |
(3) | Since the third quarter 2016, 55 thousand wholesale accesses have been reclassified from Mobile contract to Wholesale accesses in Mexico. |
SELECTED OPERATIONAL DATA
Unaudited figures
2016 | 2017 | |||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Contract percentage (%) |
22.3 | % | 22.5 | % | 22.4 | % | 22.4 | % | 22.8 | % | 22.9 | % | 23.2 | % | 23.3 | % | 0.9 p.p. | |||||||||||||||||||
Smartphones (000) |
41,448.0 | 43,082.8 | 45,031.3 | 46,134.0 | 50,408.4 | 50,456.8 | 50,492.2 | 51,355.1 | 11.3 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
37.8 | % | 39.3 | % | 40.7 | % | 41.3 | % | 46.3 | % | 46.9 | % | 47.5 | % | 48.2 | % | 6.8 p.p. | |||||||||||||||||||
LTE (000) |
9,859.6 | 11,023.3 | 12,998.2 | 15,493.4 | 17,041.5 | 18,968.5 | 21,720.3 | 26,155.0 | 68.8 | |||||||||||||||||||||||||||
LTE penetration (%) |
8.9 | % | 9.9 | % | 11.9 | % | 13.8 | % | 15.5 | % | 17.5 | % | 20.3 | % | 24.3 | % | 10.5 p.p. |
29
|
January - December 2017
|
(y-o-y changes in organic terms)
In the fourth quarter, Telefónica Argentina once again posted strong revenues and OIBDA y-o-y growth which, along with its positive performance throughout the year, generated an operating cash flow growth of 97.6% when compared to full year 2016. This strong performance was explained by a more favourable macroeconomic environment (private consumption growth and lower inflation level), a higher customer base quality (greater weight of high-value accesses in a market context of progressive tariff updates) and continuous implementation of efficiency measures.
Total accesses amounted to 25.1m in December (-7% y-o-y). In mobile accesses (19.3m, -7% y-o-y), it is worth highlighting the growth in contract (7.5m, +5% y-o-y) after posting 135k net additions in the quarter (+353k in the year) and in LTE accesses (+71% y-o-y), which achieved a penetration of 34% and a coverage of 79% (+4 p.p. y-o-y). Prepay accesses decreased 14%, affected by the implementation of a regulation that requires users to register their details, although accesses with frequent top-ups increased y-o-y (+0.5%).
Retail fixed broadband accesses amounted to 1.7m (-10% y-o-y), with a strong growth in FTTx accesses (244k; 51k new connections in the quarter and 209k throughout the year), following a coverage increase in 2017 (657k new premises passed to reach 1.2m total premises passed).
Revenues in October-December (890m) increased by 28.1% y-o-y (3,495m, +32.5% in January-December), although this growth deceleration is explained by a y-o-y comparative that reflects a significant increase in revenues in the second half of 2016.
Mobile service revenues (492m in the quarter), grew by 29.5% y-o-y (+37.4% in the year), driven by high-value accesses and ARPU (+35.0% y-o-y in the quarter, +41.2% in 2017), mainly due to the gradual update in prices, successful commercial campaigns (more top-ups) and data traffic expansion (+70% y-o-y in the quarter, +74% in 2017). Moreover, data revenues remained the main growth driver (+47.7% in the quarter; +53.8% in the year).
Handset revenues (93m in the quarter) continued to grow at a strong pace (+32.0% y-o-y, +48.4% in January-December), levered on tactical commercial campaigns focused on 4G, in a context of more rational subsidies.
Fixed business revenues (306m in October-December) accelerated to 24.6% y-o-y (+22.1% in January-December) sustained by updates in prices and a greater customer base quality. Broadband and new services revenues increased 17.5% y-o-y in the quarter (+16.2% in January-December) and ARPU grew 35.8% (+31.1% in the year).
Operating expenses in the quarter amounted to 675m (+31.9% y-o-y; 2,560m, +28.9% in 2017), affected by the inflationary impact on personnel expenses and external services and higher commercial expenses (associated with a higher value customer base). They also included 52m headcount restructuring costs incurred in the quarter (37m for the same period in 2016).
OIBDA increased to 224m, 14.6% more than in the fourth quarter of 2016 (971m, +42.0% y-o-y in 2017). OIBDA margin stood at 31.0% in October-December, excluding restructuring costs (-3.6 p.p. y-o-y; 29.3% in the year, +1.9 p.p.).
CapEx amounted to 601m (+18.6% versus 2016) and was mainly allocated to the fibre network deployment and LTE expansion. As a result, operating cash flow (OIBDA-CapEx) rose to 370m in 2017 (+97.6% y-o-y).
30
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January - December 2017
|
TELEFÓNICA ARGENTINA
SELECTED FINANCIAL DATA | January - December | October - December | ||||||||||||||||||||||||||||||
Unaudited figures (Euros in millions) |
2017 | 2016 | % Chg | % Organic Chg | 2017 | 2016 | % Chg | % Organic Chg | ||||||||||||||||||||||||
Revenues |
3,495 | 3,000 | 16.5 | 32.5 | 890 | 852 | 4.5 | 28.1 | ||||||||||||||||||||||||
Mobile Business |
2,279 | 1,867 | 22.0 | 38.8 | 585 | 552 | 6.1 | 29.9 | ||||||||||||||||||||||||
Mobile service revenues |
1,966 | 1,628 | 20.8 | 37.4 | 492 | 466 | 5.5 | 29.5 | ||||||||||||||||||||||||
Data revenues |
1,163 | 861 | 35.2 | 53.8 | 306 | 253 | 20.9 | 47.7 | ||||||||||||||||||||||||
Handset revenues |
312 | 239 | 30.5 | 48.4 | 93 | 85 | 9.1 | 32.0 | ||||||||||||||||||||||||
Fixed Business |
1,216 | 1,133 | 7.4 | 22.1 | 306 | 300 | 1.9 | 24.6 | ||||||||||||||||||||||||
FBB and new services (1) |
729 | 714 | 2.1 | 16.2 | 180 | 187 | (4.1 | ) | 17.5 | |||||||||||||||||||||||
Voice & access revenues |
488 | 419 | 16.3 | 32.4 | 126 | 113 | 11.7 | 36.4 | ||||||||||||||||||||||||
OIBDA |
971 | 797 | 21.8 | 42.0 | 224 | 272 | (17.7 | ) | 14.6 | |||||||||||||||||||||||
OIBDA margin |
27.8 | % | 26.6 | % | 1.2 p.p. | 1.9 p.p. | 25.2 | % | 32.0 | % | (6.8 p.p. | ) | (3.6 p.p. | ) | ||||||||||||||||||
CapEx |
601 | 577 | 4.2 | 18.6 | 179 | 130 | 37.4 | 64.5 | ||||||||||||||||||||||||
Spectrum |
| | | | | | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
370 | 220 | 67.8 | 97.6 | 45 | 142 | (68.2 | ) | (25.8 | ) |
Notes:
| OIBDA is presented before management and brand fees. |
(1) | Includes broadband connectivity services (retail and wholesale), including value added services, data and ICT revenues, other services over connectivity and FBB equipment. |
| Since 1 January 2016 Mobile revenues and Fixed revenues have been revised due to different allocation criteria. This change does not affect total revenue figure reported for 2016. |
| Also since 1 January 2016 Mobile data revenues have been revised due to different allocation criteria between Mobile data revenues and Other mobile service revenues. This change does not affect total Mobile service revenues figure reported for 2016. |
ACCESSES | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (Thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Final Clients Accesses |
26,430.8 | 26,242.8 | 26,755.4 | 27,096.0 | 26,370.4 | 25,981.8 | 25,770.2 | 25,077.2 | (7.5 | ) | ||||||||||||||||||||||||||
Fixed telephony accesses (1) |
4,599.7 | 4,550.5 | 4,503.3 | 4,447.7 | 4,374.3 | 4,314.5 | 4,221.9 | 4,120.8 | (7.4 | ) | ||||||||||||||||||||||||||
Fixed wireless |
276.0 | 256.2 | 243.5 | 237.2 | 233.3 | 227.7 | 221.8 | 206.1 | (13.1 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
1,911.8 | 1,910.9 | 1,907.7 | 1,882.9 | 1,841.0 | 1,802.5 | 1,758.9 | 1,700.6 | (9.7 | ) | ||||||||||||||||||||||||||
Broadband |
1,880.6 | 1,878.5 | 1,875.6 | 1,851.5 | 1,800.5 | 1,762.6 | 1,720.3 | 1,663.5 | (10.1 | ) | ||||||||||||||||||||||||||
FTTx |
9.1 | 9.8 | 13.8 | 35.1 | 75.8 | 133.6 | 192.7 | 243.8 | n.m. | |||||||||||||||||||||||||||
Mobile accesses |
19,919.2 | 19,781.5 | 20,344.4 | 20,765.4 | 20,155.1 | 19,864.8 | 19,789.4 | 19,255.9 | (7.3 | ) | ||||||||||||||||||||||||||
Prepay |
12,989.8 | 12,851.6 | 13,258.6 | 13,579.8 | 12,936.0 | 12,561.7 | 12,386.1 | 11,717.1 | (13.7 | ) | ||||||||||||||||||||||||||
Contract |
6,929.4 | 6,929.9 | 7,085.8 | 7,185.6 | 7,219.1 | 7,303.1 | 7,403.3 | 7,538.7 | 4.9 | |||||||||||||||||||||||||||
M2M |
439.2 | 428.3 | 501.3 | 521.3 | 546.2 | 581.0 | 588.0 | 596.6 | 14.4 | |||||||||||||||||||||||||||
Wholesale Accesses |
22.4 | 21.8 | 21.3 | 21.1 | 20.4 | 20.2 | 34.9 | 20.8 | (1.1 | ) | ||||||||||||||||||||||||||
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Total Accesses |
