Telefonica reported a fall in second-quarter results, hurt by negative currency effects, while underlying growth slowed from Q1. Revenues dropped 7.7 percent to EUR 12.723 billion, and OIBDA fell 7.1 percent to EUR 3.918 billion. The OIBDA margin rose to 30.8 percent from 30.5 a year ago, while net profit more than halved, to EUR 693 million from EUR 1.556 billion.
On an organic basis, the company reversed the growth of the first quarter and saw a 0.2 percent fall in revenues, and OIBDA organic growth slowed to 0.8 percent from 3.1 percent in Q1. The weaker growth was apparent in all of Telefonica's European markets, where it has started to consolidate O2 UK again, as well as some Latin American markets. Nevertheless, Telefonica said it was on track to meet its targets for the full year, including a dividend of EUR 0.75 per share and its mid-term debt ratio target.
Total service revenue was up 1.5 percent year-on-year on an organic basis, led by a 16 percent increase in non-SMS mobile data revenues. Mobile data traffic rose 50 percent year-on-year, driven by more LTE customers, which now make up 19 percent of the total mobile base. Total mobile customers were down 2.1 percent year-on-year to 272.6 million.
Telefonica's capital expenditure increased slightly to EUR 3.654 billion in the first half of 2016. Operating cash flow (OIBDA-capex) was up 3.3 percent in organic terms to EUR 4.102 billion, with a 1.4 percent increase in Q2. With net debt of EUR 52.568 billion at the end of June, Telefonica's leverage stood at 3.2 times OIBDA.
