Telefónica recorded a net profit of 298 million euros in the first quarter of the year, down 57.8% from the same period in the previous year, when it earned 706 million euros. Revenue reached 10,047 million, which represents a growth of 6.7% compared to the same period in 2022, with increases in all business units and major markets (Spain, Brazil, Germany and the United Kingdom), despite the existing inflationary tensions.
The company explains that the decrease in net income is due to three factors outside of the main business: the capital gain recorded in the first quarter of 2022 from the sale of Columbia’s fiber network; accounting adjustment for valuation of the joint venture between Virgin Media and O2 in the UK (-188m); and corporate tax expenses which increased by 71.7% to 162 million due to the tax backtracking in Germany for the payment of UMTS licenses which also occurred in the first quarter of last year.
The operating result of the operator group (Oibda) amounted to 3121 million euros at the end of March, a decrease of 2.4% compared to that recorded in the first three months of last year. Exchange rates were favorable for another quarter, with a positive contribution to group income of 136 million and 47 million in the case of Oibda.
At the end of the first quarter, net debt was €26.443 million, 3.5% less than that in the previous year, and 244 million less than at the end of last year as a result of the company’s financial strength and the cash generated. companies. As of March 31, free cash generation is €454 million.
Telefónica indicated that it is facing the current scenario of inflationary pressures and rising interest rates with a strong financial position and liquidity. More than 80% of the debt is based on fixed rates, the company covers maturities in the next three years, the average debt life is 13.2 years, and the liquidity position is close to 21.400 million euros.
And the company confirmed in a statement that the results of the first quarter put it on the path to achieving the financial goals for the full year and allow it to confirm the distribution of 2023 dividends of 0.30 euros per share, to be paid in two parts, in December 2023 and June 2024.
We started the year strong, despite the massively challenging global economic environment. We continue to implement our strategic plan and add another quarter of accelerated revenue growth across all regions in which Telefónica has a presence. For all these reasons, we are on track towards achieving our financial targets for the full year, and we can also confirm the expected earnings for 2023. Telefónica continues to fulfill its debt reduction commitments and continues to strengthen its balance sheet thanks to its ability to forecast, ”said José María Álvarez Pallet, President of Telefónica , in a note.
Subsidiaries and global units
All major markets have grown in trading volume. The Spanish subsidiary increased its income by 0.3%, to €3,088 million; Those in Germany grew by 8%, to 2,101 million, those for Brazil, by 17.5%, to 2,282 million euros, and those for the United Kingdom, operating through joint project With Virgin Media and O2, they reached €2,947 million, up 3.9%. In terms of subsidiaries reporting net results, Telefónica Brasil earned €152.5 million in the first quarter (+11.3%); Telefónica Deutschland raised its profit slightly to €30m (27m in 2022) and Virgin Media O2 posted a net loss of £289.5m (-€333m) due to accounting adjustments, compared to a profit of €91.9m last year.
The good behavior of the revenues was also reflected in Telefónica Tech, a global unit in which it grew by 43.5% in the first quarter, to 429 million euros, thanks to the growth of revenues from the B2B segment.
Telefónica Infra also continued to strengthen Telefónica’s position thanks to value creation and the implementation of new fiber infrastructure models. Telxius, Telefónica’s undersea cable company, reported an increase in reported income of 8.4% and 10.4% in the case of Oibda, which grew for the fifth consecutive quarter.
clients and networks
Telefónica’s customer base grew 4% between January and March, to 383.6 million customers, with strong growth in fiber access (+16%) and mobile contract access (+7%).
The company maintained a healthy fiber deployment rate, with a total of 168.9 million units passed through at the end of March, up 4% from last year, of which a total of 66.6 million (+15%) operated over Telefónica’s own fiber networks. With regard to 5G technology, which is already available in the four major markets, the company launched this quarter the pure version (without using the 4G network or He stands alone) in Brazil, and plans to launch it in the United Kingdom, Germany and Spain throughout 2023. At the end of March, 5G has already covered more than 2,100 locations in the United Kingdom, more than 82% of the population in Germany, 85% of the population in Spain and 58 cities in Brazil . The acceleration of fiber and 5G deployment has been compounded by the shutdown of copper plants in Spain, scheduled for April 2024.
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