Telefónica Q3 slows revenue decline

Spanish telco giant Telefónica has posted its Q3 results showing stabilisation as decline in revenues slowed and the number of high-value contract mobile customers grew.

Organic revenue grew by 2.8% year-on-year to €13.01 billion in the quarter, with 1.9% growth to €37 billion for the first half of 2014. Overall mobile accesses at 249.4 million were up by 2% compared to the same period last year, while mobile contract accesses, which now account for 36% of the operator’s entire mobile business, were up by 8%.

The operator reported improving trends across almost all of its markets in the last three months, but Europe fared worse than Latin America. In the LatAm market Mexico’s 8% year-on-year revenue growth to €403 million boosted the operator’s overall revenues in the region by 14.1% to €3.85 billion. However, the Brazilian market grew just 1.1%, with Q3 revenues reaching €2.9 billion.

Third quarter revenue in the telco’s biggest single market, Spain, on the other hand dropped by 6.6% to 2.99 billion. But this still represents a 2.5% sequential improvement. In the UK the decline in revenue was more modest at -2.3% compared to Q3 2013, while Telefónica revenues in Germany declined 5% year-on-year, showing an improvement from Q2 (-4.4%) and Q1 (-8.8%).

In terms fixed retail broadband, the operator saw 52,000 net additions representing 1% year-on-year growth, while pay TV access increased for the sixth consecutive quarter with 458,000 net additions, four times the figure in the previous quarter.

“The close of the consolidation activity in Germany and the acquisition of GVT in Brazil bring structural changes in the positioning of the company in two of its principle markets and reinforces the capacity for future growth,” Telefónica Executive Chairman, César Alierta said.

Under Alierta’s lead, Telefónica has looked to acquisition to try and accelerate growth in Brazil, where it is in the process of acquiring ISP GVT, and in Germany with the acquisition of operator E-Plus. However, the Spanish operator’s income in the third quarter dropped 13% to €947 million. Earnings were hurt by foreign exchange rates, particularly by the depreciation of the Argentine peso, Venezuelan bolivar and Brazilian real against the euro.

Telefónica said it has continued to “drive the company’s technological transformation” as the operator put it, with 4G coverage now at 54% in Europe and availability growing in Latin America where the service is currently available in eight countries.