UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May, 2023
Commission File Number: 001-09531
Telefónica, S.A.
(Translation of registrant's name into English)
Distrito Telefónica, Ronda de la Comunicación s/n,
28050 Madrid, Spain
+34 91-482 87 00
(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:
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):
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):
Telefónica, S.A.
TABLE OF CONTENTS
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Sequential Page Number |
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1. |
Quarterly Results of Telefónica Group: January- March
2023 |
2 |
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TABLE OF CONTENTS
The financial information related to January-March 2023 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).
The management of the Group uses a series of APM in its
decision-making, in addition to those expressly defined in the
IFRS, as they provide additional information useful to assess the
Group’s performance, solvency and liquidity. These measures should
not be viewed separately or as a substitute for the measures
presented according to the IFRS (see the Appendix “Alternative
performance measures”, page
21
of this document).
Telefónica’s 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 Telefónica’s
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
Telefónica’s 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.
Link to detailed financial and operational data:
click
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx
Results presentation
The management will host a webcast (click
here)
to discuss the results at
10:00am
CET on 11th
May 2023.
For more information, please contact:
Adrián Zunzunegui (adrian.zunzunegui@telefonica.com);
Isabel Beltrán (i.beltran@telefonica.com);
Torsten Achtmann (torsten.achtmann@telefonica.com);
ir@telefonica.com;
Phone: +34 91 482 87 00
https://www.telefonica.com/en/shareholders-investors/
Telefónica
Q1 2023
Financial Results
11th
May 2023
A strong start to 2023
Highlights
•Confirming
positive trends in core markets. Spain
growing service revenue for second Q in a row, commercial momentum
despite tariff upgrades and sequential improvement in OIBDA y-o-y.
Vivo in
Brazil
remains leading mobile contract and fiber, while revenue and OIBDA
accelerated trend y-o-y organic. In
Germany,
good progress in 5G, ~90% pop. by YE 23, while customer service was
awarded a “very good” rating in Connect's hotline test. In
the
UK,
VMO2 continues with its customer momentum and organic revenue
growth improvement y-o-y.
T. Tech
delivers again double-digit revenue growth, whereas
T. Infra
remains focused to deliver the network roll out of the
FiberCos.
T. HispAm
striving for self-sustainability and modulated its exposure to the
region (-28% reduction in capital invested since Dec-19). At
Group
level, Open Gateway initiative presented during MWC ’23, a joint
effort for leading Telcos under GSMA sponsorship. Relevant
regulatory issues open to revision, including in-market
consolidation in Spain (ORA/MM) and OTT contribution to network
investment (consultation open at EU level). Group gaining financial
flexibility, whilst optionality remains open for several
assets.
•Sustained
commercial momentum; building long term trust relationships with
customers (NPS, churn).
◦Total
accesses
+4%
y-o-y; fibre
+16%;
mobile contract
+7%
◦5G
coverage increasing (Spain 85% pop; Germany >82%; UK >2.1k
towns and cities, and Brazil 58 cities)
•Shutdown
of all copper exchanges in Spain as part of full migration to fibre
by April 2024.
◦Reducing
the environmental impact of the fixed network by up to 94% in
Spain
•Revenue
growth ramping-up.
◦All
business lines growing, reported and organic
◦Organic
+4.9% y-o-y and reported +6.7% y-o-y; +1.0 p.p. and +1.3 p.p. vs Q4
22
◦Very
strong B2B revenue performance (+9.0% organic)
◦Service
revenue growing +4.2% organic on pricing actions
•Delivering
resilience through proactive management of
efficiencies.
◦Steady
OIBDA growth (+1.1% organic) despite inflationary
pressures
◦Third
consecutive quarter of underlying OIBDA growth (+2.4%)
•Cash
conversion and smart capital allocation.
◦OIBDA-CapEx
+2.1% organic
◦CapEx
to Sales organic ratio at 11.3%
•Continued
reduction in
net financial debt and leverage
to €26.4bn (ND/OIBDAaL 2.51x), despite FCF
seasonality.
•Conservative
approach to debt refinancing;
>80% of debt at fixed rates; maturities covered over the next
three years; average debt life at 13.2 years; liquidity position of
€21.4bn.
Commenting on the results, José María Álvarez-Pallete, Chairman and
CEO of Telefónica, said:
"We have made a strong start to the year despite ongoing
challenges. We continue to execute on our strategic plan and
delivered another quarter of accelerated revenue growth, both in
reported and organic terms. We have achieved steady organic OIBDA
growth driven by top-line growth and efficiencies. As such, we are
well on track to meet our 2023 financial guidance and I am pleased
to confirm our dividend for 2023.
We continue to prioritise our investments towards growth
opportunities, and we are very satisfied that as a group we have
left behind capital intensity peak. From a capital structure
standpoint, our net debt continues to decline and is now lower than
in Dec-22, which demonstrates the financial strength and the cash
generation of the business.
We have made good progress on our strategy during the quarter and
capitalise on the opportunities we have in front us. Both from a
regulatory point of view, especially in Europe, and from new
industry initiatives like Open Gateway.
Finally, in our mission to help to decarbonise the economy through
digitalisation, we are close to completing our full migration to
fibre in Spain by April 2024, with the potential to reduce the
overall environmental impact of the fixed network by
94%".
Outlook
January-March 2023 Group results on track to meet FY 2023
guidance,
with performance in the first quarter fully in line with management
expectations. Financial targets for 2023 are as follows
(organic1):
•Revenue
+4.9%
y-o-y organic in Q1 23 vs. 2023 target of
"low single digit growth".
•OIBDA
+1.1%
y-o-y organic in Q1 23 vs. 2023 target of
"low single digit growth".
•CapEx
to sales ratio of
11.3%
organic in Q1 23 vs. 2023 target
of around 14%.
Shareholder remuneration confirmed
•The
second tranche of the 2022 dividend
of €0.15 per share in cash to be paid the 15th
June, 2023.
•2023
cash dividend of
€0.30 per share will be paid the 14th Dec-23
(€0.15 per share) and
in June 2024
(€0.15 per share). For the purpose of the second tranche, the
corresponding corporate resolutions will be proposed to the
AGM.
•Reduction
of share capital
through the cancellation of the Company’s own shares (24,779,409)
in
April 2023.
1
Includes 50% of VMO2 JV results. Assumes
constant exchange rates of 2022 (average in 2022). Excludes the
contribution to growth from T. Argentina and T.
Venezuela.
Considers constant perimeter of consolidation and does not include
capital gains/losses from the sale of companies, for significant
impacts. Does not include write-offs, material non-recurring
impacts and restructuring costs. CapEx excludes investments in
spectrum.
Telefónica Group Main KPIs
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Q1 23 |
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Reported
(€m) |
Reported
y-o-y % Chg |
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Revenue |
10,045 |
6.7 |
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OIBDA |
3,121 |
(2.4) |
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OIBDA underlying |
3,145 |
2.4 |
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Net Income |
298 |
(57.9) |
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FCF
(incl. leases principal payments)
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454 |
(11.6) |
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Net Financial Debt
ex-leases
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26,443 |
(3.5) |
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Q1 23 |
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Reported + 50% VMO2 (€m) |
Organic
y-o-y % Chg |
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Revenue |
11,497 |
4.9 |
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OIBDA |
3,634 |
1.1 |
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OIBDA - CapEx
(ex- spectrum)
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2,320 |
2.1 |
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March 23 (thousands) |
y-o-y % Chg |
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Total Accesses |
383,582 |
4.1 |
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o/ w FTTH |
14,768 |
16.3 |
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o/ w Contract |
126,547 |
6.8 |
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o/ w Pay TV |
10,457 |
(4.5) |
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o/ w Wholesale |
26,297 |
6.5 |
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Breakdown Main Financials
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Q1 23 (€m) |
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Reported
y-o-y % Chg |
Organic
y-o-y % Chg |
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Revenue |
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10,045 |
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6.7 |
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Telefónica España |
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3,088 |
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0.3 |
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0.3 |
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Telefónica Deutschland |
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2,101 |
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8.0 |
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8.0 |
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Telefónica Brasil |
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2,282 |
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17.5 |
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12.1 |
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Telefónica Hispam |
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2,238 |
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4.1 |
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1.6 |
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Other companies & eliminations |
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336 |
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14.6 |
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15.9 |
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Revenue + 50% VMO2
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11,497 |
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4.9 |
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VMO2 (100%) |
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2,947 |
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(1.4) |
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3.9 |
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OIBDA |
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3,121 |
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(2.4) |
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Telefónica España |
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1,116 |
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(1.7) |
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(1.7) |
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Telefónica Deutschland |
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621 |
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1.7 |
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1.7 |
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Telefónica Brasil |
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924 |
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14.8 |
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9.5 |
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Telefónica Hispam |
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409 |
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(31.6) |
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(3.9) |
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Other companies & eliminations |
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53 |
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2.1 |
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(23.7) |
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OIBDA + 50% VMO2
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3,634 |
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1.1 |
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VMO2 (100%) |
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1,020 |
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(7.3) |
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1.4 |
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CAPEX (including spectrum) |
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1,049 |
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3.1 |
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Telefónica España |
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342 |
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15.4 |
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8.6 |
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Telefónica Deutschland |
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246 |
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(7.2) |
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(7.2) |
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Telefónica Brasil |
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303 |
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(6.4) |
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(10.3) |
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Telefónica Hispam |
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128 |
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10.5 |
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0.7 |
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Other companies & eliminations |
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30 |
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81.5 |
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80.5 |
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CAPEX (including spectrum) + 50% VMO2
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1,334 |
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(0.7) |
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VMO2 (100%) |
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571 |
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(5.8) |
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1.3 |
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Operational, infrastructure and IT performance
The Group’s
accesses
base rose +4% y-o-y to 383.6m in Mar-23, with FTTH and mobile
contract growing +16% and +7% respectively.