26,453.2 | 26,264.7 | 26,776.7 | 27,117.1 | 26,390.8 | 26,002.0 | 25,805.1 | 25,098.1 | (7.4 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Contract percentage (%) |
34.8 | % | 35.0 | % | 34.8 | % | 34.6 | % | 35.8 | % | 36.8 | % | 37.4 | % | 39.2 | % | 4.6 p.p. | |||||||||||||||||||
Smartphones (000) |
7,700.6 | 8,328.3 | 9,286.3 | 8,953.5 | 9,194.8 | 8,789.6 | 9,195.1 | 9,253.8 | 3.4 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
39.8 | % | 43.4 | % | 47.1 | % | 44.5 | % | 47.2 | % | 45.9 | % | 48.2 | % | 49.9 | % | 5.4 p.p. | |||||||||||||||||||
LTE (000) |
2,213.3 | 2,462.0 | 3,130.3 | 3,744.8 | 4,136.7 | 4,707.5 | 5,363.2 | 6,387.8 | 70.6 | |||||||||||||||||||||||||||
LTE penetration (%) |
11.4 | % | 12.7 | % | 15.8 | % | 18.5 | % | 21.1 | % | 24.4 | % | 27.9 | % | 34.2 | % | 15.7 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
3.3 | % | 3.1 | % | 2.7 | % | 2.7 | % | 3.4 | % | 3.1 | % | 2.9 | % | 3.1 | % | 0.4 p.p. | |||||||||||||||||||
Contract (1) |
1.2 | % | 1.4 | % | 0.8 | % | 1.3 | % | 1.2 | % | 1.2 | % | 1.2 | % | 1.1 | % | (0.2 p.p. | ) | ||||||||||||||||||
Mobile churn (cumulative YTD) |
3.3 | % | 3.2 | % | 3.1 | % | 3.0 | % | 3.4 | % | 3.2 | % | 3.1 | % | 3.1 | % | 0.1 p.p. | |||||||||||||||||||
Contract (1) |
1.2 | % | 1.3 | % | 1.1 | % | 1.1 | % | 1.2 | % | 1.2 | % | 1.2 | % | 1.2 | % | 0.0 p.p. | |||||||||||||||||||
Mobile ARPU (EUR) (cumulative YTD) |
6.5 | 6.6 | 6.6 | 7.1 | 8.6 | 8.7 | 8.4 | 8.5 | 41.2 | |||||||||||||||||||||||||||
Prepay |
1.9 | 2.0 | 1.9 | 1.9 | 2.5 | 2.6 | 2.6 | 2.7 | 49.2 | |||||||||||||||||||||||||||
Contract (1) |
16.2 | 16.2 | 16.1 | 15.7 | 21.0 | 21.0 | 19.9 | 19.7 | 33.6 | |||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
23,517 | 51,940 | 87,337 | 126,846 | 42,378 | 92,707 | 153,286 | 220,535 | 73.9 | |||||||||||||||||||||||||||
Fixed telephony ARPU (EUR) (cumulative YTD) |
6.6 | 7.1 | 9.2 | 8.5 | 8.6 | 9.5 | 9.1 | 9.4 | 45.9 | |||||||||||||||||||||||||||
Broadband ARPU (EUR) (cumulative YTD) |
17.6 | 18.1 | 22.0 | 18.4 | 20.8 | 21.7 | 21.3 | 21.2 | 31.1 | |||||||||||||||||||||||||||
Fixed data traffic (TB) (cumulative YTD) (2) |
203,887 | 449,311 | 723,644 | 1,011,610 | 296,597 | 636,815 | 1,018,913 | 1,420,297 | 40.4 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
(2) | Includes solely traffic related with FBB accesses, not Business customers. |
31
|
January - December 2017
|
(y-o-y changes in organic terms)
Telefónica Chile maintained its strategic focus on growth in higher-value customers with a progressive deployment of high-speed networks, which resulted in a strong adoption of LTE and FTTx; all of this in a context of macroeconomic improvements, despite high competitive intensity.
Mobile accesses stood at 9.1m (stable y-o-y), with a noteworthy growth in contract accesses (+2%) after reporting the highest level of quarterly net additions of the last 6 quarters (+52k; +69k in January-December), in addition to consolidating a positive trend in portability, as a consequence of the launch of new plans in August and October 2017. Prepay accesses decreased 2% y-o-y, although accesses with frequent top-ups remained stable. Smartphones (+13% y-o-y) achieved a penetration of 39% (+5 p.p. y-o-y) and LTE accesses (+44% y-o-y) of 29% (+9 p.p.), after coverage increased to 82% in 2017. Thus, mobile data traffic grew by 54% y-o-y in the quarter (+62% in the year).
Retail broadband accesses (1.1m; +2% y-o-y) were boosted by FTTx (360k, +11% y-o-y), with 6k net additions in the quarter (+36k in 2017) and a coverage of 1.3m premises passed (28% connected). Additionally, pay TV accesses (684k) increased 4% y-o-y with 1k net additions in the quarter (+23k in January-December).
Revenues (564m in the quarter) decreased 1.1% y-o-y in October-December (2,186m; -1.1% in January-December), reflecting the markets competitive intensity and the regulation of interconnection rates (impact of -0.9 p.p. in the y-o-y growth in the quarter and in the year). Mobile service revenues amounted to 255m (-9.1% y-o-y in the quarter; -5.1% in January-December), as a result of more aggressive commercial initiatives for both the contract and prepay segments and the regulation of interconnection rates (impact of -1.6 p.p. in the y-o-y growth in the quarter and in the year). On the other hand, handset revenues (69m in the quarter) increased by 65.6% (+38.3% in 2017) sustained by greater commercial activity in a context of more rationality regarding subsidies.
Fixed business revenues (241m in the quarter) decreased 3.2% y-o-y (-2.1% in January-December), although revenues from fixed broadband and new services increased 4.2% y-o-y in October-December (+3.5% in 2017), benefiting from a boost in B2B revenues along with an ongoing improvement in FTTx revenues. Additionally, pay TV revenues increased by 2.4% y-o-y (+2.1% in January-December).
Operating expenses (442m in the quarter) grew 8.0% y-o-y (1,595m, +4.1% in 2017), mainly driven by greater network and systems expenses (due to the overall coverage growth and an update in electricity rates). They also included 22m headcount restructuring costs incurred in the quarter (9m in the same period in 2016).
OIBDA reached 133m in the quarter (-14.5% y-o-y; 630m, -10.4% in 2017). OIBDA margin stood at 27.5% in October-December excluding restructuring costs (-4.3% p.p. y-o-y; 29.8% in the year, -3.1 p.p.).
CapEx amounted to 356m in the year (-14.7% vs. 2016), mainly allocated towards the LTE infrastructure expansion, high-speed network deployment in the fixed business and increase in Big Data capacities. Operating cash flow (OIBDA-CapEx) amounted to 274m in 2017, decreasing by 4.5% y-o-y.
32
|
January - December 2017
|
TELEFÓNICA CHILE
SELECTED FINANCIAL DATA | January - December | October - December | ||||||||||||||||||||||||||||||
Unaudited figures (Euros in millions) |
2017 | 2016 | % Chg | % Organic Chg | 2017 | 2016 | % Chg | % Organic Chg | ||||||||||||||||||||||||
Revenues |
2,186 | 2,163 | 1.1 | (1.1 | ) | 564 | 590 | (4.4 | ) | (1.1 | ) | |||||||||||||||||||||
Mobile Business |
1,259 | 1,236 | 1.8 | (0.3 | ) | 323 | 333 | (3.0 | ) | 0.5 | ||||||||||||||||||||||
Mobile service revenues |
1,069 | 1,102 | (3.0 | ) | (5.1 | ) | 255 | 291 | (12.5 | ) | (9.1 | ) | ||||||||||||||||||||
Data revenues |
544 | 550 | (1.0 | ) | (3.2 | ) | 129 | 147 | (12.1 | ) | (8.8 | ) | ||||||||||||||||||||
Handset revenues |
190 | 135 | 41.4 | 38.3 | 69 | 42 | 62.2 | 65.6 | ||||||||||||||||||||||||
Fixed Business |
926 | 926 | 0.0 | (2.1 | ) | 241 | 257 | (6.3 | ) | (3.2 | ) | |||||||||||||||||||||
FBB and new services (1) |
465 | 439 | 5.8 | 3.5 | 129 | 127 | 1.2 | 4.2 | ||||||||||||||||||||||||
Pay TV |
243 | 233 | 4.4 | 2.1 | 60 | 61 | (1.4 | ) | 2.4 | |||||||||||||||||||||||
Voice & access revenues |
219 | 254 | (14.0 | ) | (15.9 | ) | 52 | 131 | (60.6 | ) | (21.9 | ) | ||||||||||||||||||||
OIBDA |
630 | 704 | (10.5 | ) | (10.4 | ) | 133 | 180 | (25.7 | ) | (14.5 | ) | ||||||||||||||||||||
OIBDA margin |
28.8 | % | 32.5 | % | (3.7 p.p. | ) | (3.1 p.p. | ) | 23.7 | % | 30.4 | % | (6.8 p.p. | ) | (4.3 p.p. | ) | ||||||||||||||||
CapEx |
356 | 409 | (12.8 | ) | (14.7 | ) | 118 | 121 | (2.2 | ) | 0.3 | |||||||||||||||||||||
Spectrum |
| | | | | | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
274 | 295 | (7.1 | ) | (4.5 | ) | 15 | 59 | (74.0 | ) | (41.3 | ) |
Notes:
| OIBDA is presented before management and brand fees. |
(1) | Includes broadband connectivity services (retail and wholesale), including value added services, data and ICT revenues, other services over connectivity and FBB equipment. |
| Since 1 May 2016, T. Chile reflects all the charges related to the towers transferred to Telxius, which are now presented in Telxius (Other Companies & Eliminations), and also, since 1 January 2016, T. Chile includes the results of the data center business which were before presented in Other Companies & Eliminations of T. Group |
| Organic y-o-y changes reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of T. Chile do not include intra-group capital gains resulting from the transfer of towers to Telxius. |
