Telefonica reported a small improvement in underlying results for the second quarter, leading the Spanish operator to maintain its outlook for the full year. While reported revenues fell 6.3 percent to EUR 12.14 billion, this was mainly due to forex effects, and organic growth improved to 2.0 percent, or 3.3 percent if regulatory effects were excluded. Growth was led by a 19.6 percent increase in handset revenues and included a 0.7 percent increase in service revenues.
OIBDA rose 1.9 percent to EUR 4.24 billion and was up 4.1 percent on an organic basis. The margin improved 2.8 percent points to 34.9 percent, helped by an 11 percent reduction in operating costs. Net profit increased 9.9 percent to EUR 902 million, supported by a positive tax ruling in Brazil. The result also included EUR 109 million in impairment charges, mainly for goodwill in Mexico, as well as EUR 40 million in gains from small asset sales.
Telefonica said it also reduced its debt for a fifth consecutive quarter, to a net EUR 43.59 billion at the end of June, a reduction of EUR 382 million in the quarter. Capex was up 29.4 percent year-on-year to EUR 2.44 billion, due mainly to spectrum in the UK, leading to a 20.9 percent fall in operating cash flow to EUR 1.80 billion.
For the full year, Telefonica still expects revenues up around 1 percent, after 2 percent growth in the first half. The OIBDA margin is forecast up half a percent point, a result already achieved in H1, and capex will reach around 15 percent of revenues, compared to 13.9 percent in H1.
Telefonica's customer base was down 1 percent year-on-year at the end of June at 357.5 million, but rose by 546,000 subscriptions compared to March. The company said the quarterly growth was supported by "intense commercial activity focused on high-value customers". This helped average revenue per subscription increase 3 percent year-on-year on an organic basis and churn reduce by 0.1 percent points.
FTTx/cable broadband led the growth in the period, adding 724,000 customers for a total 12.2 million, up 23 percent year-on-year. This already represents 57 percent of all broadband customers, up 10 percent points from a year ago, and coverage reached 47.3 million premises passed, up 15 percent from a year earlier. Pay-TV also grew strongly in the quarter, adding 131,000 new subscribers to reach 8.7 million, and mobile postpaid customers rose by nearly 2.2 million in the three months to 119.7 million, the highest quarterly growth since Q3 2011, Telefonica said.
