Telefonica Deutschland has slightly improved its outlook for full-year results, after its figures in the first nine months received a boost from faster-than-expected synergies from network integration. The German operator now expects a "slightly positive" development in annual adjusted EBITDA, excluding regulatory effects, compared to an earlier forecast of flat to slightly positive. In the first nine months of 2018, adjusted EBITDA was up 6 percent to EUR 1.42 billion, supported by the synergies from the E-Plus integration and a small increase in underlying mobile service revenue. The results support a small increase in the company's planned dividend for the year.
In the third quarter, the company reported revenues down 1.1 percent to EUR 1.83 billion. Excluding regulatory effects, revenues fell 0.4 percent, and Telefonica expects a "broadly stable" performance on this measure over the full year, in line with the first nine months.
Mobile service revenues fell 0.4 percent to EUR 1.34 billion in Q3, but were up 0.6 percent if regulatory effects are excluded. The underlying growth was supported by net additions of 233,000 postpaid subscribers in the quarter, bringing total postpaid gains for the year to 723,000. The prepaid base fell over the three months by 146,000, helping postpaid grow to 51.1 percent of the in total 43.049 million mobile customers.
Telefonica attributed the mobile success to its new O2 Free plans. The bigger data offers helped grow ARPU by 3.1 percent year-on-year to EUR 10 in the first nine months of 2018. Strong demand for smartphones led to a 7.1 percent increase in hardware revenues for the nine months, to EUR 827 million.
In the first nine months, capex amounted to EUR 740 million, 7.6 percent more than in the same period of the previous year. Investments were concentrated in the third quarter, when spending rose by 25 percent. Telefonica maintained its outlook for full-year capex of 12-13 percent of revenues, after 13.8 percent in the first nine months.
After achieving EUR 20 million of network synergies this year not expected until 2019, Telefonica kept its forecast for EUR 900 million in operating cash flow from the merger unchanged. After the rise in capex in the nine months, Telefonica's operating cash flow for the year to date was down 2.7 percent to EUR 584 million. The company said it expects to pay a slightly higher dividend of 27 cents a share for 2018, compared to 26 cents last year.
