FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of April, 2015
Commission File Number: 001-09531
Telefónica, S.A.
(Translation of registrants name into English)
Distrito Telefónica, Ronda de la Comunicación s/n,
28050 Madrid, Spain
3491-482 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:
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ¨ No x
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes ¨ No x
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
TABLE OF CONTENTS
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1. | 2 |
JANUARY MARCH 2016
TABLE OF CONTENTS
TELEFÓNICA |
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8 | ||||
RESULTS BY BUSINESS UNITS |
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22 | ||||
26 | ||||
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33 | ||||
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51 |
The financial information related to January-December 2015 contained in this document has been prepared under International Financial Reporting Standards (IFRS), as adopted by the European Union, which do not differ for the purposes of the Telefónica Group, from IFRS as issued by the International Accounting Standards Board (IASB).
Telefónicas management model, regional and integrated, means that the legal structure of the companies is not relevant for the release of Group financial information, and therefore, the operating results of each of these business units are presented independently, regardless of their legal structure. For the purpose of presenting information on a business unit basis, revenue and expenses arising from invoicing among companies within Telefónicas perimeter of consolidation for the use of the brand and management contracts have been excluded from the operating results for each business unit. This breakdown of the results does not affect Telefónicas consolidated earnings.
The English language translation of the consolidated financial statements originally issued in Spanish has been prepared solely for the convenience of English speaking readers. Despite all the efforts devoted to this translation, certain omissions or approximations may subsist. Telefónica, its representatives and employees decline all responsibility in this regard. In the event of a discrepancy, the Spanish-language version prevails.
4
01
Commercial activity in the quarter continued to focus on high-value customers and services. As such, accesses at March grew by 1% year-on-year (-2% organic) and totalled 321.9 million, with a greater proportion of higher quality customers, who continued to be the main lever for growth: mobile contract (+5%), smartphones (+26%), pay TV (+7% organic), fibre and VDSL (+34% organic) and LTE (2.5x). Also, it is worth nothing the sequential improvement of churn, across all services, and average revenue per access (+5.2%).
Mobile accesses stood at 246.9 million (-2% year-on-year due to the lower prepay base), with increased weight of contract over total accesses to 37% (+3 percentage points year-on-year) following positive growth in all regions. Smartphones increased to 115.1 million, increasing their penetration 11 percentage points year-on-year to 49% (71% in contract, +10 percentage points; 39% in prepay, +10 percentage points). LTE customers (35.6 million) represented 15% of total mobile accesses (+9 percentage points year-on-year) and recorded net additions of 5.9 million (+39% year-on-year).
Fibre and VDSL accesses stood at 7.9 million and represented 38% of total fixed broadband (+9 percentage points year-on-year organic). The total pay TV base increased to 8.4 million with a penetration of 40% over total fixed broadband (+2 percentage points organic).
The performance of the main financial variables in the first quarter was affected by the depreciation of the Latin American currencies against the euro, particularly the Brazilian real, Argentine peso, the Venezuelan bolivar and the Colombian peso. The evolution of exchange rates deducted 16.0 percentage points and 14.8 percentage points from reported revenue and OIBDA performance, respectively. These depreciations also reduced payments in euros related to CapEx, taxes and interest, with the exchange rate variance having a positive impact on free cash flow generation in the first quarter.
On the other hand, changes in the consolidation perimeter (incorporation of GVT and DTS) contributed 5.8 percentage points and 4.2 percentage points to reported year-on-year revenue and OIBDA growth, respectively.
Revenues totalled 10,784 million euros and reflected a solid organic year-on-year growth rate of 3.4% (-6.6% in reported terms). T. Hispanoamérica maintained double digit growth rates (+11.3%), while T. España accelerated its year-on-year trend 2.1 percentage points vs. the previous quarter to 0.2%. Excluding the impact of regulation, revenues would have increased by 4.4% organic year-on-year.
Mobile data revenues grew 19.9% organic year-on-year in January-March and represented 48% of mobile service revenues (+7 percentage points year-on-year) due to higher smartphone penetration and the growing weight of LTE customers. It is worth highlighting non-SMS data revenue performance (+28.8% year-on-year in the quarter), representing 86% of total data revenues (+6 percentage points year-on-year). Also, mobile data traffic growth accelerated to 51%. The main driver of this growth was the increase in LTE customers (15% of total mobile customers), with higher average usage and ARPU uplift of more than 15%.
Operating expenses (7,651 million euros) increased by 2.7% organic vs. the first quarter of 2015 (-6.5% reported) and decelerated by 2.3 percentage points versus the previous quarter reflecting efficiencies and integration synergies, despite higher expenses in T. Hispanoamérica related to higher commercial intensity, inflationary pressure and the impact of the appreciation of the US dollar against local currencies.
| Supplies (2,895 million euros) decreased by 0.9% organic versus the first quarter of 2015, mainly due to the reduction in termination rates in Latin America and the optimisation of commercial spend. |
5
| Personnel expenses increased to 1,617 million euros in January-March. In organic terms, they grew by 7.1% year-on-year affected mainly by inflationary pressure in certain Latin American countries. Also, a provision for restructuring costs, mainly in T. Deutschland, amounting to 22 million euros of impact on OIBDA was recorded in the quarter, impacting personnel expenses and other net income and expense. |
The average headcount in the first quarter of 2016 stood at 129,324 employees and increased by 11.7% vs. the previous year (-4.7% year-on-year including the equivalent average headcount of GVT and DTS in the same period of 2015).
| Other operating expenses stood at 3,139 million euros and increased by 3.9% organic vs. January-March 2015 due to higher network and systems costs, the negative effect of inflation in Latin America and the depreciation of the majority of currencies in the region against the US dollar, partially offset by savings associated with integration synergies, lower handset promotions and advertising expenses. |
Operating Income Before Depreciation and Amortization (OIBDA) totalled 3,376 million euros in the first three months of 2016, sequentially accelerating its year-on-year growth to 5.5% organic (+1.7 percentage points vs. the previous quarter; -6.7% reported), underpinned by the strong progress of T. Brasil (+8.2%) and the positive performance of T. España (+2.0%; +9.5 percentage points vs. the previous quarter). It is also particularly worth noting an across the board OIBDA growth, since in the first quarter all business units have increased year-on-year (T. Deutschland +6.2% excluding extraordinary impacts; T. Hispanoamérica +0.8%).
This way, thanks to revenue growth acceleration, the strict and increasing cost control, along with the synergies from the integration of acquired companies, OIBDA margin stood at 31.3% and presented an organic expansion of 0.6 percentage points vs. the same period of the previous year (stable in reported terms).
Depreciation and amortisation, 2,036 million euros in January-March, increased by 1.5% year-on-year organic (-3.4% reported) mainly due to the higher level of investments in Brazil and Argentina. Total depreciation and amortisation charges arising from asset purchase price allocation processes amounted to 176 million euros.
Operating income (OI) reached 1,340 million euros, 11.4% higher in organic terms compared to the same period of 2015 (-11.3% reported).
Net financial expenses increased to 661 million euros, 2.8% more than in the first quarter of 2015. However, excluding exchange rate differences (65 million euros, mainly due to the depreciation of the bolivar), they stood at 596 million euros and decreased 5.0% year-on-year, despite the increase of the average debt balance, mainly due to the lower rates of European currencies and the lower weight of debt in Latin American currencies. The effective cost of debt in the last twelve months stood at 4.66%, 39 basis points lower year-on-year, excluding exchange rate differences and the positive impact of the divestment in Telecom Italia, S.p.A. in 2015.
Corporate income tax in January-March 2016 totalled 269 million euros which, over an income before taxes of 675 million euros, implied an effective tax rate of 39.8%, 4.7 percentage points lower than in the first quarter of 2015 due to greater deductions mainly in Spain and Brazil in 2016. As in previous years and due to seasonal effects, the effective tax rate is expected to decrease throughout the year.
As such, profit from continuing operations stood at 406 million euros and decreased 15.2% vs. the first quarter of 2015.
Profit from discontinued operations totalled 377 million euros. In 2015, this item amounted to 1,304 million euros, with 1,185 million euros corresponding to the impact of deferred tax assets resulting from the estimation of the difference in Telefónica, S.A. between the fiscal value and the agreed value for the sale of Telefónicas operations in the United Kingdom.
Profit attributable to minority interests reduced net income by 7 million euros, driven by the results attributed to minority interests in T. Brasil (+19 million euros in the first quarter of 2015).
6
As a result of the items mentioned above, consolidated net income for the first quarter of 2016 stood at 776 million euros. Basic earnings per share reached 0.14 euros per share (0.37 euros in January-March 2015).
CapEx increased 7.8% organic year-on-year to 1,503 million euros (-10.6% in reported terms), with 75% of total CapEx devoted to growth and transformation of networks and systems.
Operating cash flow (OIBDA-CapEx) stood at 1,873 million euros and increased by 3.6% year-on-year in organic terms (-3.3% reported).
Interest payments totalled 883 million euros in the first three months of 2016 and decreased by 2.5% year-on-year thanks to the lower debt in euros at fixed interest rates and the improvement in the cost of the debt. Payment for taxes implied a net collection of 12 million euros. Working capital consumed 1,203 million euros, affected by seasonal factors related to CapEx, payment of taxes, contents and rents of sites, partially offset by the execution of factoring measures on accounts receivable and the extension of payment terms with suppliers. Cash flow from discontinued operations stood at 277 million euros, 140 million euros less than the first quarter of 2015 mainly due to a lesser contribution of working capital to cash flow generation.
Thus, free cash flow stood at 69 million euros (363 million euros in the first quarter of 2015).
Net financial debt stood at 50,213 million euros at March 2016 and increased in the quarter by 292 million euros. This increase was explained by: i) shareholder remuneration (dividends, treasury stock and hybrid coupons) of 757 million euros; ii) payment of labour-related commitments (141 million euros) mainly early retirements and iii) net financial investments (61 million euros). Conversely, noteworthy factors reducing the debt included: i) lower value in euros of net debt in foreign currencies (572 million euros); ii) generation of free cash flow of 69 million euros and iii) other financial factors with an impact on debt (26 million euros).
The leverage ratio (net debt over OIBDA) of the last 12 months at end March 2016 stood at 3.02 times1. Considering the closing of the sale of O2 UK, the ratio stood at 2.52 times.
In the first quarter of 2016, Telefónicas financing activity increased close to 1,984 million equivalent euros, without considering the re-financing of commercial paper and short-term bank loans. The activity focused mainly on strengthening the liquidity position and refinancing the debt maturities in an environment of very low interest rates.
In April 2016, it is worth mentioning an issuance in the bond market in euros, split in two tranches, 1,400 million at 6 years and 1,350 million at 10 years, with record-low coupons paid by Telefónica for a euro issuance in such maturities.
In the first quarter, T. Deutschland signed a credit line with a group of financial institutions amounting to 750 million euros and maturing in March 2021.
Throughout the first quarter of the year, Telefónica Group obtained funding by means of extending payment terms with suppliers, or with the factoring firm where those had been discounted, for a total 182 million equivalent euros.
Meanwhile, Telefónica, S.A. and its holding companies continued with their issuance activity under their Commercial Paper and Promissory Note Programs (Domestic and European), increasing the outstanding amount to approximately 2,755 million euros at the end of March.
1 | 12 month rolling, not considering O2 UK discontinuation, incorporating DTS and GVT OIBDA corresponding to April 2015 and excluding the non-recurring impact from restructuring costs in the 12 months rolling and the firm commitments relating to the Telefónica Foundations social activities. |
7
Telefónica maintained undrawn committed credit lines with different credit institutions for an approximate amount of 11,370 million euros, with around 10,006 million euros maturing in more than twelve months, which, along with the adjusted cash position, placed liquidity at 17,102 million euros as of 31 March.
Definition:
Organic Growth: Assumes constant exchange rates from 2015, excludes the impact of hyperinflationary adjustments in Venezuela in both years and considers a constant perimeter of consolidation. In OIBDA and OI terms, excludes write-downs, capital gains/losses from the sale of companies, sale of towers, restructuring costs and material non-recurring impacts. CapEx also excludes investment in spectrum.
(year-on-year changes in organic terms)
In the first quarter of 2016, Digital Services revenues (1,056 million euros) accelerated their growth to 19.0% year-on-year (+3.9 p.p. vs. the previous quarter). Per area, highlights include:
Video revenues totalled 665.4 million euros, up 17.3% vs. the first quarter of 2015 and improved by 3.3 percentage points their year-on-year change vs. the fourth quarter of 2015. Pay TV accesses totalled 8.4 million at March (4.5 million satellite TV), 7% more than at March 2015. Per country, the year-on-year growth is worth noting in Hispanoamerica (+12%), followed by Brazil (+5% year-on-year), and Spain (+4%). New HD channels were launched this quarter in Hispanoamerica, striving to drive the acquisition of new customers. In Spain, work continues on the production of original series and in February the exclusive channel #0 was launched.
In Security, January-March revenues (70.5 million euros) accelerated the rate of year-on-year growth vs. the previous quarter by 4.4 percentage points to 27.2% due to the continued integration of these solutions in the commercial offering. In the consumer segment, accesses with security products reached 11.8 million (+48% year-on-year) and more than 6 million customers are storing their digital data using the Personal Cloud service.
M2M revenues totalled 42.5 million euros in the quarter and increased by 41.7% year-on-year. It is worth highlighting the in Telefónica creation of a global Internet of Things (IoT) department focused on driving the development of M2M connectivity solutions and added-value E2E services in various sectors.
In the January-March period, Cloud revenues increased by 15.7% year-on-year to 87.2 million euros and the Company continued to advance in its strategy to provide cloud solutions to companies. At the same time, new partnerships were signed with Amazon and VMware and, after reaching an agreement with software provider SAGE, their solutions have been included in Telefónicas portfolio.
Regarding Telefónica Open Future_, it is worth highlighting the agreement reached with the Spanish company, Scytl, a global leader in electoral technology, to create Open Seneca, a digital platform which improves democratic participation and transparency in the public sector.
In the first quarter of 2016, TGR continued to accelerate the Group transformation, supporting growth of the operating businesses and enabling end-to-end digitalisation.
The Global Network and Operations area accelerated the deployment of ultra broadband (UBB), the All-IP transformation and continued improving network quality and efficiency. The investment in UBB focused on offering
8
excellent connectivity, increasing speed, reliability and network security. As such, the network is prepared to support the strong growth in data traffic (+46% year-on-year in the first quarter 2016), underpinned both by mobile broadband (+51% year-on-year, video traffic: +72%), and by fixed broadband (+45%).
At the end of the first quarter, the premises passed with fibre to the home totalled 20 million (15.1 in Spain and 4.7 in Brazil) and the total number of premises covered with fibre in Brazil to 16.8 million, with GVT contributing 12 million premises passed with fibre to the cabinet. Thanks to the 36,529 LTE sites in service, the population coverage reached 50% in the Group (83% in Spain, 76% in Germany, 47% in Brazil and 42% in Hispanoamerica). Furthermore, 96% of the 3G and LTE base stations are connected via IP and fibre links to the transport network. The higher coverage enables service to be provided to 2.5 times more LTE customers year-on-year, reaching 35.6 million.
In terms of All-IP transformation, it is worth highlighting the deployment of VoLTE in Peru and Colombia (the latter Cloud based) and the progressive increase in the number of VoIP customers (+1.1 million year-on-year to 5.2 million). The quality of the network also is strengthened via Big Data techniques, with the launch of a project which will enable real time customer experience monitoring, guaranteeing the network quality in real time and implementing efficiency measures.
Finally, regarding virtualisation, Telefónica completed SDN-IP trials in Peru and is a founding member of the development community Open Source Mano (OSM).
The Global IT area progressed in the structural transformation both in Full Stacks and in on-going projects surrounding them: commercial logistics, commissions, online and mobile channels, etc. In parallel, progress has been made in the per-country consolidation of different online tariff calculators into a single one, building and scaling Big Data platforms and the roll-out of global applications expanding their implementation to the main operating businesses of the Group. This has all been achieved while maintaining or improving service levels of previous years, with an average of 56% fewer critical incidents year-on-year.
Finally, the transformation has been reinforced by the continuous effort and execution of simplification measures in the legacy systems, reducing servers, data centres and applications and increasing virtualisation.
