Telefonica saw its revenue growth strengthen to 1.7 percent in the third quarter to EUR 11.9 billion, thanks to improved sales in Spain and Brazil and solid growth in the UK and Germany. However, the company's net result moved to a loss of EUR 443 million, due to restructuring charges of EUR 1.88 billion, mainly in Spain.
Revenues rose 3.4 percent on an organic basis, excluding the negative currency effect and the impact from selling the operations in Central America and data centres. Telefonica said growth came from handset sales, up 17 percent, as well as 1.8 percent growth in service revenue.
Service revenue growth came mainly from the transition to more advanced services, such as FTTH, and converged bundles, offsetting a drop in customer numbers. Telefonica's mobile base fell 3.1 percent year-on-year to 262.4 million customers, and the number of broadband lines dropped 1.7 percent to 21.6 million. FTTx/cable subscribers were up 11.2 percent to 14.2 million, and postpaid mobile subscribers increased 5.4 percent to 128.2 million.
OIBDA falls, free cash flow increases
OIBDA fell 31.9 percent to EUR 2.75 billion, hurt by the restructuring charges and a 5.3 percent underlying rise in costs. On an organic basis, OIBDA was still up 0.8 percent, thanks to growth mainly in the UK and Brazil.
Telefonica increased capex 17.2 percent to EUR 6.66 billion in the first nine months of the year, due mainly to the spectrum auction in Germany. In organic terms, spending increased 4.6 percent year-on-year in the nine months and 1.4 percent in Q3. With the spectrum payment in Germany deferred and interest payments down 17.5 percent, free cash flow improved 40.3 percent to EUR 4.15 billion in the nine months.
Net debt totaled EUR 38.3 billion at the end of September, down by EUR 2.78 billion since the start of the year and a reduction of EUR 1.94 billion in Q3 alone. The reduction was due mainly to proceeds from divestments and higher free cash flow, offset by dividend payments and increased wage commitments. The company said its latest financing activities meant debt maturities are covered for the next two years.
The results in the first nine months put the company on track to meet its full-year targets for growth of around 2 percent in revenues and EBITDA. In the nine months, revenues were up 3.6 percent and EBITDA rose 1.1 percent.
