Telefonica more than doubled its net profit in the first quarter, to EUR 886 million from EUR 406 million a year ago, thanks to lower interest charges and depreciation. Underlying results also improved, with organic OIBDA up 0.3 percent and revenues down just 1.3 percent, less than the previous quarters. The company said the results put it on track to meet its full-year outlook for stabilising underlying revenues and OIBDA.
On a reported basis, sales and OIBDA both fell 9 percent, hurt by the continued effects of the covid-19 pandemic and negative forex rates. After revenues of EUR 10.34 billion and OIBDA of EUR 3.42 billion, the margin was nearly stable year-on-year at 33.0 percent.
The company estimates the pandemic took EUR 280 million off revenues and exchange rates another EUR 754 million. Underlying service revenues were down 1.8 percent, while handset revenues improved to 2.7 percent growth. Only Germany and Brazil showed organic revenue growth, of 0.2 percent both, with all other areas lower.
Capital expenditure rose 35.1 percent year-on-year to EUR 2.0 billion, due mainly to spectrum purchases in the UK, Spain and Chile. Excluding spectrum, capex rose 9.9 percent, and cash generation improved more than 200 percent to EUR 727 million. However, with the spectrum payments, free cash flow was down 85 percent year-on-year to EUR 33 million.
Net debt declined 6.4 percent from a year earlier at EUR 35.8 billion, and Telefonica expects a reduction of another EUR 9 billion once it completes its pending divestments in Q2. Following just over EUR 3 billion in refinancing during the quarter, the company has outstanding liquidity of nearly EUR 20 billion. The second tranche of its 2020 dividend will be paid in June, with a voluntary scrip, with the first payment of the 2021 dividend following in December.
Telefonica said the results show its strategy is paying off. The company highlighted the growth in its high-quality customer base thanks to expanding fibre coverage. Total access lines were up 1.5 percent year-on-year to 347.4 million, while retail ultra-broadband accesses rose by 8.2 percent in the last year to 15.6 million and FTTH connections by 23.5 percent to 10.6 million, representing 53 percent of total retail broadband customers.
The company ended the first quarter with 137.1 million premises passed with fibre, 6 percent more than a year ago, of which 63 million were over its own networks. Two new fibre ventures were agreed in the quarter, in Brazil and Chile, alongside the joint venture set up in Germany last year.
Mobile customers rose 3.0 percent year-on-year to 268.4 million at the end of March. That includes a 3.8 percent increase in postpaid subscribers to 110.2 million.
