What happened? We expect shares to be up small (0-1%) this morning on the back of the small financial beat and Spanish net add trends.
*Telefonica group revenue and EBITDA came in line with consensus expectations this quarter.
*Excluding TEF Brazil (reported yesterday), revenue was also in-line and EBITDAaL was small miss of -0.6% vs cons.
*Group capex ex spectrum came in +13% vs. cons, and reported OpFCF came in -10% vs. cons, whilst FCF of EUR 527m compared to cons at EUR 370m
Segmental detail
*Spain: Service revenue came in-line with consensus expectations, with EBITDAaL a small beat of +0.6% - both growing at ~1% YoY (vs. +1.0%/+1.0% last Q).
*Convergent/broadband/postpaid adds were +15k/+42k/131k vs. +5k/+26k/+79k last quarter. ARPU came in lower at EUR91.1 (vs EUR92.3 last qtr) and churn improved slightly from 0.9% last qtr to +0.8%.
*Germany: Revenue/EBITDAaL came in +0.4%/-0.7% vs. cons and grew -2%/-9% YoY (vs. -2.0%/-2.0% last Q)
*Postpaid mobile/ broadband net adds were +184k/-15k (vs. +164k/flat last Q)
*Better Spanish numbers suggest TEF is holding up well against low-end price competition, and overall market health appears to be better than expected given solid MasOrange results yesterday as well.
*UK VMO2 (non consolidated JV, ~16% of TEF EV) also reported 2Q revenue declines -5.5% (vs. -4.2% last Q) and EBITDA decline -0.7% (vs. -3.1% last Q).
*The table below suggests that this implies revenue was -1.3% vs. cons and EBITDA -5.4% vs. cons. However these figures below have been manually adjusted for FX (TEF report in EUR m vs. cons in GBP m), and there are also some accounting differences. Speaking with TEF this morning, we would see VMO2 revenues and a small miss and EBITDA as a small beat vs cons - but wait for full VMO2 accounts to be released at 7:30am UKT before taking a final view.
*On the net add trends side we see that both broadband (-51k) and postpaid (-74k) remain under pressure - albeit that this was already expected...