9
TELEFÓNICA
ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
312,635.8 | 323,021.6 | 320,924.3 | 316,188.7 | 316,058.5 | 1.1 | ||||||||||||||||||
Fixed telephony accesses (1) |
36,219.8 | 40,164.5 | 39,976.9 | 39,487.7 | 39,356.8 | 8.7 | ||||||||||||||||||
Internet and data accesses |
18,195.7 | 21,229.3 | 21,410.4 | 21,344.3 | 21,486.2 | 18.1 | ||||||||||||||||||
Broadband |
17,704.7 | 20,754.8 | 20,946.3 | 20,950.3 | 21,075.7 | 19.0 | ||||||||||||||||||
Fibre and VDSL |
2,878.7 | 6,386.4 | 6,935.1 | 7,393.1 | 7,915.1 | n.m. | ||||||||||||||||||
Mobile accesses |
252,753.8 | 253,597.5 | 251,382.7 | 247,085.1 | 246,850.2 | (2.3 | ) | |||||||||||||||||
Prepay |
166,813.7 | 166,636.1 | 162,876.8 | 157,283.7 | 156,365.0 | (6.3 | ) | |||||||||||||||||
Contract |
85,940.1 | 86,961.4 | 88,506.0 | 89,801.4 | 90,485.2 | 5.3 | ||||||||||||||||||
M2M |
8,029.0 | 8,447.4 | 8,760.1 | 9,142.4 | 9,440.5 | 17.6 | ||||||||||||||||||
Pay TV |
5,466.5 | 8,030.3 | 8,154.3 | 8,271.6 | 8,365.4 | 53.0 | ||||||||||||||||||
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Wholesale Accesses |
6,475.7 | 6,401.0 | 6,271.7 | 6,062.8 | 5,826.7 | (10.0 | ) | |||||||||||||||||
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Total Accesses |
319,111.5 | 329,422.6 | 327,196.0 | 322,251.5 | 321,885.2 | 0.9 | ||||||||||||||||||
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Notes:
- | GVT and DTS accesses are consolidated from 1 May 2015. |
- | O2 UK accesses are excluded from the first quarter of 2015 as a result of the discontinuation of the operation. |
(1) | Includes fixed wireless and VoIP accesses. |
TELEFÓNICA
MOBILE ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Prepay percentage (%) |
66.0 | % | 65.7 | % | 64.8 | % | 63.7 | % | 63.3 | % | (2.7 | p.p.) | ||||||||||||
Contract percentage (%) |
34.0 | % | 34.3 | % | 35.2 | % | 36.3 | % | 36.7 | % | 2.7 | p.p. | ||||||||||||
Smartphones (000) |
91,431.1 | 99,184.0 | 108,801.2 | 112,904.5 | 115,058.2 | 25.8 | ||||||||||||||||||
Prepay |
46,368.5 | 51,139.4 | 56,510.6 | 58,547.6 | 59,781.4 | 28.9 | ||||||||||||||||||
Contract |
45,062.5 | 48,044.6 | 52,290.6 | 54,356.9 | 55,276.8 | 22.7 | ||||||||||||||||||
Smartphone penetration (%) |
38.3 | % | 41.4 | % | 45.9 | % | 48.5 | % | 49.4 | % | 11.2 | p.p. | ||||||||||||
Prepay |
28.0 | % | 30.9 | % | 35.0 | % | 37.5 | % | 38.5 | % | 10.5 | p.p. | ||||||||||||
Contract |
61.4 | % | 64.8 | % | 69.3 | % | 71.0 | % | 71.5 | % | 10.1 | p.p. | ||||||||||||
LTE (000) |
14,059.4 | 18,571.7 | 23,577.9 | 29,708.2 | 35,569.1 | 153.0 | ||||||||||||||||||
LTE penetration (%) |
5.7 | % | 7.6 | % | 9.7 | % | 12.5 | % | 15.0 | % | 9.2 | p.p. |
Notes:
- | GVT and DTS accesses are consolidated from 1 May 2015. |
- | O2 UK accesses are excluded from the first quarter of 2015 as a result of the discontinuation of the operation. |
10
TELEFÓNICA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - March | % Chg | |||||||||||||||
2016 | 2015 | Reported | Organic | |||||||||||||
Revenues |
10,784 | 11,543 | (6.6 | ) | 3.4 | |||||||||||
Internal exp. capitalized in fixed assets |
179 | 170 | 5.2 | 1.3 | ||||||||||||
Operating expenses |
(7,651 | ) | (8,185 | ) | (6.5 | ) | 2.7 | |||||||||
Supplies |
(2,895 | ) | (3,058 | ) | (5.4 | ) | (0.9 | ) | ||||||||
Personnel expenses |
(1,617 | ) | (1,634 | ) | (1.0 | ) | 7.1 | |||||||||
Other operating expenses |
(3,139 | ) | (3,493 | ) | (10.1 | ) | 3.9 | |||||||||
Other net income (expense) |
58 | 30 | 91.6 | 88.4 | ||||||||||||
Gain (loss) on sale of fixed assets |
6 | 61 | (90.4 | ) | (70.2 | ) | ||||||||||
Impairment of goodwill and other assets |
1 | (1 | ) | c.s. | c.s. | |||||||||||
Operating income before D&A (OIBDA) |
3,376 | 3,618 | (6.7 | ) | 5.5 | |||||||||||
OIBDA Margin |
31.3 | % | 31.3 | % | (0.0 | p.p.) | 0.6 | p.p. | ||||||||
Depreciation and amortization |
(2,036 | ) | (2,107 | ) | (3.4 | ) | 1.5 | |||||||||
Operating income (OI) |
1,340 | 1,511 | (11.3 | ) | 11.4 | |||||||||||
Share of profit (loss) of investments accounted for by the equity method |
(3 | ) | (3 | ) | (6.8 | ) | ||||||||||
Net financial income (expense) |
(661 | ) | (644 | ) | 2.8 | |||||||||||
Profit before taxes from continuing operations |
675 | 864 | (21.9 | ) | ||||||||||||
Corporate income tax |
(269 | ) | (385 | ) | (30.2 | ) | ||||||||||
Profit for the period from continuing operations |
406 | 479 | (15.2 | ) | ||||||||||||
Profit for the period from discontinued operations |
377 | 1,304 | (71.1 | ) | ||||||||||||
Profit for the period |
784 | 1,783 | (56.1 | ) | ||||||||||||
Non-controlling interests |
(7 | ) | 19 | c.s. | ||||||||||||
Net Income |
776 | 1,802 | (56.9 | ) | ||||||||||||
Weighted average number of ordinary shares outstanding during the period (millions) |
4,931 | 4,753 | 3.7 | |||||||||||||
Continuing operations earnings per share (euros) |
0.07 | 0.09 | (27.8 | ) | ||||||||||||
Discontinued operations earnings per share (euros) |
0.08 | 0.27 | (72.1 | ) | ||||||||||||
Basic earnings per share (euros) |
0.14 | 0.37 | (60.9 | ) |
Notes:
- | The January-March 2016 consolidated financial information uses the exchange rate of the Venezuelan bolivar set at the denominated DICOM (273 Venezuelan bolivars fuertes per dollar at 31 March 2016). |
- | From the first quarter of 2015 Telefónica UKs operations are reported as discontinued operations within the Telefónica Group and their assets and liabilities are classified as held for sale, in compliance with the IFRS, as a result of the signing of the definitive sale agreement of the company in March 2015. |
- | 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 equity (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 2015, has been taken into account. Also, the ordinary shares that would be issued upon the conversion of the mandatorily convertible notes issued on 24 September 2014 are included in the calculation of earnings per share from that date. |
- | Continuing operations earnings per share is calculated dividing profit for the period from continuing operations including non-controlling interests, adjusted for the net coupon corresponding to Other equity instruments, by the weighted average number of ordinary shares outstanding during the period. |
- | Discontinued operations per share is calculated dividing profit for the period from discontinued operations by the weighted average number of ordinary shares outstanding during the period. |
- | Basic earnings per share ratio is calculated dividing Net Income, adjusted for the net coupon corresponding to Other equity instruments, by the weighted average number of ordinary shares outstanding during the period. |
- | 2015 and 2016 reported figures include hyperinflationary adjustments in Venezuela in both years. |
- | Group consolidated results consolidate GVT and DTS results since 1 May 2015. |
TELEFÓNICA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - March | % Chg | |||||||||||||||
2016 | 2015 | Reported | Organic | |||||||||||||
Revenues |
10,784 | 11,543 | (6.6 | ) | 3.4 | |||||||||||
Voice & access |
4,701 | 5,877 | (20.0 | ) | (8.4 | ) | ||||||||||
FBB Connectivity |
3,774 | 3,532 | 6.9 | 21.5 | ||||||||||||
Services over Connectivity (SoC) |
1,285 | 974 | 31.9 | 14.3 | ||||||||||||
Others |
1,024 | 1,160 | (11.7 | ) | (3.7 | ) |
11
TELEFÓNICA
GUIDANCE 2016
2015 Base |
Operative 2016 Guidance |
2016 | ||||||||
Jan-Mar | ||||||||||
46,757 | Revenues (% Chg YoY) |
Growth > 4% | 8.0 | % | ||||||
31.5 | % | OIBDA margin (Chg YoY) |
Stabilising vs. 2015 | 0.1 | p.p. | |||||
16.8 | % | CapEx / Sales |
Around 17% | 14.2 | % | |||||
Financial 2016 Guidance |
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Net financial debt / OIBDA |
Net financial debt / OIBDA < 2.35x | 2.52x | (1) |
- | Guidance criteria 2016: Assumes constant exchange rates as of 2015 (average FX in 2015) and maintaining current company perimeter. Excludes T. Venezuelas and O2 UKs results. In addition OIBDA excludes write-offs, capital gains/losses from companies disposals, towers sales, material non-recurring impacts and restructuring charges. CapEx also excludes investment in spectrum. |
2015 adjusted base excludes:
- | OIBDA excludes additionally tower sales, the provision for restructuring charges, the provision to optimize the distribution network in Spain, the provision for Telefónica Foundation, impairments and the final settlement agreement related to the acquisition of E-Plus. |
- | CapEx excludes additionally spectrum acquisition. |
2015 adjusted base includes GVTs results in T. Brasil, along with DTS results in T. España, since May 2015.
Financial guidance criteria 2016:
- | Net financial debt / OIBDA adjusted for the closing of the sale of O2 UK. |
(1) | Not considering price adjustments in O2 UK due to debt, working capital and other circumnstances that may occur before the closing of the sale. |
12
TELEFÓNICA
REPORTED VS. ORGANIC
Unaudited figures (Euros in millions)
January - March | % | |||||||||||||||||||
2016 Reported |
2016 Organic |
2015 Organic |
Organic Change y-o-y |
Reported Change y-o-y |
||||||||||||||||
Revenues |
10,784 | 12,611 | 12,192 | 3.4 | (6.6 | ) | ||||||||||||||
OIBDA |
3,376 | 3,937 | 3,733 | 5.5 | (6.7 | ) | ||||||||||||||
OIBDA margin |
31.3 | % | 31.2 | % | 30.6 | % | 0.6 | p.p. | (0.0 | p.p.) | ||||||||||
Operating Income (OI) |
1,340 | 1,657 | 1,488 | 11.4 | (11.3 | ) | ||||||||||||||
CapEx |
1,503 | 1,789 | 1,660 | 7.8 | (10.6 | ) | ||||||||||||||
OpCF (OIBDA-CapEx) |
1,873 | 2,148 | 2,073 | 3.6 | (3.3 | ) |
2016 | 2015 | |||||||
Reported revenues |
10,784 | 11,543 | ||||||
Forex impact |
1,813 | |||||||
Hyperinflation in Venezuela |
15 | (23 | ) | |||||
Changes in the consolidation perimeter |
672 | |||||||
|
|
|
|
|||||
Organic revenues |
12,611 | 12,192 | ||||||
|
|
|
|
|||||
Reported OIBDA |
3,376 | 3,618 | ||||||
Forex impact |
529 | |||||||
Hyperinflation in Venezuela |
11 | 3 | ||||||
Restructuring charges provision |
22 | |||||||
Tower sales |
(39 | ) | ||||||
Changes in the consolidation perimeter |
151 | |||||||
|
|
|
|
|||||
Organic OIBDA |
3,937 | 3,733 | ||||||
|
|
|
|
|||||
Reported CapEx |
1,503 | 1,682 | ||||||
Forex impact |
285 | |||||||
Hyperinflation in Venezuela |
2 | (2 | ) | |||||
Spectrum acquisition |
(2 | ) | (161 | ) | ||||
Changes in the consolidation perimeter |
142 | |||||||
|
|
|
|
|||||
Organic CapEx |
1,789 | 1,660 | ||||||
|
|
|
|
Notes:
- | The breakdown of the effects for the reconciliation of reported vs. organic 2016 excludes the impacts of the forex and therefore it assumes average constant exchange rates as of January - March 2015. Forex impact on those effects is totally included under Forex impact epigraph. |
- | Organic criteria: Assumes constant exchange rates as of 2015 (average FX in 2015) and considers constant perimeter of consolidation. In OIBDA and OI terms, excludes write-downs, capital gains/losses from the sale of companies, tower sales, material non-recurring impacts and restructuring costs. CapEx also excludes investment in spectrum. |
13
TELEFÓNICA
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited figures (Euros in millions)
March 2016 | December 2015 | % Chg | ||||||||||
Non-current assets |
91,133 | 91,398 | (0.3 | ) | ||||||||
Intangible assets |
18,284 | 18,562 | (1.5 | ) | ||||||||
Goodwill |
22,108 | 21,745 | 1.7 | |||||||||
Property, plant and equipment and Investment properties |
30,549 | 30,549 | (0.0 | ) | ||||||||
Investments accounted for by the equity method |
63 | 74 | (14.8 | ) | ||||||||
Non-current financial assets |
9,454 | 10,008 | (5.5 | ) | ||||||||
Deferred tax assets |
10,676 | 10,460 | 2.1 | |||||||||
Current assets |
31,036 | 31,576 | (1.7 | ) | ||||||||
Inventories |
1,248 | 1,360 | (8.2 | ) | ||||||||
Trade and other receivables |
8,911 | 8,301 | 7.3 | |||||||||
Tax receivables |
1,177 | 1,341 | (12.3 | ) | ||||||||
Current financial assets |
3,007 | 2,971 | 1.2 | |||||||||
Cash and cash equivalents |
2,804 | 2,599 | 7.9 | |||||||||
Non-current assets classified as held for sale |
13,889 | 15,004 | (7.4 | ) | ||||||||
Total Assets = Total Equity and Liabilities |
122,169 | 122,974 | (0.7 | ) | ||||||||
Equity |
27,776 | 27,556 | 0.8 | |||||||||
Equity attributable to equity holders of the parent and other holders of equity instruments |
17,940 | 17,891 | 0.3 | |||||||||
Non-controlling interests |
9,835 | 9,665 | 1.8 | |||||||||
Non-current liabilities |
62,994 | 60,549 | 4.0 | |||||||||
Non-current interest-bearing debt |
49,580 | 47,117 | 5.2 | |||||||||
Non-current trade and other payables |
2,150 | 2,381 | (9.7 | ) | ||||||||
Deferred tax liabilities |
2,299 | 2,313 | (0.6 | ) | ||||||||
Non-current provisions |
8,965 | 8,738 | 2.6 | |||||||||
Current liabilities |
31,399 | 34,869 | (9.9 | ) | ||||||||
Current interest-bearing debt |
10,813 | 12,953 | (16.5 | ) | ||||||||
Current trade and other payables |
12,969 | 14,235 | (8.9 | ) | ||||||||
Current tax payables |
1,915 | 1,769 | 8.3 | |||||||||
Current provisions |
2,048 | 1,971 | 3.9 | |||||||||
Liabilities associated with non-current assets held for sale |
3,655 | 3,941 | (7.2 | ) | ||||||||
Financial Data |
||||||||||||
Net Financial debt (1) |
50,213 | 49,921 | 0.6 |
Note:
- | From the first quarter of 2015 Telefónicas operations in the United Kingdom are reported as discontinued operations within the Telefónica Group and their assets and liabilities are classified as held for sale, in compliance with the IFRS, as a result of the signing of the definitive sale agreement of the company in March 2015. |
- | 2015 and 2016 reported figures include the hyperinflationary adjustments in Venezuela in both years. |
(1) | Figures in million euros. Net Financial Debt in March 2016 includes: Non-current interest-bearing debt + Non-current trade and other payables (878) + Current interest-bearing debt + Current trade and other payables (435) - Non-current financial assets (5,366) - Current financial assets - Current trade and other receivables (314) - Cash and cash equivalents. |
14
TELEFÓNICA
FREE CASH FLOW AND CHANGE IN DEBT
Unaudited figures (Euros in millions)
January - March | ||||||||||||||
2016 | 2015 | % Chg | ||||||||||||
I |
Cash flow from operations |
2,490 | 2,765 | (10.0 | ) | |||||||||
II |
Net interest payment (1) |
(883 | ) | (906 | ) | |||||||||
III |
Payment for income tax |
12 | 143 | |||||||||||
A=I+II+III |
Net cash provided by operating activities |
1,618 | 2,003 | (19.2 | ) | |||||||||
B |
Net payment for investment in fixed and intangible assets |
(1,967 | ) | (2,297 | ) | |||||||||
Spectrum (2) |
(2 | ) | (96 | ) | ||||||||||
C=A+B |
Net free cash flow after CapEx |
(349 | ) | (294 | ) | 18.8 | ||||||||
D |
Net Cash received from sale of Real Estate |
0 | 1 | |||||||||||
E |
Net payment for financial investment (3) |
(44 | ) | (86 | ) | |||||||||
F |
Net payment for operations with minority shareholders and treasury stock (4) |
(756 | ) | (63 | ) | |||||||||
G=C+D+E+F |
Free cash flow after dividends from continuing operations |
(1,149 | ) | (442 | ) | 160.3 | ||||||||
L |
Free cash flow after dividends from discontinued operations |
490 | 362 | |||||||||||
H |
Effects of exchange rate changes on net financial debt |
(572 | ) | 546 | ||||||||||
I |
Effects on net financial debt of changes in consolid. and others |
205 | (85 | ) | ||||||||||
J |
Net financial debt at beginning of period |
49,921 | 45,087 | |||||||||||
K=J-G-L+H+I |
Net financial debt at end of period |
50,213 | 45,627 | 10.1 |
TELEFÓNICA
RECONCILIATIONS OF CASH FLOW AND OIBDA MINUS CAPEX FROM CONTINUING OPERATIONS
Unaudited figures (Euros in millions)
January - March | ||||||||||||
2016 | 2015 | % Chg | ||||||||||
OIBDA |
3,376 | 3,618 | (6.7 | ) | ||||||||
- CapEx accrued during the period |
(1,503 | ) | (1,682 | ) | ||||||||
- Payments related to cancellation of commitments |
(141 | ) | (266 | ) | ||||||||
- Net interest payment |
(883 | ) | (906 | ) | ||||||||
- Payment for tax |
12 | 143 | ||||||||||
- Gain (loss) on sale of fixed assets and impairment of goodwill and other assets |
(6 | ) | (59 | ) | ||||||||
