08.05.2014
DGAP-News:Telefónica Deutschland Holding AG: Telefónica Deutschland releases first quarter 2014 results
DGAP-News: Telefónica Deutschland Holding AG / Key word(s):
Preliminary Results
Telefónica Deutschland Holding AG: Telefónica Deutschland releases
first quarter 2014 results
08.05.2014 / 07:31
May 8, 2014
Telefónica Deutschland releases preliminary results for January to March
2014
MUNICH. In the first quarter of 2014, the German mobile market remained
very dynamic and competitive, with a strong focus on LTE from core network
brands. Against this background, Telefónica Deutschland continued executing
its strategy of monetising data, leveraging a strong set of assets and
brands.
"With the refresh of our "O2 Blue All-in" portfolio for the consumer
segment and the launch of "O2 Unite" for SMEs we have again successfully
demonstrated that Telefónica Deutschland remains at the forefront of data
monetisation in the German mobile market", said Rachel Empey (CFO). With
regards to the planned acquisition of E-Plus by Telefónica Deutschland, CSO
Markus Haas stated: "We are building a strong foundation on data
monetisation today and with the planned integration of E-Plus, German
consumers will benefit from a faster and accelerated 4G network roll out
and more innovative and attractive offers for all segments in the market."
First quarter 2014 operational & financial highlights:
- Net additions in the mobile postpaid segment at 78 thousand compared to
30 thousand net disconnections registered in the previous quarter.
- Smartphone penetration continued its positive trend reaching 32.8%
(70.7% in the O2 consumer postpaid segment and 21.2% in the O2 consumer
prepaid segment) with an encouraging share of LTE-enabled devices sold
over total (approx. 78%).
- Fixed broadband business further improving its operating performance,
with 18 thousand retail DSL net disconnections (vs. -22 thousand in the
fourth quarter and -29 thousand in the third quarter of 2013,
respectively), reflecting the success of the new "O2 DSL All-in"
portfolio and increased demand for higher speeds on VDSL technology.
- Telefónica Deutschland total revenues totalled 1,122 million Euro
(-8.8% year-on-year), driven by a continuation of trends in mobile and
fixed service revenues and declining handset revenues.
- Wireless service revenue excluding the impact from mobile termination
rate cuts decreased by 3.4% year-on-year (-3.6% year-on-year in
reported terms), a similar performance as in the previous quarter, with
increasing LTE adoption in the postpaid segment being offset by the
impact from tariff renewals to lower price levels, acceleration of SMS
declines and lower performance of the prepaid segment.
- OIBDA margin showed a moderate decline (-1.8 percentage points
year-on-year), mainly driven by increased commercial spend to drive
commercial performance. OIBDA reached 234 million Euro, a decline of
15.8% year-on-year.
- CapEx was lower year-on-year by 9.3%, totalling to 132 million Euro,
reflecting the focused investments into LTE network deployment and a
different year-on-year phasing of investments.
- Free Cash Flow pre dividends (FCF) reached 107 million Euro (from 105
million Euro in 2013), with silent factoring transactions playing a
major role in the positive evolution of working capital in both years.
- Consolidated net financial debt increased moderately by 13 million Euro
to 481 million Euro at the end of March 2014, reaching a leverage ratio
of 0.4x.
Telefónica Deutschland's operating performance
At the end of March 2014, Telefónica Deutschland had 25.0 million customer
accesses, a year-on-year decrease of 1.3%. The mobile access base remained
stable year-on-year at 19.3 million, while fixed line accesses declined by
4.6% year-on-year to 5.7 million.
Main commercial highlights for the first quarter of 2014 include:
- On March 25, the Company announced a complete refresh of its "O2 Blue
All-in" portfolio, including access to LTE in all tariffs and
attractive data roaming packages starting April 8, plus the
introduction of the "O2 Blue All-in Premium" - a carefree tariff for
high usage customers. Attractive bundles with the latest LTE enabled
smartphones complete the new offer, which is already gaining traction
in the market.
- Launch of a revolutionary new proposition for the business segment from
March 10: "O2 Unite", a single tariff proposition with a pool of
minutes, SMS and data volume that can be shared by all employees of the
firm with an easy to use self-management digital interface.