Telefónica continues to advance in its transformation to remain a
technological leader. The new digital world goes through our
network.
The acceleration of the
FTTH and 5G deployment
as well as the
retail copper service switch-off in Spain
targeted for April 2024 remain our focus. This transition
brings
greener technologies;
FTTH is 85% more efficient in energy consumption than copper and 5G
is 90% more energy efficient than 4G per unit of traffic. At the
same time, the environmental impact per PB is 18x lower in FTTH vs
copper and 7x in 5G vs 4G.
We are leaders in
fibre
(optimal carrier for the next 50 years XGS-PON ready). Total
UBB
PPs
+4%
y-o-y to 168.9m (Mar-23) and
FTTH
PPs +15% y-o-y to 66.6m, expanding our footprint and optimising
CapEx and returns.
5G
is available in our core markets. 5G stand-alone is already
launched in Brazil and it will be launched in UK, Germany and Spain
in 2023. 5G coverage
stands at >2,100
towns and cities in the UK, >82% population in Germany, 85% in
Spain and 58 cities in Brazil.
LTE
covers 90% pop. (99% in Europe and 87% in Latam), +3 p.p.
y-o-y.
During 2023, the commercial rollout for the
Open Broadband project
is expected to start in Brazil, as well as the lab tests in the
rest of the markets. Our
Device Development Center
manufactured
51m
CPEs, out of which 13.5m are HGUs (installed for the 95% of our
FTTH customers), and we have started the deployment of its
evolution incorporating WiFi6 (which provides 25% more coverage,
x3.5 speed, 40% more capacity for simultaneous devices). On top of
our in-house CPEs, we create a differential value proposition with
new services owned and from third parties via
Open APIs.
5G network flexibility is underpinned by cloud environments
supporting on-demand Virtual Network Functions (VNF) and Software
Defined Networks (SDN). To achieve it, we progress on the
technological systems evolution,
mobile networks
architecture
with
Open RAN,
fixed networks with
Open Broadband
and virtualisation and softwarisation. In the
Multi Edge Computing,
our strategic advantage leverages key partnerships (Microsoft and
Google), commercial solutions and COs to place Edge and 5G
platforms. 83% of our
processes
are already
digitalised
(+1 p.p. y-o-y).
We plan to commercially launch in 2023 Static
Network Slicing
in our main markets with key B2B customers. As part of the leverage
of our networks assets (NaaS),
we have started the
Open Gateway
Project, in collaboration with the GSMA, testing with developers
and hyper scalers the definition of compelling APIs and their
implementation in our networks. We have already defined and
implemented on some of our main operations (Spain, Brazil and
Germany), 8 of the project APIs (ready for first pre-commercial
testing) and are working on its commercial deployment during
2023.
In line with our
commitment to fighting climate change,
we implement efficiency projects to reduce electricity consumption,
costs, and CO2 emissions. Across our core markets, Peru, and Chile,
100% of the electricity used is renewable.
Elsewhere,
to reduce fuel consumption, we use solar/hybrid energy in some
sites and
increase the procurement of renewable energy through new long-term
PPAs. In parallel, we are reducing energy consumption with
reduction in RAN and legacy switch-off. In Spain, 11 COs were
closed in Q1 23 (2,247 since 2014), as part of the copper migration
targeted for April 2024.
These initiatives are part of the “Sustainable Platform Design”
project. All this is helping us to achieve our
goal of net-zero emissions in 2040,
with an interim target of reducing scope 1+2 emissions by 90% and
neutralising emissions in key markets by 2025.
Financial performance
Income Statement
In Q1 23, FX impact was positive y-o-y, +€136m on revenue and +€47m
on OIBDA, mainly on the Brazilian real evolution. Including 50%
VMO2 results, the FX impact amounted to €54m on revenue and €18m on
OIBDA. On net debt and net debt plus leases, FX had a negative
impact of €0.2bn.
Revenue
grew 6.7% y-o-y to €10,045m in Q1 23. In organic terms, revenue
increased 4.9% y-o-y, with service revenue and handset sales up
4.2% and 10.3% y-o-y respectively.
B2B
revenue
remained a key growth driver for the Group. B2B sales increased
9.0% y-o-y organic and grew at both the Corporate and SME segments.
Strong performance in Brazil (above double digit) and acceleration
in Germany and Hispam (mainly in SMEs). Revenue of the Tech
Companies acquired over the last years (Cancom, Incremental and
BE-terna) also contribute to the growth in the European
footprint.
Other income
reached €284m in Q1 23 vs €637m in Q1 22, which included €0.2bn
from Colombia's Infraco capital gain.
Operating expenses
increased 5.4% y-o-y to €7,202m in Q1 23. The negative FX impact
was partially offset by lower restructuring costs y-o-y (€23m
restructuring in Q1 23, mainly in Hispam). In organic terms, OpEx
increased 4.2% y-o-y mainly due to higher supply costs. Personnel
costs increased y-o-y and were partially offset by lower other
expenses.
Impairments and losses on disposal of assets
amounted to €6m in Q1 23 (€13m in Q1 22).
Operating income before depreciation and amortisation
(OIBDA)
decreased -2.4% y-o-y to €3,121m in Q1 23 mainly reflecting Q1 22
capital gains, partially offset by the positive FX effect and lower
restructuring costs. OIBDA increased 1.1% y-o-y in organic terms
and was up 2.4% in underlying terms.
OIBDA margin
in organic terms was down -1.2 p.p. y-o-y to 32.1% in Q1
23.
Depreciation and amortisation
was 2.0% up y-o-y to €2,151m in Q1 23, +1.5% y-o-y in organic
terms.
Share of profit of investments accounted for by the equity
method
amounted to -€188m in Q1 23 vs +€72m in Q1 22, mainly reflecting
VMO2's results, lower y-o-y primarily due to the change in fair
value of derivatives.
Net financial expenses
reduced -8.8% y-o-y to €266m in Q1 23 thanks to the solid position
at fixed interest rates in strong currencies to face the rise in
rates.
Corporate tax expenses
increased 71.7% y-o-y to €162m in Q1 23, mainly due to an
extraordinary positive impact from the tax provision reversal in
Germany (positive outcome of the tax inspection of Group 3G UMTS),
partially offset by the Colombian’s fiber sale tax effect, both in
Q1 22.
Profit attributable to non-controlling interests
was down -19.0% y-o-y to €57m in Q1 23 mainly due to lower profit
from minority interests from T. Colombia.
Profit attributable to equity holders of the parent company
amounted to €298m in Q1 23 with
earnings per share
of €0.04 (€706m and €0.11 in Q1 22). In underlying terms, net
income totalled €563m (-21.8% y-o-y) with EPS of €0.09 (-23.4%
y-o-y) after excluding -€15m of restructuring and -€250m of other
impacts.
Free Cash flow
Free cash flow
amounted to €454m in Q1 (€513m in Q1 22), reflecting an improvement
in y-o-y organic OIBDA-CapEx and higher dividends received,
partially offset by higher working capital consumption, financial,
tax and lease payments.
OIBDA-CapEx
totalled €2,073m in Q1 23 and increased by +2.1% y-o-y in organic
terms.
CapEx
amounted to €1,049m in Q1 23. It was up 3.1% y-o-y mainly due to FX
moves and higher spectrum (€20m in Q1 23 -in Spain- vs €2m in Q1
22). In organic terms, it was down -0.7% y-o-y with
CapEx/Revenue
at 11.3%.
Working capital
consumed €396m in Q1 23, mainly impacted by recurrent seasonal
effects such as CapEx execution. Compared to Q1 22, working capital
consumption was €150m higher, affected by the seasonality of
CapEx.
Interest
payments
increased 19.2% y-o-y to €667m in Q1 23 due to seasonality effects
and extraordinary payments. The effective cost of debt related
interest payments (L12M) was 3.87% as of Mar-23.
Dividends received
increased to €193m in Q1 23 (vs. €9m in Q1 22) mainly due to €185m
from VMO2.
Tax payments
grew 15.1% y-o-y to €126m in Q1 23 mainly due to the non-refund
taxes in Spain partially offset by lower payments in Brazil and
Colombia in Q1 23.
Dividends paid to minority shareholders
totalled €5m in Q1 23 (€7m in Q1 22).
