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Research Tree provides access to ongoing research coverage, media content and regulatory news on TELEFONICA SA. We currently have 6 research reports from 1 professional analysts.
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A solid Q4, but cautious guidance
23 Feb 17
Q4 revenues were up organically by 2.7% yoy (at constant forex), a quite good surprise as they were stable in both Q2 and Q3. The adjusted EBITDA which had increased by 3.1% during the first 9m was also up by a strong 9.4% in Q4. Note that, in this quarter, the currency impact was still strong in South America, except in…Brazil: South American revenues, which grew organically in current currencies by 10.9% yoy in Q4, were still down by 5.2% yoy in reported terms while Brazilian revenues which were up by a modest 1.1% (as in the previous quarters) were up by 18.1% in reported terms. Note exceptional restructuring cost provisions amounting to €1.29bn in Q4 (of which €856m in Spain). Telefonica gave a cautious guidance for 2017: - Revenue should be stable vs 2016 (despite however a negative 1.2ppt impact from regulation) but with an EBITDA margin expansion of 1ppt vs 2016; - Capex/sales should be at around 16% (vs 17% in 2016). This will enable Telefonica to have the most extensive ftth network in Spain (17m premises passed) and to exceed 17m premises with fibre in Brazil, or an LTE penetration >90% in Spain and UK, >80% in Germany and >50% in Latin America. The group has also confirmed the new dividend to strengthen its balance sheet and intensify organic deleverage, maintaining, however, an attractive level of shareholder remuneration. The dividend should be €0.4 in 2016 (still a yield above the 4%) vs €0.75 in 2015. Note, concerning the deleveraging, that after the closing of the year, on 20 February Telefónica reached an agreement for the sale of up to 40% of the total share capital of Telxius to Taurus Bidco for €1,275m (€12.75 per share). The closing is subject to obtaining the corresponding regulatory approvals. After the closing of the transaction, Telefónica will maintain control over Telxius.
Q3 slightly better than Q2 but dividend is cut by 25%
31 Oct 16
Q3 revenues were down organically by 0.2% yoy (at constant forex), exactly like in Q2 while they had grown by 3.4% yoy during Q1. The adjusted EBITDA which had increased by 5.5% in Q1 and grew by only 0.8% in Q2 was however up again by 3.1% yoy in Q3. Note that, this quarter, the currency impact was still strong in South America, except in… Brazil: South American revenues, which grew organically in current currencies by 4.1% yoy in Q3, were still down by 13.9% yoy in reported terms while Brazilian revenues which were up by a modest 1.1% (like in the previous quarters) were up by 7.9% in reported terms. Global Q3 revenues and EBITDA were down by respectively 6% and 1% yoy in reported terms. Telefonica has reiterated its guidance for 2016: - organic revenue growth which should be >4% yoy with an EBITDA margin stable vs 2015 (remember that this guidance assumes constant exchange rates as of 2015 and excludes Venezuela with its hyperinflationary adjustments and O2); - capex/sales should be at around 17%. This, however, enables Telefonica to have the most extensive ftth network in Spain (16.4m premises passed) and to reach 16.9m premises with fibre in Brazil, or an LTE penetration in Europe of 86% (> 90% in Spain and UK but only 77% in Germany) and 49% in Latin America; The key point of the release is that to recover money via its subsidiaries on the market (both its towers (Telxius) and O2 (UK mobile) could not be floated or sold at proper prices) in a tough context, the group has decided to modify the dividend to strengthen its balance sheet and intensify organic deleverage, maintaining however an attractive level of shareholder remuneration. The dividend should be €0.55 in 2016 (still a yield above the 5%) vs €0.75 in 2015.
A disappointing Q2
28 Jul 16
Q2 revenues were quite disappointing, down organically by 0.2% yoy (at constant change) while they have grown by 3.4% yoy during Q1. The adjusted EBITDA which had increased by 5.5% in Q1, grew by only 0.8% yoy. Note this quarter, the currency impact was still strong: the South American revenues, which grew organically in current currencies by only 2.3% yoy in Q2 (vs 7% during Q1!), were still down by 12.5% yoy in reported terms. And the value of Telefonica unfortunately follows the evolution of these currencies as the South American revenues weighed 50% of Telefonica’s global business. Global Q2 revenues and EBITDA were down by 7/8% yoy in reported terms. Telefonica has, however, reiterated its guidance for 2016: - organic revenue growth in line with our model which should be >4% yoy with an EBITDA margin stable vs 2015; - the capex/sales should be at around 17% vs 16% in our model. This, however, enables Telefonica to have in Spain the most extensive ftth network (15.7m premises passed) and to reach more than 17m premises with fibre in Brazil, or achieve an LTE penetration in Europe of 85% and 45% in Latin America; Note also, from Q2 16, Telefonica’s operations in the UK are no longer reported as discontinued operations within the Telefonica Group and all its assets and liabilities have ceased to be reported as “held for sale”, and have been reclassified back into full consolidation within Telefonica’s financial statements.