- New "O2 DSL" high-speed offers for young people (O2 DSL Young),
families (O2 DSL All-in), and self-employed (O2 DSL Professional)
available from March 13, extending VDSL into tariffs specifically
tailored to new customer segments. The NGA cooperation with Telekom
Deutschland GmbH allows Telefónica Deutschland to reach almost 15
million households all over Germany with speeds of up to 50 Mbit/s.
Postpaid mobile net additions in the first quarter of 2014 were 78
thousand, compared to the negative figure reported in the previous quarter
(-30 thousand ) with an improving trend of gross additions on the back of
increased commercial investments. Total postpaid base increased to 10.4
million customers (+1.6% year-on-year) and its share over total mobile base
grew by 1.0 percentage points year-on-year, to reach 53.8%.
The mobile prepaid segment registered 204 thousand net disconnections in
the quarter driven by the O2 consumer segment, main reasons being
disconnection of inactive customers and more targeted acquisitions across
channels. Prepaid customer base declined by 2.3% year-on-year to reach 8.9
million at the end of March 2014.
Blended churn in the first quarter was stable year-on-year at 2.4%.
Postpaid churn excluding M2M stood at 1.6% (+0.1 percentage points,
year-on-year) reflecting the intense competition seen in the German mobile
market.
Smartphone penetration reached 32.8% at the end of March 2014, an
improvement of 5.0 percentage points over the previous year. In the
specific segment of O2 consumer postpaid, smartphone penetration reached
70.7%; +5.7 percentage points year-on-year. In the prepaid segment,
penetration further improved to 21.2% in O2 consumer segment (+8.0
percentage points year-on-year) and 28.4% in Fonic (+15.2 percentage points
year-on-year).
The share of LTE-enabled handsets as a percentage of total handsets sold,
stood almost stable compared to prior quarter at 78%, with the overall
number of LTE-enabled handsets sold to customers in the O2 consumer
postpaid segment having exceeded the mark of 1 million at the end of April.
Mobile ARPU in the first quarter of 2014 was 12.1 Euro, a decline of 3.3%
year-on-year (-3.1% excluding the impact from mobile termination rate
cuts).
Postpaid ARPU excluding M2M4 declined 5.0% year-on-year to 18.5 Euro (-4.8%
excluding mobile termination rate cuts), showing a better year-on-year
performance over previous quarters. The positive contribution from new
customers driven by the uplift in LTE and the increasing data consumption
did not yet offset the impact from the repositioning of the current
customer base and the acceleration of declines of SMS usage. The ARPU
performance is further impacted by the increasing usage of discounted
online channels from our customers and a stronger commercial focus on
selective bundles of handsets with tariffs from the "O2 Blue All-in"
portfolio.
Prepaid ARPU reached 5.0 Euro in the first quarter, an increase of 0.4%
year-on-year excluding the impact from mobile termination rate cuts. The
higher adoption of data tariffs from prepaid customers is offsetting the
reduction of traditional voice and messaging services which also applies to
this segment.
Retail fixed broadband accesses continued the improving trend over prior
quarters, declining by 18 thousand in the first quarter (-22 thousand in
the last quarter of 2013), leveraging the increased demand for the VDSL
speed option and the good acceptance of the new "O2 DSL All-in" portfolio,
leading to lower churn. Wholesale broadband accesses registered net
additions of 3 thousand in the quarter.
Telefónica Deutschland's financial performance
Telefónica Deutschland's revenues totalled 1,122 million Euro in the first
quarter of 2014, a year-on-year decline of 8.8% (-8.7% excluding the impact
from mobile termination rate cuts).
Wireless service revenues reached 707 million Euro , declining 3.4%
year-on-year excluding the impact from mobile termination rate cuts (-3.6%
in reported terms), a similar performance to the previous quarter. The O2
consumer segment continued to be the main driver: continuous decline of SMS
usage, lower trading momentum for new customers and declining prices for
tariff renewals in the postpaid base added to the negative year-on-year
performance seen in the prepaid segment from a lower customer base. The
share of bundled revenues over total wireless service revenues in the first
quarter continued to grow by 7 percentage points year-on-year to reach 68%
in the specific O2 consumer postpaid segment.
Mobile data continued to be a main driver for revenue performance, reaching
350 million Euro in the first quarter, with the accelerated decline of SMS
revenues (-24.6% year-on-year) being the reason for an overall decline of
data revenues of 1.3% year-on-year. Non-SMS data revenues registered growth
of 12.1% year-on-year in the first quarter, representing 72.0% of total
data revenues in the quarter, an increase of 8.6 percentage points compared
to prior year.