- Investment In working capital and other deferred income and expenses |
(1,203 | ) | (1,142 | ) | ||||||||
= Net Free Cash Flow after CapEx |
(349 | ) | (294 | ) | 18.8 | |||||||
+ Payments related to cancellation of commitments |
141 | 266 | ||||||||||
- Operations with minority shareholders |
0 | (26 | ) | |||||||||
= Free Cash Flow from continuing operations |
(208 | ) | (54 | ) | n.m. | |||||||
+ Free Cash Flow from discontinued operations |
277 | 417 | (33.6 | ) | ||||||||
= Free Cash Flow |
69 | 363 | (81.1 | ) | ||||||||
Weighted average number of ordinary shares outstanding during the period (millions) |
4,931 | 4,753 | ||||||||||
= Free Cash Flow per share from continuing operations (euros) |
(0.04 | ) | (0.01 | ) | n.m. | |||||||
= Free Cash Flow per share from discontinued operations (euros) |
0.06 | 0.09 | (36.0 | ) | ||||||||
= Free Cash Flow per share (euros) |
0.01 | 0.08 | (81.7 | ) |
Notes:
- | From the first quarter of 2015 Telefónica UKs operations are reported as discontinued operations within the Telefónica Group and their assets and liabilities are classified as held for sale, in compliance with the IFRS, as a result of the signing of the definitive sale agreement of the company in March 2015. For comparative purposes, 2014 results are reported using these same criteria. |
- | The January-March 2016 consolidated financial information uses the exchange rate of the Venezuelan bolivar set at the denominated DICOM (273 Venezuelan bolivars fuertes per dollar at 31 March 2016). |
- | The concept Free Cash Flow reflects the amount of cash flow available to remunerate Telefónica S.A. Shareholders, to protect solvency levels (financial debt and commitments), and to accomodate strategic flexibility. |
- | The differences with the caption Net Free Cash Flow after CapEx included in the table presented above, are related to Free Cash Flow being calculated before payments related to commitments (payment of labour commitments) and after operations with minority shareholders, due to cash recirculation within the Group. |
- | 2015 and 2016 reported figures include the hyperinflationary adjustments in Venezuela in both years. |
(1) | Includes cash received from dividends paid by subsidiaries that are not fully consolidated. |
(2) | Figures in million euros. 2016 includes: 1 in Colombia and 1 in Germany. 2015 includes: 67 in Ecuador, 22 in Spain, 6 in Chile and 2 in Colombia. |
(3) | Includes in 2015 the purchase of a minority stake in Mediaset Premium. |
(4) | Dividends paid by Telefónica S.A., operations with treasury stock, issuance of shares, issuance and coupons of undated deeply subordinated securities, issuance of mandatorily convertible bonds into Telefónica S.A. shares and operations with minority shareholders from subsidiaries that are consolidated through the equity method. |
15
TELEFÓNICA
NET FINANCIAL DEBT PLUS COMMITMENTS
Unaudited figures (Euros in millions)
March 2016 | ||||||
Long-term debt (1) | 50,458 | |||||
Short term debt including current maturities (2) | 11,248 | |||||
Cash and cash equivalents | (2,804 | ) | ||||
Short and Long-term financial investments (3) | (8,687 | ) | ||||
A |
Net Financial Debt | 50,213 | ||||
Gross commitments related to employee benefits (4) | 6,041 | |||||
Value of associated Long-term assets (5) | (737 | ) | ||||
Taxes receivable (6) | (1,597 | ) | ||||
B |
Net commitments related to employee benefits | 3,707 | ||||
A + B |
Total Debt + Commitments | 53,920 | ||||
Net Financial Debt / OIBDA (7) | 3.02 | x |
- | Notes: |
- | From the first quarter of 2015 Telefónicas operations in the United Kingdom are reported as discontinued operations within the Telefónica Group and their assets and liabilities are classified as held for sale, in compliance with the IFRS, as a result of the signing of the definitive sale agreement of the company in March 2015. |
- | 2015 reported figures include the hyperinflationary adjustments in Venezuela. |
(1) | Includes Non current interest-bearing debt and 878 million euros of Non-current trade and other payables. |
(2) | Includes Current interest-bearing debt and 435 million euros of Other current payables. |
(3) | Includes Current financial assets, 5,366 million euros of Non-current financial assets and 314 million euros of Trade and other current receivables. |
(4) | Mainly in Spain. This amount is detailed in the captions Long-term provisions and Short-term provisions and other liabilities of the Statement of Financial Position, and is the result of adding the following items: Provision for Pre-retirement, Social Security Expenses and Voluntary Severance, Group Insurance, Technical Reserves, Provisions for Pension Funds of Other Companies and Voluntary Employment Suspension Plan. |
(5) | Amount included in the caption Non-current financial assets of the Statement of Financial Position. Mostly related to investments in fixed income securities and long-term deposits that cover the materialization of technical reserves of the Group insurance companies. |
(6) | Net present value of tax benefits arising from the future payments related to actual workforce reduction commitments. |
(7) | OIBDA 12 month rolling, not considering O2 UK discontinuation, incorporating DTS and GVT OIBDA corresponding to April 2015 and excluding the non-recurring impact from restructuring costs in the 12 months rolling and the firm commitments relating to the Telefónica Foundations social activities. |
TELEFÓNICA
EXCHANGES RATES APPLIED
P&L and CapEx (1) | Statement of Financial Position (2) | |||||||||||||||
Jan - Mar 2016 | Jan - Mar 2015 | March 2016 | December 2015 | |||||||||||||
USA (US Dollar/Euro) |
1.102 | 1.126 | 1.138 | 1.089 | ||||||||||||
United Kingdom (Sterling/Euro) |
0.770 | 0.743 | 0.792 | 0.734 | ||||||||||||
Argentina (Argentine Peso/Euro) |
15.894 | 9.788 | 16.601 | 14.197 | ||||||||||||
Brazil (Brazilian Real/Euro) |
4.290 | 3.215 | 4.052 | 4.251 | ||||||||||||
Chile (Chilean Peso/Euro) |
772.332 | 703.349 | 762.567 | 773.150 | ||||||||||||
Colombia (Colombian Peso/Euro) |
3,577.459 | 2,784.003 | 3,416.211 | 3,428.826 | ||||||||||||
Costa Rica (Colon/Euro) |
597.729 | 610.128 | 617.284 | 593.120 | ||||||||||||
Guatemala (Quetzal/Euro) |
8.459 | 8.599 | 8.779 | 8.309 | ||||||||||||
Mexico (Mexican Peso/Euro) |
19.850 | 16.844 | 19.624 | 18.779 | ||||||||||||
Nicaragua (Cordoba/Euro) |
30.966 | 30.140 | 32.184 | 30.405 | ||||||||||||
Peru (Peruvian Nuevo Sol/Euro) |
3.799 | 3.444 | 3.786 | 3.713 | ||||||||||||
Uruguay (Uruguayan Peso/Euro) |
34.755 | 27.880 | 36.138 | 32.604 | ||||||||||||
Venezuela (Bolivar Fuerte/Euro) (3) |
310.752 | 56.057 | 310.752 | 216.310 |
(1) | Average exchange rates for the period. |
(2) | Exchange rates as of 31/03/16 and 31/12/15. |
(3) | After considering Venezuela as a hyperinflationary country, the P&L and CapEx for Telefónicas operations in Venezuela are converted to the Bolivar Fuerte/Euro exchange rate at close. The January-March 2016 consolidated financial information uses the exchange rate of the Venezuelan bolivar set at the denominated DICOM (273 Venezuelan bolivars fuertes per dollar at 31 March 2016). |
16
NET FINANCIAL DEBT STRUCTURE BY CURRENCY
Unaudited figures
March 2016 | ||||||||||||||||
EUR | LATAM | GBP | USD | |||||||||||||
Net financial debt structure by currency |
71 | % | 14 | % | 13 | % | 2 | % |
TOTAL FINANCIAL LIABILITIES BREAKDOWN
Unaudited figures
March 2016 | ||||||||||||
Bonds and commercial paper |
Debt with financial institutions |
Other financial debt (including governments) and net derivatives |
||||||||||
Total financial liabilities |
78 | % | 23 | % | -1 | % |
CREDIT RATINGS
Long-Term | Short-Term | Perspective | Date of last rating change | |||||||||||||
Moodys1 |
Baa2 | P-2 | Stable | 25/03/2015 | ||||||||||||
S&P1 |
BBB | A-2 | Positive | 28/05/2015 | ||||||||||||
Fitch1 |
BBB+ | F-2 | Stable | 26/06/2015 |
(1) | The rating is issued by a credit rating agency established in the EU and registered under Regulation (EC) 1060/2009. |
TELEFÓNICA
YEAR TO DATE MAIN FINANCING OPERATIONS
Unaudited figures
Issue date | Amount (m) | Currency | Issuer | Coupon |
Maturity date | ISIN code | ||||||||||||||||||
DEBENTURES AND BONDS |
|
|||||||||||||||||||||||
Cash-settled equity-linked bonds related to Telefónica, S.A. shares |
9-Mar-16 | 600 | EUR | Telefónica Participaciones, S.A.U. | 0.000% | 9-Mar-21 | S1377251423 | |||||||||||||||||
Eurobond |
13-Apr-16 | 1,400 | EUR | Telefónica Emisiones, S.A.U. | 0.750% | 13-Apr-22 | S1394777665 | |||||||||||||||||
Eurobond |
13-Apr-16 | 1,350 | EUR | Telefónica Emisiones, S.A.U. | 1.460% | 13-Apr-26 | S1394764689 |
Signing date | Amount | Currency | Borrower | Maturity date | ||||||||||||||||
INTEREST-BEARING DEBT |
||||||||||||||||||||
Bilateral Loan |
23-Feb-16 | 100 | EUR | Telefónica, S.A. | 23-Feb-21 | |||||||||||||||
Bilateral Loan |
23-Feb-16 | 100 | EUR | Telefónica, S.A. | 23-Feb-19 | |||||||||||||||
Loan on supplies |
8-Mar-16 | 300 | EUR | Telefónica, S.A. | 8-Mar-21 | |||||||||||||||
Syndicated facility |
22-Mar-16 | 750 | EUR | Telefónica Germany GmbH & Co. OHG | 22-Mar-21 | |||||||||||||||
Club deal loan |
15-Apr-16 | 150 | USD | Telefónica Móviles Chile | 15-Apr-21 |
17
02
Telefónica España showed a clear recovery in its first quarter 2016 results, with organic growth of 0.2% year-on-year in revenues (+8.6% reported) and 2.0% in OIBDA, which is a significant change in the trend as revenues and OIBDA had not grown year-on-year simultaneously since the third quarter of 2008.
Commercial activity in the quarter was affected by the tariff repositioning in the consumer segment, mainly in fixed broadband services, mobile contract and Fusión.
Total accesses stood at 41.7 million, of which 28.1 million were consumer accesses (-2% organic year-on-year in both).
Consumer Movistar Fusión customers reached 4.2 million (+9% year-on-year), and 2.0 million additional mobile lines (+8% year-on-year). Quarterly net additions amounted to 69 thousand, lower than the previous quarter (138 thousand) due to the impact of the change in tariffs. In the Consumer segment, Fusión now accounts for 82% of fixed broadband customers, 74% of TV customers and 69% of mobile contract customers.
The acquisition of high-value customers was sustained by the quarterly gross additions, since 51% are completely new customers and 91% incorporated at least one new service. As a result, the higher penetration of value services in the Fusión customer base is noteworthy; 30% now have ultrafast fibre (+7 percentage points year-on-year) and 66% pay TV (+16 percentage points year-on-year).
The quarterly ARPU for Consumer Fusión stood at 78.2 euros (+14% year-on-year, +7% quarter-on-quarter) driven by the tariff refresh in May 2015 and February 2016 and the greater weight of high-value customers after the end of the Premium TV promotion. Churn stood at 1.3% (+0.4 percentage points year-on-year; +0.2 percentage points quarter-on-quarter), significantly lower compared with the churn for standalone services, and reflecting the higher loyalty of the growing base of convergent customers.
Retail fixed telephony accesses (-4% year-on-year) fell by 95 thousand accesses in the quarter, although their performance recovered monthly in the quarter (-17 thousand in March) thanks to the improvement in gross additions and churn.
Retail broadband accesses grew by 1% year-on-year, with net quarterly additions of 17 thousand accesses mainly affected by the uptick in churn (1.5%; +0.2 percentage points year-on-year). However, commercial activity improved throughout the quarter and stabilised in the month of March (net additions +20 thousand).
Fibre accesses stood at 2.5 million (1.6x vs. March 2015), and represent 41% of broadband accesses (+15 percentage points year-on-year; +4 percentage points quarter-on-quarter), with net additions of 235 thousand in January-March. Ultrafast fibre accesses (additional ARPU of 12 euros, including VAT), account for 67% of the fibre base, after adding 111 thousand in the quarter. The fibre-to-the-home coverage increased by 700 thousand new premises passed reaching 15 million, the widest coverage in Europe.
Pay TV accesses totalled 3.7 million (+4% organic year-on-year) including 823 thousand DTS accesses via satellite. Net additions in January-March, affected by the change in tariffs, increased to 56 thousand as a result of the net additions of IPTV (+159 thousand) and the net loss of satellite TV customers (-103 thousand), at the same time impacted by the migration of 44 thousand DTS customers to Fusión. Churn in the quarter stood at 1.8% (-0.5 percentage points quarter-on-quarter).
18
Mobile accesses (17.1 million; -2% year-on-year), reflect the continuous growth in contract (+1%) with net losses in the quarter of 17 thousand accesses (-65 thousand ex-M2M; vs. +17 thousand in the previous quarter) affected by the repositioning of tariffs in the consumer segment and a higher competitive pressure. However, commercial momentum recovered in March. Contract churn ex-M2M stood at 1.4% in the quarter (-0.1 percentage points year-on-year).
Smartphone penetration (67%; +4 percentage points year-on-year) is driving mobile data traffic (+69% year-on-year). LTE coverage reached 83% (+8 percentage points vs. December) and LTE penetration 30% (+16 percentage points year-on-year).
Wholesale accesses amounted to 4.9 million (-9% year-on-year), with net losses of 171 thousand accesses. Meanwhile, wholesale fibre accesses grew to 219 thousand (tripling year-on-year).
Operating revenue (3,126 million euros) increased by 0.2% year-on-year in organic terms, with an improvement of 2.1 percentage points compared with the previous quarter (+8.6% reported). Excluding mobile handset sales, revenues grew by 1.0% organic. Breakdown by item:
Consumer revenues (1,626 million euros) grew by 1.8% organic year-on-year driven by updated tariffs in 2015 and 2016 associated mainly with value increase and by the customer base growth. It is worth highlighting the strong growth Fusión revenues (979 million euros; +26.2% year-on-year) which more than offset the drop in non-Fusión revenues.
Business revenues (836 million euros) decreased by 2.8% year-on-year organic mainly due to lower traditional communications revenues (-5.3% in organic terms), which continued to improve their trend. On the other hand, IT revenues maintained a strong growth rate (+9.5% in organic terms).
Other revenues (548 million euros) grew by 5.1% year-on-year in organic terms mainly due to the growth in wholesale TV revenues.
Operating expenses reached 1,954 million euros in January-March, declining 1.3% year-on-year (+0.4% organic in the previous quarter) due to the higher reduction in other operating expenses.
Supplies (781 million euros) increased 0.2% organic year-on-year (-2.6% the previous quarter) due to higher content and interconnection costs. Net content costs (of wholesale TV revenues) increased 5.8% year-on-year organic (vs. -8.0% in the previous quarter) due to the inclusion of the Champions League in Movistar+.
Personnel expenses (593 million euros) increased by 3.0% organic year-on-year (+4.4% the previous year), mainly due to the effects of the new collective agreement. As of March 2016, the total headcount of T. España stood at 31,118 employees. In relation to the Employment Suspension Plan, the bulk of the employees that joined the plan left on 1 April, thus it had no relevant impact on savings in the first quarter.
Other operating expenses (580 million euros) decreased by 7.2% organic year-on-year (+1.2% previous quarter) mainly due to lower commercial costs (handset promotions, advertising and tele-assistance), associated with activity in the quarter.
OIBDA amounted to 1,266 million euros in January-March and grew 2.0% organic year-on-year (+9.5% percentage points vs. the previous quarter). OIBDA margin stood at 40.5% in January-March (+0.7 percentage points year-on-year in organic terms).
CapEx amounted to 427 million euros in the first quarter of the year (+7% organic year-on-year).
