Renta 4 | The results have exceeded forecasts for income (+1% vs R4e and consensus) and have missed those of the consensus for EBITDA excluding the impact of IFRS 16 (+414 M€) and extraordinary payments (+120 M€ vs +100M€ foreseen) by -3%, while remaining slightly above ours (+0.5%).
The greater spending on amortisation (IFRS 16) did not prevent Telefónica exceeding the consensus forecast for EBIT (+3%), already with a neutral impact of IFRS 16), beating our figures even more, which were at the lower level of the consensus. By divisions, excluding the impact of IFRS, Telefónica has fulfilled forecasts of EBITDA in Spain, UK, Germany and Brazil, while is has fallen below in Latin America (both North (principally Mexico) and South (Argentina)).
Net debt has been reduced by -693 M€ compared to Q418 to 40,381 Bn€ (-1% compared to R4e but in line with the consensus) and the net debt/EBITDA 2019 R4e multiple remains at 2.6X (2.6X in Q418). After the sale of the data centres, the net debt is 38.7 Bn€ (2.5X EBITDA 2019 R4e). Including IFRS 16 (leases), the net debt would increase to 47.82 Bn€ in Q119. Telefonica maintains the guidance targets for 2019: increase of income +2% (+3.8% in Q119), EBITDA growth +2% (+1% in Q119) and capex/sales 15% (13.1% in Q119), assuming constant exchange rates and scope of consolidation. We do not expect a significant impact on the share price understanding that, despite the results, the shares reflect a scenario which we consider excessively negative.