Telefónica earns 1,026 million euros in the first half of 2022

  • The company achieves solid results in the first half, based on the good performance of key markets, and is progressing in the execution of its roadmap with transactions aimed at creating value.
  • El Grupo actualiza al alza sus objetivos financiers para 2022 gracias a la aceleración del crecimiento en el segundo del año quarter, que ha impulado el incremento orgánico de los ingresos (+4.2%) y del OIBDA (+2.7%) en the semester.
  • Telefónica reiterates the shareholder remuneration policy for 2022, consisting of a dividend of 0.30 euro per share entirely in cash, and will propose to the General Meeting of Shareholders the amortization of 0.4% of own shares.
  • Free cash flow reached 1,348 million euros through June, 48% more than in the first half of the previous year.
  • Telefónica Tech reinforces its growth track record with a first-half revenue increase of 71.9%.
  • “The world is going through a period of economic weakness and it is now that Telefónica’s behavior is even more valuable, with its solid fundamentals and results that exceed the objectives set and consolidate its profitable activity, its quality and its service to society. . Telefónica is not immune to global uncertainties, but it is resilient to continue to offer confidence and stability to all the challenges ahead,” says Telefónica President José María Álvarez-Pallete.

Madrid, July 28, 2022. Telefónica achieved solid results in the first half of 2022 in a context marked by high uncertainty in global markets. In the second quarter, the company accelerated revenue and operating income before amortization (OIBDA) growth, with sales again increasing in all of the operator’s markets, both in organic and reported terms. In addition, it closes the semester with a cumulative net profit of 1,026 million euros, a figure that stabilizes the Group’s profits after the extraordinary results of operations closed in the first half of 2021. Then the profit exceeded 8,600 million euros after the 7,400 million euros of the extraordinary results of the creation of VMO2 in the United Kingdom with Virgin Media and the sale of the Telxius towers.

In addition, the positive evolution recorded between April and June allows the company to move even further and update its financial objectives for turnover and OIBDA initially set for 2022.

Telefónica also reiterates the shareholder remuneration policy for 2022, consisting of an all-cash dividend of 0.30 euro per share, and announces that it will propose to the next General Meeting of Shareholders the amortization of 0.4% of the capital it held in treasury shares at the end of June.

Featured, Telefónica 2022 Q2 Results

“The world is going through a period of economic weakness and it is now that the behavior of Telefónica is even more valuable, with its solid fundamentals and its results that exceed the objectives set and consolidate its profitable activity, its quality and its service to society. “, says the president of Telefónica, José María Álvarez-Pallete. And he adds: “Telefónica does not live outside of reality. The war in Ukraine, an energy crisis that complicates the inflationary scenario and rising financing costs have a direct impact on the lives of companies and individuals, without exception. Telefónica is grounded and well aware that economic headwinds require determination, effort, intuition and leadership skills. This is the only way to explain the value creation of Telefónica, which successfully achieves all its objectives and confirms the dividend for 2022, without forgetting the commitment to net zero emissions. Telefónica is not immune to global uncertainties, but it is resilient to continue to offer confidence and stability to all the challenges that lie ahead”.

consistent results

The positive evolution of different magnitudes in the first six months of 2022 is based on the consistent results of Telefónica’s main markets, a key element of the respect of the strategic plan as well as the efficiency gains derived from the operating model, the process of continued leadership of Telefónica Tech and the seizing of opportunities by Telefónica Infra. Strategic management has made it possible to face the current inflationary pressures and to maintain the solid fundamentals of the company.

By country, in the second quarter of the year, Spain maintained an average revenue per customer (ARPU) above 90 euros (+3.1% year-on-year) and the churn rate fell to 1.1% , its lowest level in six years. . Also in the second quarter, the plans for the deployment of 5G in Germany have advanced by encima de lo esperado, y la integración de los activos móviles de Oi ha fortalecido el liderazgo del Grupo en Brasil, que aumenta sus ingresos casi a 35% en el second trimester. As for the United Kingdom, the company continues to innovate its catalog of products and services and to accelerate investments in network infrastructures to move forward with the objective of making VMO2 the leading operator in the British market. At Hispam, the change in operating model resulted in a double-digit increase in turnover (+18.4%) between April and June.

Overall revenue growth

Revenues for the second quarter of the year are up in all markets. On an organic basis and including 50% of UK VMO2, revenue increased by 5.2% over the quarter, to 11,519 million, and by 4.2% over the first six months of the year, to 22,402 million .

