Telefonica sees brighter prospects with Q3 revenue

Telefonica sees brighter prospects with Q3 revenue

12 NOV 2014

Telefonica painted a rosier picture than previous quarters with its revenue growth in July-September — pulled through by its Latin American business and by mobile data and digital services.

Revenue of €13 billion in the third quarter represented a year-on-year growth rate of 2.8 per cent. Nine-month revenue growth was lower at 1.9 per cent.

However, it should be noted that both these growth figures are organic. On a reported basis, quarterly revenue fell by 7.4 per cent, although this was still superior to a nine-month decline of 10.9 per cent.

Quarterly net income fell by 13 per cent to €947 million.

It boasted record quarterly net additions for smartphones (more than 8.5 million additions, mainly boosted by Telefonica Brasil’s 5.8 million), which comprised 72 per cent of total Q3 device shipments. And 30 per cent of those total Q3 shipments were LTE-enabled devices.

Data traffic on mobile networks was up 50 per cent and the company achieved 54 per cent LTE coverage in Europe.

Of Telefónica’s total customer base of 316.1 million, mobile accounts for 249.4 million. Smartphones account for 82.3 million of that base.

Latin America
Good news came partly from Telefonica Hispanoamerica where revenue rose 14 per cent to €3.8 billion, on an organic basis. On a reported basis, the revenue declined by nine per cent (the Latin America business was particularly hard hit by currency movements).

The company wants to further build its presence in Latin America. The sale earlier this week of half its 5 per cent stake in China Unicom could fund further expansion. The sale raised $854 million. It has been reported that Telefonica might team up with local rivals to participate in the consolidation of the Brazilian mobile market.

The rate of revenue decline improved in Spain —the group’s largest national market — during the quarter. In addition to take up of its Movistar Fusion fixed-mobile package, another factor highlighted was data services.

The growth in smartphone penetration among Telefonica’s Spanish base to 57 per cent — 9 per cent higher than end-September 2013 —boosted data traffic growth to 25 per cent in Q3. 4G rollout hit 50 per cent population coverage.

Telefonica Deutschland produced a similar performance as revenue decline improved in the third quarter. In fact, the fall of 0.5 per cent (the same for reported and organic) means the operator is in danger of soon turning positive.

The operator attributed Germany’s improvement to a strategy focused on data monetisation. Its performance was driven by increased demand for LTE and handset offers. Its contract base of mobile subscribers grew three per cent year-on-year.

Smartphone penetration at 34 per cent lags the Spanish performance. However, there is strong demand from new and existing users for 4G devices. In the third quarter, 88 per cent of total quarterly smartphone shipments were 4G.


Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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