Spanish telco group Telefónica has confirmed its 2023 guidance after reporting solid first quarter revenue growth.

For the full year, the company expects low single digit growth in both revenue and operating income before depreciation and amortisation (OIBDA). It expects to achieve a capex to sales ratio of 14%. Telefónica also confirmed its 2023 dividend.

“We have made a strong start to the year despite ongoing challenges,” said Telefónica CEO José María Álvarez-Pallete, in a statement. “We continue to execute on our strategic plan and delivered another quarter of accelerated revenue growth, both in reported and organic terms. We have achieved steady organic OIBDA growth driven by top-line growth and efficiencies. As such, we are well on track to meet our 2023 financial guidance and I am pleased to confirm our dividend for 2023.”

Telefónica seems to be finding favour with users at the moment. At the end of March, it served 383.6 million customers – which includes both fixed and mobile users – up 4% on a year ago. Its FTTH base jumped 16%.

The respectable customer momentum helped to increase group revenue by 6.7% on last year, to €10.05 billion, with every opco in the group seeing growth.

The standout performers were Germany, where strong mobile momentum resulted in top-line growth of 8%, and Brasil, where sales grew 12.1% on customer additions and high-end tariff uptake. On the domestic front, revenue inched up 0.3% thanks to a better tariff mix, which helped service revenue grow by 1%. That was enough to offset declines in handset sales and lower wholesale revenue from football.

Earnings-wise though, the performance was decidedly more mixed.

While group OIBDA was up 1.1% organically, on a reported basis it fell 2.4% to €3.12 billion. It was dragged down by Spain (-1.7%) and its operations across Central and South America (excluding Brazil), where earnings were boosted in Q1 last year to the tune of €184 million, thanks to the sale of its infrastructure arm in Colombia. Brazil was one exception, growing OIBDA to €924 million from €804 million, thanks to solid customer additions, which in turn grew both service and handset revenues.

Interestingly, given the current economic backdrop, Telefónica also made sure to point out how well it is dealing with its debts. Its net debt currently weighs in at a sizeable €26.44 billion, but that represents a 3.5% decline compared to the end of March 2022.

More than 80% of its debt is at fixed rates – which will soften the blow of rising interest rates – and it is able to cover all debts that mature in the next three years, the telco said. Its liquidity currently stands at close to €21.4 billion.

“From a capital structure standpoint, our net debt continues to decline and is now lower than in Dec-22, which demonstrates the financial strength and the cash generation of the business,” said Álvarez-Pallete.

Telefónica’s results seem to have been met with ambivalence. At the time of writing, its shares were trading in Madrid at €3.88, down 3.7% on Wednesday.

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