19
TELEFÓNICA ESPAÑA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - March | % Chg | |||||||||||||||
2016 | 2015 | Reported | Organic | |||||||||||||
Revenues |
3,126 | 2,878 | 8.6 | 0.2 | ||||||||||||
Mobile handset revenues |
117 | 142 | (18.2 | ) | (18.2 | ) | ||||||||||
Revenues ex-mobile handset revenues |
3,009 | 2,736 | 10.0 | 1.0 | ||||||||||||
Consumer (1) |
1,626 | 1,380 | 17.8 | 1.8 | ||||||||||||
Fusión |
979 | 776 | 26.2 | 26.2 | ||||||||||||
Non-Fusión |
647 | 604 | 7.1 | (21.3 | ) | |||||||||||
Business |
836 | 860 | (2.8 | ) | (2.8 | ) | ||||||||||
Communications |
677 | 715 | (5.3 | ) | (5.3 | ) | ||||||||||
IT |
158 | 145 | 9.5 | 9.5 | ||||||||||||
Other (2) |
548 | 496 | 10.4 | 5.1 | ||||||||||||
Internal expenditure capitalized in fixed assets |
87 | 88 | (1.1 | ) | (1.2 | ) | ||||||||||
Operating expenses |
(1,954 | ) | (1,735 | ) | 12.6 | (1.3 | ) | |||||||||
Supplies |
(781 | ) | (604 | ) | 29.2 | 0.2 | ||||||||||
Personnel expenses |
(593 | ) | (557 | ) | 6.5 | 3.0 | ||||||||||
Other operating expenses |
(580 | ) | (573 | ) | 1.1 | (7.2 | ) | |||||||||
Other net income (expense) |
5 | 5 | (6.1 | ) | (15.8 | ) | ||||||||||
Gain (loss) on sale of fixed assets |
4 | 46 | (90.6 | ) | (43.7 | ) | ||||||||||
Impairment of goodwill and other assets |
(1 | ) | (0 | ) | n.m. | n.m. | ||||||||||
Operating income before D&A (OIBDA) |
1,266 | 1,282 | (1.2 | ) | 2.0 | |||||||||||
OIBDA Margin |
40.5 | % | 44.5 | % | (4.0 | p.p.) | 0.7 | p.p. | ||||||||
CapEx |
427 | 414 | 3.2 | 7.3 | ||||||||||||
Spectrum |
| 22 | | | ||||||||||||
OpCF (OIBDA-CapEx) |
840 | 868 | (3.3 | ) | (0.5 | ) |
Note:
- | The reported figures include DTS in Telefónica Españas consolidation perimeter from 1 May 2015. |
- | OIBDA and OI before management and brand fees. |
- | Mobile handset revenues have been restated from 1 January 2015 including all the business of Telefónica España (previously only Telefónica Móviles España). |
(1) | Consumer revenues include residential and SOHO revenues. |
(2) | Other revenues include wholesale, subsidiaries and other revenues. |
TELEFÓNICA ESPAÑA
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Var | |||||||||||||||||||
Final Clients Accesses |
35,882.6 | 36,958.2 | 36,868.1 | 36,935.6 | 36,791.3 | 2.5 | ||||||||||||||||||
Fixed telephony accesses (1) |
10,321.9 | 10,126.6 | 10,064.9 | 10,005.6 | 9,910.6 | (4.0 | ) | |||||||||||||||||
Internet and data accesses |
5,972.7 | 5,905.1 | 5,947.8 | 6,000.0 | 6,012.8 | 0.7 | ||||||||||||||||||
Broadband |
5,928.3 | 5,861.0 | 5,906.1 | 5,962.0 | 5,978.6 | 0.8 | ||||||||||||||||||
Fibre |
1,560.3 | 1,720.7 | 1,950.5 | 2,223.0 | 2,458.3 | 57.6 | ||||||||||||||||||
Mobile accesses |
17,448.6 | 17,330.7 | 17,272.0 | 17,258.5 | 17,140.1 | (1.8 | ) | |||||||||||||||||
Prepay |
3,122.6 | 2,989.1 | 2,881.1 | 2,777.1 | 2,675.7 | (14.3 | ) | |||||||||||||||||
Contract |
14,325.9 | 14,341.6 | 14,390.9 | 14,481.4 | 14,464.5 | 1.0 | ||||||||||||||||||
M2M |
1,662.4 | 1,726.5 | 1,705.6 | 1,778.8 | 1,827.2 | 9.9 | ||||||||||||||||||
Pay TV (2) |
2,139.5 | 3,595.7 | 3,583.4 | 3,671.5 | 3,727.8 | 74.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Wholesale Accesses |
5,333.6 | 5,286.7 | 5,200.4 | 5,037.7 | 4,866.9 | (8.7 | ) | |||||||||||||||||
Fibre |
74.0 | 115.9 | 149.9 | 178.0 | 218.5 | 195.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
41,658.2 | 41,658.2 | 41,658.2 | 41,658.2 | 41,658.2 | 1.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
(2) | From the second quarter of 2015, Pay TV accesses include DTS. |
CONSUMER ACCESSES (Fusión + non-Fusión)
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Var | |||||||||||||||||||
Fixed telephony accesses |
7,782.2 | 7,609.9 | 7,559.7 | 7,509.9 | 7,428.5 | (4.5 | ) | |||||||||||||||||
Internet and data accesses |
5,119.0 | 5,049.6 | 5,089.0 | 5,135.8 | 5,145.4 | 0.5 | ||||||||||||||||||
Mobile accesses |
12,240.0 | 12,049.3 | 12,001.3 | 11,920.1 | 11,759.7 | (3.9 | ) | |||||||||||||||||
Prepay |
3,122.6 | 2,989.2 | 2,881.1 | 2,777.1 | 2,675.7 | (14.3 | ) | |||||||||||||||||
Contract |
9,117.3 | 9,060.0 | 9,120.2 | 9,143.0 | 9,084.0 | (0.4 | ) | |||||||||||||||||
Pay TV |
2,139.5 | 3,595.7 | 3,583.4 | 3,671.5 | 3,727.8 | 74.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Consumer Accesses |
27,280.6 | 28,304.5 | 28,233.5 | 28,237.2 | 28,061.4 | 2.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
20
TOTAL MOBILE ACCESSES
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Var | |||||||||||||||||||
Prepay percentage (%) |
17.9 | % | 17.2 | % | 16.7 | % | 16.1 | % | 15.6 | % | (2.3 | p.p.) | ||||||||||||
Contract percentage (%) |
82.1 | % | 82.8 | % | 83.3 | % | 83.9 | % | 84.4 | % | 2.3 | p.p. | ||||||||||||
Smartphones (000) |
9,801.4 | 9,877.2 | 10,052.6 | 10,169.0 | 10,200.2 | 4.1 | ||||||||||||||||||
Prepay |
365.7 | 351.4 | 348.8 | 383.5 | 366.3 | 0.2 | ||||||||||||||||||
Contract |
9,435.7 | 9,525.8 | 9,703.8 | 9,785.5 | 9,833.9 | 4.2 | ||||||||||||||||||
Smartphone penetration (%) |
62.8 | % | 64.0 | % | 65.2 | % | 66.3 | % | 67.2 | % | 4.4 | p.p. | ||||||||||||
Prepay (%) |
11.7 | % | 11.8 | % | 12.1 | % | 13.8 | % | 13.7 | % | 2.0 | p.p. | ||||||||||||
Contract (%) |
75.6 | % | 76.5 | % | 77.4 | % | 77.9 | % | 78.7 | % | 3.1 | p.p. | ||||||||||||
LTE (000) |
2,159.4 | 2,554.2 | 2,995.9 | 3,293.0 | 4,520.7 | 109.4 | ||||||||||||||||||
LTE penetration (%) |
13.7 | % | 16.4 | % | 19.2 | % | 21.3 | % | 29.5 | % | 15.8 | p.p. |
CONSUMER FUSIÓN
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Var | |||||||||||||||||||
Fusión Customers |
3,866.2 | 3,880.7 | 4,002.7 | 4,140.3 | 4,209.1 | 8.9 | ||||||||||||||||||
Fibre 100/300 |
891.8 | 957.1 | 1,064.4 | 1,188.1 | 1,267.4 | 42.1 | ||||||||||||||||||
IPTV |
1,926.6 | 2,035.7 | 2,339.1 | 2,600.2 | 2,768.6 | 43.7 | ||||||||||||||||||
Mobile add-ons |
1,870.5 | 1,915.2 | 1,969.1 | 2,016.5 | 2,023.3 | 8.2 |
CONSUMER FUSIÓN
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Var | |||||||||||||||||||
Fusión ARPU (EUR) |
68.6 | 71.3 | 73.8 | 73.2 | 78.2 | 14.1 | ||||||||||||||||||
Fusión churn |
0.9 | % | 1.4 | % | 1.1 | % | 1.1 | % | 1.3 | % | 0.4 | p.p. |
SELECTED OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Var | |||||||||||||||||||
Total voice traffic (Million minutes) |
42,519 | 41,490 | 41,490 | 41,490 | 38,139 | (10.3 | ) | |||||||||||||||||
Fixed voice traffic |
23,895 | 22,866 | 22,866 | 22,866 | 20,456 | (14.4 | ) | |||||||||||||||||
Mobile voice traffic |
18,624 | 18,624 | 18,624 | 18,624 | 17,683 | (5.1 | ) | |||||||||||||||||
Total data traffic (TB) |
1,007,617 | 946,695 | 1,075,921 | 1,237,898 | 1,333,989 | 32.4 | ||||||||||||||||||
Fixed data traffic |
982,743 | 916,869 | 1,037,339 | 1,200,768 | 1,291,860 | 31.5 | ||||||||||||||||||
Mobile data traffic |
24,874 | 29,826 | 38,582 | 37,129 | 42,129 | 69.4 |
Notes:
Since 1 January 2015:
- | Consumer accesses (Fusión + Non-Fusión) include accesses of services taken out by the Consumer segment (including SOHOs). |
- | Fusión Consumer ARPU: average monthly Consumer Fusión revenue divided by average customers for the period. |
- | Fusión Consumer customer base excludes SMEs customers. |
- | Fusión Consumer mobile add-ons include Vive 13 accesses associated to Fusión packages. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non-rounded. |
21
03
(year-on-year changes in organic terms)
In the first quarter of 2016 Telefónica Deutschland continued to drive momentum in a dynamic market, while at the same time made further progress with a number of integration projects (started to unify the brand and tariff portfolio). In addition, the Company is focussing on the execution of crucial projects in 2016 with longer lead times that will generate savings in the latter years, while requiring upfront investments in the first half of 2016 (repositioning of the O2 brand, customer base migration, network integration and IT transformation).
Commercially, the Company continued to focus on the O2 brand in premium and supporting data usage in prepaid by introducing LTE for new O2 customers from February 2016. In addition, the launch of the convergent proposition O2 Blue One helps cross and upselling across the customer base.
The total access base was higher by 1% year-on-year and stood at 48.3 million at the end of March, mainly on the back of a 2% of mobile growth (43.0 million). The contract mobile customer base (45% of total) grew by 2% year-on-year, with 181 thousand quarterly net additions, driven by the continued strong performance of partners and with focus maintained on retention over acquisition. The prepay access base (+2% year-on-year; 23.7 million) posted 236 thousand net disconnections mainly due to seasonal effects.
Smartphone penetration reached 55%, up 6 percentage points year-on-year, reflecting the strong increase in LTE acceses (8.7 million accesses; +10% quarter-on-quarter). Thus, LTE penetration improved by 8 percentage points year-on-year (+2 percentage points quarter-on-quarter) to 21% and drove mobile data traffic (+28% year-on-year vs January-March 2015).
As a result, data ARPU turned to growth in the quarter (+3.1% year-on-year vs -3.7% in the fourth quarter), with non-SMS data ARPU growing 10.3% year-on-year and driving better contract ARPU performance (-3.8% year-on-year vs -4.3% in the previous quarter). Prepay segment ARPU continued to grow (+1.3% vs +2.7% in the fourth quarter) and mobile ARPU trends stabilised (-3.3% vs -3.2% year-on-year in October-December period).
Retail broadband posted the best performance since the second quarter of 2011 driven by strong uptake of VDSL (76 thousand net additions in the period until March) which more than offset DSL disconnections and resulted in 3 thousand retail broadband net additions.
Revenues in the first three months of 2016 declined by 2.3% year-on-year to 1,858 million euros. Mobile service revenues remain pressured by partner customer mix and posted similar performance as in previous quarter (-1.3% year-on-year in the first quarter vs -1.0% in previous). Fixed revenues sustained revenue evolution vs. previous quarter (-3.1% vs -3.2% in the fourth quarter of 2015) while handset revenue declined 5.5% year-on-year (+17.9% year-on-year in October-December).
Mobile service revenues totalled 1,336 million euros (-1.3% year-on-year) in the first quarter, reflecting the higher share of wholesale revenues as well as regulatory headwinds (interconnection rate cuts explain 0.3 percentage points of year-on-year decline).
Mobile data revenues (729 million euros in January-March 2016) were up by 5.4% year-on-year due to the strong growth of non-SMS data revenues (550 million euros; +12.7% year-on-year) more than offsetting the declining SMS-usage. As a result, mobile data revenues over mobile service revenues increased 4 percentage points to 55% and non-SMS data represented 75% of mobile data revenues (+5 percentage points higher year-on-year).
22
Handset sales declined by 5.5% year-on-year to 267 million euros for the January to March period as a result of handset saturation in the market after a particular strong fourth quarter in 2015 and in line with market dynamics.
Fixed revenues totalled 253 million euros (-3.1% year-on-year) in the quarter, reflecting the performance of retail fixed broadband driven by VDSL uptake and the good evolution of the carrier voice business, while wholesale fixed broadband declined.
Operating expenses were 1,483 million euros for January to March 2016; lower by 5.0% year-on-year (excluding restructuring expenses of 23 million euros in the first quarter: 18 million euros in personnel expenses and 4 million euros in other operating expenses) on the back of synergies. Breakdown by component:
Supplies declined 4.6% to 629 million euros in the quarter and improved their performance vs the fourth quarter (-2.0% year-on-year), mainly as a result of lower interconnection and hardware costs.
Personnel expenses (173 million euros) dropped 13.2% year-on-year (excluding restructuring costs), mainly benefitting from the execution of the first wave of the restructuring programme. Slowdown in personnel expenses vs the fourth quarter (-18.2% year-on-year) is the result of annualisation of savings.
Other operating expenses totalled 681 million euros in the first quarter, 3.4% lower year-on-year (excluding restructuring expenses) vs -2.5% in the fourth quarter; mainly as savings from integration initiatives offset investments in the Companys brands and upfront costs related with the large integration initiatives started in 2016.
OIBDA in the period up to March totalled 392 million euros and grew by 6.2% year-on-year (excluding restructuring costs of 23 million euros in the first quarter of 2016 and excluding the gain from the disposal of yourfone of 17 million euros in the same period of 2015) leveraged on synergy capture from the rollover of 2015 initiatives executed (55 million euros). In reported terms, OIBDA was 3.8% lower year-on-year.
OIBDA margin stood at 21.1% in the first quarter, up 1.8 percentage points year-on-year (excluding the above non-recurrent impacts).
CapEx amounted to 220 million euros (-1.2% year-on-year) mainly due to different year-on-year phasing across the year, as investments are back-end loaded on the expected intensification of the network integration effort in the second half of 2016.
Operating Cash Flow (OIBDA-CapEx) was 173 million euros; +16.0% year-on-year organic and excluding non-recurrents.
23
TELEFÓNICA DEUTSCHLAND
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - March | % Chg | |||||||||||||||
2016 | 2015 | Reported | Organic | |||||||||||||
Revenues |
1,858 | 1,901 | (2.3 | ) | (2.3 | ) | ||||||||||
Mobile Business |
1,603 | 1,636 | (2.0 | ) | (2.0 | ) | ||||||||||
Mobile service revenues |
1,336 | 1,354 | (1.3 | ) | (1.3 | ) | ||||||||||
Data revenues |
729 | 692 | 5.4 | 5.4 | ||||||||||||
Handset revenues |
267 | 282 | (5.5 | ) | (5.5 | ) | ||||||||||
Fixed Business |
253 | 261 | (3.1 | ) | (3.1 | ) | ||||||||||
FBB and new services (1) |
192 | 198 | (2.9 | ) | (2.9 | ) | ||||||||||
Voice & access revenues |
61 | 63 | (3.8 | ) | (3.8 | ) | ||||||||||
Internal expenditure capitalized in fixed assets |
25 | 23 | 8.3 | 8.3 | ||||||||||||
Operating expenses |
(1,483 | ) | (1,543 | ) | (3.9 | ) | (5.0 | ) | ||||||||
Supplies |
(629 | ) | (659 | ) | (4.6 | ) | (4.6 | ) | ||||||||
Personnel expenses |
(173 | ) | (179 | ) | (3.1 | ) | (13.2 | ) | ||||||||
Other operating expenses |
(681 | ) | (705 | ) | (3.4 | ) | (3.4 | ) | ||||||||
Other net income (expense) |
(7 | ) | 10 | c.s. | c.s. | |||||||||||
Gain (loss) on sale of fixed assets |
0 | 17 | (99.1 | ) | (99.1 | ) | ||||||||||
Impairment of goodwill and other assets |
| | | | ||||||||||||
Operating income before D&A (OIBDA) |
392 | 408 | (3.8 | ) | 1.7 | |||||||||||
OIBDA Margin |
21.1 | % | 21.5 | % | (0.3 | p.p.) | 0.9 | p.p. | ||||||||
CapEx |
220 | 221 | (0.5 | ) | (1.2 | ) | ||||||||||
Spectrum |
2 | | ||||||||||||||
OpCF (OIBDA-CapEx) |
173 | 187 | (7.8 | ) | 5.1 |
Note:
- | OIBDA and OI before management and brand fees. |
(1) | Includes FBB connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
24
TELEFÓNICA DEUTSCHLAND
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
46,572.8 | 46,981.4 | 47,627.2 | 47,391.2 | 47,341.7 | 1.7 | ||||||||||||||||||
Fixed telephony accesses (1) |
2,022.0 | 2,009.7 | 1,999.9 | 1,997.8 | 2,002.8 | (0.9 | ) | |||||||||||||||||
Internet and data accesses |
2,371.6 | 2,354.7 | 2,338.7 | 2,330.6 | 2,330.9 | (1.7 | ) | |||||||||||||||||
Broadband |
2,128.3 | 2,115.2 | 2,102.7 | 2,098.0 | 2,101.5 | (1.3 | ) | |||||||||||||||||
VDSL |
322.2 | 379.8 | 444.0 | 516.8 | 593.0 | 84.1 | ||||||||||||||||||
Mobile accesses |
42,179.2 | 42,617.0 | 43,288.6 | 43,062.8 | 43,008.0 | 2.0 | ||||||||||||||||||
Prepay |
23,264.2 | 23,500.9 | 24,003.7 | 23,979.4 | 23,743.5 | 2.1 | ||||||||||||||||||
Contract (2) |
18,915.0 | 19,116.1 | 19,284.9 | 19,083.4 | 19,264.4 | 1.8 | ||||||||||||||||||
M2M |
443.4 | 506.2 | 570.7 | 632.0 | 682.2 | 53.9 | ||||||||||||||||||
Wholesale Accesses |
1,085.3 | 1,059.3 | 1,017.5 | 972.0 | 910.5 | (16.1 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
47,658.1 | 48,040.7 | 48,644.7 | 48,363.2 | 48,252.2 | 1.2 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
(2) | In the fourth quarter of 2015, 400 thousand inactive customer accesses were excluded. |
MOBILE ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Prepay percentage (%) |
55.2 | % | 55.1 | % | 55.5 | % | 55.7 | % | 55.2 | % | 0.1 | p.p. | ||||||||||||
Contract percentage (%) |
44.8 | % | 44.9 | % | 44.5 | % | 44.3 | % | 44.8 | % | (0.1 | p.p.) | ||||||||||||
Smartphones (000) |
20,364.1 | 21,153.4 | 22,145.5 | 22,594.3 | 23,083.0 | 13.4 | ||||||||||||||||||
Prepay |
9,086.7 | 9,538.8 | 10,097.5 | 10,279.7 | 10,678.9 | 17.5 | ||||||||||||||||||
Contract |
11,277.4 | 11,614.6 | 12,048.0 | 12,314.6 | 12,404.1 | 10.0 | ||||||||||||||||||
Smartphone penetration (%) |
49.8 | % | 51.3 | % | 52.9 | % | 54.2 | % | 55.4 | % | 5.6 | p.p. | ||||||||||||
Prepay |
39.6 | % | 41.1 | % | 42.6 | % | 43.3 | % | 45.4 | % | 5.8 | p.p. | ||||||||||||
Contract |
63.0 | % | 64.4 | % | 66.4 | % | 68.7 | % | 68.6 | % | 5.5 | p.p. | ||||||||||||
LTE (000) |
5,146.0 | 6,093.0 | 7,002.2 | 7,883.5 | 8,690.5 | 68.9 | ||||||||||||||||||
LTE penetration (%) |
12.3 | % | 14.5 | % | 16.4 | % | 18.6 | % | 20.5 | % | 8.2 | p.p. |
SELECTED OPERATIONAL DATA
Unaudited figures
2014 | 2015 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg | |||||||||||||||||||
Voice traffic (Million minutes) |
30,769 | 29,334 | 28,324 | 29,450 | 28,910 | (6.0 | ) | |||||||||||||||||
Fixed voice traffic |
6,533 | 5,686 | 4,915 | 5,067 | 5,214 | (20.2 | ) | |||||||||||||||||
Mobile voice traffic |
24,236 | 23,647 | 23,409 | 24,383 | 23,696 | (2.2 | ) | |||||||||||||||||
Data traffic (TB) |
485,180 | 497,059 | 514,154 | 603,296 | 664,202 | 36.9 | ||||||||||||||||||
Fixed data traffic (1) |
445,008 | 454,804 | 468,256 | 552,795 | 612,603 | 37.7 | ||||||||||||||||||
Mobile data traffic |
40,172 | 42,255 | 45,898 | 50,501 | 51,599 | 28.4 | ||||||||||||||||||
Mobile ARPU (EUR) |
11 | 11 | 11 | 11 | 10 | (3.3 | ) | |||||||||||||||||
Prepay |
5.6 | 5.9 | 6.0 | 5.8 | 5.7 | 1.3 | ||||||||||||||||||
Contract (2) |
17.2 | 17.2 | 17.4 | 16.9 | 16.6 | (3.8 | ) | |||||||||||||||||
Data ARPU (EUR) |
5.5 | 5.6 | 5.6 | 5.5 | 5.6 | 3.1 | ||||||||||||||||||
% non-SMS over data revenues |
70.5 | % | 71.5 | % | 71.9 | % | 72.5 | % | 75.4 | % | 4.9 | p.p. | ||||||||||||
Mobile churn |
2.4 | % | 2.1 | % | 2.1 | % | 2.8 | % | 2.5 | % | 0.1 | p.p. | ||||||||||||
Contract (2) |
1.7 | % | 1.7 | % | 1.7 | % | 2.4 | % | 1.8 | % | 0.1 | p.p. |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Includes solely traffic pertaining to FBB accesses, not Business customers. |
(2) | Excludes M2M. |
25
04
(year-on-year changes in organic terms)
Telefónica Brasil improved its profitability in the quarter, accelerating OIBDA growth year-on-year, leveraged on the data centric strategy and with a focus on capturing synergies and efficiencies, offsetting the macro impact. Additionally, the Company continues to reinforce its positioning in the highest value segments: mobile contract, fibre and pay TV.
The quarterly results are affected by the cut in mobile termination rates (-33.8%), in the fixed-mobile retail tariff (VC: -20.6%) and in the fixed local and interurban tariffs (TU-RL: -65.9%; TU-RIU: -21.3%) since 24 February 2016.
Telefónica managed 97.3 million accesses in Brazil, 8% lower than in March 2015 due to the more restrictive calculation of prepaid accesses. Mobile accesses stood at 73.3 million and decreased by 10.5% year-on-year due to lower prepay accesses, partially neutralised by the increase in contract.