Lease principal payments
increased +6.2% y-o-y to €623m in Q1 23 mainly due to seasonal
impacts.
Funding and financing
Net financial debt
was down €244m to €26,443m in Q1 23, due to a positive free cash
flow generation of €454m and net financial investment collections
of €407m (mainly related to net proceeds from the recovery of
Telxius tax payments in advance partially offset by the acquisition
of an additional stake in Telxius). Factors that increased net debt
were shareholder remuneration (€324m, including coupon payments of
capital instruments), labour commitment payments (€196m) and other
net factors of €96m (mainly due to higher value in euros of net
debt in foreign currencies).
Net financial debt including lease liabilities decreased -2.8%
y-o-y to €35,061m with stable lease liabilities (-0.5%
y-o-y).
Telefónica raised €1,857m long term financing in Q1, of which
€1,150m at the Group and €707m equivalent at VMO2.
•In
Jan-23, Telefónica launched a green hybrid bond of €1,000m and 7.25
years reset date together with a tender offer for the purchase of
existing hybrid bonds with first call date in Sep-23 and Mar-24. T.
Europe accepted the purchase in an aggregate principal amount of
€1bn. In Feb-23, Telefónica signed a 10-year bilateral loan of
€150m. VMO2 signed a USD 750m sustainable-linked term loan with
maturity in Mar-31.
Telefónica financing activity has allowed the Group to maintain a
solid liquidity position of €21,391m of which €11,819m correspond
to undrawn committed credit lines (€11,029m maturing over 12M) and
maintain long debt maturities with 2023-2026 gross debt maturities
average at €3.0bn, -58% lower vs four-year average at Mar-17. As of
Mar-23, the Group has covered debt maturities over the next three
years and the average debt life stood at nearly 13.2
years.
Telefónica and its holding companies continued their issuance
activity under the Promissory Notes and Commercial Paper Programmes
(Domestic and European), maintaining an outstanding notional
balance of €992m as of Mar-23.
Sustainability performance
Our sustainability objectives are embedded in our business strategy
and aligned with the
UN SDGs.
“E” Environmental: Building a greener future
•Key
targets:
Net-zero emissions
by 2040, including the value chain (interim target: -90% Scope 1+2
in core markets and neutralising 10% unabated emissions by 2025).
Objectives validated by SBTi;
100% renewables
and
zero-waste
by 2030
•Q1
23 progress:
◦Reducing
emissions across the value chain:
final phase of fixed network migration to fibre in Spain, reducing
overall environmental impact per PB (energy and other material
resources) by 94%. Telefónica was ranked by CDP as a Supplier
Engagement Leader (4th
consecutive year) on Scope 3 emissions reduction efforts. (SDG
#13)
◦Development
and use of renewables,
with a further 3 Distributed Generation plants in operation in
Brazil in Q1 23, totalling 51 (85 planned). Additionally, 1 PPA
were signed in Germany. (SDG #7)
◦Circular
economy:
>10k used network units sold to third parties in Q1 23 and
recycling 98% of waste. (SDG #12, #13)
“S” Social: Helping society to thrive
•Key
targets in 2024:
Expand connectivity
with
>90% rural MBB coverage
in core markets;
33% female executives
and
zero adjusted2
gender pay gap
•Q1
23 progress:
◦Connecting
communities
with ongoing 4G/5G and UBB/fibre rollouts,
e.g., >80% pop 5G rollout
in Germany & Spain;
promoting affordability
with expanded eligibility criteria for social tariffs in the UK.
(SDG #1, #9, #10)
◦#1
in Digital Inclusion Benchmark
by World Benchmarking Alliance, for 2nd
consecutive year. (SDG #6, #10)
◦Driving
diversity & inclusion:
first VMO2 UK Gender & Ethnicity Pay Gap report published. (SDG
#5, #8)
“G” Governance: Leading by example
•Key
targets:
Gender parity3
in top governing bodies by 2030;
Zero tolerance of corruption
and
30-35% financing4
linked to sustainability criteria
by 2024
•Q1
23 progress:
◦Implementing
best practices in Corporate Governance,
with all resolutions proposed by the Board approved at the latest
General Shareholder’s Meeting. (SDG #16)
◦Certified
ESG management systems:
ISO 14001 certificates renewed in Hispam (CHL, MEX, PER); ISO 9001
in Mexico; NCh:3262 on gender equality in Chile. (SDG #5,
#13)
◦Financing
linked to sustainability criteria:
Leading the sector with €17bn.
2
Adjusted pay gap: equal pay for jobs of equal value
3
Parity defined as not less than 40% of each
gender represented
4
Financing linked to sustainability criteria
includes balance sheet debt, hybrids and undrawn committed credit
lines based on ICMA sustainable bond principles, LMA Sustainability
Linked Loan Principles and other ESG criteria. Not necessarily
linked to EU Taxonomy aligned activities
TELEFÓNICA ESPAÑA
(y-o-y changes in organic terms)
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27% |
of total Telefónica Q1 23 revenue
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31% |
of total Telefónica Q1 23 OIBDA |
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34% |
of total Telefónica Q1 23 OIBDA-CapEx |
|
Weights calculated with revenue, OIBDA and CapEx (ex spectrum) with
50% of the VMO2 JV
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Key messages
•Improved
commercial activity in the quarter despite tariff
upgrade
•Growth
y-o-y in fixed broadband accesses for the first time in 4 years and
a new drop in convergent churn
•Improved
year-on-year service revenue growth and OIBDA trend
Operating performance
T. España's
results in Q1 23 confirmed the recovery shown in recent years, both
commercially and financially, with positive net adds in the higher
value accesses and improved y-o-y revenue and OIBDA trends. Service
revenue accelerated its growth to 1.0% y-o-y and the decline in
OIBDA slowed to -1.7% y-o-y. In a quarter with tariff repositioning
(+6.8% on average in Movistar products since mid-January), the
quality of the offer in a rational competitive environment has
allowed convergent churn to continue to reduce in a still complex
macro environment.
Likewise, our commitment to
sustainability
continues to promote products and services that reduce
environmental impact. In March 2023 we launched an offer of
refurbished Movistar handsets that contribute to the circular
economy, and Eco Smart services already account for nearly 60% of
the portfolio in the business segment. In line with its social
commitment, Telefónica and Fundación ONCE renewed the
Inserta Agreement,
promoting the incorporation of people with disabilities in the
Company.
Accesses
(stable y-o-y) increased in Q1 23 vs. Q4 22. Both FBB and mobile
contract posted its best quarterly performance since the end of
pandemic (Q3 20). Net adds in fixed broadband for the 4th straight
quarter (21k) led to year-on-year growth for the first time since
Q2 19 (+1%), while mobile contract posted net adds for the 3rd
consecutive quarter (23k).
Fibre
also accelerated its growth rate (+119k accesses; +80k retail) and
now accounts for 89% of broadband customers out of a coverage of
28.3m premises passed as of Mar-23, reaching an uptake of 30%. TV
accesses (-49k) were impacted by the increased presence of O2 in
the base and the continued decline of satellite-only
customers.
Convergent customers
(-1% y-o-y) confirmed their improving trend (-5k in Q1 23) despite
the repositioning of tariffs in January, thanks to "miMovistar"
portfolio, which continues to perform well and now accounts for
more than 30% of the convergent base. ARPU reached 92.6€ and grew
again (+1.7% y-o-y), while churn, despite the price upgrade,
improved sequentially to 0.9% (-0.1
p.p.)
and year-on-year (-0.4 p.p.).
Financial performance
Revenue
continued to grow year-on-year (+0.3% in Q1 23; +0.2% in Q4 22)
thanks to the acceleration in service revenue (+1.0% in Q1 23;
+0.6% in Q4 22), supported by the stronger retail revenue (+1.7%
y-o-y; +0.8 p.p. vs Q4 22) and driven by the repositioning of
tariffs, the improved commercial activity and IT revenues which
maintained double-digit growth, and despite the lower wholesale
revenue from football since mid Q3 22. Handset sales declined
-14.0%
y-o-y
(-8.0% in Q4 22), maintaining an absolute level similar to that of
Q4 22.
OIBDA
confirmed its recovery trend (-1.7%
y-o-y,
+0.4 p.p. vs. Q4 22), mainly due to the higher growth in service
revenues and the better evolution of costs, reflecting lower energy
costs, the elimination of the fee to finance public TV and lower
content costs (World Cup in Q4 22), and despite the increase in
personnel costs. OIBDA margin stood at 36.1% (-0.7 p.p.
y-o-y).
CapEx
(+8.6%
y-o-y)
remained focused on the rollout of 5G and FTTH (retail copper
switch-off in April 2024), while
OIBDA-CapEx
declined 5.4%
y-o-y,
leaving a cash margin of 25.1%.