By market, 28% of first-half sales came from Spain; 20%, Hispam; 19% from Brazil; 18% from Germany; and 13% from the UK.

OIBDA increased by 3.4% during the quarter, to 3,712 million euros, and by 2.7% during the first six months of the year, to a total of 7,465 million euros , in both cases considering 50% of VMO2.

Also by market, 30% of OIBDA comes from Spain; 23% from Brazil; 17% from Germany; 15%, Hispam; and 15% from the UK.

On the other hand, and in line with the first quarter of the year, the favorable evolution of exchange rates had a positive impact on the published figures, of 526 million euros in turnover and 187 million in OIBDA ( 768 million and 283 million euros for the half-year, respectively).

Our revenues by geography, Telefónica Q2 2022 Results

Higher cash generation

Free cash flow for the quarter reached 835 million euros and amounted to 1,348 million for the whole half, or 48% more than in the first half of 2021. It is worth highlighting the contribution to the half of 146 million euros as a dividend from VMO2, part of the total figure of approximately 800 million euros expected for the full year.

Cumulative investments (CapEx) until June amounted to 2,482 million euros, which remains stable on an organic basis and leads to a turnover ratio of 13%, within the limit of the objective set for the whole year.

Telefónica Tech continues to outperform the market

income from Telefonica Tech increased by 64.8% over the quarter, to 335 million euros, thanks to the behavior of the businesses, which continue to beat the market, and to the integration of the companies acquired in recent months, such as Incremental and BE-terna. Revenue growth between January and June was close to 72%, at 634 million euros.

Telefónica Cybersecurity & Cloud Tech and Telefónica IoT & Big Data Tech, which are the two areas that make up Telefónica Tech, also separately topped the market in terms of revenue, growing 73.7% and 59.4%, respectively, during of the semester.

Solid liquidity position: 20.6 billion euros

Telefónica’s financing activity through June amounted to €7,392 million, allowing the Group to maintain a strong liquidity position of up to €20,603 million. Additionally, the company has maturities hedged beyond 2024, the average maturity of its debt is up to 12.8 years, and nearly 80% of debt is anchored at historically low fixed rates. As of June 30, net financial debt amounted to 28,817 million euros. Taking into account post-closing transactions, the debt would be around 27,800 million euros.

On the other hand, Telefónica has achieved its objective of allocating more than 10,000 million euros to sustainable financing during this second quarter, and announces the new objective that approximately 25% of financing until 2024 is sustainable.

Valuable customers and a leader in the deployment of ultra-fast networks

Telefónica’s access base exceeds 384 million at the end of the semester, with a growth of 6% compared to June 2021 thanks to the increase in high-value customers: FTTH (+18%) and mobile plan (+9 %).

With regard to the deployment of very high-speed networks, Telefónica continues to maintain its world leadership (excluding China), with 164.7 million real estate units (UUII) sold, of which a total of 86 million pass through its own network ( +9%).

As for 5G technology, its coverage is constantly growing, with a presence in more than 600 localities in the United Kingdom, around 1,600 cities in Germany, 35 cities in Brazil and almost 83% of the Spanish population.

ESG: towards the achievement of objectives

Throughout the second quarter, Telefónica made progress in achieving its ESG objectives, aligned with the ODS United Nations. Thus, in terms of environmental objectives (E), the JV Solar360 already offers solar energy to residential and professional customers and SBTi has validated Telefónica’s zero emissions objective in 2040, the first telco to achieve it within the framework of the new standard. In addition, the company has set up a platform that facilitates the reuse of equipment, both internally and with suppliers, in line with the Circular Economy Plan, which aims for Zero Waste by 2030.

On the social side (S), Telefónica connected 2.5 million people in remote areas of Peru to 4G technology under the “Internet for All” program. In addition, initiatives have been launched to promote digital inclusion (VMO2 donated 10,000 smartphones to the UK). International Volunteer Day was also celebrated, with a total of 700 initiatives and the participation of 29,000 volunteers.

With regard to governance (G), compliance with the sustainable funding objective mentioned above stands out, the diversity rate in Vivo’s board of directors, which increased from 25% to 33%, and training on responsible business principles for all company employees.

One million people trained in the digital world

Within the Global Innovation and Talent Hub, and thanks to Telefónica’s commitment to promoting digital training for society as a whole, Fundación Telefónica trained nearly one million people in the first half of 2022.

Additionally, as part of its goal to serve society and stand with those most in need, Telefónica continued to carry out various initiatives to help the people of Ukraine.

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