Quarterly net additions in contract reached to 179 thousand accesses in a context of lower commercial activity across the market. It is worth highlighting the year-on-year stability of churn (1.8%), despite the macroeconomic deterioration. Thus, market share in contract stood at 42.4% (+0.8 percentage points year-on-year), after capturing 41% of new accesses in January and February.
LTE accesses posted strong growth (3x times year-on-year) to 12.5 million, after increasing coverage to 188 cities (47% of population coverage), maintaining its market leadership (36.3% share as of February).
ARPU increased 13.7% vs. January-March 2015, driven by data ARPU acceleration (+37.0% year-on-year) which offset the negative impact of the incoming ARPU (lower termination rates).
The year-on-year variances in the fixed business were affected by the homogenisation of accesses criteria with GVT in the fourth quarter of 2015 (with no impact on revenue). For this reason, and due to fixed-mobile substitution, traditional accesses declined 2% year-on-year.
Retail broadband accesses increased by 4% year-on-year to 7.2 million accesses as of March. Fibre accesses accounted for 54% of the base (+4 percentage points year-on-year) reaching 3.9 million accesses (637 thousand FTTH) increasing the number of premises passed with FTTx to 16.8 million (4.7 million premises passed with FTTH in Sao Paolo).
The roll-out of fibre, together with the improvement in the quality of the customer base (accesses with speeds above 30 Mbps now account for 12 % of total broadband accesses, +5 percentage points year-on-year), led to a better ARPU growth year-on-year (+7.7% year-on-year).
Pay TV accesses totalled 1.8 million (+5% year-on-year) and ARPU growth accelerated to 12.6% in the quarter due to the greater weight of premium accesses (67% of the total base, +7 percentage points year-on-year). Accesses decreased by one thousand worsening compared with net additions of 74 thousand of the first quarter of 2015 as a result of a more selective commercial strategy.
Revenues for the period January-March 2016 increased to 2,431 million euros and increased by 0.6% year-on-year (+3.3% excluding regulatory changes), but decelerated 2.7 percentage points compared with the previous quarter due to lower handset sales, the deterioration in the macroeconomic environment and the strong growth in the previous year following measures adopted to improve mobile data monetisation. Service revenues increased by 1.1% (+4.1% excluding regulatory changes).
26
Mobile service revenues (1,378 million euros) increased by 0.4% compared with the first three months of 2015, impacted by regulatory changes (+3.3% excluding that effect) and lower voice consumption, mainly in prepay.
Data revenues grew 24.0% year-on-year, boosted by 4G accesses and smartphones, and accounted for 48% of service revenues (+9 percentage points year-on-year). Non-SMS data revenues represented 86% of total data revenues (+4 percentage points vs. the first three months of 2015) and increased 30.5% year-on-year, remaining as the main revenue growth lever, despite tougher year-on-year comparison (data revenue accelerated significantly from the first quarter of the previous year).
Handset revenues declined 10.9% year-on-year in the quarter (+16.4% in the fourth quarter) as a result of lower commercial activity and lower handset upgrades, although this was partially offset by the higher average price of handsets (higher mix of high-end devices due to the focus on high-value gross additions and profitability).
Fixed business revenues totalled 983 million euros in January-March (+2.0% year-on-year) driven by fibre and pay TV revenues and despite the higher regulatory impact (-2.5 percentage points in the year-on-year change in the quarter and -2.1 percentage points in the fourth quarter).
Broadband and new services revenues increased to 352 million euros in the quarter (+2.8% year-on-year) and TV revenues increased 21.1% year-on-year.
Operating expenses (1,656 million euros) declined 1.0% vs January-March 2015, significantly improving the year-on-year evolution compared with the previous quarter (+5.6% in the fourth quarter) despite the impact of inflation mainly thanks to the execution of efficiency measures, more selective commercial spend and the positive impact of regulatory changes.
Supplies (524 million euros) decreased 5.5% vs. the first quarter of 2015, mainly as a result of the positive impact of termination rates cuts. The improved year-on-year performance vs the fourth quarter (+5.3% year-on-year) was mainly due to lower consumption of hardware as a result of commercial spend optimisation (more selective commercial activity with a focus on profitable customers).
Personnel expenses (249 million euros in the first three months) grew 4.6% year-on-year (5.5% in the fourth quarter), as a result of the insourcing of a subcontract and inflation, although the increase continued to be lower than the growth in salaries thanks to the restructuring plans implemented.
Other operating expenses (883 million euros in the first three months) increased by 0.4% year-on-year as a result of the higher energy expense which was practically offset by the lower provision for bad debt (-13.4%). The strong improvement in year-on-year performance (+5.9% in the fourth quarter) is a result of lower commercial spend, customer service and provision for bad debt.
OIBDA totalled 805 million euros in the first three months of the year and grew 8.2% year-on-year. This performance reflected the implementation of different cost containment and simplification measures and the benefits obtained through synergies. As such, OIBDA margin stood at 33.1% in the quarter (+2.3 percentage points year-on-year).
First quarter results do not include the capital gains registered in Telefónica Brasil from the sales of towers to Telxius.
CapEx reached 348 million euros in the quarter (-12.6% year-on-year) and was dedicated mainly to boosting commercial growth and offering a differential quality in connectivity.
27
TELEFÓNICA BRASIL
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - March | % Chg | |||||||||||||||
2016 | 2015 | Reported | Organic | |||||||||||||
Revenues |
2,431 | 2,794 | (13.0 | ) | 0.6 | |||||||||||
Mobile Business |
1,448 | 1,942 | (25.4 | ) | (0.3 | ) | ||||||||||
Mobile service revenues |
1,378 | 1,836 | (25.0 | ) | 0.4 | |||||||||||
Data revenues |
667 | 718 | (7.1 | ) | 24.0 | |||||||||||
Handset revenues |
70 | 105 | (33.2 | ) | (10.9 | ) | ||||||||||
Fixed Business |
983 | 852 | 15.4 | 2.0 | ||||||||||||
FBB and new services (1) |
352 | 310 | 13.4 | 2.8 | ||||||||||||
Pay TV |
111 | 52 | 111.5 | 21.1 | ||||||||||||
Voice & access revenues |
520 | 489 | 6.3 | (1.8 | ) | |||||||||||
Internal exp. capitalized in fixed assets |
25 | 10 | 144.7 | 10.5 | ||||||||||||
Operating expenses |
(1,656 | ) | (1,933 | ) | (14.3 | ) | (1.0 | ) | ||||||||
Supplies |
(524 | ) | (665 | ) | (21.2 | ) | (5.5 | ) | ||||||||
Personnel expenses |
(249 | ) | (220 | ) | 13.0 | 4.6 | ||||||||||
Other operating expenses |
(883 | ) | (1,048 | ) | (15.7 | ) | 0.4 | |||||||||
Other net income (expense) |
2 | (28 | ) | c.s. | c.s. | |||||||||||
Gain (loss) on sale of fixed assets |
1 | (2 | ) | c.s. | c.s. | |||||||||||
Impairment of goodwill and other assets |
2 | (1 | ) | c.s. | c.s. | |||||||||||
Operating income before D&A (OIBDA) |
805 | 840 | (4.1 | ) | 8.2 | |||||||||||
OIBDA Margin |
33.1 | % | 30.1 | % | 3.0 | p.p. | 2.3 | p.p. | ||||||||
CapEx |
348 | 395 | (11.9 | ) | (12.6 | ) | ||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
457 | 445 | 2.8 | 32.1 |
Note:
- | The Consolidated Income Statement of Telefónica Brasil includes GVT since 1 May 2015. |
- | OIBDA and OI before management and brand fees. |
(1) | Includes FBB connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
28
TELEFÓNICA BRASIL
ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
97,339.9 | 106,528.1 | 103,432.6 | 96,899.3 | 97,283.7 | (0.1 | ) | |||||||||||||||||
Fixed telephony accesses (1) |
10,609.4 | 14,869.6 | 14,876.8 | 14,654.5 | 14,945.4 | 40.9 | ||||||||||||||||||
Internet and data accesses |
4,066.5 | 7,224.0 | 7,319.5 | 7,195.5 | 7,294.2 | 79.4 | ||||||||||||||||||
Broadband |
3,926.5 | 7,092.4 | 7,191.5 | 7,129.5 | 7,229.2 | 84.1 | ||||||||||||||||||
Fibre |
428.5 | 3,640.8 | 3,788.6 | 3,779.9 | 3,913.5 | n.m. | ||||||||||||||||||
Mobile accesses |
81,873.2 | 82,648.6 | 79,407.1 | 73,261.3 | 73,257.4 | (10.5 | ) | |||||||||||||||||
Prepay |
52,972.3 | 53,068.7 | 48,978.8 | 42,194.4 | 42,011.5 | (20.7 | ) | |||||||||||||||||
Contract |
28,900.8 | 29,580.0 | 30,428.3 | 31,066.9 | 31,245.8 | 8.1 | ||||||||||||||||||
M2M |
3,687.5 | 3,935.2 | 4,105.7 | 4,234.7 | 4,390.0 | 19.1 | ||||||||||||||||||
Pay TV |
790.9 | 1,785.9 | 1,829.2 | 1,787.9 | 1,786.7 | 125.9 | ||||||||||||||||||
Wholesale Accesses |
25.4 | 23.6 | 22.9 | 22.3 | 21.0 | (17.0 | ) | |||||||||||||||||
|
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|
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|
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|
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Total Accesses T. Brasil |
97,365.2 | 106,551.7 | 103,455.5 | 96,921.5 | 97,304.7 | (0.1 | ) | |||||||||||||||||
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Terra Accesses |
269.0 | 172.1 | 159.9 | 150.3 | 141.5 | (47.4 | ) | |||||||||||||||||
|
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|
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|
- | GVT accesses are consolidated from 1 May 2015. |
(1) | Includes fixed wireless and VoIP accesses. |
MOBILE ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Prepay percentage (%) |
64.7 | % | 64.2 | % | 61.7 | % | 57.6 | % | 57.3 | % | (7.4 | p.p.) | ||||||||||||
Contract percentage (%) |
35.3 | % | 35.8 | % | 38.3 | % | 42.4 | % | 42.7 | % | 7.4 | p.p. | ||||||||||||
Smartphones (000) |
30,216.9 | 32,732.7 | 39,117.1 | 39,911.7 | 40,327.0 | 33.5 | ||||||||||||||||||
Prepay |
18,710.6 | 19,372.1 | 22,945.3 | 22,376.4 | 22,977.1 | 22.8 | ||||||||||||||||||
Contract |
11,506.3 | 13,360.6 | 16,171.8 | 17,535.4 | 17,349.9 | 50.8 | ||||||||||||||||||
Smartphone penetration (%) |
40.3 | % | 43.3 | % | 54.2 | % | 60.4 | % | 61.0 | % | 20.7 | p.p. | ||||||||||||
Prepay |
35.5 | % | 36.7 | % | 47.1 | % | 53.4 | % | 55.1 | % | 19.6 | p.p. | ||||||||||||
Contract |
51.8 | % | 58.8 | % | 68.9 | % | 72.7 | % | 71.1 | % | 19.3 | p.p. | ||||||||||||
LTE (000) |
3,943.1 | 5,691.1 | 7,542.2 | 10,214.7 | 12,498.3 | n.m. | ||||||||||||||||||
LTE penetration (%) |
5.0 | % | 7.2 | % | 10.0 | % | 14.8 | % | 18.1 | % | 13.1 | p.p. |
SELECTED OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice traffic (Million minutes) |
93,747 | 95,738 | 97,299 | 92,647 | 93,579 | (0.2 | ) | |||||||||||||||||
Fixed voice traffic |
25,155 | 25,894 | 25,137 | 23,965 | 23,680 | (5.9 | ) | |||||||||||||||||
Mobile voice traffic |
68,592 | 69,843 | 72,162 | 68,682 | 69,899 | 1.9 | ||||||||||||||||||
Data traffic (TB) |
1,395,331 | 1,583,612 | 1,763,495 | 2,065,902 | 2,564,860 | 83.8 | ||||||||||||||||||
Fixed data traffic |
1,330,287 | 1,514,813 | 1,695,219 | 1,995,403 | 2,485,715 | 86.9 | ||||||||||||||||||
Mobile data traffic |
65,043 | 68,799 | 68,276 | 70,500 | 79,146 | 21.7 | ||||||||||||||||||
Mobile ARPU (EUR) |
7.2 | 6.5 | 5.7 | 5.7 | 6.1 | 13.7 | ||||||||||||||||||
Prepay |
3.8 | 3.3 | 2.8 | 2.9 | 3.2 | 15.2 | ||||||||||||||||||
Contract (1) |
15.3 | 14.2 | 12.3 | 11.6 | 11.5 | 0.7 | ||||||||||||||||||
Data ARPU (EUR) |
3.0 | 3.0 | 2.8 | 3.0 | 3.0 | 37.0 | ||||||||||||||||||
% non-SMS over data revenues |
81.6 | % | 82.5 | % | 83.0 | % | 84.5 | % | 85.8 | % | 4.2 | p.p. | ||||||||||||
Fixed telephony ARPU (EUR) |
15.0 | 14.5 | 13.2 | 12.0 | 11.3 | (1.0 | ) | |||||||||||||||||
Pay TV ARPU (EUR) |
22.3 | 23.5 | 22.0 | 21.1 | 20.6 | 12.9 | ||||||||||||||||||
Broadband ARPU (EUR) |
12.5 | 12.3 | 11.0 | 10.6 | 10.3 | 7.7 | ||||||||||||||||||
Mobile churn |
2.9 | % | 3.2 | % | 4.7 | % | 6.1 | % | 3.3 | % | 0.5 | p.p. | ||||||||||||
Contract (1) |
1.8 | % | 1.9 | % | 1.9 | % | 1.8 | % | 1.8 | % | 0.0 | p.p. |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Excludes M2M. |
29
05
(year-on-year changes in organic terms)
Telefonica Hispanoméricas results in euros (revenues -16.7%; OIBDA -23.2%) reflect the depreciation of the regions currencies, which have deducted 28 percentage points and 24 percentage points from the year-on-year growth of revenues and OIBDA, respectively. In organic terms, the year-on-year revenue growth accelerated in the quarter thanks to the continued focus on acquiring high-quality customers, such as LTE, smartphones, mobile contract, broadband and pay TV.
Total accesses reached 134.3 million at the end of March (+1% year-on-year). In the mobile business, contract accesses growth improved to 7% year-on-year, after recording net additions of 315 thousand accesses in January-March, eight times higher than that of the same period of the previous year. Similarly, this improvement in net additions was posted in all the countries across the region.
In prepay, quarterly net losses were 399 thousand accesses, due to the competitive intensity in Peru and Chile, and the disconnections of lower value customers in Argentina.
Smartphones (+33% year-on-year) and LTE accesses (3.5x higher year-on-year) reached penetrations of 38% (+9 percentage points) and 9% (+6 percentage points), respectively. The expansion of population coverage in the region must be mentioned, now at 42%, 22 p.p. more than one year ago.
In the fixed business, broadband accesses (5.6 million) increased by 3% year-on-year after recording net additions of 14 thousand accesses, lower than these of the first quarter of 2015 (+73 thousand) due to lower commercial activity in Colombia (affected by the performance of the subcontracted company) and in Chile (lower activity in the market). However, the evolution of Peru and the low levels of churn maintained in the region (2.0%; stable year-on-year) continued to be noteworthy. Additionally, the focus continued to be on the progressive improvement in the speed delivered to customers, increasing accesses with speeds above 4 Mb to 55.0% (+5 percentage points year-on-year).
Pay TV accesses (2.9 million, +12% year-on-year) presented quarterly net additions of 39 thousand accesses, compared to 104 thousand accesses captured in the first quarter of 2015 due to the lower commercial activity in Chile. However, strong levels of commercial activity were maintained in the rest of the countries, mainly in Peru, thanks to the exclusivity and production of own content.
Revenues increased by 11.3% vs. January-March 2015 and improved their trend compared with the previous quarter, explained by Mexico, Venezuela, Colombia and Argentina, and despite a higher decline in handset revenues (-4.5% year-on-year). The regulatory impact deducted 1.1 percentage point from year-on-year change.
Quartely mobile service revenues reflected a strong acceleration to 13.4% year-on-year (+8.8% in the fourth quarter of 2015) due to the improved performance in Venezuela, Mexico and Colombia. The growth of smartphones and LTE continued to boost data revenues (+32.5% year-on-year) and mainly non-SMS data revenues (+48.7% year-on-year in the quarter) which now represent 91% of total data revenues (+10 percentage points year-on-year), showing the growth potential of data services in the region given the levels of penetration.
Fixed business revenues also improved their year-on-year performance to 13.1% (+10.6% year-on-year in the fourth quarter), underpinned by the growth of broadband and new services (+22.2% year-on-year in the quarter, +17.1% in the previous quarter) and the solid growth maintained in pay TV (+18.2% and +27.4% respectively).
Operating expenses increased to 2,237 million euros, 16.3% higher year-on-year (+13.3% in the fourth quarter).
30
Supplies (912 million euros) accelerated their year-on-year growth to 11.5% (+3.9% in previous quarter) due to the depreciation of Latin American currencies against the USD and the higher interconnection costs in Mexico, Chile and Argentina.
Personnel expenses (379 million euros in January-March 2016) accelerated year-on-year growth vs the previous quarter (+31.5% vs +19.5%) given the inflationary pressure mainly in Argentina and Venezuela. Meanwhile, the average workforce remained stable year-on-year.
Other operating expenses (946 million euros) grew +14.9% year-on-year in the first quarter as a result of increased network cost due to the expansion of fixed and mobile networks, as well as the impact of inflation and depreciation of the Latin American currencies against the USD. The improved year-on-year performance (+20.9% in the fourth quarter) is explained by the lower growth in commercial expenses.
OIBDA for January-March amounted to 866 million euros and increased 0.8% year-on-year. The deceleration of growth vs. previous quarters is due in some markets to the higher commercial activity and to the impact of the currency depreciations (not yet transfered to tariffs or subsidies due to the levels of competitive intensity). As a result, the OIBDA margin stood at 28.3% in January-March (-2.9 percentage points year-on-year).
CapEx totalled 459 million euros, and grew 31.1% vs. the first three months of 2015 (excluding 139 million euros for spectrum acquisition in 2015: 133 million euros in Ecuador and 6 million euros in Chile). This investment was dedicated to the deployment and increase of 3G and 4G capacity, the improvement of the copper network and the development of fibre and VDSL networks.
