Telefónica has recorded a net profit of 298 million euros in the first quarter of this year, 57.8% lower than the same period the previous year, which brought in 706 million euros. Revenue has reached 10.047 million, representing a growth of 6.7% over the same period in 2022, with increases across all business units and in key markets (Spain, Brazil, Germany and the UK), despite inflationary tensions.

The company explained the decline in net profit was due to three factors outside of its core business: the capital gain recorded in the first quarter of 2022 from sales of fiber networks in Colombia; accounting adjustments for the valuation of the joint venture between Virgin Media and O2 in the UK (-188 million); and corporate tax expense which increased 71.7% to 162 million due to the reversal of taxes in Germany for payment of UMTS licenses which also occurred in the first quarter of last year.

The operating results of the operator group (Oibda) totaled 3,121 million euros at the end of March, a decrease of 2.4% compared to that recorded in the first three months of last year. The exchange rate was favorable for the next quarter, with a positive contribution to the group’s revenue of 136 million and 47 million in the case of Oibda.

At the end of the first quarter, net debt stood at 26,443 million euros, 3.5% lower than the previous year’s level, and 244 million less than at the end of last year as a result of the company’s financial strength and cash generated by the business. As of March 31, free cash generation has reached 454 million euros.

Telefónica has indicated that it faces the current scenario of inflation pressures and rising interest rates with a solid financial position and liquidity. More than 80% of the debt is anchored at a fixed rate, the company has a maturity covered in the next three years, the average age of the debt is 13.2 years and the liquidity position is close to 21,400 million euros.

The company has emphasized in a statement that the results for the first quarter put it on track to meet financial targets for the year as a whole and make it possible to confirm the distribution of a 2023 dividend, of 0.30 euros per share, to be paid in two parts, in December 2023 and June 2024 .

“We have started this year strong, despite the great challenges from the global economic environment. We continued to execute our strategic plan and added a quarter of accelerated revenue growth in all regions where Telefónica has a presence. For all these reasons, we are on the right track to meet our financial targets for the year as a whole, and we can also ensure the expected dividend for 2023. Telefónica continues to fulfill its debt reduction commitments and continues to strengthen its balance sheet thanks to its ability to anticipate ”, has indicated José María Álvarez-Pallete, president of Telefónica, in a note.

Global subsidiaries and units

All major markets grow in turnover. The Spanish subsidiary has increased its revenue by 0.3%, up to 3,088 million euros; those of Germany have grown by 8%, to 2.101 million, those of Brazil, 17.5%, to 2.282 million euros, and those of England, where it operates through cooperate with Virgin Media and O2, they totaled 2.947 million euros, 3.9% more. Regarding the subsidiaries that reported net results, Telefónica Brasil earned 152.5 million euros in the first quarter (+11.3%); Telefónica Deutschland slightly increased its profits to 30 million euros (27 million in 2022) and Virgin Media O2 recorded a net loss of 289.5 million pounds (-333 million euros) due to accounting adjustments, compared to a profit of 91.9 million last year.

The good earnings behavior is also reflected in Telefónica Tech, the global unit where they grew by 43.5% in the first quarter, to 429 million euros, thanks to revenue growth from the B2B segment.

Telefónica Infra has also continued to strengthen Telefónica’s position thanks to the value creation and adoption of new fiber infrastructure models. Telxius, Telefónica’s submarine cable business, has seen an increase in reported revenue of 8.4% and 10.4% in the case of Oibda, which has grown for five consecutive quarters.

Clients and networks

Telefónica’s subscriber base grew by 4% between January and March, reaching 383.6 million, with strong growth in fiber access (+16%) and mobile contract access (+7%).

The company maintains good fiber deployment rates, with a total of 168.9 million real estate units authorized at the end of March, 4% more than last year, of which a total of 66.6 million (+15%) were run through Telefónica properties. fiber network. Regarding the 5G technology already available in four major markets, during the quarter the company launched a pure version (without using a 4G network or stand-alone) in Brazil, and plans to roll out in the UK, Germany and Spain throughout 2023. As of the end of March, 5G had reached more than 2,100 locations in the UK, over 82% of the population in Germany, 85% of the population in Spain and 58 city ​​in Brazil. The accelerated deployment of fiber and 5G has been compounded by the closure of a copper plant in Spain, which is scheduled for April 2024.

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