TELEFÓNICA DEUTSCHLAND
(y-o-y changes in organic terms)
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18% |
of total Telefónica Q1 23 revenue
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17% |
of total Telefónica Q1 23 OIBDA |
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16% |
of total Telefónica Q1 23 OIBDA-CapEx |
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Weights calculated with revenue, OIBDA and CapEx (ex spectrum) with
50% of the VMO2 JV
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Key messages
•Good
commercial traction on back of strong own brand momentum, +368k
contract and +25k fixed BB net adds
•Sustained
financial performance with continued healthy revenue & OIBDA
growth
•Excellent
progress of 5G roll-out within normalized CapEx envelope; well on
track for ambition of ~90% by YE 23
Operating performance
Telefónica Deutschland
had a robust start to the year, delivering another Q of good
commercial traction on strong own brand performance. At the same
time, the company implemented its ‘more-for-more’ strategy across
all brands and portfolios; most importantly with the launch of the
new ‘O2
Mobile’ portfolio in April. The new tariffs include higher data
volumes and/or higher speeds while being on average priced at ~10%
higher price points.
T. Deutschland’s customer service team achieved a ‘very good’
rating in the recent connect magazine’s hotline test and widened
the gap vs the third placed German MNO. In parallel, the company
made good progress with its 5G network roll-out with a focus on
network densification both, in cities and rural areas, to further
improve the 5G customer experience. In Q1 23, ~1k of additional 5G
sites went live, taking T. Deutschland’s 5G pop coverage to
>82%; well on track to deliver ~90% of 5G pop coverage by
year-end 2023.
T. Deutschland again improved its S&P score (65/100 in 2023 vs.
57/100 in 2022) and ranks in the TOP 12% of the 181 telecoms
companies surveyed worldwide. Top score and leader in industry
comparison in the Social and Environmental Reporting
categories.
Mobile contract
delivered
+368k net adds (+287k in Q1 22; +264k in Q4 22), with the continued
high O2
brand appeal driving gross add momentum. Contribution of partner
brands remained solid. Churn rates returned to low levels achieved
prior to the EECC implementation in the German market.
O2
contract churn improved 0.2 p.p. y-o-y to very low rates of 1.0% in
Q1 23, reflecting commercial success (network and service quality
and strong brand attractiveness).
O2
contract ARPU
was up +0.5% vs. Q1 22 due to the popularity of high value tariffs
while slightly offset by the further reduction of MTRs as of 1
January 2023.
Mobile prepaid
recorded 353k net disconnections (-100k in Q1 22) driven by usual
seasonality in combination with the ongoing German market trend of
prepaid to postpaid migration.
Fixed broadband
delivered +25k net adds (-10k in Q1 22) reflecting the ongoing
success of T. Deutschland’s technology agnostic
O2
my Home tariff portfolio and churn returning to the low levels
reported prior to the EECC implementation in the German
market.
Financial performance
Revenue
posted strong growth at +8.0% y-o-y in Q1 23 (+6.6% y-o-y in Q4 22)
driven by sustained mobile revenue momentum (+8.6% y-o-y) on the
back of strong own-brand performance and a solid contribution from
partners, more than offsetting the negative impact from the MTR
glidepath. Handset sales had another record Q, +23.6% y-o-y in Q1
23 (+3.4% in Q4 22) fuelled by ongoing customer demand for 5G
enabled devices and good availability of high value handsets in
combination with an ongoing trend towards longer-term
‘O2
myHandy’ contracts.
OIBDA
up +1.7% y-o-y in Q1 23 (+6.6% y-o-y in Q4 22). Improved
operational leverage mainly in mobile was partly offset by
anticipated inflationary cost pressures versus Q1 22 which e.g.
still benefited from energy supplies at prior year pricing. As a
result,
OIBDA margin
stood at 29.5% (-1.8 p.p. y-o-y), mainly on the particular strong
growth of broadly margin neutral handset revenues.
Post the successful completion of its 3-year ‘investment for
growth’ programme, T. Deutschland returned to a normalised
CapEx/Sales. Q1 23
CapEx
-7.2% y-o-y with a CapEx/Revenue ratio of 11.7%.
Consequently,
OIBDA-CapEx
was up 8.6% y-o-y in Q1 23 and
OIBDA-CapEx/Revenue
reached 17.8%, +0.1 p.p. y-o-y.
Virgin Media - O2 UK
(100% of VMO2, y-o-y changes in organic terms)
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13% |
of total Telefónica Q1 23 revenue
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14% |
of total Telefónica Q1 23 OIBDA |
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10% |
of total Telefónica Q1 23 OIBDA-CapEx |
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Weights calculated with revenue, OIBDA and CapEx (ex. spectrum)
with 50% of the VMO2 JV
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Key messages
•Revenue
growth of +3.9%: underpinned by Nexfibre contribution and mobile
revenue growth
•Resilient
trading performance with a growing customer base of 58m (+3%
y-o-y)
•We
remain on track to deliver over 50% of run-rate £540 million
synergies by YE 23
Operating performance
Virgin Media O2
(VMO2) has delivered a solid first quarter, with a resilient
trading performance and accelerated long term growth drivers. The
Company has continued its integration, with the start of the
migration of Virgin Mobile customers to O2, which is targeted to
complete by YE 23. Q1 23 was the first full quarter of network
rollout on behalf of Nexfibre, and delivery is being prepared to
ramp up through the year.
The fixed footprint deployment advanced, continuing to connect
communities, with 108k PPs in Q1 23. The upgrade of the existing
network to full fibre continues to be on track.
VMO2, supporting humanitarian charity Jungala, helped provide
internet connectivity to aid the relief efforts in the countries
impacted by the earthquake in Turkey. For customers, the
eligibility for the Essential Broadband social tariff was extended,
which increased accessibility and allowed 9.7m people access to
broadband at a reduced price of £12.50. Access to mobile was also
stepped up, with the opening of the 100th National Databank with
Good Things Foundation.
The
contract mobile base
declined by 21k in Q1 23 (+11k in Q1 22), driven by seasonal
increased activity at the lower end of the market while
O2 mobile contract churn
was stable y-o-y and remained at low levels of just
1.0%.
In Q1 23,
IoT accesses
grew by +425k (+364k in Q1 22), contributing to an overall mobile
base growth.
Fixed broadband net additions
totalled +29k in Q1 23 (-1k in Q1 22), driven by the continued
demand for fast and reliable connectivity.
Financial performance
Revenue
grew by 3.9% y-o-y in Q1 23 (+0.4% y-o-y in Q4 22), with +3.4%
y-o-y increase in mobile revenue (+1.8% in Q4 22) driven by a rise
of 8.3% y-o-y in handset sales and a continuation of service
revenue growth. Fixed revenue declined -4.8% y-o-y in Q1 23 (-2.2%
y-o-y in Q1 22) due to a lower ARPU alongside continued decline in
B2B. The sequential improvement has been impacted by an increase in
other revenue, driven by Nexfibre.
OIBDA
grew by 1.4% y-o-y in Q1 23 (+9.9% y-o-y in Q4 22), with key driver
of growth for the period being the realisation of synergies
partially offset by energy costs. The sequential slowdown in y-o-y
variation was due to worse comparables in marketing costs and
Virgin Mobile MVNO base migration. In addition, our fixed price
rise will be effective in Q2 23 whereas last year it took place in
Q1 22.
OIBDA margin
stood at 34.6% in Q1 23 (-0.9 p.p. y-o-y).
CapEx
increased 1.3% y-o-y in Q1 23 as the Company continued to invest in
its fixed and mobile infrastructure. As a result,
OIBDA-CapEx
was up 1.4% y-o-y with
OIBDA-CapEx/Revenue
down -0.4 p.p y-o-y to 15.2%.
TELEFÓNICA BRASIL
(y-o-y changes in organic terms)
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20% |
of total Telefónica Q1 23 revenue
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25% |
of total Telefónica Q1 23 OIBDA |
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27% |
of total Telefónica Q1 23 OIBDA-CapEx |
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Weights calculated with revenue, OIBDA and CapEx (ex. spectrum)
with 50% of the VMO2 JV
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Key Messages
•Mobile
market share of 39.0% (+1 p.p. since Oi mobile assets acquisition;
43.7% in contract, +2 p.p.)
•Acceleration
in revenue growth to 12.1% y-o-y (the highest in the last 10
years)
•OIBDA-CapEx
grew 22.7% y-o-y, reflecting revenue performance and CapEx
decline
Operating performance
On ESG,
Vivo
is recognised as Supplier Engagement Leader by the CDP, thanks to
actions like Supply Chain Carbon Programme, which has involved more
than 100 partners with CO2 intensive operations.
In addition, the commitment to the environment has been reinforced,
with the inauguration of 3 new renewable energy plants, already
reaching 51, in line with the target of 85 in the scope of the
Distributed Generation Programme.
Vivo continued to strengthen its ecosystem of B2C services,
highlighting financial services (mainly thanks to Vivo Money and
insurance) and Video OTT, which already has more than 2m
subscriptions. Additionally, the Vida-V (health and well-being) and
Viva E (e-learning) services launched in March 2023 are already in
operation.
T. Brasil
accesses
grew +12% year-on-year thanks to contract accesses (+15%) and FTTH
(+17%).
In
mobile,
Vivo continues increased tariffs progressively in a more rational
environment. Contract churn fell to historically low levels of 1.1%
(-0.1 p.p. y-o-y). In March, 0.5m of inactive prepaid accesses
acquired from Oi were disconnected, with no impact on
revenue.