| Since 1 January 2016 Mobile revenues and Fixed revenues have been revised due to different allocation criteria. This change does not affect total revenue figure reported for 2016. |
| Also since 1 January 2016 Mobile data revenues have been revised due to different allocation criteria between Mobile data revenues and Other Mobile service revenues. This change does not affect total Mobile service revenues figure reported for 2016. |
ACCESSES
Unaudited figures (Thousands) |
2016 | 2017 | ||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Final Clients Accesses |
12,741.5 | 12,481.1 | 12,430.0 | 12,301.3 | 12,210.5 | 12,142.9 | 12,248.6 | 12,227.9 | (0.6 | ) | ||||||||||||||||||||||||||
Fixed telephony accesses (1) |
1,459.0 | 1,438.4 | 1,422.8 | 1,406.5 | 1,380.5 | 1,365.1 | 1,350.5 | 1,326.5 | (5.7 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
1,109.1 | 1,150.8 | 1,146.2 | 1,140.5 | 1,138.8 | 1,162.9 | 1,170.4 | 1,160.8 | 1.8 | |||||||||||||||||||||||||||
Broadband |
1,098.4 | 1,093.3 | 1,096.7 | 1,090.3 | 1,088.1 | 1,111.6 | 1,118.6 | 1,108.5 | 1.7 | |||||||||||||||||||||||||||
FTTx |
268.9 | 290.2 | 312.2 | 324.3 | 329.0 | 341.9 | 354.3 | 360.0 | 11.0 | |||||||||||||||||||||||||||
Mobile accesses |
9,527.9 | 9,235.1 | 9,199.8 | 9,093.9 | 9,034.4 | 8,945.3 | 9,044.6 | 9,056.6 | (0.4 | ) | ||||||||||||||||||||||||||
Prepay |
6,524.9 | 6,150.1 | 6,070.5 | 5,956.0 | 5,891.1 | 5,817.3 | 5,889.7 | 5,849.2 | (1.8 | ) | ||||||||||||||||||||||||||
Contract |
3,002.9 | 3,085.0 | 3,129.2 | 3,137.9 | 3,143.3 | 3,128.0 | 3,154.9 | 3,207.4 | 2.2 | |||||||||||||||||||||||||||
M2M |
331.2 | 354.8 | 378.0 | 369.4 | 377.8 | 387.0 | 405.6 | 409.5 | 10.9 | |||||||||||||||||||||||||||
Pay TV |
645.6 | 656.8 | 661.3 | 660.5 | 656.8 | 669.7 | 683.1 | 684.0 | 3.6 | |||||||||||||||||||||||||||
Wholesale Accesses |
5.2 | 5.1 | 5.1 | 5.1 | 5.3 | 5.2 | 5.2 | 5.2 | 1.1 | |||||||||||||||||||||||||||
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Total Accesses |
12,746.7 | 12,486.2 | 12,435.2 | 12,306.5 | 12,215.7 | 12,148.1 | 12,253.8 | 12,233.0 | (0.6 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures |
2016 | 2017 | ||||||||||||||||||||||||||||||||||
March | June | September | December | March | June | September | December | % Chg | ||||||||||||||||||||||||||||
Contract percentage (%) |
31.5 | % | 33.4 | % | 34.0 | % | 34.5 | % | 34.8 | % | 35.0 | % | 34.9 | % | 35.4 | % | 0.9 p.p. | |||||||||||||||||||
Smartphones (000) |
2,957.2 | 2,864.1 | 2,883.2 | 2,902.4 | 2,962.3 | 2,894.6 | 2,933.0 | 3,285.8 | 13.2 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
32.9 | % | 33.0 | % | 33.5 | % | 34.2 | % | 35.3 | % | 35.0 | % | 35.1 | % | 39.3 | % | 5.1 p.p. | |||||||||||||||||||
LTE (000) |
1,179.6 | 1,340.9 | 1,583.4 | 1,743.7 | 1,837.2 | 1,879.7 | 2,210.6 | 2,517.2 | 44.4 | |||||||||||||||||||||||||||
LTE penetration (%) |
12.8 | % | 15.1 | % | 17.9 | % | 20.0 | % | 21.2 | % | 22.0 | % | 25.6 | % | 29.1 | % | 9.1 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
3.6 | % | 3.7 | % | 3.2 | % | 3.6 | % | 3.3 | % | 3.4 | % | 3.0 | % | 3.4 | % | (0.3 p.p. | ) | ||||||||||||||||||
Contract (1) |
2.0 | % | 2.1 | % | 2.2 | % | 2.4 | % | 2.4 | % | 2.6 | % | 2.7 | % | 2.6 | % | 0.2 p.p. | |||||||||||||||||||
Mobile churn (cumulative YTD) |
3.6 | % | 3.7 | % | 3.5 | % | 3.6 | % | 3.3 | % | 3.3 | % | 3.2 | % | 3.2 | % | (0.3 p.p. | ) | ||||||||||||||||||
Contract (1) |
2.0 | % | 2.1 | % | 2.3 | % | 2.4 | % | 2.4 | % | 2.5 | % | 2.6 | % | 2.6 | % | 0.2 p.p. | |||||||||||||||||||
Mobile ARPU (EUR) (cumulative YTD) |
8.9 | 9.0 | 9.1 | 9.5 | 10.1 | 9.8 | 9.5 | 9.3 | (3.0 | ) | ||||||||||||||||||||||||||
Prepay |
3.0 | 3.0 | 2.9 | 2.6 | 2.9 | 2.8 | 2.6 | 2.6 | (13.3 | ) | ||||||||||||||||||||||||||
Contract (1) |
24.7 | 24.8 | 24.9 | 23.9 | 26.6 | 25.8 | 25.2 | 24.7 | (4.8 | ) | ||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
27,449 | 55,131 | 90,932 | 131,081 | 42,969 | 92,426 | 150,683 | 212,517 | 62.1 | |||||||||||||||||||||||||||
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Fixed telephony ARPU (EUR) (cumulative YTD) |
13.1 | 13.3 | 14.8 | 14.5 | 13.0 | 12.8 | 12.5 | 12.4 | (11.9 | ) | ||||||||||||||||||||||||||
Pay TV ARPU (EUR) (cumulative YTD) |
24.4 | 24.6 | 24.8 | 25.2 | 26.1 | 25.6 | 24.9 | 24.5 | (4.9 | ) | ||||||||||||||||||||||||||
Broadband ARPU (EUR) (cumulative YTD) |
16.2 | 16.6 | 18.0 | 17.5 | 18.8 | 18.1 | 17.4 | 17.3 | (3.3 | ) | ||||||||||||||||||||||||||
Fixed data traffic (TB) (cumulative YTD) |
321,246 | 665,841 | 1,050,624 | 1,490,584 | 434,322 | 970,592 | 1,502,438 | 2,006,161 | 34.6 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
33
|
January - December 2017
|
(y-o-y changes in organic terms)
In the fourth quarter of 2017, the improved trends initiated in the previous quarter continued, leveraged on a commercial acceleration in the fixed business (focus on high-speed networks rollout and TV) and a significant improvement in mobile contract (returning to a positive balance in portability). This was achieved amidst a highly competitive environment, mainly in the mobile business, with elevated levels of churn in contract.
Mobile accesses amounted to 13.7m, decreasing by 11% y-o-y; although there was a change in the trend of main business indicators since the launch of new commercial plans during the year and boosted by the growth of the multi-device TV service Movistar Play launched the previous quarter (433k subscribed users). Moreover, contract net loss in the quarter slowed down significantly (-57k accesses vs. -289k in the third quarter and -340k in the second) and, since November, portability returned to positive performance (positive adoption of Elige+ plans). In prepay, accesses with frequent top-ups grew for the second consecutive quarter (+3% sequential) driven by the Preplan plans. Smartphones maintained a strong growth of 68% y-o-y and 4G accesses grew 31% (23% penetration; 72% coverage).
Within the fixed business it is worth highlighting the growth in retail broadband accesses (1.8m; +6% y-o-y), with quarterly net additions of 35k accesses (102k in 2017) and better quality on the success of FTTx and cable (+46%), with 85k connections in the quarter (330k in 2017) and a coverage that reached 3.7m premises passed (+854k in 2017). Furthermore, pay TV growth was particularly noteworthy at 7% y-o-y (1.4m accesses) with net additions of 40k in October-December (91k in 2017).
Revenues totalled 561m in October-December (-7.8% y-o-y; 2,318m, -8.7% in 2017).
Mobile service revenues (253m) decreased by 10.1% y-o-y (-12.5% in January-December), though they improved sequentially by 3.0 p.p. thanks to the reshaped mobile offering and the improved contract performance. Handset revenues decreased by 25.9% y-o-y in the quarter (-9.1% in 2017) due to the financing campaign in the fourth quarter of 2016 which increased sales.
Fixed business revenues in October-December (273m) fell by 2.3% y-o-y (-4.6% in 2017), affected by the decrease in broadband and new services (-9.9%; -5.8% in 2017) related to the seasonal effect of IT projects. Pay TV revenues increased by 11.1% y-o-y (+7.9% in the third quarter), with a 2.9% increase in ARPU. On the other hand, voice revenues remained virtually stable, substantially improving the decrease posted in previous quarters (-0.1% y-o-y; -16.4% in 2017).
Operating expenses (440m in the quarter) changed their y-o-y trend, decreasing by 1.4% (+0.3% in January-December), reflecting the simplification plans, with network expenses optimisation and a reduction in personnel expenses. This reduction offset the greater interconnection expenses coming from the off-net traffic increase and content associated with the growth in the TV business. Moreover, operating expenses included the impact of 2m of restructuring costs in the quarter (20m in the same period of 2016).
OIBDA reached 146m in the fourth quarter and decreased by 20.5% y-o-y (588m, -26.9% in 2017) and OIBDA margin stood at 26.0% (-4.2 p.p. y-o-y) and at 25.4% in 2017.
CapEx (394m; -10.3% vs. January-December 2016) was focused on service quality improvement, with increased 4G coverage and high-speed networks deployment. Hence, operating cash flow (OIBDA-CapEx) amounted to 194m as of December 2017 (-46.5% y-o-y).