31
TELEFÓNICA HISPANOAMÉRICA
CONSOLIDATED INCOME STATEMENT
Unaudited figures (Euros in millions)
January - March | % Chg | |||||||||||||||
2016 | 2015 | Reported | Organic | |||||||||||||
Revenues |
3,054 | 3,665 | (16.7 | ) | 11.3 | |||||||||||
Mobile Business |
2,173 | 2,668 | (18.6 | ) | 11.4 | |||||||||||
Mobile service revenues |
1,949 | 2,367 | (17.6 | ) | 13.4 | |||||||||||
Data revenues (1) |
851 | 889 | (4.2 | ) | 32.5 | |||||||||||
Handset revenues |
224 | 302 | (25.9 | ) | (4.5 | ) | ||||||||||
Fixed Business |
886 | 1,007 | (11.9 | ) | 13.1 | |||||||||||
FBB and new services revenues (2) |
468 | 503 | (7.0 | ) | 22.2 | |||||||||||
Pay TV revenues |
140 | 133 | 5.3 | 18.2 | ||||||||||||
Voice & access revenues |
278 | 370 | (24.8 | ) | (1.0 | ) | ||||||||||
Internal exp. capitalized in fixed assets |
27 | 27 | 1.1 | 20.2 | ||||||||||||
Operating expenses |
(2,237 | ) | (2,583 | ) | (13.4 | ) | 16.3 | |||||||||
Supplies |
(912 | ) | (1,030 | ) | (11.4 | ) | 11.5 | |||||||||
Personnel expenses |
(379 | ) | (418 | ) | (9.3 | ) | 31.5 | |||||||||
Other operating expenses |
(946 | ) | (1,135 | ) | (16.7 | ) | 14.9 | |||||||||
Other net income (expense) |
21 | 17 | 22.9 | 43.0 | ||||||||||||
Gain (loss) on sale of fixed assets |
0 | 0 | 42.8 | c.s. | ||||||||||||
Impairment of goodwill and other assets |
| | | | ||||||||||||
Operating income before D&A (OIBDA) |
866 | 1,127 | (23.2 | ) | 0.8 | |||||||||||
OIBDA Margin |
28.3 | % | 30.8 | % | (2.4 | p.p.) | (2.9 | p.p.) | ||||||||
CapEx |
459 | 622 | (26.1 | ) | 31.1 | |||||||||||
Spectrum |
| 139 | | | ||||||||||||
OpCF (OIBDA-CapEx) |
406 | 505 | (19.6 | ) | (21.6 | ) |
Note:
- | The January-March 2016 consolidated financial information uses the exchange rate of the Venezuelan bolivar set at the denominated DICOM (273 Venezuelan bolivars fuertes per dollar at 31 March 2016). |
- | OIBDA before management and brand fees. |
- | 2015 and 2016 reported figures include the hyperinflationary adjustments in Venezuela in both years. |
(1) | Since the first quarter 2015, data and voice revenues have been reassigned to homogenise the year-on-year comparison. |
(2) | Includes FBB connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
132,461.8 | 132,247.2 | 132,672.7 | 134,612.4 | 134,274.3 | 1.4 | ||||||||||||||||||
Fixed telephony accesses (1) |
13,266.5 | 13,158.7 | 13,035.3 | 12,829.8 | 12,497.9 | (5.8 | ) | |||||||||||||||||
Internet and data accesses |
5,516.0 | 5,573.4 | 5,644.5 | 5,667.8 | 5,706.8 | 3.5 | ||||||||||||||||||
Broadband |
5,452.7 | 5,514.1 | 5,586.1 | 5,610.4 | 5,624.8 | 3.2 | ||||||||||||||||||
Fibre and VDSL |
413.2 | 501.6 | 619.2 | 751.1 | 835.4 | n.m. | ||||||||||||||||||
Mobile accesses |
111,143.1 | 110,866.4 | 111,251.2 | 113,302.7 | 113,218.7 | 1.9 | ||||||||||||||||||
Prepay |
87,454.6 | 87,077.4 | 87,013.2 | 88,332.8 | 87,934.3 | 0.5 | ||||||||||||||||||
Contract |
23,688.6 | 23,789.1 | 24,238.1 | 24,969.8 | 25,284.4 | 6.7 | ||||||||||||||||||
M2M |
2,125.9 | 2,144.8 | 2,214.3 | 2,296.9 | 2,315.1 | 8.9 | ||||||||||||||||||
Pay TV |
2,536.2 | 2,648.6 | 2,741.7 | 2,812.2 | 2,850.9 | 12.4 | ||||||||||||||||||
Wholesale Accesses |
31.4 | 31.4 | 31.0 | 30.9 | 28.2 | (10.2 | ) | |||||||||||||||||
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|||||||||||||
Total Accesses T. Hispanoamerica |
132,493.2 | 132,278.6 | 132,703.7 | 134,643.3 | 134,302.5 | 1.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
MOBILE ACCESSES
Unaudited figures (thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Prepay percentage (%) |
78.7 | % | 78.5 | % | 78.2 | % | 78.0 | % | 77.7 | % | (1.0 | p.p.) | ||||||||||||
Contract percentage (%) |
21.3 | % | 21.5 | % | 21.8 | % | 22.0 | % | 22.3 | % | 1.0 | p.p. | ||||||||||||
Smartphones (000) |
31,048.7 | 35,420.7 | 37,486.0 | 40,229.5 | 41,448.0 | 33.5 | ||||||||||||||||||
Prepay |
18,205.6 | 21,877.1 | 23,118.9 | 25,508.0 | 25,759.1 | 41.5 | ||||||||||||||||||
Contract |
12,843.1 | 13,543.6 | 14,367.1 | 14,721.5 | 15,689.0 | 22.2 | ||||||||||||||||||
Smartphone penetration (%) |
28.9 | % | 33.0 | % | 34.8 | % | 36.7 | % | 37.8 | % | 8.9 | p.p. | ||||||||||||
Prepay |
21.0 | % | 25.3 | % | 26.8 | % | 29.1 | % | 29.5 | % | 8.5 | p.p. | ||||||||||||
Contract |
61.9 | % | 64.9 | % | 67.5 | % | 67.0 | % | 70.3 | % | 8.4 | p.p. | ||||||||||||
LTE (000) |
2,811.4 | 4,233.6 | 6,037.5 | 8,321.9 | 9,859.6 | n.m. | ||||||||||||||||||
LTE penetration (%) |
2.6 | % | 3.9 | % | 5.5 | % | 7.5 | % | 8.9 | % | 6.3 | p.p. |
32
(year-on-year changes in organic terms)
In the first quarter of the year Telefónica Argentina maintained the focus on the acquisition and retention of high-value customers, highlighting the fast roll-out of LTE, which enabled coverage to be increased to 69%.
Meanwhile, and with no impact on the results of the quarter, the Company, following authorisation from the Argentine regulator, announced the increase in the regulated tariff of the monthly fee to 38 pesos (previously 13 pesos). This tariff had been frozen since 2001 and will become effective from 15 May 2016.
Accesses managed by the Company totalled 26.5 million and remained stable year-on-year. In the mobile business, accesses (19.9 million; +1% year-on-year) posted net losses of 470 thousand accesses associated with the higher churn of low-value customers in prepay (with no impact on revenues). However, the year-on-year growth of the prepay customer base who top up frequently accelerated to 5% (2% in the fourth quarter of 2015). The balance of contract portability continued to improve (+18 thousand accesses in the quarter).
Smartphones (7.7 million; +26% vs. March 2015), with quarterly net additions of 469 thousand accesses, reached a penetration of 40% (+8 percentage points year-on-year) driven by the swift adoption of LTE (2.2 million vs. 116 thousand accesses in the first quarter of 2015) which frees up the 3G network and increases the quality of the customer base (LTE traffic accounts for 31% of the total; penetration only 11%). Likewise, mobile data traffic multiplied by 2.3 times with respect to January-March 2015.
Retail broadband accesses totalled 1.9 million, remaining stable year-on-year, and the focus continued to be on increasing the service quality through a gradual increase in speeds (34% of the base in speeds above 4 Mb, +3 percentage points year-on-year).
Revenues reached 689 million euros in the first quarter of 2016 and accelerated their growth to 19.7% year-on-year boosted by fixed revenues (less affected by the slowdown in consumption).
Mobile service revenues increased by 14.1% slightly decelerating their year-on-year growth in the first three months of the year impacted by the lower levels of consumption in the economy and by the different timings of the tariff updates vs. the previous year. Meanwhile, data revenues accelerated their growth in the first quarter to 39.0% year-on-year reflecting a positive monetisation of the service. Thus, non-SMS data revenues increased their weight over total data by 26 percentage points to 82%.
Fixed business revenues totalled 268 million euros in the quarter and improved their pace of year-on-year growth to 29.6% explained by fixed broadband and new services revenues (+44.4% year-on-year) due to the higher quality of the base.
Operating expenses reached 543 million euros in January-March 2016 and increased by 32.6% vs. the same period of the previous year mainly as a result of the inflation increase (which impacts mainly in personnel and external services expenses), the depreciation of the Argentine peso (mainly in supplies) and higher commercial expenses (lack of handsets in the same period of the previous year). These expenses are partially offset by the efficiencies generated by the Company.
OIBDA increased to 149 million euros in the first quarter and decreased by 11.4% year-on-year as a result of last years reduced commercial activity and high inflation. Thus, OIBDA margin for the quarter stood at 21.4% (-7.5 percentage points year-on-year).
CapEx (159 million euros in the first three months of the year) increased 76.8% year-on-year mainly due to the expansion of 3G and 4G networks and the improvements implemented in the fixed network. It should be noted that the year-on-year change for the quarter cannot be extrapolated to the full year, given the different execution levels of investment in both years.
33
TELEFÓNICA ARGENTINA
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
689 | 935 | (26.3 | ) | 19.7 | |||||||||||
Mobile Business |
421 | 599 | (29.7 | ) | 14.1 | |||||||||||
Mobile service revenues |
371 | 529 | (29.8 | ) | 14.1 | |||||||||||
Data revenues |
172 | 201 | (14.4 | ) | 39.0 | |||||||||||
Handset revenues |
50 | 71 | (29.4 | ) | 14.7 | |||||||||||
Fixed Business |
268 | 336 | (20.2 | ) | 29.6 | |||||||||||
FBB and new services (1) |
168 | 189 | (11.0 | ) | 44.4 | |||||||||||
Voice & access revenues |
99 | 146 | (32.1 | ) | 10.3 | |||||||||||
OIBDA |
149 | 273 | (45.4 | ) | (11.4 | ) | ||||||||||
OIBDA margin (2) |
21.4 | % | 28.8 | % | (7.5 | p.p.) | ||||||||||
CapEx |
159 | 146 | 8.9 | 76.8 | ||||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
(10 | ) | 127 | c.s. | c.s. |
Note:
- | OIBDA is presented before management and brand fees. |
(1) | Includes FBB connectivity services (retail and wholesale), including value-added services, ICT revenues, other services over connectivity and FBB equipment. |
(2) | Margin over revenues includes fixed to mobile interconnection. |
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
26,318.5 | 26,236.0 | 26,375.5 | 26,910.7 | 26,430.8 | 0.4 | ||||||||||||||||||
Fixed telephony accesses (1) |
4,693.2 | 4,669.3 | 4,662.2 | 4,635.2 | 4,599.7 | (2.0 | ) | |||||||||||||||||
Fixed wireless |
285.9 | 286.4 | 295.1 | 288.0 | 276.0 | (3.5 | ) | |||||||||||||||||
Internet and data accesses |
1,880.7 | 1,877.8 | 1,883.9 | 1,886.3 | 1,911.8 | 1.7 | ||||||||||||||||||
Broadband |
1,871.8 | 1,869.9 | 1,877.5 | 1,881.2 | 1,880.6 | 0.5 | ||||||||||||||||||
Mobile accesses |
19,744.6 | 19,688.9 | 19,829.4 | 20,389.2 | 19,919.2 | 0.9 | ||||||||||||||||||
Prepay |
12,778.0 | 12,859.0 | 12,985.6 | 13,434.6 | 12,989.8 | 0.9 | ||||||||||||||||||
Contract |
6,966.5 | 6,829.9 | 6,843.8 | 6,954.6 | 6,929.4 | 1.7 | ||||||||||||||||||
M2M |
455.4 | 446.9 | 450.5 | 448.8 | 439.2 | (0.5 | ) | |||||||||||||||||
Wholesale Accesses |
23.3 | 23.5 | 23.0 | 23.1 | 22.4 | (3.6 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
26,341.7 | 26,259.5 | 26,398.6 | 26,933.8 | 26,453.2 | (3.6 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice traffic (Million minutes) |
16,463 | 16,641 | 16,592 | 16,382 | 14,882 | (9.6 | ) | |||||||||||||||||
Fixed voice traffic |
6,612 | 6,916 | 7,003 | 6,768 | 6,066 | (8.3 | ) | |||||||||||||||||
Mobile voice traffic |
9,851 | 9,725 | 9,590 | 9,614 | 8,816 | (10.5 | ) | |||||||||||||||||
Data traffic (TB) |
117,077 | 167,451 | 172,826 | 165,947 | 175,385 | 49.8 | ||||||||||||||||||
Fixed data traffic (1) |
107,008 | 155,961 | 158,290 | 146,912 | 151,868 | 41.9 | ||||||||||||||||||
Mobile data traffic |
10,069 | 11,491 | 14,536 | 19,035 | 23,517 | 133.6 | ||||||||||||||||||
Mobile ARPU (EUR) |
9.1 | 9.9 | 9.9 | 9.0 | 6.5 | 16.0 | ||||||||||||||||||
Prepay |
2.7 | 2.9 | 2.9 | 2.7 | 1.9 | 14.5 | ||||||||||||||||||
Contract (2) |
22.3 | 24.0 | 24.5 | 22.6 | 16.2 | 17.7 | ||||||||||||||||||
Data ARPU (EUR) |
3.4 | 4.3 | 4.5 | 4.0 | 2.9 | 19.0 | ||||||||||||||||||
% non-SMS over data revenues |
56.2 | % | 78.1 | % | 76.1 | % | 79.2 | % | 82.2 | % | 26.0 | p.p. | ||||||||||||
Fixed telephony ARPU (EUR) |
9.9 | 9.8 | 10.4 | 9.1 | 6.6 | 8.8 | ||||||||||||||||||
Broadband ARPU (EUR) |
21.3 | 21.9 | 22.5 | 21.6 | 17.6 | 34.3 | ||||||||||||||||||
Churn |
3.1 | % | 2.9 | % | 2.7 | % | 1.9 | % | 3.3 | % | 0.3 | p.p. | ||||||||||||
Contract (2) |
1.1 | % | 1.5 | % | 1.7 | % | 1.3 | % | 1.2 | % | 0.1 | p.p. |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Includes solely traffic pertaining to FBB accesses, not Business customers. |
(2) | Excludes M2M. |
34
(year-on-year changes in organic terms)
In the first quarter of the year the Company maintained its leadership in high-value segments, despite the competitive pressure, particularly in the mobile segment.
The quarterly results were affected by the reduction in mobile termination rates of 19% from 25 January 2016 and 8% in the fixed network termination rates from 5 May 2015.
The total number of accesses amounted to 12.7 million, 8% lower than in March 2015, explained by the 10% decrease in mobile accesses (9.5 million), mainly from prepay (-17%). However, it is worth highlighting the 7% year-on-year growth in mobile contract accesses, the highest level in more than four years, after recording quarterly net additions of 83 thousand (-2 thousand in the first quarter of 2015), maintaining a positive balance in portability (+10 thousand accesses). Prepay accesses posted net losses of 470 thousand accesses in January-March due to the higher intensity in the competitive environment.
Smartphones (3.0 million; +5% year-on-year), with net additions of 72 thousand accesses in the quarter, reached a penetration of 33%, +5 percentage points vs. March 2015. LTE accesses (1.2 million accesses) more than doubled year-on-year due to the accelerated deployment of coverage (80% at March; +13 percentage points year-on-year). In this environment of higher demand for these services, mobile data traffic increased significantly (multiplying by almost 2 times year-on-year in the quarter).
Retail broadband accesses grew by 4% year-on-year to 1.1 million, although they presented quarterly net losses of 3 thousand accesses due to lower commercial activity in the market; churn remained stable year-on-year thanks to the focus on retention. At the same time, the quality of the customer base continued to increase due to the progressive migration of accesses towards higher-speed plans, with 80% of the base in speeds above 4Mb (+9 percentage points year-on-year).
Pay TV accesses (646 thousand) increased by +5% compared with March of the previous year after posting net additions of 1 thousand accesses in the period, lower than that of previous quarters due to lower levels of consumption.
Revenues in the first quarter of 2016 reached 511 million euros and were reduced by 0.7% year-on-year, negatively impacted by lower handset sales and regulation (-0.9 percentage points in year-on-year change).
Mobile services revenues for the quarter decreased by 3.7% year-on-year impacted by the decline in termination rates (-1.4 percentage points on year-on-year growth). It is worth highlighting the increase in data revenues (+37.4% year-on-year), driven by the strong growth of smartphones and LTE accesses which accounted for 46% of mobile service revenues (+14 percentage points year-on-year).
Handset revenues decreased by 5.6% year-on-year in January-March due to the direct sale of prepay handsets through third party distribution channels, resulting both in lower revenues and in lower expenses.
Fixed business revenues continued to present a solid performance (214 million euros; +4.2% year-on-year) driven by both fixed broadband and new services revenues (+11.7%) and by pay TV revenues (+6.3%).
Operating expenses totalled 345 million euros in the quarter and decreased by 4.9% year-on-year (-0.5% in the fourth quarter of 2015) due to a higher rationalisation in commercial expenses with lower expenditure on subsidies, which more than offset the higher network expenses associated with transformation and growth projects.
35
OIBDA reached 176 million euros in January-March, and grew by 10.2% year-on-year mainly as a result of the lower levels of subsidies compared with previous quarters. As such, the OIBDA margin stood at 34.4% in the quarter (+3.4 percentage points year-on-year).
CapEx totalled 114 million euros in the quarter (+7.2% year-on-year, excluding 6 million euros from spectrum acquisition in the first quarter of 2015) and was devoted to the improvement of 4G and fibre networks.