In
fixed,
the Company strengthened its leadership thanks to its quality value
proposition and differential fibre services. FTTH connections
reached 5.7m, 17% more than in Mar-22 thanks to the deployment of
FTTH PPs (24.4m, 4m PPs passed in LTM); up-take remains stable
y-o-y at 23%.
Financial performance
Revenue
growth y-o-y accelerated to double-digit for the fourth consecutive
quarter (+12.1% Q1 23 vs. +10.1% in Q4 22) thanks to higher
accesses, progressive tariff upgrades and the good performance of
digital services.
Digital B2B revenue accounted for more than 6% of total revenues in
Q1 23. Mobile revenue increased 16.3% y-o-y, due to service revenue
(+15.9% y-o-y) and handset sales (+20.6% y-o-y) while fixed revenue
grew +3.5% y-o-y, the highest rate since Q3 15.
OIBDA
grew 9.5% in Q1 23 (+6.6% in Q4 22) thanks to revenue growth and
the boost from efficiencies that offset higher expenses associated
with lower margin services such as digital services and handset
sales.
OIBDA margin
stood at 40.5% (-0.9 p.p. vs. Q1 22).
CapEx
in Q1 23 was 10.3% lower y-o-y, in line with the target of bringing
it down below BRL9bn by 2023, and
OIBDA-CapEx
up 22.7% y-o-y.
TELEFÓNICA TECH
(y-o-y changes)
Key messages
•Continued
market outperformance supported by larger scale and
capabilities
•Double-digit
revenue growth ambition for 2023
•Strong
market position supported by new recognition from clients,
strategic partners, and Industry Analysts
T. Tech
continued to deliver outstanding growth in Q1 23, proving the
benefits of its consolidation as a leading provider of NextGen
solutions, with large scale and differential capabilities. The
company’s main asset is its people, and therefore it is committed
to growing their skill sets, whilst also attracting and retaining
the best talent.
Its highly
skilled and diversified team
of ~6.2k professionals (>60 nationalities, ~4k certifications in
strategic partners’ technologies) mostly located in Europe (~80%)
provides a
differential customer journey
across its hubs in Spain, UK, Central Europe & Americas. This
allows T. Tech to deliver a trustful migration from traditional
comms & IT services to NextGen IT solutions. Leveraging T.
Tech,
Telefónica’s position in the B2B large global deals category has
improved,
to enter the first division of telcos providing IT services, after
years of steady progress from a regional player to a super-regional
operator (according to the
OMDIA's
Telco Global Services Outlook 2023).
T. Tech has an
excellent track record in delivering innovative IT
solutions and services while exceeding customer expectations. Its
capabilities were recognised in Q1 23 by key partners such
as
Checkpoint
(“Relevant Partner of the Year awards”),
Genesys
and
Netskope,
and also by Industry Analysts like
GlobalData
(“Managed Security Services” and” Private LTE/5G Network
Services”),
Cloudtango
(“Listed in Global 100 Managed Service Providers“) and
Frost Radar
(Listed in TOP 12 Americas Managed Security
Services”).
Operating performance
Commercial performance maintained a positive trend (bookings c.
+40% in the L12M) and generated a solid funnel.
T. Cybersecurity & Cloud Tech:
•Solid
commercial activity
with strong growth in the European footprint (+4.5k new contracts
in Q1 23).
•Reinforced
credentials
by increasing partners’ accreditations: from
Google Cloud
“Distinction as Partner Specialised in Application Development and
Infrastructure”; from
AWS
“AWS Partner Network Certification Distinction”.
•Pilot
of
AWS Wavelength Zone
in Madrid. This pilot allows companies to easily test use cases
that require low latency, which is provided by the integration of
AWS compute and storage services in facilities located at the Edge
of Telefónica’s network.
T. IoT & Big Data Tech:
•Strong
commercial momentum
on high demand from Utilities, Mobility, Retail, and Public
Sector.
•New
partnerships:
with
AWS
to offer solutions of “Integrated Private Wireless” in the frame of
Edge & 5G automation (to optimize customers’ operations);
with
Hitachi Vantara
(to create a pool of operational and IT capabilities) and
with
expert.ai
(for digital transformation through natural language
processing).
•Showcased
innovative solutions at MWC 2023;
Industry 4.0 Digital Twin, Smart Agro, AI Video Analytics and
Computer Vision alongside AWS.
Financial Performance
Revenue
reached €429m in Q1 23, growing +43.5% y-o-y (+27% in constant
perimeter, more than twice the market growth). T. Tech is
increasing its scale and progressively transforming its revenue
mix, as reflected in the increased weight of revenue from managed
& professional services and own platforms, and the improved
geographic profile (>85% revenues from hard currency
countries).
Revenues from both
T. Cybersecurity & Cloud Tech and T. IoT & Big Data
Tech
outperformed the market and reached
€372m (+39.1% y-o-y) and €59m (+82.4% y-o-y),
respectively.
TELEFÓNICA INFRA
Key Messages
•Consolidating
leadership in FibreCos and critical infrastructure
•Execution
and growth on fibre vehicles already covering
15m5
PPs in underserved and/or low-density areas
•Telxius'
robust financial performance with the fifth quarter in a row
growing OIBDA6
by +6.0% in Q1 23 y-o-y org
Operating performance
T. Infra: Boosting inclusive and sustainable progress
T. Infra combines the best infrastructure portfolio, with
investments in high demand assets including fibre to the home, data
centres and submarine cable. It leverages on Telefónica’s scale and
experience to deploy telco infrastructure, accelerating the reach
of digital networks within the Group’s footprint whilst providing
long-term investors a compelling proposition in the digital and
green realm.
In Spain,
Bluevía
(Vauban/CAA consortium 45%, T. Infra 25% and T. España 30%),
deployment is progressing as planned and has already met more than
80% of its target to pass 5m FTTH PPs by YE 2024. Bluevía is
successfully driving digital development by using fibre to connect
businesses and people throughout Spain.
In Germany,
Unsere Grüne Glasfaser (UGG)
(Allianz 50%, T. Infra 40% and T. Deutschland 10%), continued to
promote MoU sign-ins, with more than 870k premieses as of end of
Mar-23, while projects under construction are
increasing.
In the UK,
Nexfibre
(InfraVia Capital Partners 50%, T. Infra 25% and Liberty Global
25%), since its closing on Dec-22, is scaling up the team,
processes, and interaction with VMO2 whilst executing its
deployment strategy as planned (target of 5m premises with FTTH by
2026 and option to expand to an additional c. 2m).
In Brazil,
FiBrasil
(CDPQ 50%, T. Infra 25% and T. Brasil 25%) reached 4.3m PPs as of
Mar-23, is present in 151 cities in 22 Brazilian states and is
providing connectivity through shared network infrastructure with
best-in-class quality standards.
ONNET Fibra Chile
(KKR 60% and T. Chile 40%) and
ONNET Fibra Colombia
(KKR 60% and T. Colombia 40%) are the largest neutral wholesale
FTTH providers in their respective countries. In Chile (initial
3.5m PPs target reached in Q3 22 ahead of time), was increased to
3.7m PPs in Mar-23. The regulatory and competition approvals to
close the agreement with Entel are expected in H2 23. In Colombia,
the InfraCo continues to exceed expectations by passing 2.6m
PPs.
Nabiax
(Asterion Industrial Partners 80% and T. Infra 20%) continued
focused on growth, leveraging on its top tier data centres and
being a benchmark for Hyperscalers in the country.
Telxius: Next-Generation Subsea Cables
Early in the quarter,
Telxius
and América Móvil announced the deployment of Tikal (by Telxius), a
new ultrahigh capacity subsea cable to link Guatemala and the US,
featuring an initial estimated capacity of 190 Tbps. The cable
serves a key route in the Caribbean with the highest levels of
service, reliability, and security. The supply contract is already
in force with ASN and provides options to increase capacity and to
incorporate additional branching units to serve other destinations.
Since 2018, Telxius has added 7 new generation subsea cables on
both sides of the Atlantic to its network, increasing its footprint
from around 31,000km to more than 82,000km. This improves the ratio
of services delivered on its own infrastructure, reaching more than
80% in the last 12 months, which facilitates the management of
services that guarantee a better quality for its
clients.
During Q1 23,
Telxius
posted healthy financials, with revenue growing +4.7% y-o-y
organically (+8.4% reported) and OIBDA growth of +6.0% organic
(+10.4% reported) thanks to continuous cost management, delivering
an OIBDA margin of 54.2% (+0.7 p.p. y-o-y organic). Traffic
increased by +15% y-o-y (+7 p.p. vs Q1 22) during the same
time.