34
|
January - December 2017
|
TELEFÓNICA PERÚ | ||||||||||||||||||||||||||||||||
SELECTED FINANCIAL DATA | January - December | October - December | ||||||||||||||||||||||||||||||
Unaudited figures (Euros in millions) |
2017 | 2016 | % Chg | % Organic Chg | 2017 | 2016 | % Chg | % Organic Chg | ||||||||||||||||||||||||
Revenues |
2,318 | 2,499 | (7.3 | ) | (8.7 | ) | 561 | 635 | (11.7 | ) | (7.8 | ) | ||||||||||||||||||||
Mobile Business |
1,226 | 1,373 | (10.7 | ) | (12.1 | ) | 288 | 344 | (16.2 | ) | (12.4 | ) | ||||||||||||||||||||
Mobile service revenues (1) |
1,072 | 1,206 | (11.1 | ) | (12.5 | ) | 253 | 294 | (14.1 | ) | (10.1 | ) | ||||||||||||||||||||
Data revenues |
614 | 638 | (3.8 | ) | (5.2 | ) | 143 | 155 | (7.5 | ) | (3.1 | ) | ||||||||||||||||||||
Handset revenues |
154 | 167 | (7.7 | ) | (9.1 | ) | 35 | 50 | (29.0 | ) | (25.9 | ) | ||||||||||||||||||||
Fixed Business |
1,092 | 1,126 | (3.1 | ) | (4.6 | ) | 273 | 291 | (6.2 | ) | (2.3 | ) | ||||||||||||||||||||
FBB and new services (2) |
543 | 568 | (4.3 | ) | (5.8 | ) | 131 | 151 | (13.6 | ) | (9.9 | ) | ||||||||||||||||||||
Pay TV |
318 | 288 | 10.6 | 8.9 | 80 | 75 | 6.6 | 11.1 | ||||||||||||||||||||||||
Voice & access revenues |
230 | 271 | (15.1 | ) | (16.4 | ) | 62 | 65 | (4.0 | ) | (0.1 | ) | ||||||||||||||||||||
OIBDA |
588 | 779 | (24.5 | ) | (26.9 | ) | 146 | 175 | (16.5 | ) | (20.5 | ) | ||||||||||||||||||||
OIBDA margin |
25.4 | % | 31.2 | % | (5.8 p.p. | ) | (6.3 p.p. | ) | 26.0 | % | 27.5 | % | (1.5 p.p. | ) | (4.2 p.p. | ) | ||||||||||||||||
CapEx |
394 | 717 | (45.0 | ) | (10.3 | ) | 165 | 207 | (20.2 | ) | (18.7 | ) | ||||||||||||||||||||
Spectrum |
| 284 | | | | 2 | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
194 | 62 | n.m. | (46.5 | ) | (19 | ) | (32 | ) | (40.0 | ) | 7.5 |
Notes:
| OIBDA is presented before management and brand fees. |
(1) | Includes fixed wireless revenues. |
(2) | Includes broadband connectivity services (retail and wholesale), including value added services, data and ICT revenues, other services over connectivity and FBB equipment. |
| Since 1 April 2016, T. Perú reflects all the charges related to the towers transferred to Telxius, which are now presented in Telxius (Other Companies & Eliminations). |
| Organic y-o-y changes reflect all the charges related to the towers transferred to Telxius since 1 January 2016. The results of T. Perú do not include intra-group capital gains resulting from the transfer of towers to Telxius. |
| Since 1 January 2016 Mobile revenues and Fixed revenues have been revised due to different allocation criteria. This change does not affect total revenue figure reported for 2016. |
| Also since 1 January 2016 Mobile Data revenues have been revised due to different allocation criteria between Mobile Data revenues and Other Mobile Service revenues. This change does not affect total Mobile Service revenue figure reported for 2016. |
ACCESSES | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (Thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Fixed telephony accesses (1) |
2,452.1 | 2,491.0 | 2,486.8 | 2,445.1 | 2,455.0 | 2,458.2 | 2,471.9 | 2,491.2 | 1.9 | |||||||||||||||||||||||||||
Fixed wireless |
127.7 | 117.6 | 95.5 | 72.3 | 84.6 | 84.9 | 85.4 | 85.8 | 18.7 | |||||||||||||||||||||||||||
Internet and data accesses |
1,663.9 | 1,685.0 | 1,696.5 | 1,691.1 | 1,707.3 | 1,722.1 | 1,758.7 | 1,794.7 | 6.1 | |||||||||||||||||||||||||||
Broadband |
1,639.2 | 1,660.3 | 1,666.8 | 1,660.9 | 1,676.8 | 1,691.9 | 1,728.2 | 1,763.4 | 6.2 | |||||||||||||||||||||||||||
FTTx/Cable |
557.0 | 623.7 | 620.1 | 722.7 | 841.7 | 821.7 | 967.7 | 1,052.4 | 45.6 | |||||||||||||||||||||||||||
Mobile accesses |
16,445.4 | 16,211.9 | 15,954.2 | 15,498.5 | 14,810.6 | 14,438.8 | 13,826.5 | 13,745.1 | (11.3 | ) | ||||||||||||||||||||||||||
Prepay |
10,530.0 | 10,228.5 | 10,214.7 | 9,807.8 | 9,429.8 | 9,397.5 | 9,073.7 | 9,049.4 | (7.7 | ) | ||||||||||||||||||||||||||
Contract |
5,915.5 | 5,983.4 | 5,739.5 | 5,690.7 | 5,380.9 | 5,041.3 | 4,752.7 | 4,695.7 | (17.5 | ) | ||||||||||||||||||||||||||
M2M |
81.7 | 79.7 | 90.1 | 85.1 | 82.9 | 82.1 | 92.7 | 108.5 | 27.5 | |||||||||||||||||||||||||||
Pay TV |
1,229.6 | 1,250.3 | 1,261.3 | 1,275.1 | 1,297.4 | 1,309.3 | 1,326.2 | 1,366.3 | 7.2 | |||||||||||||||||||||||||||
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Total Accesses |
21,791.0 | 21,638.3 | 21,398.8 | 20,909.8 | 20,270.3 | 19,928.4 | 19,383.2 | 19,397.3 | (7.2 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA | 2016 |
2017 |
||||||||||||||||||||||||||||||||||
Unaudited figures |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Contract percentage (%) |
36.0 | % | 36.9 | % | 36.0 | % | 36.7 | % | 36.3 | % | 34.9 | % | 34.4 | % | 34.2 | % | (2.5 p.p. | ) | ||||||||||||||||||
Smartphones (000) |
4,652.9 | 4,867.0 | 4,951.9 | 4,900.5 | 8,130.0 | 8,283.6 | 8,291.3 | 8,246.5 | 68.3 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
28.6 | % | 30.3 | % | 31.4 | % | 32.0 | % | 55.5 | % | 58.0 | % | 60.7 | % | 60.8 | % | 28.8 p.p. | |||||||||||||||||||
LTE (000) |
1,464.1 | 1,851.4 | 2,095.7 | 2,348.3 | 2,370.0 | 2,505.4 | 2,324.4 | 3,087.6 | 31.5 | |||||||||||||||||||||||||||
LTE penetration (%) |
8.9 | % | 11.5 | % | 13.2 | % | 15.2 | % | 16.1 | % | 17.5 | % | 16.9 | % | 22.6 | % | 7.4 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
4.8 | % | 5.0 | % | 5.2 | % | 5.4 | % | 5.3 | % | 5.1 | % | 5.5 | % | 5.6 | % | 0.2 p.p. | |||||||||||||||||||
Contract (1) |
2.5 | % | 2.6 | % | 3.5 | % | 3.1 | % | 2.7 | % | 3.1 | % | 3.1 | % | 3.3 | % | 0.3 p.p. | |||||||||||||||||||
Mobile churn (cumulative YTD) |
4.8 | % | 4.9 | % | 5.0 | % | 5.1 | % | 5.3 | % | 5.2 | % | 5.3 | % | 5.3 | % | 0.3 p.p. | |||||||||||||||||||
Contract (1) |
2.5 | % | 2.6 | % | 3.1 | % | 3.3 | % | 2.7 | % | 2.9 | % | 3.0 | % | 3.0 | % | (0.3 p.p. | ) | ||||||||||||||||||
Mobile ARPU (EUR)(cumulative YTD) |
6.3 | 6.2 | 6.1 | 6.3 | 6.3 | 6.3 | 6.2 | 6.1 | (1.4 | ) | ||||||||||||||||||||||||||
Prepay |
2.8 | 3.0 | 2.5 | 2.5 | 2.1 | 2.0 | 2.1 | 2.0 | (18.2 | ) | ||||||||||||||||||||||||||
Contract (1) |
12.0 | 11.8 | 12.5 | 11.3 | 13.7 | 13.8 | 13.7 | 13.6 | 6.1 | |||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
11,451 | 23,486 | 39,758 | 77,864 | 37,157 | 84,961 | 133,034 | 185,166 | 137.8 | |||||||||||||||||||||||||||
Fixed telephony ARPU (EUR) (cumulative YTD) |
9.4 | 9.1 | 7.6 | 8.3 | 7.5 | 7.0 | 6.8 | 6.7 | (12.9 | ) | ||||||||||||||||||||||||||
Pay TV ARPU (EUR) (cumulative YTD) |
16.6 | 16.3 | 17.6 | 17.8 | 19.4 | 19.1 | 18.8 | 18.6 | 2.9 | |||||||||||||||||||||||||||
Broadband ARPU (EUR) (cumulative YTD) |
16.4 | 16.2 | 19.3 | 15.9 | 15.6 | 15.1 | 14.7 | 14.3 | (11.1 | ) | ||||||||||||||||||||||||||
Fixed data traffic (TB) (cumulative YTD) |
407,019 | 809,376 | 1,317,625 | 1,968,734 | 692,053 | 1,378,078 | 2,075,593 | 2,814,311 | 43.0 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
35
|
January - December 2017
|
(y-o-y changes in organic terms)
Telefónica Colombia reported a solid performance in the fourth quarter (+1.6% and +1.4% y-o-y in revenues and OIBDA ex-regulation) leveraged on the adoption of 4G and FTTx and the continued efficiency measures. Following the final termination of the PARAPAT operating agreement, the subsidiaries of Telebucaramanga, Metrotel and Optecom were transferred to Coltel during the quarter, which provided improved strategic positioning of the Company in the fixed business.
Mobile accesses amounted to 14.6m (+6% y-o-y) with net additions of 460k accesses in the quarter (865k in January-December). In contract, accesses grew by 4% y-o-y (+4k accesses in October-December; +144k in January-December). Prepay accesses (+7%) registered net additions in the quarter of 457k (721k in January-December), highlighting the positive adoption of the Todo en Uno and Prepagada offers. Furthermore, the strong y-o-y growth trend in Smartphones (+19%; 43% penetration) and LTE accesses (+82%; 30% penetration) was maintained.
In the fixed business, the retail broadband accesses totalled 1.2m (+24% y-o-y), and included 226k accesses from Telebucaramanga and Metrotel. The strategic focus on increasing speeds was reflected in the FTTx network deployment (672k premises passed as of December; +326k in the year), reaching 127k connected homes at December (+40k in the quarter; +100k in 2017). Meanwhile, pay TV (530k accesses) grew by 2% vs. December 2016.