TELEFÓNICA CHILE
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
511 | 565 | (9.5 | ) | (0.7 | ) | ||||||||||
Mobile Business |
297 | 339 | (12.5 | ) | (3.9 | ) | ||||||||||
Mobile service revenues |
267 | 304 | (12.3 | ) | (3.7 | ) | ||||||||||
Data revenues |
123 | 98 | 25.1 | 37.4 | ||||||||||||
Handset revenues |
30 | 35 | (14.0 | ) | (5.6 | ) | ||||||||||
Fixed Business |
214 | 226 | (5.1 | ) | 4.2 | |||||||||||
FBB and new services (1) |
97 | 95 | 1.7 | 11.7 | ||||||||||||
Voice & access revenues |
55 | 57 | (3.2 | ) | 6.3 | |||||||||||
Others |
63 | 74 | (15.2 | ) | (6.9 | ) | ||||||||||
OIBDA |
176 | 176 | (0.0 | ) | 9.8 | |||||||||||
OIBDA margin |
34.4 | % | 31.1 | % | 3.3 | p.p. | ||||||||||
CapEx |
114 | 123 | (7.2 | ) | 1.9 | |||||||||||
Spectrum |
| 6 | | | ||||||||||||
OpCF (OIBDA-CapEx) |
62 | 53 | 16.6 | 28.2 |
Note:
- | OIBDA is presented before management and brand fees. |
(1) | Includes FBB connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
36
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
13,861.3 | 13,610.4 | 13,387.4 | 13,158.3 | 12,741.5 | (8.1 | ) | |||||||||||||||||
Fixed telephony accesses (1) |
1,557.7 | 1,537.4 | 1,510.3 | 1,486.0 | 1,459.0 | (6.3 | ) | |||||||||||||||||
Internet and data accesses |
1,067.9 | 1,093.6 | 1,106.4 | 1,112.0 | 1,109.1 | 3.9 | ||||||||||||||||||
Broadband |
1,056.7 | 1,082.5 | 1,095.4 | 1,101.1 | 1,098.4 | 3.9 | ||||||||||||||||||
Fibre and VDSL |
192.2 | 216.3 | 240.7 | 256.7 | 268.9 | 39.9 | ||||||||||||||||||
Mobile accesses |
10,619.5 | 10,345.1 | 10,129.6 | 9,915.6 | 9,527.9 | (10.3 | ) | |||||||||||||||||
Prepay |
7,817.5 | 7,503.0 | 7,268.0 | 6,995.3 | 6,524.9 | (16.5 | ) | |||||||||||||||||
Contract |
2,802.0 | 2,842.1 | 2,861.7 | 2,920.3 | 3,002.9 | 7.2 | ||||||||||||||||||
M2M |
293.0 | 291.0 | 294.3 | 310.0 | 331.2 | 13.0 | ||||||||||||||||||
Pay TV |
616.2 | 634.3 | 641.0 | 644.7 | 645.6 | 4.8 | ||||||||||||||||||
Wholesale Accesses |
5.9 | 5.9 | 5.8 | 5.7 | 5.2 | (12.7 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
13,867.2 | 13,616.3 | 13,393.2 | 13,164.0 | 12,746.7 | (8.1 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice traffic (Million minutes) |
8,725 | 8,693 | 8,927 | 9,296 | 9,130 | 4.6 | ||||||||||||||||||
Fixed voice traffic |
1,354 | 1,353 | 1,320 | 1,301 | 1,127 | (16.8 | ) | |||||||||||||||||
Mobile voice traffic |
7,372 | 7,340 | 7,607 | 7,995 | 8,003 | 8.6 | ||||||||||||||||||
Data traffic (TB) |
252,756 | 289,259 | 309,838 | 322,994 | 348,695 | 38.0 | ||||||||||||||||||
Fixed data traffic |
238,140 | 269,957 | 288,230 | 296,880 | 321,246 | 34.9 | ||||||||||||||||||
Mobile data traffic |
14,616 | 19,302 | 21,607 | 26,114 | 27,449 | 87.8 | ||||||||||||||||||
Mobile ARPU (EUR) |
9.4 | 9.7 | 9.0 | 8.8 | 8.9 | 3.8 | ||||||||||||||||||
Prepay |
3.8 | 3.8 | 3.3 | 3.1 | 3.0 | (11.4 | ) | |||||||||||||||||
Contract (1) |
27.8 | 28.7 | 26.3 | 25.2 | 24.7 | (2.5 | ) | |||||||||||||||||
Data ARPU (EUR) |
3.1 | 3.4 | 3.4 | 3.5 | 4.2 | 49.3 | ||||||||||||||||||
% non-SMS over data revenues |
94.0 | % | 93.5 | % | 93.5 | % | 93.7 | % | 97.4 | % | 3.4 | p.p. | ||||||||||||
Fixed telephony ARPU (EUR) |
14.1 | 14.1 | 13.6 | 14.8 | 13.1 | 1.9 | ||||||||||||||||||
Pay TV ARPU (EUR) |
29.1 | 30.4 | 26.1 | 26.1 | 24.4 | (8.1 | ) | |||||||||||||||||
Broadband ARPU (EUR) |
17.9 | 18.1 | 16.9 | 16.8 | 16.2 | (0.5 | ) | |||||||||||||||||
Mobile churn |
3.2 | % | 3.7 | % | 3.2 | % | 3.4 | % | 3.6 | % | 0.4 | p.p. | ||||||||||||
Contract (1) |
1.9 | % | 1.9 | % | 2.3 | % | 2.2 | % | 2.0 | % | 0.1 | p.p. |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Excludes M2M. |
37
(year-on-year changes in organic terms)
In the first quarter of the year, Telefónica Perú recorded strong commercial momentum in high value customers; mobile contract, smartphones, LTE and pay TV.
Total accesses stood at 21.8 million (-1% year-on-year). Within mobile accesses (16.4 million; -3% year-on-year). The strong evolution of the contract segment was particularly outstanding (+13% year-on-year), on the back of solid net additions (142 thousand accesses, +28% year-on-year) driven by greater migrations from prepay (+82% year-on-year). On the other hand, prepay accesses decreased by 10% vs. March 2015 in a highly competitive environment, which translated into net losses in the period of 483 thousand accesses.
Smartphones increased by 79% year-on-year; reaching 29% of total accesses (+13 percentage points year-on-year), while LTE accesses amounted to 1.5 million (2.4 times vs. previous year), with a penetration of 9%, +5 percentage points year-on-year. The performance of both was reflected in data traffic acceleration (2.3x compared with January-March 2015).
In the fixed business, the commercial offer was underpinned by the differential attributes of pay TV and the bundling campaigns, with 59% of the traditional accesses base already on bundles (+9 percentage points year-on-year).
Retail broadband accesses grew by 7% vs. March 2015 (1.6 million) and recorded quarterly net additions of 18 thousand accesses (-37% year-on-year) with a stable year-on-year churn at 2.2%.
Pay TV accesses also posted strong year-on-year growth (+21% year-on-year; 1.2 million) and net additions of 29 thousand accesses in January-March, levered on own production and exclusive content as well as on customer base digitalisation.
Revenues amounted to 624 million euros in the quarter (-0.5% year-on-year), affected by the cut in termination rates applied in April 2015 (+1.4% stripping out this effect) and by the competitive environment, which impacted mainly the performance of prepay outgoing revenues. These effects were not offset by the sustained growth in TV revenues and mobile data.
Mobile service revenues decreased 4.2% year-on-year in January-March (-1.0% stripping out the impact of regulation)
However, data revenues growth accelerated strongly to 8.8% year-on-year (+6.2% in the previous quarter), underpinned by the increase in data traffic (+8% quarter-on-quarter) and due to better monetisation following the end of certain campaigns. Thus, data revenues accounted for 47% of total mobile service revenues (+6 percentage points year-on-year).
Handset revenues maintained the trend of the previous quarter and increased by 4.0% vs. the first three months of 2015, due to a greater weight of mid and high-end handsets.
Fixed business revenues stood at 279 million euros (+3.3% year-on-year), leveraged on pay TV revenues (+24.8% year-on-year) and revenues from broadband and new services (+1.2% year-on-year).
Operating expenses amounted to 444 million euros in January-March, 6.0% more than the same period of the previous year, affected by the impact of the exchange rate on expenses denominated in foreign currency and an unfavourable year-on-year comparison. These higher costs were partially offset by efficiencies in general and personnel expenses resulting from the simplification programme. Compared with the previous quarter, expenses increased, mainly due to the greater intensity of commercial spend in high-value customers retention and the higher impact of the exchange rate.
38
As such, OIBDA stood at 187 million euros in the quarter and decreased by 13.2% year-on-year, mainly affected by the aforementioned Opex performance. The OIBDA margin stood at 30.0% (-4.4 percentage points year-on-year).
CapEx (55 million euros; -4.2% vs. January-March 2015) was mainly devoted to increasing fixed infrastructure speeds (deployment plan for fixed ultra broadband networks) and the deployment and maintenance of 3G and 4G networks.
TELEFÓNICA PERU
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
624 | 692 | (9.8 | ) | (0.5 | ) | ||||||||||
Mobile Business |
345 | 394 | (12.4 | ) | (3.4 | ) | ||||||||||
Mobile service revenues (1) |
308 | 354 | (13.2 | ) | (4.2 | ) | ||||||||||
Data revenues (2) |
146 | 148 | (1.3 | ) | 8.8 | |||||||||||
Handset revenues |
38 | 40 | (5.7 | ) | 4.0 | |||||||||||
Fixed Business |
279 | 298 | (6.3 | ) | 3.3 | |||||||||||
FBB and new services (3) |
138 | 151 | (8.2 | ) | 1.2 | |||||||||||
Pay TV |
69 | 61 | 13.2 | 24.8 | ||||||||||||
Voice & access revenues |
72 | 87 | (16.7 | ) | (8.2 | ) | ||||||||||
OIBDA |
187 | 238 | (21.3 | ) | (13.2 | ) | ||||||||||
OIBDA margin |
30.0 | % | 34.4 | % | (4.4 | p.p.) | ||||||||||
CapEx |
55 | 63 | (13.2 | ) | (4.2 | ) | ||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
133 | 175 | (24.3 | ) | (16.5 | ) |
Note:
- | OIBDA is presented before management and brand fees. |
(1) | Includes fixed wireless revenues. |
(2) | Since the first quarter 2015, data and voice revenues have been reassigned to homogenise the year-on-year comparison. |
(3) | Includes FBB connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
39
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
22,083.4 | 22,104.2 | 22,184.3 | 22,231.0 | 21,791.0 | (1.3 | ) | |||||||||||||||||
Fixed telephony accesses (1) |
2,641.4 | 2,605.8 | 2,634.9 | 2,596.6 | 2,452.1 | (7.2 | ) | |||||||||||||||||
Fixed wireless |
191.2 | 229.8 | 208.5 | 191.9 | 127.7 | (33.2 | ) | |||||||||||||||||
Internet and data accesses |
1,557.4 | 1,589.2 | 1,628.0 | 1,647.1 | 1,663.9 | 6.8 | ||||||||||||||||||
Broadband |
1,529.7 | 1,564.4 | 1,602.5 | 1,621.2 | 1,639.2 | 7.2 | ||||||||||||||||||
VDSL |
219.1 | 283.5 | 376.7 | 488.7 | 557.0 | 154.3 | ||||||||||||||||||
Mobile accesses |
16,870.2 | 16,819.1 | 16,773.8 | 16,786.5 | 16,445.4 | (2.5 | ) | |||||||||||||||||
Prepay |
11,645.3 | 11,450.4 | 11,255.3 | 11,013.3 | 10,530.0 | (9.6 | ) | |||||||||||||||||
Contract |
5,224.8 | 5,368.7 | 5,518.5 | 5,773.1 | 5,915.5 | 13.2 | ||||||||||||||||||
M2M |
118.0 | 98.4 | 99.8 | 103.3 | 81.7 | (30.8 | ) | |||||||||||||||||
Pay TV |
1,014.5 | 1,090.1 | 1,147.7 | 1,200.8 | 1,229.6 | 21.2 | ||||||||||||||||||
Wholesale Accesses |
0.3 | 0.2 | 0.2 | 0.1 | 0.0 | n.m. | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
22,083.7 | 22,104.3 | 22,184.5 | 22,231.1 | 21,791.0 | (1.3 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice traffic (Million minutes) |
24,759 | 24,635 | 26,225 | 28,033 | 27,479 | 11.0 | ||||||||||||||||||
Fixed voice traffic |
5,460 | 5,429 | 5,398 | 5,322 | 5,144 | (5.8 | ) | |||||||||||||||||
Mobile voice traffic |
19,300 | 19,206 | 20,828 | 22,711 | 22,336 | 15.7 | ||||||||||||||||||
Data traffic (TB) |
119,624 | 130,167 | 133,338 | 141,780 | 140,739 | 17.7 | ||||||||||||||||||
Fixed data traffic |
114,584 | 123,778 | 125,105 | 131,164 | 129,287 | 12.8 | ||||||||||||||||||
Mobile data traffic |
5,040 | 6,389 | 8,232 | 10,616 | 11,451 | 127.2 | ||||||||||||||||||
Mobile ARPU (EUR) |
7.0 | 6.8 | 6.7 | 6.7 | 6.3 | (1.3 | ) | |||||||||||||||||
Prepay |
4.2 | 3.9 | 3.7 | 3.6 | 2.8 | (28.7 | ) | |||||||||||||||||
Contract (1) |
13.5 | 13.2 | 13.1 | 12.9 | 12.0 | (0.1 | ) | |||||||||||||||||
Data ARPU (EUR) (2) |
2.9 | 3.1 | 3.1 | 3.2 | 2.9 | 10.5 | ||||||||||||||||||
% non-SMS over data revenues |
94.1 | % | 95.6 | % | 96.2 | % | 96.9 | % | 99.1 | % | 5.0 | p.p. | ||||||||||||
Fixed telephony ARPU (EUR) |
10.8 | 9.8 | 10.0 | 8.5 | 9.4 | (3.4 | ) | |||||||||||||||||
Pay TV ARPU (EUR) |
19.4 | 18.7 | 18.1 | 17.4 | 16.6 | (5.4 | ) | |||||||||||||||||
Broadband ARPU (EUR) |
19.5 | 18.9 | 18.5 | 18.0 | 16.4 | (7.3 | ) | |||||||||||||||||
Mobile churn |
4.0 | % | 4.3 | % | 4.4 | % | 4.3 | % | 4.8 | % | 0.8 | p.p. | ||||||||||||
Contract (1) |
2.2 | % | 2.0 | % | 2.2 | % | 1.8 | % | 2.5 | % | 0.3 | p.p. |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. |
(1) | Excludes M2M. |
(2) | Since the first quarter 2015, data and voice revenues have been reassigned to homogenise the year-on-year comparison. |
40
(year-on-year changes in organic terms)
In the first quarter, Telefónica Colombia posted revenue growth acceleration underpinned by the simplification strategy in the mobile offer, the outstanding performance of pay TV and the solid B2B IT revenue growth. The market environment continued to be impacted by intense competition and, in addition, significant mobile termination rate cuts (-42%) were introduced from 1 January.
The Company managed 16.0 million accesses (+1% year-on-year) as of March. Mobile accesses stood at 13.1 million (+1%), with 161 thousand net additions in the quarter (3.8x higher than those of the same period of the previous year). It is worth highlighting contract net additions (46 thousand accesses, negative in the first quarter of 2015) and the churn improvement (1.8%, -0.3 percentage points year-on-year), due to the strong adoption of commercial propositions launched in May 2015 and their simplification at the end of last year, and the changes in the distribution network (which drove sound growth in commercial activity). In prepay, net additions also posted a strong performance (114 thousand in the quarter; 2.3x year-on-year) with the average top-up also improving (+12.5% vs the first quarter of 2015).
Smartphones continued to post strong growth (+25% year-on-year; 4.4 million) and penetration reached 35% (+6 percentage points year-on-year). In LTE, accesses increased 2.9 times vs last years figure to 1.4 million, resulting in a penetration of 11%, 7 percentage points more than in March 2015.
Regarding the fixed business, commercial activity in the quarter was affected by issues associated with the operation of an outsourced company, impacting both commercial activity and customer disconnections. Thus, retail broadband accesses grew by 1% year-on-year to 1.0 million and remained stable compared with the previous quarter. Additionally, it is also worth highlighting the improved speed mix (38% of customers on speeds equal to or above 4 Mb, +8 percentage points year-on-year).
Pay TV accesses grew 16% year-on-year (497 thousand accesses), with a higher mix of premium customers, which was reflected in the strong ARPU growth (+15% year-on-year). Net additions in January-March amounted to 9 thousand accesses and penetration of bundled customer base increased to 72% (+3 percentage points year-on-year) thanks to the successful commercial propositions.
Revenues reached 323 million euros in the first three months of the year, with a continued growth trend improvement (+4.1% year-on-year), driven by both businesses, and despite the strong regulatory impact (+6.1% excluding this effect).
Mobile business revenues amounted to 198 million euros in the quarter and returned to growth after 4 quarters (+1.1% year-on-year) thanks to the recovery of mobile services revenues (-1.1% year-on-year, -5.4% in the previous quarter), mainly reflecting data revenue growth. Excluding the regulatory impact mobile service revenues grew 2.3% year-on-year. Data revenues accelerated to 19.2% year-on-year (+13.6% in the fourth quarter of 2015) thanks the strong demand for smartphones and LTE, which drove the data traffic increase (+34% year-on-year in the quarter).
Handset revenues maintained a consistent trend compared with the previous quarter and increased 19.5% year-on-year, reflecting the higher commercial activity.
Fixed business revenues (125 million euros in January-March) improved their growth to 9.3% year-on-year, underpinned both by pay TV revenues (+35.4% year-on-year) and by broadband and new services revenues (+21.4%).
41
Operating expenses amounted to 223 million euros (+11.4% year-on-year), affected by higher commercial expenses, the higher impact of the exchange rate on costs denominated in foreign currency and the impact of inflation on general expenses such as energy, rent and outsourcing, among others.
Thus, OIBDA reached 107 million euros in the quarter (-8.1% year-on-year) and OIBDA margin stood at 33.3% (-4.4 percentage points year-on-year).
CapEx (33 million euros; -10.8% year-on-year) reflected the improvements in capacity in both mobile and fixed networks, although the year-on-year change cannot be extrapolated to the full year, given the different execution levels of investment in both years.
