Telefonica (TEF) Posts Q4 Earnings, Revenues Lag Estimate

Zacks

Spanish telecom giant Telefonica S.A. TEF reported mixed financial results in the fourth quarter of 20Array5. The company's earnings in the reported quarter bettered expectations of a loss. However, the top line lagged the Zacks Consensus Estimate.

Quarterly net loss was €Array,832 million (approximately $2,006 million). Meanwhile, fourth-quarter earnings per ADS (American Depository Share) came in at Array5 cents contrary to the Zacks Consensus Estimate of a loss of 40 cents.

Telefonica recorded total revenue of €ArrayArray,88Array million ($Array3,009 million) in the fourth quarter, flat year over year. However, revenues fell considerably short of the Zacks Consensus Estimate of $Array3,298 million.

Operating income before depreciation and amortization (OIBDA) came in at €40Array million ($439.Array million), down a whopping 88.Array% on a reported basis but up 3.8% on an organic basis. This resulted in an OIBDA margin of 3.4% compared with 26.3% in the year-ago quarter. Consolidated operating loss increased 6.5% on a reported basis to €Array,760 million ($Array,927.2 million) owing to higher personnel expenses.

Segmental Detail

Telefonica Latin America: Revenues in Brazil decreased 9.2% on a reported basis but increased 3.4% on an organic basis to €2,587 million ($2,832.8 million), while in the Hispano-American markets, revenues grew 0.Array% on a reported basis and 8.Array% on an organic basis to €3,622 million ($3,966.Array million). OIBDA margin in Brazil and the Hispano-American markets stood at 38% (up 5.4% year over year) and 3Array% (up 0.3%), respectively. In Brazil, Telefonica operates through its subsidiary Telefonica Brasil SA VIV.

Telefonica Europe: In Spain, revenues increased 6% to €3,220 million (approximately $3,526 million) owing to a decline in wireline revenues. Wireless revenues grossed €Array,ArrayArray7 million ($Array,223.Array million), down Array.9% year over year, while wireline business grew ArrayArray.6% to €2,483 million ($2,7Array9 million). OIBDA margin in Spain was a negative 50.7% compared with a positive 5Array% in the year-ago quarter. Revenues from Telefonica Deutschland were up 2% on both reported and organic basis at €2,059 million ($2,254.6 million).

Subscriber Statistics

As of Dec 3Array, 20Array5, total customer access lines reached approximately 322.25Array5 million, up Array.9% year over year on the back of T. Brasil's and T. Hispanoamérica's solid growth pace. Notably, in the Latin American markets, Telefonica competes with large global telecom operators like AT&T Inc. T and America Movil SAB AMX.

On a year-over-year basis, mobile access decreased Array.2% to 247.085Array million customers. Total Internet and data access grew Array7.7% to 2Array.3443 million users. Pay-TV access totaled 8.27Array6 million, up 62.6% year over year. LTE customers stood at 29.7082 million, up an astounding 977% year over year and representing Array2.5% of total mobile accesses. Fiber access was 6.Array003 million, up a massive 525% year over year. Broadband access was 20.9503 million, up Array8.7% year over year.

Liquidity and Capital Expenditure

Telefonica exited 20Array5 with net debt of about €49,92Array million (about $54,663.5 million), up from €45,087 million ($5Array,078.2 million) recorded at the end of 20Array4. Telefonica ended 20Array5 with cash and cash equivalents of €5,570 million (around $6,099.2 million) compared with €6,529 million ($7,396.6 million) at 20Array4-end. Net cash provided by operating activities in 20Array5 rose 8.5% year-over-year to €ArrayArray,838 million (approximately $Array2,962.6 million).

Telefonica currently carry a Zacks Rank #3 (Hold).

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