Revenues amounted to 368m in the quarter and decreased by 0.5% y-o-y (1,462m; +0.8% in 2017), but the trend improved by 0.7 p.p. vs. the previous quarter, mainly due to the tariffs update in October and despite the strong impact of regulatory measures (-2.1 p.p. in the y-o-y change for the quarter and the full year).
Mobile service revenues (186m) grew by 1.3% y-o-y (+2.0% in 2017) and continued leveraged on data revenue growth (+27.7% in the quarter; +33.3% in January-December). Additionally, handset revenues grew by 6.8% y-o-y in the quarter (+17.7% in 2017) after the successful Christmas campaign (2x1 in smartphones).
Fixed business revenues in the fourth quarter (146m) decreased by 5.1% (-4.4% in January-December), improving the y-o-y trend by 2.9 p.p. vs. the previous quarter on the positive performance of pay TV revenues (+3.7% y-o-y) and broadband and new service revenues (+1.3%; -6.3% in the previous quarter). However, they continued to be affected by lower voice revenues (-18.2% y-o-y in the quarter).
Operating expenses amounted to 272m in October-December and increased by 1.3% y-o-y (+0.3% in January-December), below the rate of inflation thanks to efficiency measures and despite higher commercial expenses on high-value accesses growth. Moreover, operating expenses included the impact of 12m of restructuring costs in the quarter (3m in the same period of 2016).
Thus, OIBDA in the fourth quarter (115m) decreased by 3.3% y-o-y (+1.4% excluding the regulatory measures) and increased by 2.0% in January-December, with an OIBDA margin of 31.1% (-1.0 p.p. y-o-y) and 32.9% in 2017 (+0.4 p.p. y-o-y).
CapEx for 2017 amounted to 327m (excluding 470m related to the arbitral award registered in the third quarter) and decreased by 4.7% y-o-y, aimed at the continuous improvement of the fixed and mobile network, as well as the deployment of the fibre network. Therefore, the operating cash flow (OIBDA-CapEx), excluding the value of the arbitral award, amounted to 155m as of December 2017, posting strong y-o-y growth of 18.2%.
36
|
January - December 2017
|
TELEFÓNICA COLOMBIA | ||||||||||||||||||||||||||||||||
SELECTED FINANCIAL DATA | January - December | October - December | ||||||||||||||||||||||||||||||
Unaudited figures (Euros in millions) |
2017 | 2016 | % Chg | % Organic Chg | 2017 | 2016 | % Chg | % Organic Chg | ||||||||||||||||||||||||
Revenues |
1,462 | 1,409 | 3.8 | 0.8 | 368 | 375 | (1.7 | ) | (0.5 | ) | ||||||||||||||||||||||
Mobile Business |
909 | 861 | 5.5 | 4.1 | 223 | 234 | (5.1 | ) | 2.2 | |||||||||||||||||||||||
Mobile service revenues |
768 | 743 | 3.4 | 2.0 | 186 | 198 | (6.0 | ) | 1.3 | |||||||||||||||||||||||
Data revenues |
436 | 323 | 35.1 | 33.3 | 109 | 92 | 19.1 | 27.7 | ||||||||||||||||||||||||
Handset revenues |
141 | 118 | 19.3 | 17.7 | 37 | 37 | 0.2 | 6.8 | ||||||||||||||||||||||||
Fixed Business |
554 | 548 | 1.1 | (4.4 | ) | 146 | 140 | 4.1 | (5.1 | ) | ||||||||||||||||||||||
FBB and new services (1) (2) |
275 | 284 | (3.1 | ) | (4.4 | ) | 66 | 70 | (6.2 | ) | 1.3 | |||||||||||||||||||||
Pay TV |
86 | 77 | 11.0 | 9.6 | 20 | 21 | (4.0 | ) | 3.7 | |||||||||||||||||||||||
Voice & access revenues (2) |
193 | 187 | 3.3 | (10.2 | ) | 60 | 49 | 22.4 | (18.2 | ) | ||||||||||||||||||||||
OIBDA |
482 | 464 | 3.7 | 2.0 | 115 | 126 | (9.1 | ) | (3.3 | ) | ||||||||||||||||||||||
OIBDA margin |
32.9 | % | 33.0 | % | |
(0.0 p.p. |
) |
|
0.4 p.p. |
|
31.1 | % | 33.7 | % | (2.6 p.p. | ) | (1.0 p.p. | ) | ||||||||||||||
CapEx |
796 | 330 | n.m. | (4.7 | ) | 139 | 116 | 19.9 | 17.4 | |||||||||||||||||||||||
Spectrum (3) |
470 | | | | | | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
(315 | ) | 134 | c.s. | 18.2 | (24 | ) | 10 | c.s. | c.s. |
Notes:
| OIBDA is presented before management and brand fees. |
(1) | Includes broadband connectivity services (retail and wholesale), including value added services, data and ICT revenues, other services over connectivity and FBB equipment. |
(2) | Following the pre-payment of the debt derived from the operating agreement with PARAPAT and after taking over its subsidiaries Telebucaramanga, Metrotel and Optecom, the consolidated results are included in the fixed business from 1 October 2017. Organic y-o-y comparison excludes these results. |
(3) | Spectrum includes 470m in Q3 17 related to the cost of licenses associated with the arbitration award in connection with the reversion of certain assets earmarked for the provisions of services under former concessions. |
| Since 1 January 2016 Mobile data revenues have been revised due to different allocation criteria between Mobile data revenues and Other Mobile service revenues. This change does not affect total Mobile service revenues figure reported for 2016. |
ACCESSES | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (Thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Final Clients Accesses |
15,977.2 | 16,161.0 | 16,503.1 | 16,573.4 | 16,471.3 | 16,610.7 | 16,964.5 | 17,940.1 | 8.2 | |||||||||||||||||||||||||||
Fixed telephony accesses (1) (2) |
1,414.2 | 1,402.7 | 1,389.4 | 1,353.4 | 1,352.7 | 1,330.6 | 1,319.7 | 1,609.6 | 18.9 | |||||||||||||||||||||||||||
Internet and data accesses (2) |
1,008.4 | 1,011.6 | 1,025.1 | 977.2 | 990.0 | 982.3 | 984.9 | 1,210.0 | 23.8 | |||||||||||||||||||||||||||
Broadband |
999.9 | 1,003.2 | 1,003.2 | 964.1 | 976.8 | 969.1 | 971.5 | 1,196.4 | 24.1 | |||||||||||||||||||||||||||
FTTx |
| | | 27.1 | 33.4 | 54.6 | 86.5 | 126.8 | n.m. | |||||||||||||||||||||||||||
Mobile accesses |
13,057.2 | 13,226.3 | 13,556.9 | 13,725.3 | 13,603.0 | 13,768.6 | 14,130.1 | 14,590.6 | 6.3 | |||||||||||||||||||||||||||
Prepay |
9,625.1 | 9,730.2 | 10,019.0 | 10,136.8 | 9,974.3 | 10,096.8 | 10,401.1 | 10,857.7 | 7.1 | |||||||||||||||||||||||||||
Contract |
3,432.1 | 3,496.1 | 3,537.9 | 3,588.5 | 3,628.6 | 3,671.8 | 3,729.0 | 3,732.9 | 4.0 | |||||||||||||||||||||||||||
M2M |
471.0 | 464.3 | 481.3 | 478.7 | 474.8 | 463.7 | 468.6 | 454.3 | (5.1 | ) | ||||||||||||||||||||||||||
Pay TV |
497.4 | 520.4 | 531.7 | 517.5 | 525.6 | 529.3 | 529.8 | 529.9 | 2.4 | |||||||||||||||||||||||||||
Wholesale Accesses |
0.6 | 0.6 | 0.6 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | (11.7 | ) | ||||||||||||||||||||||||||
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Total Accesses |
15,977.8 | 16,161.6 | 16,503.7 | 16,573.9 | 16,471.8 | 16,611.2 | 16,965.0 | 17,940.5 | 8.2 | |||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
(2) | Following the pre-payment of the debt derived from the operating agreement with PARAPAT and after taking over its subsidiaries Telebucaramanga, Metrotel and Optecom, the consolidated results are included in the fixed business from 1 October 2017. |
SELECTED OPERATIONAL DATA |
2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Contract percentage (%) |
26.3 | % | 26.4 | % | 26.1 | % | 26.1 | % | 26.7 | % | 26.7 | % | 26.4 | % | 25.6 | % | (0.5 p.p. | ) | ||||||||||||||||||
Smartphones (000) |
4,391.3 | 4,516.1 | 4,744.8 | 5,043.4 | 5,324.1 | 5,477.0 | 5,761.4 | 5,977.1 | 18.5 | |||||||||||||||||||||||||||
Smartphone penetration (%) |
35.5 | % | 36.0 | % | 36.8 | % | 38.6 | % | 41.1 | % | 41.7 | % | 42.7 | % | 42.7 | % | 4.1 p.p. | |||||||||||||||||||
LTE (000) |
1,375.6 | 1,667.1 | 1,943.0 | 2,340.6 | 2,682.5 | 3,193.6 | 3,731.2 | 4,260.0 | 82.0 | |||||||||||||||||||||||||||
LTE penetration (%) |
10.9 | % | 13.1 | % | 14.9 | % | 17.7 | % | 20.4 | % | 24.0 | % | 27.3 | % | 30.1 | % | 12.4 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
3.2 | % | 3.2 | % | 2.9 | % | 3.5 | % | 4.2 | % | 3.4 | % | 2.9 | % | 2.9 | % | (0.7 p.p. | ) | ||||||||||||||||||
Contract (1) |
1.8 | % | 1.7 | % | 1.7 | % | 1.6 | % | 1.5 | % | 1.6 | % | 1.5 | % | 1.7 | % | 0.2 p.p. | |||||||||||||||||||
Mobile churn (cumulative YTD) |
3.2 | % | 3.2 | % | 3.1 | % | 3.2 | % | 4.2 | % | 3.8 | % | 3.5 | % | 3.3 | % | 0.1 p.p. | |||||||||||||||||||
Contract (1) |
1.8 | % | 1.8 | % | 1.6 | % | 1.5 | % | 1.5 | % | 1.5 | % | 1.5 | % | 1.6 | % | 0.1 p.p. | |||||||||||||||||||
Mobile ARPU (EUR)(cumulative YTD) |
4.2 | 4.3 | 4.3 | 4.4 | 4.7 | 4.6 | 4.5 | 4.4 | (0.5 | ) | ||||||||||||||||||||||||||
Prepay |
1.1 | 1.2 | 1.1 | 1.0 | 1.2 | 1.2 | 1.2 | 1.2 | (0.9 | ) | ||||||||||||||||||||||||||
Contract (1) |
14.6 | 14.8 | 15.0 | 14.2 | 16.4 | 15.9 | 15.3 | 15.0 | (2.5 | ) | ||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
14,077 | 29,400 | 46,343 | 66,085 | 22,498 | 48,002 | 75,237 | 105,623 | 59.8 | |||||||||||||||||||||||||||
Fixed telephony ARPU (EUR) (cumulative YTD) |
9.8 | 10.1 | 10.7 | 10.7 | 11.1 | 10.8 | 10.2 | 9.3 | (12.1 | ) | ||||||||||||||||||||||||||
Pay TV ARPU (EUR) (cumulative YTD) |
11.0 | 11.3 | 11.9 | 12.2 | 14.3 | 14.1 | 13.5 | 13.2 | 7.4 | |||||||||||||||||||||||||||
Broadband ARPU (EUR) (cumulative YTD) |
8.2 | 8.5 | 10.3 | 9.2 | 11.0 | 11.1 | 10.9 | 10.3 | 10.4 | |||||||||||||||||||||||||||
Fixed data traffic (TB) (cumulative YTD) (2) |
70,654 | 149,797 | 234,125 | 319,800 | 89,505 | 192,552 | 296,678 | 401,577 | 25.6 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
(2) | Includes solely traffic pertaining to FBB accesses, not Business customers. |
37
|
January - December 2017
|
(y-o-y changes in organic terms)
Telefónica Mexico maintained its improvement trend showed throughout 2017 and once again posted y-o-y growth in the fourth quarter in revenues and OIBDA and margin expansion (+0.3%, +21.4% and +4.3 p.p. respectively). Likewise, it continued to progress in its strategic positioning with an improvement in the commercial offering and distribution channels, in addition to the coverage and quality of the network thanks to the focus on investment in the main cities in the country, as well as the national roaming agreement and other investment models.