A not so bad Q1 at... constant change
02 May 16
Q1 revenues grew by 3.4% yoy organically and at constant change while the adjusted EBITDA increased by 5.5%. These results are quite similar to those in H2 2015 and were expected. But this quarter, in addition to the Brazilian real which has continued to fall vs the euro, the Argentine peso has affected the global revenues of Telefonica by 2.2% (the currency sank by 40% after the country lifted its currency controls at the end of 2015). The South American revenues, which grew organically in current currencies by 7% yoy during Q1, were indeed down by more than 15% yoy in reported terms. And the value of Telefonica unfortunately follows the evolution of these currencies as the South American revenues weighed for 50% of Telefonica’s global business. Global Q1 revenues and EBITDA were down by 6.5% yoy in reported terms. The new CEO José Maria Alvarez-Pallete said also that concerning the sale of O2 UK to Hutchison “a negative decision could not be disregarded”. The group would talk to other buyers if the deal were blocked by the European competition authorities. There were also a number of options for the business such as a full or partial sale or a flotation. Of course, it does not encourage buying the stock. Telefonica has also reiterated its guidance for 2016: - organic revenue growth in line with our model which should be >4% yoy with an EBITDA margin stable vs 2015; - the capex/sales should be at around 17% vs 16% in our model. This would however enable Telefonica to have in Spain the most extensive ftth network (14.3m premises passed) and to reach more than 17m premises with fibre in Brazil, or achieve an LTE penetration in Europe of 75% and 43% in Latin America; - the dividend for 2016 should be €0.75 per share.
A quite solid year excluding the forex impact
07 Mar 16
Q4 revenues grew by 4% yoy organically and at constant change while the adjusted EBITDA increased by 3.8%. These results are quite similar to those in Q3 and were expected. Note, however, that the Brazilian real has once again weighed on the Brazilian reported figures (with a 9.2% yoy revenue decline despite 3.5% organic growth in local currency). The reported Q4 EBITDA was also affected by an exceptional provision for restructuring of €3.15bn (of which €2.9bn in Spain). This corresponds to a Voluntary Employment Suspension Plan offered to Telefonica’s workers as an early retirement plan. “The estimated run rate of savings in direct expenses is approximately €370m from year two,” said the company. This announcement comes after the company revealed at the end of last year that it had reached a deal with Spanish trade unions for the period 2015-2017 encompassing all the units in Spain and affecting a total of around 26k of its employees. The agreement included the right to take up voluntary redundancy from the age of 53 and a guaranteed wage increase of 4% plus bonuses amounting to €1,000 over the next three years. Telefonica has also announced its guidance for 2016: - organic revenue growth in line with our model which should be >4% yoy with an EBITDA margin stable vs 2015 (vs a slight improvement in our model); - the capex/sales should be at around 17% vs 16% in our model. This would however enable Telefonica to have in Spain the most extensive ftth network (14.3m premises passed) and to reach more than 17m premises with fibre in Brazil, or achieve an LTE penetration in Europe of 75% and 43% in Latin America; - the dividend for 2016 should be €0.75 per share (but subject to the closing of the sale of O2 UK) while an amortisation of treasury stock for a total of 1.5% of the capital will be proposed at the 2016 AGM.
Growth in Spain for the first time in 7 years
06 Nov 15
Q3 revenues grew by 4.8% yoy organically and at constant change while the EBITDA increased by exactly the same number. Even though this was expected, it is a good performance. Note however that the Brazilian real has once again weighed on the Brazilian reported figures (with a 5.5% yoy decline despite a 5.2% organic growth in local currency).
FY 2016 results confirm further strong delivery
21 Mar 17
Gamma’s FY 2016 revenues, Adjusted EBITDA and Adjusted EPS numbers were a touch ahead of our estimates. We make small upward adjustments to forecasts for all three years of our forecast horizon reflecting that performance. Gamma is capitalising on its position as a nimble player in an attractive marketplace. It made strong progress in 2016 as Voice over IP technology drove uptake of SIP Trunking and Hosted PBX services - both areas where Gamma has strong platforms. In addition, data services reflected Gamma’s investment in its network, channel partner numbers increased again and the indirect business accordingly showed strong revenue growth. The Direct Business also produced good growth and won some significant new contracts. The outlook statement is ’enthusiastic’ about the current year and comments that the Board ‘remains open to suitable M&A opportunities and areas for strategic capital investment’. Overall, an optimistic picture, in our view.