TELEFÓNICA COLOMBIA
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
323 | 398 | (19.0 | ) | 4.1 | |||||||||||
Mobile Business |
198 | 251 | (21.3 | ) | 1.1 | |||||||||||
Mobile service revenues |
172 | 223 | (23.1 | ) | (1.1 | ) | ||||||||||
Data revenues |
61 | 66 | (7.3 | ) | 19.2 | |||||||||||
Handset revenues |
26 | 28 | (7.0 | ) | 19.5 | |||||||||||
Fixed Business |
125 | 147 | (15.0 | ) | 9.3 | |||||||||||
FBB and new services (1) |
64 | 68 | (5.6 | ) | 21.4 | |||||||||||
Pay TV |
17 | 16 | 5.3 | 35.4 | ||||||||||||
Voice & access revenues |
44 | 63 | (30.4 | ) | (10.5 | ) | ||||||||||
OIBDA |
107 | 150 | (28.3 | ) | (7.8 | ) | ||||||||||
OIBDA margin |
33.3 | % | 37.6 | % | (4.3 | p.p.) | ||||||||||
CapEx |
33 | 48 | (30.6 | ) | (10.8 | ) | ||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
74 | 102 | (27.2 | ) | (6.4 | ) |
Note:
- | OIBDA is presented before management and brand fees. |
(1) | Includes FBB connectivity services (retail and wholesale), including value added services, ICT revenues, other services over connectivity and FBB equipment. |
42
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Final Clients Accesses |
15,777.5 | 15,308.1 | 15,587.6 | 15,824.5 | 15,777.5 | 1.3 | ||||||||||||||||||
Fixed telephony accesses (1) |
1,465.8 | 1,450.8 | 1,448.2 | 1,430.6 | 1,465.8 | (3.5 | ) | |||||||||||||||||
Internet and data accesses |
997.3 | 999.8 | 1,012.8 | 1,008.7 | 997.3 | 1.1 | ||||||||||||||||||
Broadband |
988.9 | 991.3 | 1,004.4 | 1,000.2 | 988.9 | 1.1 | ||||||||||||||||||
Mobile accesses |
12,884.9 | 12,413.3 | 12,655.6 | 12,896.7 | 13,057.2 | 1.3 | ||||||||||||||||||
Prepay |
9,633.2 | 9,158.6 | 9,341.8 | 9,510.9 | 9,625.1 | (0.1 | ) | |||||||||||||||||
Contract |
3,251.7 | 3,254.7 | 3,313.7 | 3,385.8 | 3,432.1 | 5.5 | ||||||||||||||||||
M2M |
438.7 | 444.4 | 456.4 | 467.5 | 471.0 | 7.4 | ||||||||||||||||||
Pay TV |
429.4 | 444.2 | 471.0 | 488.6 | 497.4 | 15.8 | ||||||||||||||||||
Wholesale Accesses |
1.9 | 1.9 | 1.9 | 1.9 | 0.6 | (69.1 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
15,779.4 | 15,310.1 | 15,589.5 | 15,826.5 | 15,977.8 | 1.3 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
SELECTED OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice traffic (Million minutes) |
13,700 | 13,236 | 14,011 | 14,201 | 14,373 | 4.9 | ||||||||||||||||||
Fixed voice traffic |
3,598 | 3,227 | 3,304 | 3,068 | 3,234 | (10.1 | ) | |||||||||||||||||
Mobile voice traffic |
10,101 | 10,009 | 10,707 | 11,133 | 11,139 | 10.3 | ||||||||||||||||||
Data traffic (TB) |
59,658 | 69,725 | 76,320 | 81,966 | 84,731 | 42.0 | ||||||||||||||||||
Fixed data traffic (1) |
49,142 | 58,338 | 64,088 | 68,446 | 70,654 | 43.8 | ||||||||||||||||||
Mobile data traffic |
10,516 | 11,387 | 12,232 | 13,520 | 14,077 | 33.9 | ||||||||||||||||||
Mobile ARPU (EUR) |
5.5 | 5.5 | 4.7 | 4.6 | 4.2 | (1.1 | ) | |||||||||||||||||
Prepay |
1.4 | 1.4 | 1.3 | 1.3 | 1.1 | 4.6 | ||||||||||||||||||
Contract (2) |
19.9 | 19.6 | 16.4 | 16.0 | 14.6 | (5.6 | ) | |||||||||||||||||
Data ARPU (EUR) |
1.7 | 1.8 | 1.6 | 1.6 | 1.6 | 18.5 | ||||||||||||||||||
% non-SMS over data revenues |
96.9 | % | 97.3 | % | 97.7 | % | 98.2 | % | 98.7 | % | 1.8 | p.p. | ||||||||||||
Fixed telephony ARPU (EUR) |
13.8 | 13.9 | 11.5 | 11.3 | 9.8 | (8.7 | ) | |||||||||||||||||
Pay TV ARPU (EUR) |
12.4 | 12.5 | 10.8 | 11.0 | 11.0 | 14.6 | ||||||||||||||||||
Broadband ARPU (EUR) |
10.4 | 10.8 | 9.0 | 8.8 | 8.2 | 0.7 | ||||||||||||||||||
Mobile churn |
3.0 | % | 4.5 | % | 3.4 | % | 3.3 | % | 3.2 | % | 0.2 | p.p. | ||||||||||||
Contract (2) |
2.2 | % | 2.3 | % | 2.0 | % | 1.8 | % | 1.8 | % | (0.3 | p.p.) |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Includes solely traffic pertaining to FBB accesses, not Business customers. |
(2) | Excludes M2M. |
43
(year-on-year changes in organic terms)
Telefónica México presented a solid set of results in the first quarter of 2016 despite the strong competitive environment in prepay, with unlimited tariffs from all operators in the United States and Canada and unlimited access to social networks, which has resulted in a traffic increase and sharp reductions in average unitary prices (voice and data).
Meanwhile, it should be taken into account that the results have been impacted by the reduction in termination rates on the networks of non-dominant mobile operators from 1 January 2016 (-25% voice termination). Additionally, an agreement has been reached with other operators regarding disputes over termination rates from previous periods with a positive impact on revenues and OIBDA.
Accesses in Telefónica México amounted to 27.0 million and increased by 12% vs. March 2015. Mobile accesses stood at 25.7 million (+14% year-on-year) featuring solid growth in contract (+25% year-on-year). Net additions in the quarter stood at 760 thousand accesses (-12% year-on-year), highlighting net additions in contract (59 thousand accesses, more than 4 times higher than those of January-March 2015) with a level of gross additions that almost doubled that of the first quarter of the previous year.
Smartphones continued to maintain strong commercial momentum (10.9 million; +47% year-on-year) with net additions of 639 thousand accesses in the quarter, and reached a penetration of 44%, +10 percentage points higher than those of March 2015. LTE accesses (2.2 million accesses) more than doubled year-on-year following the expansion of the population coverage to 37% (+21 percentage points year-on-year). Thus, data traffic increased more than 2 times year-on-year in the quarter driven by new commercial plans.
Revenues reached 409 million euros in the first quarter (+8.6% year-on-year) driven by double digit growth in the customer base in a highly competitive environment, lower handset sales and regulatory impact (-3.0 percentage points in the year-on-year variance).
Mobile service revenues grew by 12.8% year-on-year leveraged on the strong growth in the customer base and the agreements on termination rates, in a context of strong competition, reduction in termination rates and lower handset sales. Data revenues grew by 11.9% year-on-year in January-March driven by the growing adoption of smartphones and LTE. Non-SMS data revenues increased their weight over total data by 6 percentage points to 91%.
Handset revenues decreased by 14.3% year-on-year in the first quarter due to lower additions with an accompanying handset sale.
Operating expenses stood at 320 million euros in January-March and increased by 9.4% year-on-year as a result of the higher expenses in supplies resulting from the greater volume of traffic generated, the higher commercial expenditure and the impact of the depreciation of the Mexican peso (mainly in handset consumption). These items are partially offset by the generation of economies of scale following the strong growth in accesses.
OIBDA totalled 106 million euros in the quarter, growing 14.6% year-on-year reflecting the growth in revenues and the interconnection agreement. Its year-on-year change slowed compared to the previous quarter, mainly due to the positive impact of the spectrum swap with AT&T in the fourth quarter of 2015. Thus, OIBDA margin stood at 25.9% (+1.3% percentage points versus the first quarter of 2015).
CapEx stood at 42 million euros in the first three months of the year (+4.7% year-on-year) and was focused on the development of the 3G and 4G networks along with the improvement of the distribution channel.
44
TELEFÓNICA MÉXICO
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
409 | 444 | (7.8 | ) | 8.6 | |||||||||||
Mobile service revenues |
360 | 376 | (4.3 | ) | 12.8 | |||||||||||
Data revenues (1) |
155 | 163 | (5.1 | ) | 11.9 | |||||||||||
Handset revenues |
50 | 69 | (27.3 | ) | (14.3 | ) | ||||||||||
OIBDA |
106 | 109 | (2.4 | ) | 15.0 | |||||||||||
OIBDA margin |
25.9 | % | 24.5 | % | 1.4 | p.p. | ||||||||||
CapEx |
42 | 47 | (11.2 | ) | 4.7 | |||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
65 | 62 | 4.1 | 22.7 |
Note:
- | OIBDA is presented before management and brand fees. |
(1) | Since the first quarter 2015, data and voice revenues have been reassigned to homogenise the year-on-year comparison. |
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Mobile accesses |
22,536.6 | 23,048.8 | 23,405.0 | 24,895.0 | 25,655.4 | 13.8 | ||||||||||||||||||
Prepay |
21,056.6 | 21,553.9 | 21,779.8 | 23,102.0 | 23,803.2 | 13.0 | ||||||||||||||||||
Contract |
1,480.0 | 1,494.9 | 1,625.2 | 1,793.0 | 1,852.2 | 25.1 | ||||||||||||||||||
M2M |
455.8 | 485.9 | 521.2 | 567.5 | 602.6 | 32.2 | ||||||||||||||||||
Fixed Wireless |
1,545.6 | 1,553.8 | 1,468.9 | 1,382.9 | 1,296.9 | (16.1 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
24,082.2 | 24,602.6 | 24,873.9 | 26,277.9 | 26,952.3 | 11.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED MOBILE OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice Traffic (Million minutes) |
13,435 | 13,785 | 13,915 | 15,570 | 18,525 | 37.9 | ||||||||||||||||||
Data traffic (TB) |
7,891 | 7,967 | 8,991 | 11,791 | 17,192 | 117.9 | ||||||||||||||||||
ARPU (EUR) |
4.9 | 4.9 | 4.7 | 4.4 | 3.8 | (8.3 | ) | |||||||||||||||||
Prepay |
4.3 | 4.3 | 4.3 | 3.9 | 3.3 | (10.4 | ) | |||||||||||||||||
Contract (1) |
19.0 | 19.2 | 17.1 | 15.7 | 14.6 | (9.3 | ) | |||||||||||||||||
Data ARPU (EUR) (2) |
1.3 | 1.3 | 1.4 | 1.2 | 2.0 | (2.8 | ) | |||||||||||||||||
% non-SMS over data revenues |
80.2 | % | 82.0 | % | 76.2 | % | 81.7 | % | 91.1 | % | 6.3 | p.p. | ||||||||||||
Churn |
2.8 | % | 3.4 | % | 3.6 | % | 3.4 | % | 3.5 | % | 0.7 | p.p. | ||||||||||||
Contract (1) |
1.7 | % | 2.2 | % | 1.6 | % | 1.7 | % | 1.7 | % | 0.0 | p.p. |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Excludes M2M. |
(2) | Since the first quarter 2015, data and voice revenues have been reassigned to homogenise the year-on-year comparison. |
45
TELEFÓNICA VENEZUELA (1)
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
77 | 212 | (63.7 | ) | 91.2 | |||||||||||
Mobile service revenues |
75 | 184 | (59.2 | ) | 115.5 | |||||||||||
Data revenues (2) |
32 | 71 | (54.6 | ) | 151.6 | |||||||||||
Handset revenues |
2 | 28 | (92.9 | ) | (63.9 | ) | ||||||||||
OIBDA |
22 | 53 | (58.4 | ) | 101.6 | |||||||||||
OIBDA margin |
28.5 | % | 24.9 | % | 3.6 | p.p. | ||||||||||
CapEx |
9 | 21 | (54.7 | ) | 151.6 | |||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
13 | 32 | (60.7 | ) | 77.3 |
Note:
- | The January-March 2016 consolidated financial information uses the exchange rate of the Venezuelan bolivar set at the denominated DICOM (273 Venezuelan bolivars fuertes per dollar at 31 March 2016). |
- | OIBDA is presented before management and brand fees. |
(1) | Reported figures include the hyperinflationary adjustments in Venezuela in both years. For comparative purposes and to facilitate the interpretation of the year-on-year changes vs. 2015, variations in local currency of the headings affected by the hyperinflation adjustments are reported excluding the impact of this adjustment. |
(2) | Data revenues do not include hyperinflationary adjustments. |
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Fixed telephony accesses (1) |
758.3 | 742.2 | 712.9 | 697.3 | 672.9 | (11.3 | ) | |||||||||||||||||
Internet and data accesses |
8.2 | 8.3 | 8.5 | 8.5 | 8.3 | 0.5 | ||||||||||||||||||
Broadband |
3.4 | 3.6 | 3.8 | 4.0 | 4.0 | 17.9 | ||||||||||||||||||
Mobile accesses |
10,820.8 | 10,888.6 | 10,738.6 | 10,583.1 | 10,423.4 | (3.7 | ) | |||||||||||||||||
Prepay (2) |
9,468.5 | 9,546.3 | 9,405.4 | 9,259.2 | 9,114.2 | (3.7 | ) | |||||||||||||||||
Contract |
1,352.3 | 1,342.3 | 1,333.2 | 1,323.9 | 1,309.2 | (3.2 | ) | |||||||||||||||||
M2M |
113.5 | 115.6 | 116.8 | 117.0 | 114.2 | 0.6 | ||||||||||||||||||
Pay TV |
476.1 | 480.0 | 482.1 | 478.1 | 478.2 | 0.4 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
12,063.4 | 12,119.1 | 11,942.0 | 11,767.0 | 11,582.8 | (4.0 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
(2) | Includes prepay M2M accesses. |
SELECTED MOBILE OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice Traffic (Million minutes) |
13,528 | 14,404 | 15,178 | 14,892 | 14,137 | 4.5 | ||||||||||||||||||
Data traffic (TB) |
8,672 | 9,823 | 10,261 | 11,550 | 11,379 | 31.2 | ||||||||||||||||||
ARPU (EUR) (1) |
4.5 | n.m. | 2.0 | 2.3 | 2.5 | 116.4 | ||||||||||||||||||
Prepay |
4.1 | n.m. | 1.8 | 2.1 | 2.3 | 117.7 | ||||||||||||||||||
Contract (2) |
8.0 | n.m. | 3.5 | 4.0 | 4.2 | 108.8 | ||||||||||||||||||
Data ARPU (EUR) (3) |
2.1 | n.m. | 1.0 | 1.2 | 1.4 | 156.6 | ||||||||||||||||||
% non-SMS over data revenues |
83.3 | % | n.m. | 86.0 | % | 87.0 | % | 90.2 | % | 6.9 | p.p. | |||||||||||||
Churn |
2.0 | % | 2.2 | % | 2.3 | % | 2.2 | % | 2.1 | % | 0.1 | p.p. | ||||||||||||
Contract (2) |
0.8 | % | 0.9 | % | 0.9 | % | 0.7 | % | 0.8 | % | 0.0 | p.p. |
Notes:
- | The January-March 2016 consolidated financial information uses the exchange rate of the Venezuelan bolivar set at the denominated DICOM (273 Venezuelan bolivars fuertes per dollar at 31 March 2016). |
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | For comparative purposes and in order to facilitate the interpretation of the year-on-year change versus 2015 results, the variation in local currency of the ARPU in Venezuela is reported excluding the impact of the hyperinflation adjustment. |
(2) | Excludes M2M. |
(3) | Does not include hyperinflation adjustment. |
46
TELEFÓNICA CENTRAL AMERICA (1)
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||
2016 | 2015 | % Chg | % Chg Local Cur | |||||||||||||
Revenues |
227 | 214 | 5.9 | 5.0 | ||||||||||||
Mobile service revenues |
213 | 202 | 5.6 | 4.8 | ||||||||||||
Data revenues |
85 | 71 | 20.1 | 19.1 | ||||||||||||
Handset revenues |
14 | 12 | 10.9 | 10.3 | ||||||||||||
OIBDA |
53 | 53 | 1.5 | 1.1 | ||||||||||||
OIBDA margin |
23.6 | % | 24.6 | % | (1.0 | p.p.) | ||||||||||
CapEx |
32 | 20 | 56.7 | 54.9 | ||||||||||||
Spectrum |
| | ||||||||||||||
OpCF (OIBDA-CapEx) |
22 | 32 | (33.3 | ) | (32.8 | ) |
Note:
- | OIBDA is presented before management and brand fees. |
(1) | Central America includes Guatemala, Panama, El Salvador, Nicaragua and Costa Rica. |
ACCESSES
Unaudited figures (Thousands)
2015 | 2016 | |||||||||||||||||||||||
March | June | September | December | March | % Chg | |||||||||||||||||||
Fixed telephony accesses (1) |
556.4 | 555.6 | 561.2 | 567.8 | 567.0 | 1.9 | ||||||||||||||||||
Fixed Wireless |
335.2 | 336.0 | 343.1 | 334.9 | 355.6 | 6.1 | ||||||||||||||||||
Internet and data accesses |
4.4 | 4.7 | 4.9 | 5.1 | 5.4 | 21.9 | ||||||||||||||||||
Broadband |
2.2 | 2.4 | 2.6 | 2.7 | 2.7 | 25.4 | ||||||||||||||||||
Mobile accesses |
11,078.8 | 11,273.2 | 11,577.6 | 12,083.4 | 12,453.4 | 12.4 | ||||||||||||||||||
Prepay (2) |
10,204.4 | 10,396.8 | 10,692.7 | 11,186.5 | 11,536.6 | 13.1 | ||||||||||||||||||
Contract |
874.5 | 876.3 | 884.9 | 896.9 | 916.7 | 4.8 | ||||||||||||||||||
M2M |
34.4 | 32.1 | 31.5 | 32.7 | 34.3 | (0.3 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Accesses |
11,639.7 | 11,833.5 | 12,143.8 | 12,656.3 | 13,025.7 | 11.9 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes fixed wireless and VoIP accesses. |
(2) | Includes prepay M2M accesses. |
SELECTED MOBILE OPERATIONAL DATA
Unaudited figures
2015 | 2016 | |||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | % Chg Local Cur | |||||||||||||||||||
Voice Traffic (Million minutes) |
6,851 | 6,938 | 6,896 | 7,247 | 6,939 | 1.3 | ||||||||||||||||||
Data traffic (TB) |
5,628 | 6,648 | 7,587 | 9,948 | 10,960 | 94.8 | ||||||||||||||||||
ARPU (EUR) |
5.8 | 5.9 | 6.0 | 5.7 | 5.6 | (4.2 | ) | |||||||||||||||||
Prepay |
4.6 | 4.6 | 4.5 | 4.6 | 4.4 | (5.3 | ) | |||||||||||||||||
Contract (1) |
21.1 | 21.8 | 24.2 | 20.1 | 22.4 | 5.6 | ||||||||||||||||||
Data ARPU (EUR) |
2.1 | 2.1 | 2.5 | 2.3 | 2.3 | 8.0 | ||||||||||||||||||
% non-SMS over data revenues |
76.5 | % | 77.7 | % | 80.5 | % | 86.3 | % | 84.3 | % | 7.8 | p.p. | ||||||||||||
Churn |
3.2 | % | 3.5 | % | 3.4 | % | 3.6 | % | 3.2 | % | 0.0 | p.p. | ||||||||||||
Contract (1) |
1.6 | % | 1.6 | % | 1.4 | % | 1.5 | % | 1.3 | % | (0.3 | p.p.) |
Notes:
- | ARPU: monthly average revenue divided by the monthly average accesses of the period. |
- | Voice traffic is defined as minutes per access used on the companys network, both outbound and inbound. Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is included. Traffic volume non rounded. |
- | Data traffic is defined as Terabytes used by the company customers, both upload and download (1TByte = 10^12 bytes). Promotional traffic is included. Traffic not associated to the Companys mobile customers (roaming-in, MVNOs, interconnection of third parties and other business lines) is also included. Traffic volume non rounded. |
(1) | Excludes M2M. |
47
TELEFÓNICA ECUADOR
SELECTED FINANCIAL DATA
Unaudited figures (Euros in millions)
January - March | ||||||||||||||||