Mobile accesses decreased by 6% y-o-y, although contract accesses increased 13% after posting net additions of 58k in the quarter (+251k in the year) thanks to the highest commercial activity in the last eight quarters (boosted by the growth in own stores). Prepay accesses increased in the quarter by 474k (-1.7m in the year), after posting a churn improvement of 1.1 p.p. vs. previous quarter.
For the second consecutive quarter, ARPU increased y-o-y (+1.5%, -4.7% in the year) due to greater rationality in prepay commercial offerings.
Revenues (334m in the quarter) grew 0.3% y-o-y (-2.2% in the year) with a positive performance in outgoing mobile revenues (+0.8%; -8.2% in the year), reverting its trend thanks to the growth in contract accesses and ARPU. Additionally, handset revenues increased on the greater commercial activity, mainly in the high-end range (+56.6% y-o-y in the quarter, +47.9% in the year) amid a context of more rational subsidies.
Operating expenses reached 263m in October-December and decreased by 5.6% y-o-y (-4.1% in the year), primarily because of lower interconnection expenses and the generation of efficiencies, which more than offset the higher handset consumption. Moreover, headcount restructuring costs of 6m were booked in the quarter (11m for the same quarter in 2016).
OIBDA amounted to 78m and increased by 21.4% vs. the fourth quarter of 2016 due to the improvement in revenues and the efficiency measures in expenses. For the full year, OIBDA decreased 1.8% y-o-y.
Thus, OIBDA margin stood at 23.3% (+4.3 p.p. y-o-y) and 22.6% in 2017 (+0.1 p.p. y-o-y).
CapEx totalled 217m in the year (+0.6% y-o-y) and was allocated to deploying and improving 3G and 4G. Thus, operating cash flow (OIBDA-CapEx) reached 86m in January-December (-6.7% y-o-y).
38
|
January - December 2017
|
TELEFÓNICA MÉXICO | ||||||||||||||||||||||||||||||||
SELECTED FINANCIAL DATA | January - December | October - December | ||||||||||||||||||||||||||||||
Unaudited figures (Euros in millions) |
2017 | 2016 | % Chg | % Organic Chg | 2017 | 2016 | % Chg | % Organic Chg | ||||||||||||||||||||||||
Revenues |
1,336 | 1,410 | (5.2 | ) | (2.2 | ) | 334 | 347 | (3.9 | ) | 0.3 | |||||||||||||||||||||
Service revenues |
1,102 | 1,246 | (11.6 | ) | (8.8 | ) | 259 | 298 | (13.0 | ) | (9.0 | ) | ||||||||||||||||||||
Data revenues |
555 | 533 | 4.2 | 7.6 | 144 | 122 | 18.5 | 22.9 | ||||||||||||||||||||||||
Handset revenues |
234 | 164 | 43.3 | 47.9 | 75 | 50 | 50.8 | 56.6 | ||||||||||||||||||||||||
OIBDA |
302 | 309 | (2.2 | ) | (1.8 | ) | 78 | 60 | 29.6 | 21.4 | ||||||||||||||||||||||
OIBDA margin |
22.6 | % | 21.9 | % | 0.7 p.p. | 0.1 p.p. | 23.3 | % | 17.3 | % | 6.0 p.p. | 4.3 p.p. | ||||||||||||||||||||
CapEx |
217 | 219 | (0.9 | ) | 0.6 | 85 | 88 | (4.0 | ) | (0.2 | ) | |||||||||||||||||||||
Spectrum |
4 | | | | | | | | ||||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
86 | 90 | (5.4 | ) | (6.7 | ) | (7 | ) | (28 | ) | (75.0 | ) | c.s. |
Notes:
| OIBDA is presented before management and brand fees. |
| Since 1 January 2016 Data revenues have been revised due to different allocation criteria between Data revenues and other service revenues. This change does not affect total Service revenues figure reported for 2016. |
ACCESSES | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (Thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Mobile accesses |
25,655.4 | 25,928.8 | 25,937.5 | 26,557.2 | 25,657.9 | 25,277.7 | 24,539.2 | 25,070.9 | (5.6 | ) | ||||||||||||||||||||||||||
Prepay |
23,803.2 | 24,069.1 | 24,081.0 | 24,620.1 | 23,639.3 | 23,197.6 | 22,408.7 | 22,882.4 | (7.1 | ) | ||||||||||||||||||||||||||
Contract (1) |
1,852.2 | 1,859.7 | 1,856.5 | 1,937.2 | 2,018.6 | 2,080.1 | 2,130.5 | 2,188.5 | 13.0 | |||||||||||||||||||||||||||
M2M |
602.6 | 629.2 | 658.3 | 668.4 | 710.1 | 744.0 | 789.2 | 854.5 | 27.8 | |||||||||||||||||||||||||||
Fixed Wireless |
1,296.9 | 1,252.9 | 1,176.8 | 1,057.4 | 974.4 | 924.2 | 849.5 | 808.4 | (23.6 | ) | ||||||||||||||||||||||||||
Wholesale Accesses (1) |
| | 54.8 | 39.8 | 39.2 | 38.5 | 38.4 | 10.3 | (74.2 | ) | ||||||||||||||||||||||||||
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Total Accesses |
26,952.3 | 27,181.7 | 27,169.1 | 27,654.4 | 26,671.5 | 26,240.4 | 25,427.1 | 25,889.5 | (6.4 | ) | ||||||||||||||||||||||||||
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(1) | Since the third quarter 2016, 55 thousand wholesale accesses have been reclassified from Mobile contract to Wholesale accesses. |
SELECTED OPERATIONAL DATA | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Contract percentage (%) |
7.2 | % | 7.2 | % | 7.2 | % | 7.3 | % | 7.9 | % | 8.2 | % | 8.7 | % | 8.7 | % | 1.4 p.p. | |||||||||||||||||||
Smartphones (000) |
10,916.0 | 11,489.4 | 11,569.6 | 11,961.4 | 11,865.9 | 11,789.9 | 11,483.8 | 11,576.0 | (3.2 | ) | ||||||||||||||||||||||||||
Smartphone penetration (%) |
43.8 | % | 45.6 | % | 45.8 | % | 46.3 | % | 47.6 | % | 48.1 | % | 48.4 | % | 47.9 | % | 1.6 p.p. | |||||||||||||||||||
LTE (000) |
2,154.7 | 2,477.9 | 2,776.6 | 3,312.1 | 3,658.0 | 4,035.0 | 4,309.6 | 5,111.2 | 54.3 | |||||||||||||||||||||||||||
LTE penetration (%) |
8.6 | % | 9.8 | % | 11.0 | % | 12.8 | % | 14.7 | % | 16.4 | % | 18.1 | % | 21.1 | % | 8.3 p.p. | |||||||||||||||||||
Mobile churn (quarterly) |
3.5 | % | 3.3 | % | 3.6 | % | 3.7 | % | 4.8 | % | 3.9 | % | 4.7 | % | 3.7 | % | (0.0 p.p. | ) | ||||||||||||||||||
Contract (1) |
1.7 | % | 2.9 | % | 1.7 | % | 1.9 | % | 2.1 | % | 1.9 | % | 2.2 | % | 2.5 | % | 0.6 p.p. | |||||||||||||||||||
Mobile churn (cumulative YTD) |
3.5 | % | 3.4 | % | 3.5 | % | 3.6 | % | 4.8 | % | 4.4 | % | 4.5 | % | 4.3 | % | 0.7 p.p. | |||||||||||||||||||
Contract (1) |
1.7 | % | 2.4 | % | 1.7 | % | 1.4 | % | 2.1 | % | 1.7 | % | 1.9 | % | 2.1 | % | 0.7 p.p. | |||||||||||||||||||
Mobile ARPU (EUR)(cumulative YTD) |
3.8 | 3.5 | 3.3 | 3.3 | 2.7 | 2.9 | 3.0 | 3.0 | (4.7 | ) | ||||||||||||||||||||||||||
Prepay |
3.3 | 3.0 | 2.8 | 2.1 | 2.3 | 2.4 | 2.5 | 2.5 | (6.5 | ) | ||||||||||||||||||||||||||
Contract (1) |
14.6 | 14.2 | 14.2 | 12.8 | 12.1 | 12.4 | 12.5 | 12.3 | (8.8 | ) | ||||||||||||||||||||||||||
Mobile data traffic (TB) (cumulative YTD) |
17,192 | 37,369 | 60,088 | 86,315 | 30,861 | 69,939 | 112,251 | 155,767 | 80.5 |
Notes:
| ARPU: monthly average revenue divided by the monthly average accesses of the period. % Change in local currency. |
| Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
(1) | Excludes M2M. |
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SELECTED FINANCIAL DATA | January - December | October - December | ||||||||||||||||||||||||||||||
Unaudited figures (Euros in millions) |
2017 | 2016 | % Var | % Organic Chg | 2017 | 2016 | % Var | % Organic Chg | ||||||||||||||||||||||||
Revenues |
1,771 | 2,122 | (16.6 | ) | 59.9 | 435 | 642 | (32.3 | ) | 91.4 | ||||||||||||||||||||||
Telefónica Venezuela |
106 | 432 | (75.4 | ) | n.m. | 18 | 196 | (90.9 | ) | n.m. | ||||||||||||||||||||||
Telefónica Central America |
890 | 912 | (2.5 | ) | 0.8 | 227 | 244 | (6.9 | ) | 2.3 | ||||||||||||||||||||||
Telefónica Ecuador |
539 | 551 | (2.1 | ) | (0.3 | ) | 135 | 139 | (3.1 | ) | 5.7 | |||||||||||||||||||||
Telefónica Uruguay |
