Brazil, LatAm key for Telefonica’s net profit surge in first three months

Telefonica ended the first quarter of 2013 with a 20.6% growth in net profit to 902 million euros at the end of March, the Spanish corporation said today in a press release. Basic net profit per share increased by 22.2% to 0.20 euros per share.

In the presentation of the figures of the Company corresponding to the period January-March, the Executive Chairman of Telefonica, César Alierta, highlighted the advances made in the execution of the Company’s transformation process, already producing visible results which translate into “a progressive stabilisation of the business and a greater degree of diversification, together with the constant improvement in the financial position.”

In the first quarter of the year, the results continued to put in value the growing diversification of the Group. In fact, for the second consecutive quarter, Latin America generated over 50% of the consolidated revenue (which totalled 14,141 million euros) and for the first time Brazil became Telefonica’s biggest market in revenue generation.

Equally, the results also reflect the benefits of the scale and scope of the Company and the new commercial model based on quality and differential offers in each one of the markets. All of this, together with the considerable effort to simplify and save costs, enables Telefonica to maintain a high level of profitability, with stability of the OIBDA in organic terms (4,567 million euros, -0.1%) and year-on-year growth of the OIBDA margin (+0.5 percentage points) and the operating cash flow (OIBDA-CapEx), which increased by almost double digits year on year. At the same time, Telefonica continues to advance in the launch of new businesses through Telefonica Digital and the projects led by Telefonica Global Resources keep improving operating and commercial processes globally.

With all of this, the results of the first quarter, in line with the company’s estimates, make it possible to reiterate the operating and financial targets set for 2013.

Growth in mobile customers with contracts accelerates by up to +8%

Telefonica managed 315.7 million accesses at the end of March, up 2% year-on-year driven by sustained growth in mobile contract, especially in smartphones. Mobile accesses stood at 247.3 million at the end of the quarter (+3% year-on-year), with the contract segment continuing to drive the Company’s commercial activity. Contract customers year-on-year growth accelerated by one percentage point from December 2012 to 8% year-on-year, already accounting for 33% of total mobile accesses (+2 percentage points year-on-year). Quarterly contract net additions totalled 1.4 million (excluding the disconnection of 114 thousand contract mobile accesses in the Czech Republic).

Mobile broadband accesses with a data tariff attached posted a solid 34% year-on-year growth to surpass 55 million at the end of March 2013 and accounted for 22% of mobile accesses (+5 percentage points year-on-year). One quarter more, it is worth highlighting the strong commercial momentum of smartphones, with net additions of 2.6 million, reaching a penetration rate of 20% of mobile accesses (+6 percentage points year-on-year).

By region, Telefonica Latinoamerica (67% of the total accesses) consolidated as the main contributor to access growth, increasing 3% year-on-year (despite the application of more restrictive accounting criteria for prepay customers), and continued to reinforce its regional leadership in contract customers (+13% year-on-year to 40.7 million), reflecting the better quality of our customer base in the region. Net contract additions in the quarter stood at 1.3 million accesses, 1.5 times more than in the same period of 2012, strengthening the growth in high-value customers.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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