Telefonica targets small sales increase in 2012

Telefonica reported revenues of EUR 62.84 billion for 2011, up 3.5 percent from a year earlier. Growth was led by its Latin America activities, where revenues rose 13.5 percent year-on-year, helped by the acquisition of full control of Vivo in Brazil. Sales in its home market Spain fell 7.6 percent, and revenues in the rest of Europe were down 1.3 percent. On an organic basis, revenues were up just 0.1 percent, versus the company's outlook for up to 2 percent growth. Telefonica's OIBDA fell 21.6 percent to EUR 20.21 billion, hurt by cuts to termination rates and extra sales costs. The OIBDA margin fell to 32.2 percent from 42.4 in 2010, with the organic result of 36.1 percent near the guidance for a result in the upper 30s. Net profit plunged to EUR 5.40 billion from EUR 10.17 billion in 2010, hurt by charges of EUR 1.87 billion for restructuring in Spain and an impairment on its stake Telecom Italia, which offset one-time gains on Vivo in 2010. Free cash flow rose 9.5 percent to EUR 9.27 billion, and capex fell 5.7 percent to EUR 10.22 billion, including EUR 1.3 billion on spectrum. The number of access lines passed 300 million in the quarter, up by almost 20 million from 2010 to a total 306.61 million. Mobile customers rose by almost 7 million in the fourth quarter, to 238.75 million at year-end, and mobile broadband customers were up 61 percent year-on-year to over 38 million. For 2012, Telefonica forecast revenue growth of at least 1 percent at currency exchange rates, a small decline in the OIBDA margin and a similar ratio of capex to sales. The company maintained its outlook for a lower dividend this year, of EUR 1.50 per share versus EUR 1.60 in 2011, with at least EUR 1.30 in cash and the remainder via share buybacks.