Handset revenues, mainly through "O2 My Handy" distribution model, reached
120 million Euro in the first quarter of 2014, a decline of 33.2%
year-on-year, mainly driven by overall lower volumes of handsets sold and
selective hardware campaigns.
Wireline revenues reached 293 million Euro in the quarter, already showing
a better sequential trend (-7.0% year-on-year, vs -9.2% in the previous
quarter), reflecting a lower retail DSL base which is partly mitigated by
the uptake of VDSL.
Operating expenses amounted to 909 million Euro, a year-on-year decrease of
6.1% year-on-year. This performance was mainly driven by:
- Decline in supplies of 14.8% year-on-year to 427million Euro in the
first quarter as a result of lower handset sales and lower termination
cost from outgoing SMS.
- Personnel expenses increased by 2.8% year-on-year to 108 million Euro
as a consequence of general increases in salaries from July 2013.
- Other expenses increased by 3.5% year-on-year to 373 million Euro
mainly driven by the increase in both mobile acquisition and retention
cost from intensified commercial activities.
Operating Income before Depreciation and Amortisation (OIBDA) totalled 234
million Euro in the first quarter of 2014 (-15.8% year-on-year).
OIBDA margin was down 1.8 percentage points year-on-year to 20.9%, a
largely stable year-on-year performance relative to the underlying
performance in the previous quarter.
OIBDA excluding group fees reached 251 million Euro in the quarter (-14.6%
year-on-year) with an OIBDA margin of 22.3% (down 1.5 percentage points
year-on-year).
The year-on-year OIBDA performance was driven by the negative flow-through
effect from service revenues as well as focused commercial investments to
gain trading momentum, including selected offers with discounted devices.
Depreciation & Amortisation in the first quarter 2014 totalled 267 million
Euro, a decrease of 4.7% year-on-year, driven by the year-on-year impact of
full depreciation of assets, mainly within the software category.
Operating income amounted to -33 million Euro in the first quarter of 2014,
compared to -2 million Euro in the same period of prior year.
Net financial result as of March 31, 2014 stood at -8 million Euro (-11
million Euro in the previous year).
In the first quarter of 2014 the Company registered a positive income from
prior year income taxes of 14 thousand Euro (18 thousand in the previous
year).
Profit for the period in the first quarter 2014 was -40 million Euro
compared to -13 million Euro in the same quarter of previous year.
CapEx was lower year-on-year by 9.3%, totalling to 132 million Euro,
reflecting the focused investments into LTE network deployment and a
different year-on-year phasing of investments. LTE outdoor coverage already
reached approximately 50% mark at the end of April, 2014.
Operating Cash Flow (OIBDA minus CapEx) reached 102 million Euro in the
first quarter of 2014 compared to 133 million in the same period of 2013.
Free Cash Flow pre dividends (FCF) reached 107 million Euro (from 105
million Euro in 2013). The conversion from Operating Cash Flow to FCF was
the result of a positive working capital development of 17 million Euro,
with silent factoring transactions executed in both years having a major
role. In 2014 the Company registered a net interest payment of 4 million
Euro (4 million Euro also in the same period of prior year) and a
contribution to a term deposit in the amount of 8 million Euro which will
be released over time.
The Company did not pay income taxes neither in the first quarter of 2014
nor in the same period of 2013.
Consolidated net financial debt at the end of March 2014 increased
moderately from December 2013 by 13 million Euro to 481 million Euro due to
a 500 million second Eurobond issuance in February 2014. The effect was
largely compensated by an increase in liquidity of 477 million Euro, while
financial assets declined by 116 million Euro mainly due to lower "O2 My
Handy receivables". The Company further early redeemed 125 million Euros of
its inter-company loan. The leverage ratio remained constant at 0.4x.
Telefónica Deutschland continued its successful positioning in the debt
capital market and achieved a very attractive funding and spread levels,
with a 2.375% coupon in the 7-Year issuance in February. This transaction
strengthened the Company's liquidity position, extending its maturity
profile while diversifying its investor base.
