Telefonica has raised its outlook for the full year, now forecasting flat to slightly higher revenues and OIBDA compared to a previous target of stable results. This follows an improvement in underlying results in the second quarter, with organic growth of 3.4 percent in revenues and 3.3 percent in OIBDA.
On a reported basis, quarterly revenues were still down 3.6 percent to EUR 9.96 billion in Q2, impacted by forex effects and divestments. OIBDA benefited from EUR 10.2 billion in capital gains booked on divestments and reached EUR 13.47 billion. On an organic basis, the OIBDA margin was unchanged at 33.1 percent.
The gains included the sale of Telxius towers in Europe and Latin America and a profit on the merger of O2 UK with Virgin Media. This led to a record net profit in the quarter, at EUR 7.74 billion.
Telefonica maintained its forecast for dividend payments and said it expects to return to a more normal capex level of around 15 percent of sales. In addition, it will propose to the AGM to cancel the 0.7 percent of outstanding shares held as treasury stock.
Capex rebounded 12.8 percent in Q2 after the sharp slowdown in the year-earlier period due to the pandemic. This led to a small drop in organic operating cash flow, to EUR 12.08 billion, and free cash flow fell 11.3 percent to EUR 877 million. Telefonica ended the period with net debt of EUR 23.15 billion, down 37.8 percent from a year ago thanks to the divestment proceeds. Adjusting for proceeds to Telxius minorities, net debt was at EUR 26.2 billion at end-June, down 29.5 percent year-on-year.