Making Mobiles Better
17 Jan 17
Mobile phones are increasingly the key connection for the modern world. This means that the performance of mobile phones, and their networks, is going to become more critical for all the apps and businesses that rely on them. New technologies such as VR, AR, and AV will need better, more reliable connections to really move into the mainstream. In this thematic piece we attempt to identify some of the most important issues facing mobile phone networks and their users, and start to identify solutions and enablers that will solve these problems and create value by doing so.
Panmure Morning Note 13-06-2016
13 Jun 16
More news on 5G means a favourable read-across for the key 5G ‘name’ – Spirent. Today the Dutch Ministry of Economic Affairs has gathered 10 partner organisations together to run a 5G test in North Groningen – tests to be carried out at the end of the year. This is favourable for Spirent as it illustrates that 5G is getting closer and with it raises the possibilities of earlier revenue opportunities for Spirent. Short term is good for share sentiment. We retain our Buy.
N+1 Singer - Morning Song 09-02-2017
09 Feb 17
Amino Technologies (AMO LN) Benefits of recent acquisitions shining through | Media Bad advertising…Big agencies and Google in the firing line? | Travel & Leisure Enterprise Inns (ETI LN) (Not Rated) - Solid AGM update | Northgate (NTG LN) Reiterating our Buy stance after a positive meeting | Small-cap quantitative research New quality style screen + 11 quality focus stocks | Speedy Hire (SDY LN) Forecast upgrades after a solid Q3 update
20 Mar 17
Despite the University of Michigan releasing its preliminary reading of March consumer sentiment on Friday, which suggested US personal finance confidence rising again, this time to a 17-year high as the Nation effectively achieves full employment, US equities remained narrowly rangebound. Industrial production data also released held steady in February which, although slightly below market consensus, still provided underlying confidence in continued growth amid a pickup in manufacturing and mining activity. But this was not enough given receipt of a slightly less hawkish tenor from the Fed. The problem appears to be that investors have heard Trump ‘talk-the-talk’ but, as was seen with the latest judges’ ruling against his travel ban, they are not yet convinced he can ‘walk-the-walk’. Thursday’s White House budget proposals, which focussed on cutting funding for projects deemed to have regional benefits, in order to increase funding to those with national scope, compounded this with some commentators suggesting the new programs will be less effective than existing ones. The President’s joint address to Congress, calling for legislation to procure US$1tr to rebuild the country’s tired infrastructure, for example, makes for great soundbites but Congressional scrutiny, particularly from fiscal conservatives who are reluctant to back massive federal spending, looks set be arduous to say the least. So while the wall of money being liberated globally from bond market rout provides plenty of back pressure, investors appear to be waiting for a new injection of confidence before being prepared to push already heady equity valuations one further step further. Traders also appeared unimpressed by U.S. Treasury Secretary Steven Mnuchin rebuffing a concerted push by world finance chiefs to disavow protectionism, fanning fears that the Trump administration's pursuit of an ‘America First’ policy could ignite global trade conflicts. With many officials suggesting they departed the G-20 meeting confused about where the new administration will ultimately land on trade policy, US equities ended mixed with only the NASDAQ able to put on a minute gain helped by Adobe, while the other two principal US indices were knocked by continued selling of health-care stocks, in particular Amgen which had released disappointing results from a cholesterol drug study. The cautionary mood spread to Asia, where only the Hang Seng put on a modest gain while the region’s other indices stayed in the red with the Nikkei being closed for a holiday. Important macro data from London today is limited to the Rightmove House Price Index for February which was released at midnight at +2.3% y-o-y, in line with expectations, while the EU produces Q4 Labour Costs; the US provides its Chicago Fed National Activity Index and later the Fed’s Charles Evans is due to make a speech. UK corporates due to report today include Volution Group (FAN.L), Satellite Solutions Worldwide (SAT.L), Frenkel Topping Group (FEN.L), Phoenix Group (PHNX.L) and Finsbury Food Group (FIF.L). Equities in London as seen similarly lacklustre this morning, with the FTSE-100 see moving 5 to 10 down in early trading.
The Joy of Techs
15 Aug 16
Mobile money has been slow to deliver but investors need to stay engaged as there are plenty of reasons as there are plenty of reasons for success. Mobile penetration and network coverage are growing inexorably and where communication leads, transactions follow, as e-commerce has proven. Banking and payments lead the way but it will embrace other financial services too, from insurance to cross-border remittance. Slowly but surely, mobile money is coming of age.