235 | 226 | 4.0 | 0.9 | 55 | 63 | (12.4 | ) | (2.8 | ) | ||||||||||||||||||||||
Service revenues |
1,623 | 1,991 | (18.5 | ) | 92.3 | 392 | 603 | (34.9 | ) | n.m. | ||||||||||||||||||||||
Telefónica Venezuela |
104 | 420 | (75.3 | ) | n.m. | 18 | 191 | (90.7 | ) | n.m. | ||||||||||||||||||||||
Telefónica Central America |
827 | 856 | (3.5 | ) | (0.2 | ) | 209 | 229 | (8.5 | ) | 0.7 | |||||||||||||||||||||
Telefónica Ecuador |
474 | 506 | (6.2 | ) | (4.4 | ) | 114 | 125 | (9.0 | ) | (0.5 | ) | ||||||||||||||||||||
Telefónica Uruguay |
218 | 210 | 4.1 | 1.1 | 51 | 53 | (2.8 | ) | (1.4 | ) | ||||||||||||||||||||||
OIBDA |
545 | 623 | (12.5 | ) | 113.2 | 156 | 207 | (24.9 | ) | n.m. | ||||||||||||||||||||||
Telefónica Venezuela |
34 | 111 | (69.1 | ) | n.m. | 9 | 51 | (81.7 | ) | n.m. | ||||||||||||||||||||||
Telefónica Central America |
263 | 254 | 3.3 | 9.6 | 83 | 82 | 1.0 | 13.0 | ||||||||||||||||||||||||
Telefónica Ecuador |
163 | 177 | (8.3 | ) | (6.2 | ) | 42 | 52 | (18.4 | ) | (10.5 | ) | ||||||||||||||||||||
Telefónica Uruguay |
85 | 80 | 6.7 | 3.8 | 21 | 23 | (6.7 | ) | 2.6 | |||||||||||||||||||||||
CapEx |
312 | 363 | (14.0 | ) | 61.4 | 138 | 152 | (9.3 | ) | 91.0 | ||||||||||||||||||||||
Telefónica Venezuela |
9 | 91 | (90.4 | ) | n.m. | (2 | ) | 42 | c.s. | n.m. | ||||||||||||||||||||||
Telefónica Central America |
165 | 139 | 18.9 | (4.6 | ) | 93 | 48 | 94.7 | 25.1 | |||||||||||||||||||||||
Telefónica Ecuador |
77 | 99 | (22.8 | ) | (21.6 | ) | 34 | 45 | (24.1 | ) | (20.4 | ) | ||||||||||||||||||||
Telefónica Uruguay |
62 | 34 | 82.4 | (0.5 | ) | 14 | 18 | (21.6 | ) | (14.0 | ) | |||||||||||||||||||||
Spectrum |
64 | | | | 35 | | | | ||||||||||||||||||||||||
Telefónica Venezuela |
| | | | | | | | ||||||||||||||||||||||||
Telefónica Central America |
36 | | | | 36 | | | | ||||||||||||||||||||||||
Telefónica Ecuador |
| | | | | | | | ||||||||||||||||||||||||
Telefónica Uruguay |
27 | | | | (1 | ) | | | | |||||||||||||||||||||||
OpCF (OIBDA-CapEx) |
233 | 259 | (10.3 | ) | 183.9 | 17 | 55 | (68.3 | ) | n.m. | ||||||||||||||||||||||
Telefónica Venezuela |
25 | 20 | 30.1 | n.m. | 12 | 8 | 41.9 | n.m. | ||||||||||||||||||||||||
Telefónica Central America |
98 | 116 | (15.4 | ) | 26.6 | (10 | ) | 34 | c.s. | (3.8 | ) | |||||||||||||||||||||
Telefónica Ecuador |
86 | 78 | 10.3 | 13.5 | 9 | 7 | 15.7 | 54.2 | ||||||||||||||||||||||||
Telefónica Uruguay |
23 | 46 | (49.4 | ) | 7.1 | 7 | 5 | 45.5 | 75.6 |
| After considering Venezuela as a hyperinflationary country, P&L and CapEx from the operations in the country are to be accounted at the closing exchange rate Bolivar Fuerte/Euro. For the January-December 2017 period Telefónica uses a synthetic exchange rate of 36,115 Venezuelan bolivars fuertes per dollar at December 2017. |
| OIBDA is presented before management and brand fees. |
| 2016 and 2017 reported figures include the hyperinflationary adjustments in Venezuela in both years. |
| Central America includes Guatemala, Panama, El Salvador, Nicaragua and Costa Rica. |
ACCESSES | 2016 | 2017 | ||||||||||||||||||||||||||||||||||
Unaudited figures (Thousands) |
March | June | September | December | March | June | September | December | % Chg | |||||||||||||||||||||||||||
Fixed telephony accesses (1) |
1,276.1 | 1,263.7 | 1,250.3 | 1,229.8 | 1,212.6 | 1,195.8 | 1,158.7 | 1,136.8 | (7.6 | ) | ||||||||||||||||||||||||||
Internet and data accesses |
13.7 | 13.7 | 13.0 | 13.3 | 16.9 | 17.6 | 18.1 | 19.2 | 44.5 | |||||||||||||||||||||||||||
Broadband |
6.7 | 6.9 | 2.8 | 3.0 | 2.6 | 2.7 | 2.8 | 3.4 | 14.7 | |||||||||||||||||||||||||||
Mobile accesses |
28,613.6 | 28,960.4 | 29,407.0 | 29,644.2 | 29,446.6 | 29,175.6 | 28,812.9 | 28,844.7 | (2.7 | ) | ||||||||||||||||||||||||||
Prepay |
24,461.3 | 24,780.9 | 25,155.7 | 25,360.7 | 25,128.1 | 24,832.2 | 24,469.3 | 24,466.6 | (3.5 | ) | ||||||||||||||||||||||||||
Contract |
4,152.2 | 4,179.5 | 4,251.4 | 4,283.5 | 4,318.5 | 4,343.5 | 4,343.6 | 4,378.1 | 2.2 | |||||||||||||||||||||||||||
M2M |
389.6 | 397.9 | 423.5 | 438.6 | 435.5 | 451.2 | 456.6 | 463.1 | 5.6 | |||||||||||||||||||||||||||
Pay TV |
478.2 | 478.1 | 468.7 | 466.1 | 462.6 | 452.7 | 451.8 | 452.2 | (3.0 | ) | ||||||||||||||||||||||||||
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Total Accesses |
30,381.6 | 30,715.9 | 31,139.0 | 31,353.4 | 31,138.7 | 30,841.7 | 30,441.5 | 30,452.8 | (2.9 | ) | ||||||||||||||||||||||||||
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(1) | Includes fixed wireless and VoIP accesses. |
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07
Key Holdings of the Telefónica Group
(1) | On 2 November 2017, Telefónica de España, S.A. took over Iberbanda, S.A. |
(2) | On 2 November 2017, Telefónica Móviles España, S.A took over Tuenti Technologies, S.L. |
(3) | On 24 October 2017, Telefónica transferred to KKR the 24.8% of Telxius share capital and the remainder 15.2% of the share capital was transferred in the fourth quarter of 2017. |
(4) | After the capital increase carried out on 24 November 2017, Telefónica stake reduced to 0.6%. |
(5) | As of 20 February 2018, stake communicated to CNMV. |
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During 2017, the following changes have been made to the perimeter of consolidation:
| On 13 March 2017, Telefónica increased its shareholding in Telefónica Deutschland Holding AG from 63.2% to 69.2% through a share swap agreement with KPN. Telefónica delivered 72.0m of its treasury shares (representing 1.43% of its share capital), in exchange for 178.5m shares of its subsidiary Telefónica Deutschland Holding AG, representing 6.0% of the share capital of the latter. |
| Additionally, on 20 February 2017, Telefónica reached an agreement for the sale to Taurus Bidco S.à.r.l. of up to 40% of the capital stock of Telxius for 1,275m (12.75 per share). |
| On the 24th of October of 2017, after obtaining all the relevant regulatory approvals, Telefónica transferred to KKR the 24.8% of its share capital. On the 8th of December of 2017, the exchange of the remainder 15.2% of the share capital of Telxius was closed, for an amount of 484.5m. |
| After the transaction, Telefónica maintains control over Telxius. |
| On 30 September 2017, as part of the early termination agreement regarding the contract with Patrimonio Autónomo Receptor de Activos de la Empresa Nacional de Telecomunicaciones (the PARAPAT) Colombia Telecomunicaciones, S.A. ESP (Coltel) acquired control of the Colombian companies Empresa de Telecomunicaciones de Telebucaramanga S.A. ESP (Telebucaramanga), operating from the city of Bucaramanga; Metropolitana de Telecomunicaciones S.A. ESP (Metrotel); and Operaciones Tecnológicas y Comerciales S.A.S. (Optecom), operating in the city of Barranquilla, for an overall price of approximately 147m equivalent on the transaction date. These companies primarily provide fixed telephony, data, pay TV, installation and maintenance services. |
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Alternative performance measures
Information included in compliance with the ESMA Guidelines, 5 October 2015, on Alternative Performance Measures (APM), applicable to published regulated information from 3 July 2016.