APPENDIX - DATA TABLES
Please refer to the following link to access the download of the data
tables. Thank you.
https://www.telefonica.de/investor-relations-en/financial-reports/q1-2014.html
Further information
Telefónica Deutschland Holding AG
Investor Relations
Georg-Brauchle-Ring 23-25
80992 München
Victor J. García-Aranda, Head of Investor Relations
Marion Polzer, Manager Investor Relations
Pia Hildebrand, Office Coordinator Investor Relations
(t) +49 89 2442 1010
ir-deutschland@telefonica.com
www.telefonica.de/investor-relations
Disclaimer:
The financial information contained in this document (in general prepared
under International Financial Reporting Standards (IFRS)) contains in
respect of the results for January - March 2014 period only preliminary
numbers. The financial information and opinions contained in this document
are unaudited and are subject to change without notice.
None of the Company, its subsidiaries or affiliates or by any of its
officers, directors, employees, advisors, representatives or agents shall
be liable whatsoever for any loss however arising, directly or indirectly,
from any use of this document its content or otherwise arising in
connection with this document.
This document contains statements that constitute forward-looking
statements and expectations about Telefónica Deutschland Holding AG (in the
following "the Company" or "Telefónica Deutschland") that reflect the
current views and assumptions of Telefónica Deutschland's management with
respect to future events, including financial projections and estimates and
their underlying assumptions, statements regarding plans, objectives and
expectations which may refer, among others, to the intent, belief or
current prospects of the customer base, estimates regarding, among others,
future growth in the different business lines and the global business,
market share, financial results and other aspects of the activity and
situation relating to the Company. Forward-looking statements are based on
current plans, estimates and projections. The forward-looking statements in
this document can be identified, in some instances, by the use of words
such as "expects", "anticipates", "intends", "believes", and similar
language or the negative thereof or by forward-looking nature of
discussions of strategy, plans or intentions. Such forward-looking
statements, by their nature, are not guarantees of future performance and
are subject to risks and uncertainties, most of which are difficult to
predict and generally beyond Telefónica Deutschland's control, and other
important factors that could cause actual developments or results to
materially differ from those expressed in or implied by the Company's
forward-looking statements. These risks and uncertainties include those
discussed or identified in fuller disclosure documents filed by Telefónica
Deutschland with the relevant Securities Markets Regulators, and in
particular, with the German Market Regulator (Bundesanstalt für
Finanzdienstleistungsaufsicht - BaFin). The Company can offer no assurance
that its expectations or targets will be achieved.
Analysts and investors, and any other person or entity that may need to
take decisions, or prepare or release opinions about the shares /
securities issued by the Company, are cautioned not to place undue reliance
on those forward-looking statements, which speak only as of the date of
this document, and shall take into account that the numbers published are
only preliminary. Past performance cannot be relied upon as a guide to
future performance.
Except as required by applicable law, Telefónica Deutschland undertakes no
obligation to release publicly the results of any revisions to these
forward-looking statements which may be made to reflect events and
circumstances after the date of this presentation, including, without
limitation, changes in Telefónica Deutschland's business or acquisition
strategy or to reflect the occurrence of unanticipated events.
This document contains summarized information or information that has not
been audited. In this sense, this information is subject to, and must be
read in conjunction with, all other publicly available information,
including if it is necessary, any fuller disclosure document published by
Telefónica Deutschland.
Finally, it is stated that neither this document nor any of the information
contained herein constitutes an offer of purchase, subscribe, sale or
exchange, nor a request for an offer of purchase, subscription, sale or
exchange of shares / securities of the Company, or any advice or
recommendation with respect to such shares / securities. This document or a
part of it shall not form the basis of or relied upon in connection with
any contract or commitment whatsoever.
These written materials are especially not an offer of securities for sale
in the United States, Canada, Australia, South Africa and Japan. Securities
may not be offered or sold in the United States absent registration under
the US Securities Act of 1933, as amended, or an exemption there from. The
issuer or selling security holder has not and does not intend to register
any securities under the US Securities Act of 1933, as amended, and does
not intend to offer any securities in the United States. No money,
securities or other consideration from any person inside the United States
is being solicited and, if sent in response to the information contained in
these written materials, will not be accepted.
End of Corporate News
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Language: English
Company: Telefónica Deutschland Holding AG
Georg-Brauchle-Ring 23-25
80992 München
Germany
Phone: +49 (0)89 24 42 0
Internet: www.telefonica.de
ISIN: DE000A1J5RX9
WKN: A1J5RX
Listed: Regulierter Markt in Frankfurt (Prime Standard);
Freiverkehr in Berlin, Düsseldorf, Hamburg, München,
Stuttgart
TecDAX
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