5
Included in the total Group´s FTTH
PPs
6 Constant
perimeter (excluding Tower business)
TELEFÓNICA HISPAM
(y-o-y changes in organic terms)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19% |
of total Telefónica Q1 23 revenue
|
|
11% |
of total Telefónica Q1 23 OIBDA |
|
12% |
of total Telefónica Q1 23 OIBDA-CapEx
|
|
Weights calculated with revenue, OIBDA and CapEx (ex. spectrum)
with 50% of the VMO2 JV
|
Key Messages
•Differential
and sustainable growth model, focused on digital services and
profitability
•Revenue
+1.6% and OIBDA -3.9% y-o-y impacted by Chile (FiberCo model and
increased commercial activity)
•Better
evolution of OIBDA expected in H2 23; ambition to grow in 2023 in
OIBDA-CapEx
Operating performance
T. Hispam keeps people at the core of its strategy and thus
continues to seek viable and long-term alternatives to advance
digitalisation, affordable and quality connectivity in the
countries of the region.
In
mobile,
growth in contract accesses in main countries continued, mainly in
Mexico (+13% y-o-y) and Colombia (+7%).
In
fixed,
strong growth of FTTH connections (186k in Q1 23) was maintained,
mainly due to the deployment of the InfraCos in Chile and Colombia.
PPs passed with FTTH amounted to 17.6m after deploying 4m in the
last twelve months.
Chile's InfraCo, which reached the initial target of 3.5m PPs in Q3
22 with FTTH and already reached 3.7m PPs. The Company expects to
obtain the approval of the Chilean competition agency to close the
agreement with Entel during 2H 23 (+1.2m PPs with FTTH from Entel
as well as a wholesale agreement between both companies). In
Colombia, the InfraCo continues to beat initial expectations and
reached 2.6m PPs with FTTH. Furthermore, both companies continue to
make progress in reaching wholesale agreements, thus increasing
their profitability (Direct TV and Entel in Chile and Liwa in
Colombia).
Financial performance
Revenue
grew 1.6% y-o-y in Q1 23 driven by handset sales (+3.7%) and
service revenue (+1.2%) thanks to the good performance in Colombia
(+9.1%) and in Chile (+6.4%). Revenue in reported terms up +4.1%,
positively impacted by the y-o-y appreciation of the main Latin
American currencies.
OIBDA
fell 3.9% in Q1 23 mainly because of Chile and to a lesser extent
Peru. Chile's performance reflected the increased commercial
activity and the FiberCo business model (higher OpEx, linked to the
acceleration of the growth of the FTTH accesses, and lower CapEx).
The rest of the countries posted y-o-y OIBDA growth.
The y-o-y reported OIBDA in Q1 23 was impacted by the capital gain
associated with the sale of 60% of InfraCo in Colombia (+€184M) in
Q1 22. Likewise in Q1 23, €22m of personnel restructuring expenses
have been recorded in Argentina (-€41m in Q1 22 also in
Argentina).
OIBDA margin
stood at 18.3% in Q1 23 (-1.1 p.p. y-o-y).
OIBDA-CapEx
decreased by 5.6% as a result of lower OIBDA with CapEx stable
(+0.7%).
Evolution by Country
•Chile:
Revenue growth accelerated y-o-y to 6.4% thanks to the FBB
differential value proposition (95% of total FBB accesses), B2B
projects and the tariff update in Q1 23. OIBDA declined -15.5%
y-o-y was affected by higher commercial expenses and the FiberCo
business model.
•Perú:
Results are impacted by the difficult social and economic backdrop
and the competitive environment. Revenue declined -8.2% y-o-y and
OIBDA -3.3% (cost efficiency measures partially reduced the impact
of lower revenue). In the context of the recent rains emergency in
the northern and central coast of Peru, the company activated its
Contingency Plan, providing the necessary resources to ensure
service.
•Colombia:
Revenue and OIBDA growth of +9.1% and +1.3% y-o-y respectively
thanks to sustained commercial momentum in value accesses, tariff
increases and digital businesses despite the commercial impact on
operating expenses. First company in Colombia to achieve for the
second time the Equipares Gold Seal certification (eliminating wage
and employment discrimination against women).
•México:
Strong commercial performance, mainly in contract (accesses +13%
y-o-y), led to revenue growth of +1.5% despite lower
interconnection tariffs. OIBDA (+13.4% y-o-y) was impacted by the
last mile capacity access agreement (100% of traffic migrated since
Q3 22 vs. 61% in Q1 22) and by the savings associated with the
access network shutdown. The Company ranks first in the sector in
the MERCO ESG Reputation Monitor for environmental, social and
corporate governance management.
•Argentina:
Maintained good commercial performance, mainly in contract and FTTH
in a more rational market environment. Revenue growth accelerated
y-o-y to +82.6% in local currency in Q1 23 and OIBDA grew +68.1%.
The Company reached 1m accesses connected with fibre. At MWC,
Movistar was recognised as the fastest internet service provider in
Argentina (Speedtest Award from Ookla, global leading network
tester). Q1 23 concluded with 53 people with disabilities in the
workforce.
APPENDIX
Selected consolidated financial statements
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|
TELEFÓNICA CONSOLIDATED INCOME STATEMENT |
|
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|
|
|
|
|
|
|
|
|
Unaudited figures (Euros in millions) |
|
Q1 23 |
Q1 22 |
|
y-o-y % Chg Reported |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
10,045 |
9,410 |
|
6.7 |
|
|
|
|
|
|
Other income |
|
284 |
637 |
|
(55.4) |
|
|
|
|
|
|
Operating expenses |
|
(7,202) |
(6,836) |
|
5.4 |
|
|
|
|
|
|
Impairments & losses on disposal of assets |
|
(6) |
(13) |
|
(54.7) |
|
|
|
|
|
|
Underlying operating income before D&A (OIBDA) |
|
3,145 |
3,071 |
|
2.4 |
|
|
|
|
|
|
Operating income before D&A (OIBDA) |
|
3,121 |
3,199 |
|
(2.4) |
|
|
|
|
|
|
OIBDA Margin |
|
31.1 |
% |
34.0 |
% |
|
(2.9 p.p.) |
|
|
|
|
|
|
Depreciation and amortisation |
|
(2,151) |
(2,109) |
|
|
2.0 |
|
|
|
|
|
|
Operating income (OI) |
|
970 |
1,090 |
|
(11.0) |
|
|
|
|
|
|
Share of profit (loss) of investments accounted for by the equity
method |
|
(188) |
72 |
|
c.s. |
|
|
|
|
|
|
Net financial income (expense) |
|
(266) |
(292) |
|
(8.8) |
|
|
|
|
|
|
Profit before taxes |
|
516 |
870 |
|
(40.7) |
|
|
|
|
|
|
Corporate income tax |
|
(162) |
(94) |
|
71.7 |
|
|
|
|
|
|
Profit for the period |
|
354 |
776 |
|
(54.4) |
|
|
|
|
|
|
Attributable to equity holders of the Parent |
|
298 |
706 |
|
(57.9) |
|
|
|
|
|
|
Attributable to non-controlling interests |
|
57 |
70 |
|
(19.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares outstanding during the
period (millions) |
|
5,682 |
5,769 |
|
(1.5) |
|
|
|
|
|
|
Basic earnings per share attributable to equity holders of the
Parent (Euros) |
|
0.04 |
0.11 |
|
(64.0) |
|
|
|
|
|
|
Underlying basic earnings per share attributable to equity holders
of the Parent (Euros) |
|
0.09 |
0.12 |
|
(23.4) |
|
|
|
|
|
- The weighted average number of ordinary shares outstanding during
the period has been obtained applying the IAS rule 33 "Earnings per
share". Thereby, the weighted average of shares held as treasury
stock have not been taken into account as outstanding shares. On
the other hand, the denominator is retrospectively adjusted for
transactions that have changed the number of shares outstanding
without a corresponding change in resources (as if such
transactions had occurred at the beginning of the earliest period
presented).
For instance, the bonus share issue carried out to meet the scrip
dividends paid in
June 2022, were
taken into account.
