Telefonica reported a recovery in organic revenue growth in the fourth quarter to 5.0 percent on annual basis. On a reported basis, revenues were still down 14.0 percent to EUR 12.4 billion, hurt by negative currency effects and divestments. OIBDA was stable on an organic basis but fell 35.9 percent to EUR 3.19 billion on a reported basis, mainly due to charges for the integration of E-Plus in Germany and a continued drop in profit in Spain. The OIBDA margin fell 8.7 percent points year-on-year to 25.7 percent. Net profit declined 90 percent to EUR 152 million, hurt by a charge for the devaluation of the Venezuelan currency.
Over the full year, Telefonica increased capital expenditure 16.9 percent to EUR 9.45 billion, led by expansion in Brazil. Operating cash flow fell 12.7 percent to EUR 6.07 billion. The operator finished the year with net debt of EUR 45.09 billion, in line with its target, while the negative forex effects reduced the amount of debt reduction achieved to EUR 294 million. Leverage was at 2.74 times OIBDA, and Telefonica said this will drop to 2.15 once it completes the planned sale of O2 UK.
For 2015, Telefonica expects organic revenue growth to accelerate to 7 percent, helped by continued growth in mobile data services and the acquisitions of E-Plus in Germany and GVT in Brazil, while excluding the results of Telefonica UK. The operator aims to limit the drop in the OIBDA margin to no more than 1 percent point from 32.6 percent in 2014, with possible pressure from spending on commercial initiatives. By 2016, the margin should start to stabilise. Telefonica also pledged to maintain capex at around 17 percent of revenues, keep the annual dividend at EUR 0.75 per share and reduce net debt to 2.35 times OIBDA by the end of 2015.
Telefonica ended 2014 with 274.5 million mobile customers, up by 7.8 percent over the year. The postpaid base grew by 10.7 percent to 98.7 million, and prepaid customers were up 6.1 percent to 175.7 million. The operator said 36 percent of customers used mobile broadband and 35 percent had smartphones at year-end. The number of pay-TV customers increased by 41.2 percent in 2014 to 5.1 million, while fixed broadband subscribers fell by 4.2 percent to 17.2 million. The number of fixed telephony customers dropped by 6.4 percent to 36.8 million.