The management of the Group uses a series of APM in its decision-making, in addition to those expressly defined in the IFRS, because they provide additional information useful to assess the Groups performance, solvency and liquidity. These measures should not be viewed in isolation or as a substitute for the measures presented according to the IFRS.
The APM included in this report are: Operating Income Before Depreciation and Amortization, Net financial debt and Net financial debt plus commitments, leverage ratio, Free cash flow, Organic result and Underlying result.
Operating income before amortisation (OIBDA)
Operating income before depreciation and amortization (OIBDA) is calculated by excluding solely depreciation and amortization from operating income. OIBDA is used to track the performance of the business and to establish operating and strategic targets of the Telefónica Group companies. OIBDA is a commonly reported measure and is widely used among analysts, investors and other interested parties in the telecommunications industry, although not a measure explicitly defined in IFRS, and therefore, may not be comparable to similar indicators used by other companies. OIBDA should not be considered as a substitute for operating income or cash flow from operating activities.
The detailed reconciliation of Telefónica Groups OIBDA and Operating Income and each of its segments, can be found on this document (Telefónica Group and Segment P&Ls), as well as on the selected financial information contained on https://www.telefonica.com/documents/162467/138879215/rdos17t4-data.zip/96af5b99-318e-be4c-97b2-5c3a0e3a9432 .
The OIBDA is also defined on the financial information published by the Group as of 31st December, 2017 (see particularly Note 2 and Note 5 of the Consolidated Annual Financial Statements of 2017).
Debt indicators
a) Net financial debt and Net financial debt plus commitments
As calculated by us, net financial debt includes: (i) current and non-current financial liabilities in our consolidated statement of financial position (which includes the negative mark-to-market value of derivatives) and (ii) other payables included in Trade and other payables (mainly corresponding to payables for deferred payment of radio spectrum that have a financial component). From these liabilities, the following are subtracted: i) cash and cash equivalents, ii) current financial assets (which include short-term derivatives), iii) the positive mark-to-market value of derivatives with a maturity beyond one year, and iv) other interest-bearing assets (components of Trade and other receivables and Non-current financial assets in our consolidated statement of financial position). The accounts included in the net financial debt calculation recorded in Trade and other payables or Non-current financial assets have a maturity beyond one year and a financial component. In Trade and other receivables we include the customer financing corresponding to the instalments for the next 12 months in connection with terminal sales for a period of more than one year, and Non-current financial assets includes derivatives, instalments for the long term sales of terminals to customers and other long term financial assets.
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January - December 2017
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We calculate net financial debt plus commitments by adding gross commitments related to employee benefits to net financial debt, and deducting the value of long-term assets associated with those commitments and the tax benefits arising from the future payments of those commitments.
We believe that net financial debt and net financial debt plus commitments are meaningful for investors and analysts because they provide an analysis of our solvency using the same measures used by our management. We use net financial debt and net financial debt plus commitments to calculate internally certain solvency and leverage ratios used by management. Nevertheless, neither net financial debt nor net financial debt plus commitments as calculated by us should be considered as a substitute for gross financial debt as presented in the consolidated statement of financial position.
The reconciliation of Telefónica Groups gross financial debt according to the consolidated statement of financial position, net financial debt and net financial debt plus commitments at the end of December 2017 can be found on page 13 of this document and on the financial information contained on https://www.telefonica.com/documents/162467/138879215/rdos17t4-data.zip/96af5b99-318e-be4c-97b2-5c3a0e3a9432. Net financial debt is also defined on the financial information published by the Group as of 31st December, 2017 (see Note 2 of the Consolidated Annual Financial Statements of 2017).
b) Leverage ratio
The leverage ratio is calculated as the ratio of net financial debt over OIBDA for the past 12 months, including or excluding the OIBDA of the companies which are incorporated or removed from the perimeter of consolidation, and excluding certain factors in line with the calculation of organic OIBDA.
The reconciliation of the leverage ratio can be found in the selected financial information contained on https://www.telefonica.com/documents/162467/138879215/rdos17t4-data.zip/96af5b99-318e-be4c-97b2-5c3a0e3a9432.
Free Cash Flow
The Groups free cash flow is calculated starting from Net cash flow provided by operating activities as indicated in the consolidated statement of cash flows; deducting (Payments on investments)/Proceeds from the sale of investments in property, plant and equipment and intangible assets, net, adding the cash received form government grants and deducting dividends paid to minority interests. The cash used to cancel commitments related to employee benefits (originally included in the Net cash flow provided by operating activities) is added as it represents the payments of principal of the debt incurred with those employees.
The definition of free cash flow has been revised so that the cash received from the sale of real estate (which in recent years amounted to 35 million euros in 2015, 8 million euros in 2016 and 8 million euros in 2017) is no longer excluded from the cash flow proceeding from the operations. Cash received from the sale of real estate is included in the (Payments on investments)/Proceeds from the sale of investments in property, plant and equipment and intangible assets, net figure within the free cash flow.
We believe that free cash flow is a meaningful measure for investors and analysts because it provides an analysis of the cash flow available to protect solvency levels and to remunerate the parent companys shareholders and other equity holders (which is why free cash flows do not consider payments to minority interests). The same measure is used internally by our management. Nevertheless, free cash flow as calculated by us should not be considered as a substitute for the various flows of cash as presented in the consolidated statements of cash flows.
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The reconciliation of net cash flow from operations, according to the consolidated statement of cash flows (on a straight-line basis) and the Groups Free cash flow according to the above definition, can be found on the selected financial information contained on https://www.telefonica.com/documents/162467/138879215/rdos17t4-data.zip/96af5b99-318e-be4c-97b2-5c3a0e3a9432. Free cash flow is also defined in the financial information published by the Group as of 31st December, 2017 (see Note 2 of the Consolidated Annual Financial Statements of 2017).
Organic Result
Year-on-year changes referred to in this document as organic or presented in organic terms intend to present a homogeneous comparison, by applying a constant perimeter of consolidation, constant exchange rates and other specific adjustments which are described herein. Organic variations, provide useful information about the evolution of the business due to several factors:
| They provide information on the organic performance of the Groups operations in the different markets in which it operates, by maintaining constant exchange rates and perimeter, removing the impact of certain exogenous factors which may distort the year-on-year comparison since they are specific to a certain moment and not associated with the ordinary performance of the business (such as, for example, capital gains or losses from the sale of companies or restructuring associated to simplification plans and aimed at improving efficiency and future profitability of the Company) and therefore, helping the business performance analysis in homogeneous terms. |
| Organic results are therefore used both internally and by the various agents in the market to conduct consistent monitoring of trends and of the operating performance of the business. Moreover, this data helps the comparison between the business performance of Telefónica and that of other operators, although the term organic is not a term defined in IFRS, and the organic measures included herein may not be comparable to similar measures presented by other companies. |
For the purposes of this document, organic variation 2017/2016 is defined as the reported variation adjusted by the following factors:
| Assumes average constant foreign exchange rates of 2016, excludes the impact of hyperinflation adjustment in Venezuela in both years. |
| Considers a constant perimeter of consolidation. |
| At OIBDA and Operating cash flow levels, excludes write-downs, capital gains/losses from the sale of companies, sale of towers, restructuring expenses and non-recurrent material impacts. |
| CapEx also excludes investment in spectrum. |
Reconciliation between reported data and organic revenue figures, OIBDA and operating cash flow can be found on the selected financial information contained on https://www.telefonica.com/documents/162467/138879215/rdos17t4-data.zip/96af5b99-318e-be4c-97b2-5c3a0e3a9432.
The Management Report contained in the Consolidated Financial Statements for the period ended 31st December, 2017 of Telefónica Group also includes the description of the adjustments for the calculation of the organic variations.
Underlying Result
Underlying results or results in underlying terms and year-on-year changes referred to in this document as underlying or presented in underlying terms intend to present a comparison with the adjustment of certain factors which distort the year-on-year comparison of the business performance. Unlike the organic result, no exchange rate or perimeter adjustments are made to the underlying result. Likewise, the underlying result is
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calculated up to net income, while organic variations are calculated up to the Operating Cash Flow (OIBDA - CapEx). The underlying result and variations, provide useful information for the company and market agents because:
| They provide additional information on the underlying performance of the Groups operations in the different markets, removing the impact of certain factors which distort the year-on-year comparison, as they are specific to a certain moment and not associated with the ordinary performance of the business, and facilitate the underlying analysis of the business. |
| The inclusion of the business underlying performance is used both internally and by the various agents in the market to perform consistent monitoring of trends and operating performance of the business; this data also facilitates the comparison between the business performance of Telefónica and that of other operators, although the term underlying is not a term defined in IFRS, and the underlying measures included herein may not be comparable to similar measures presented by other companies. |
For the purposes of this document, underlying variation 2017/2016 is defined as the reported variation as adjusted by the following factors:
| At OIBDA level, excludes write-downs, capital gains/losses from the sale of companies, sale of towers, restructuring expenses and material non-recurrent impacts. |
| At net income level, amortisation of assets from purchase price allocation processes is also excluded. |
Reconciliation between reported data and OIBDA underlying figures and net can be found on the selected financial information contained on https://www.telefonica.com/documents/162467/138879215/rdos17t4-data.zip/96af5b99-318e-be4c-97b2-5c3a0e3a9432.
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DISCLAIMER
This document may contain forward-looking statements regarding intentions, expectations or forecasts related to the Telefónica Group (hereinafter, the Company or Telefónica). 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, Companys 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 Telefónica 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 Telefónica 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 law, Telefónica 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 Companys 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 in conjunction 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 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 the year 2017 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 security, a solicitation of any offer to purchase, sale or exchange of securities, or a recommendation or advice regarding any security.
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Investor Relations
Distrito Telefónica - Ronda de la Comunicación, s/n
28050 Madrid (Spain)
Telephone: +34 91 482 87 00
Pablo Eguirón ([email protected])
Isabel Beltrán ([email protected])
Gonzalo Borja ([email protected])
www.telefonica.com/accionistaseinversores |
47
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Telefónica, S.A. | ||||||||
Date: February 22, 2018 | By: | /s/ Laura Abasolo García de Baquedano | ||||||
Name: | Laura Abasolo García de Baquedano | |||||||
Title: | Chief Finance and Control Officer. |