- Basic 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”
(€66m in Q1 23 and €51m in Q1 22), by the weighted average number
of ordinary shares outstanding during the period.
|
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|
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|
|
|
|
|
|
|
|
|
|
|
TELEFÓNICA CONSOLIDATED STATEMENT OF FINANCIAL POSITION |
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
Unaudited figures (Euros in millions) |
Mar 23 |
|
Dec 22 |
|
% Chg vs. Dec |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets |
86,635 |
|
|
87,053 |
|
|
(0.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets |
11,721 |
|
|
12,017 |
|
|
(2.5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
18,611 |
|
|
18,471 |
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
23,628 |
|
|
23,714 |
|
|
(0.4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rights of Use |
8,378 |
|
|
8,279 |
|
|
1.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments accounted for by the equity method |
11,330 |
|
|
11,587 |
|
|
(2.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial assets and other non-current assets |
8,130 |
|
|
8,101 |
|
|
0.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets |
4,837 |
|
|
4,884 |
|
|
(1.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
21,692 |
|
|
22,589 |
|
|
(4.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories |
1,611 |
|
|
1,546 |
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables and other current assets |
9,119 |
|
|
9,134 |
|
|
(0.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax receivables |
1,373 |
|
|
2,213 |
|
|
(37.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other current financial assets |
2,245 |
|
|
2,444 |
|
|
(8.1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
7,337 |
|
|
7,245 |
|
|
1.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets and disposal groups held for sale
|
7 |
|
|
7 |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets = Total Equity and Liabilities |
108,327 |
|
|
109,642 |
|
|
(1.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
30,121 |
|
|
31,708 |
|
|
(5.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to equity holders of the parent and other
holders of equity instruments |
24,033 |
|
|
25,088 |
|
|
(4.2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity attributable to non-controlling interests |
6,088 |
|
|
6,620 |
|
|
(8.0) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities |
53,818 |
|
|
54,834 |
|
|
(1.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current financial liabilities |
33,978 |
|
|
35,059 |
|
|
(3.1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current lease liabilities |
6,610 |
|
|
6,657 |
|
|
(0.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables and other non-current liabilities |
3,751 |
|
|
3,546 |
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities |
3,081 |
|
|
3,067 |
|
|
0.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current provisions |
6,397 |
|
|
6,505 |
|
|
(1.7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
24,388 |
|
|
23,100 |
|
|
5.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current financial liabilities |
4,207 |
|
|
4,020 |
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current lease liabilities |
2,035 |
|
|
2,020 |
|
|
0.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payables and other current liabilities |
15,011 |
|
|
13,509 |
|
|
11.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current tax payables |
1,655 |
|
|
1,920 |
|
|
(13.8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current provisions |
1,480 |
|
|
1,631 |
|
|
(9.3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities associated with non-current assets and disposal groups
held for sale
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- The consolidated statement of financial position includes a
positive value of the derivatives portfolio for a net amount of
€1,119m, €2,195m included as financial liabilities and €3,314m
included as financial assets.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TELEFÓNICA CONSOLIDATED CASH FLOW STATEMENT |
|
|
|
|
|
|
|
|
|
|
Unaudited figures (Euros in millions) |
|
Q1 23 |
Q1 22 |
y-o-y % Chg |
|
|
|
|
|
|
|
|
|
|
|
|
Cash received from operations |
|
12,070 |
|
11,434 |
|
|
|
Cash paid from operations |
|
(9,169) |
|
(8,770) |
|
|
|
Net payments of interest and other financial expenses net of
dividends received |
|
(474) |
|
(551) |
|
|
|
Taxes proceeds/(paid) |
|
(126) |
|
(110) |
|
|
|
Net cash flow provided by operating activities |
|
2,301 |
|
2,003 |
|
14.9 |
|
|
|
|
|
|
(Payments)/proceeds on investments in property, plant and equipment
and intangible assets, net |
|
(1,402) |
|
(1,104) |
|
|
|
Proceeds on disposals/ (payments on investments) in companies, net
of cash and cash equivalents disposed |
|
948 |
|
91 |
|
|
|
Proceeds/(payments) on financial investments and placements of cash
surpluses not included under cash equivalents |
|
262 |
|
1,465 |
|
|
|
Government grants received
|
|
8 |
|
— |
|
|
|
Net cash flow used in investing activities |
|
(184) |
|
452 |
|
c.s. |
|
|
|
|
|
|
Dividends paid |
|
(145) |
|
(38) |
|
|
|
Proceeds from share capital increase with minority
interest |
|
114 |
|
— |
|
|
|
Proceeds/(payments) of treasury shares and other operations with
shareholders and with minority interests |
|
(635) |
|
(119) |
|
|
|
Operations with other equity holders (1) |
|
(126) |
|
(116) |
|
|
|
Proceeds on issue of debentures and bonds, loans, borrowing and
promissory notes, and other debts |
|
915 |
|
664 |
|
|
|
Repayments of debentures and bonds, and other debts and repayments
of loans, borrowings and promissory notes |
|
(1,496) |
|
(2,754) |
|
|
|
Lease Principal Payments |
|
(623) |
|
(586) |
|
|
|
Financed operating payments and investments in property, plant and
equipment and intangible assets payments |
|
(32) |
|
(230) |
|
|
|
Net cash used in financing activities |
|
(2,028) |
|
(3,179) |
|
(36.2) |
|
|
|
|
|
|
Effect of changes in exchange rates, cash reclassified to assets
held for sale, effect of changes in consolidation methods and
others |
|
3 |
|
256 |
|
|
|
Net increase (decrease) in cash and cash equivalents during the
year |
|
92 |
|
(468) |
|
c.s. |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the
period |
|
7,245 |
|
8,580 |
|
|
|
Cash and cash equivalents at the end of the period |
|
7,337 |
|
8,112 |
|
|
(1) Includes issuance and coupons of undated deeply subordinated
securities
Alternative performance measures
The management of the Group uses a series of APM in its
decision-making, in addition to those expressly defined in the
IFRS, as they provide additional information useful to assess the
Group’s performance, solvency and liquidity. These measures should
not be viewed separately or as a substitute for the measures
presented according to the IFRS.
Operating income before depreciation and amortisation
(OIBDA)
Operating income before depreciation and amortisation (OIBDA) is
calculated by excluding solely depreciation and amortisation from
Operating income. OIBDA is used to track the performance of the
business and to establish operating and strategic targets of
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.
Furthermore, the Group uses the OIBDA margin measure, which is the
result of dividing OIBDA by revenue.
The detailed reconciliation of Telefónica Group's OIBDA and
Operating Income can be found in the selected financial information
contained in
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx.
OIBDA is also defined on consolidated financial statements
published by the Group for 2022 (see "Alternative measures not
defined in IFRS" in Note 2).
OIBDA-CapEx and OIBDA-CapEx excluding spectrum
acquisitions
OIBDA-CapEx is defined as Operating income before depreciation and
amortisation, reduced by accrued capital expenditures. OIBDA-CapEx
excluding spectrum acquisitions is defined as Operating income
before depreciation and amortisation, reduced by accrued capital
expenditures excluding those related to spectrum
acquisitions.
Furthermore, the Group uses the measures OIBDA-CapEx margin and
OIBDA-CapEx excluding spectrum acquisitions margin, which is the
result of dividing these measures by revenue.
We believe that it is important to consider capital expenditures,
and capital expenditures excluding spectrum acquisitions, together
with OIBDA in order to have a more complete measure of the
performance of our telecommunications businesses. We use these
measures internally to track the performance of our business, to
establish operating and strategic targets of the Group's businesses
and in our internal budgeting process.
Neither OIBDA-CapEx nor OIBDA-CapEx excluding spectrum acquisitions
is a measure expressly defined in IFRS, and therefore they may not
be comparable to similar indicators used by other companies. In
addition, neither OIBDA-CapEx nor OIBDA-CapEx excluding spectrum
acquisitions should be considered a substitute for Operating
income, the most comparable financial measure calculated in
accordance with IFRS, or any measure of liquidity calculated in
accordance with IFRS.
The detailed reconciliation of Telefónica Group's OIBDA-CapEx and
OIBDA-CapEx excluding spectrum acquisitions with Operating Income,
can be found in the consolidated financial statements published by
the Group for 2022 (see "Alternative measures not defined in IFRS"
in Note 2).
OIBDA-CapEx and OIBDA-CapEx excluding spectrum acquisitions are
also defined on the consolidated financial statements published by
the Group for 2022 (see "Alternative measures not defined in IFRS"
in Note 2).
Debt indicators
a)Net
financial debt and Net financial debt plus leases and Net financial
debt plus commitments
As per the Group calculation, 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), ii) other payables included
in “Payables and other non-current liabilities” and "Payables and
other current liabilities" (mainly corresponding to payables for
deferred payment of radio spectrum that have an explicit financial
component
and the supplier financing for the customer financing of terminal
sales) and
(iii) financial liabilities included in “Liabilities associated
with non-current assets classified as held for sale”.
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, iv) other
interest-bearing assets (components of “Receivables and other
current assets”, “Tax receivables” and “Financial assets and other
non-current assets” in the consolidated statement of financial
position), v) cash and other current financial assets included in
“Non-current assets
classified as held for sale”, vi) mark-to-market adjustment by cash
flow hedging activities related to debt, and vii) fair value of
derivatives adjustment used for the economic hedging of gross
commitments related to employee benefits. On December 31, 2022, the
classification of these derivatives in the debt indicators was
revised, and these are now presented together with the "net
commitments related employee benefits". This change in the
presentation allows to include in the same section the economic
underlying and the derivative associated with the hedged risk. So
that, the effects on the underlying and the economic hedge are
offset, avoiding distortions due to being registered under
different headings, particularly at times of strong volatility, as
has occurred in recent months compared to previous years. The
totals of "net financial debt plus commitments" and "net financial
debt plus leases plus commitments" are not affected by this
presentation change. The new criteria was applied retrospectively.
In "Receivables and other current assets" we include the customer
financing of terminal sales classified as short term, and
"Financial assets and other non-current assets"
includes
derivatives, instalments for the long-term sales of terminals to
customers and other long-term financial assets. On December 31,
2022, Others liabilities included in "Payables and other current
liabilities" and Others assets included in "Receivables and other
current assets" were reviewed, including non-material changes in
the customer financing of terminal sales and applied retroactively
to the net financial debt figures.
