Telefonica clocks 29% earnings hike and plots new Spanish fibre JV

Revenue growth in the first half of the year accelerated in the second quarter, says Telefonica, increasing by 1.2% to €10,255 million Between April and June. This was, driven by service revenues, which rose by 2.2%. For the half year, revenues grew by 1.1% to €20,395 million.

EBITDA in the second quarter increased in all geographic areas to €3,219 million, a 1.8% hike, and in the first half it grew by 1.9% to a total of €6,424 million.

In terms of business divisions held up as key performers, Telefónica España grew in fixed broadband, mobile contract, television and convergent accesses in H1. Meanwhile Telefónica Tech ended the first half with 11.1% revenue growth to a total of €984 million, and Telefonica’s overall customer base reached 392 million, up 2.2% YoY. Fibre accesses grew 12.1% and mobile contract customers by 3.3%.

Boyed by these results, Telefonica has confirmed its financial targets for 2024, which set revenue growth of around 1%, EBITDA growth between 1% and 2% and operating cash flow (EBITDAaL-CapEx) between 1% and 2%. It also forecasts a CapEx over revenue figure of up to 13% and an increase in free cash flow of ‘more than 10%’.

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"Revenues are growing, EBITDA is up and the customer base is larger and more satisfied with the service we provide,” said José María Álvarez-Pallete, Chairman of Telefónica. “Telefónica is a more profitable and sustainable company, meeting the pillars of its GPS strategic plan, confirming all its financial targets for 2024 and reaffirming its attractive shareholder remuneration."

Meanwhile, Telefonica and Vodafone Spain have signed a deal to look at building a new fibre JV in Spain. The intention is that this will cover around 3.5 million premises and will provide fibre access services to both companies within this footprint.

The initial ownership split of the FibreCo be based on their customer numbers within the footprint, and they plan to bring a third-party financial investor into the share capital of the new company. Telefonica is expected to retain majority ownership and Zegona, which owns Vodafone Spain, is expected to retain 10%.

Eamonn O’Hare, Chairman and CEO of Zegona said: “Creating a new FibreCo in partnership with Telefonica is another key milestone in our plan to transform Vodafone Spain. This transaction fully complements the MasOrange FibreCo we announced last week and gives Vodafone Spain guaranteed access to future-proof networks with attractive economics. Moving Vodafone Spain to these new FibreCo structures is expected to create significant incremental value for all Zegona stakeholders.”

Also announced today, Millicom International Cellular is working on a US$400 million deal to buy Telefonica out of its Colombian operations – and you can read all about that in our report here.