Net financial debt plus commitments is calculated by adding gross
commitments related to employee benefits to net financial
debt
and the fair value of the derivatives used for the economic hedging
of such commitments 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. Gross commitments related to
employee benefits are current and non-current provisions recorded
for certain employee benefits such as termination plans,
post-employment defined benefit plans and other
benefits.
Net financial debt, net financial debt plus leases and net
financial debt plus commitments are meaningful for investors and
analysts because they provide an analysis of Group solvency using
the same measures used by Group management. They are used to
calculate internally certain solvency and leverage ratios.
Nevertheless, none of them should be considered as a substitute for
gross financial debt as presented in the consolidated statement of
financial position.
The reconciliation of Telefónica Group's gross financial debt
according to the consolidated statement of financial position, net
financial debt and net financial debt plus leases at the end
of March 2023 can be found
in the financial information contained in
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx.
Net financial debt is also defined in the consolidated financial
statements of the Group for 2022 (see "Alternative measures not
defined in IFRS" in Note 2.
b)Leverage
ratio
The leverage ratio is calculated as the ratio of net financial debt
over OIBDAaL (OIBDA after leases) for the past 12
months,
including or excluding the OIBDAaL of the companies which are
incorporated or removed from the perimeter of consolidation, and
excluding certain non-ordinary factors.
The reconciliation of the leverage ratio can be found in the
selected financial information contained in
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx.
Free Cash Flow
The Group’s 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)/proceeds
on investments in property, plant and equipment and intangible
assets, net, adding the cash received form government grants and
deducting dividends paid to minority interests and payments of
financed spectrum without explicit interest. 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.
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 company’s shareholders and other equity holders. The same
measure is used internally by Group management. Nevertheless, free
cash flow should not be considered as a substitute for the various
flows of cash as presented in the consolidated statements of cash
flows.
The reconciliation of net cash flow from operations, according to
the consolidated statement of cash flows (on a straight-line basis)
and the Group’s Free cash flow according to the above definition,
can be found on the selected financial information contained
in
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx.
Free cash flow is also defined in the consolidated financial
statements of the Group for 2022 (see "Alternative measures not
defined in IFRS" in Note 2).
Organic variations
Y-o-y changes referred to in this document as "organic" or
presented "in organic terms" intend to present a homogeneous
comparison by applying 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 Group's
operations in the different markets in which it operates, by
maintaining constant exchange rates and perimeter, adjusting the
results corresponding to the participation of relevant
non-consolidated operations in the Group (VMO2 joint venture in the
UK), removing the impact of certain exogenous factors which may
distort the y-o-y 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 2023/2022 is
defined as the reported variation adjusted by the following
factors:
•Includes
50% of VMO2 joint venture's results.
•Assumes
average constant foreign exchange rates of 2022. Nevertheless, the
reported variation of the companies of the countries with
hyperinflationary economies (Argentina and Venezuela) is
excluded.
•Considers
a constant perimeter of consolidation.
•At
OIBDA and OIBDA-CapEx levels, does not include capital gains/losses
from the sale of companies, for significant impacts, write-offs,
material non-recurring impacts and restructuring
costs.
•CapEx
also excludes investment in spectrum.
Reconciliation between reported data and organic revenue figures,
OIBDA and OIBDA-CapEx can be found in the selected financial
information contained in
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx.
The Management Report of Telefónica Group contained in the
Consolidated Financial Statements for 2022 also includes the
description of the adjustments for the calculation of the organic
variations.
Underlying Result
“Underlying” result or results in “underlying” terms intend to
present a result adjusted by certain factors which distort the
analysis of the business performance, but without adjusting for
exchange rates, hyperinflation, or perimeter. The underlying result
is calculated up to net income, while organic variations are
calculated up to the Operating income and OIBDA - CapEx. The
"underlying" result provides useful information for the company and
market agents because:
•It
provides additional information on the underlying performance of
the Group's operations, removing the distorting effects of certain
factors, as they are specific to a certain moment and not
associated with the ordinary performance of the business,
facilitating 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 consistently
monitor trends and operating performance of the business; this data
also facilitates the relation 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" result is defined
as the reported result as adjusted by the following
factors:
•Does
not include capital gains/losses from the sale of companies, for
significant impacts, write-offs, material non-recurring impacts and
restructuring costs.
•Amortisation
of intangible assets from purchase price allocation processes is
also excluded.
Reconciliation between reported data and OIBDA underlying figures
and net income can be found on the selected financial information
contained on
https://www.telefonica.com/en/wp-content/uploads/sites/5/2023/02/rdos23t1-data.xlsx.
Effect of the incorporation of the joint venture between Telefónica
and Liberty Global in the UK
Telefónica UK, which was fully consolidated, left the consolidation
perimeter on June 1, 2021. On the same date, the closing of the
transaction resulting in the VMED O2 UK Ltd joint venture (VMO2)
was carried out. VMO2 is considered a reportable segment in the
consolidated financial statements of the Group, as Telefónica UK
was until June 1, 2021, while VMO2 is a joint venture and as such
it is registered by the equity method under IFRS. The effect on the
Group's alternative performance measures included in this document
is as follows:
•OIBDA/OIBDA
- CapEx: Telefónica UK ceased to consolidate in the Group's OIBDA
on June 1, 2021. The OIBDA of VMO2 does not compute in the Group's
consolidated OIBDA.
•Debt
indicators: Telefónica UK's debt is no longer consolidated in the
Group as of June 1, 2021. The debt of VMO2 is not consolidated in
the Telefónica Group debt.
•Free
cash flow: Telefónica UK ceased to consolidate in the Group's free
cash flow on June 1, 2021. From that date, dividends received from
VMO2 are included in the Group's Free Cash Flow.
•Organic
variations: 50% of VMO2's results are computed in the Group's
organic variations in order to provide a more complete view of the
evolution of the businesses managed by the Company and to reflect
the relative weight of the different geographies. Furthermore, the
performance by segment table presents, in addition to the
consolidated figures calculated in accordance with IFRS, the
consolidated revenue, OIBDA and CapEx figures, aggregating 50% of
VMO2.
•Underlying
result: Telefónica UK ceased to consolidate in the Group's
underlying profit or loss on June 1, 2021. VMO2 is included in the
Group's underlying profit or loss under equity accounted
investments.
DISCLAIMER
This document may contain forward-looking statements and
information (hereinafter, the “Statements”) relating to the
Telefónica Group (hereinafter, the "Company" or "Telefónica").
These Statements may include financial forecasts and estimates or
statements regarding plans, objectives and expectations regarding
matters such as the customer base and its evolution, growth of the
different business lines and of the global business, market share,
possible acquisitions, divestitures or other transactions, the
outcome of recently completed transactions, the Company’s results
and its operations, including its environmental, social and
governance commitments and targets.
The Statements can be identified, in certain cases, through the use
of words such as “forecast”, "expectation", "anticipation",
“aspiration”, "purpose", "belief", “may”, “will”, “would”, “could”,
“plan”, “project” or similar expressions or variations of such
expressions. These Statements reflect the current views or
aspirations 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 materially differ from those
expressed or implied by such Statements. These risks and
uncertainties include those identified in the documents containing
more comprehensive information filed by Telefónica with the
different supervisory authorities of the securities markets in
which its shares are listed and, in particular, the Spanish
National Securities Market Commission (CNMV) and the U.S.
Securities and Exchange Commission (SEC).
Except as required by applicable law, Telefónica does not assume
any obligation to publicly update the Statements to adapt them to
events or circumstances taking place after the date hereof,
including changes in the Company's business, changes in its
business development strategy or any other
circumstances.
This document may contain summarized, non-audited or non-IFRS
financial information (including information referred to as
“organic” and “underlying”). Such information may not be prepared
in accordance with the financial reporting requirements established
by the SEC, is presented for supplemental informational purposes
only and should not be considered a substitute for audited
financial information presented in accordance with IFRS. The
Company’s non-IFRS financial measures may differ from similarly
titled measures used by other companies. In addition, there are
material limitations associated with the use of non-IFRS financial
measures since they exclude significant expenses and income that
are recorded in the Company’s financial statements. Information
related to Alternative Performance Measures (APM) used in the
present document are included in the Appendix “Alternative
performance measures”, page 21 of this document. Moreover,
recipients of this document are invited to read Telefónica’s
consolidated financial statements and consolidated management
report for year 2022 submitted to the CNMV, in Note 2, page 13, of
the pdf filed.
Neither this document nor any of its contents constitute an offer
to purchase, sale or exchange any security, a solicitation of any
offer to purchase, sale or exchange any security, or a
recommendation or advice regarding any security.
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.
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Telefónica, S.A.
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Date: |
May 11, 2023 |
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By: |
/s/ Laura Abasolo García de Baquedano |
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Name: |
Laura Abasolo García de Baquedano |
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Title: |
Chief Finance and Control Officer |
Grafico Azioni Telefonica (NYSE:TEF)
Storico
Da Ago 2023 a Set 2023
Grafico Azioni Telefonica (NYSE:TEF)
Storico
Da Set 2022 a Set 2023
