Good start to the year:Telefónica Deutschland reports significant growth in sales and earnings in the first quarter
Telefónica Deutschland has made a good start to the year 2020. The company grew more strongly than in previous quarters in terms of both revenue and earnings. In the first three months, revenue rose by 3.8 percent to 1.85 billion euros, while adjusted operating income (OIBDA) increased by 1.6 percent to 532 million euros. This was due to both continued growth in mobile postpaid accesses and strong demand for fixed-network services. Telefónica Deutschland continued to expand its network and was able to maintain a high level of customer service even under the extraordinary circumstances of the coronavirus pandemic. With its reliable infrastructure and special services for its customers, the company made an important contribution to society during the crisis. Telefónica Deutschland confirms its outlook for the year but will continue to monitor and analyse the effects of COVID-19.
- Revenue increases by 3.8 percent thanks to strong development in wireless services
- Fixed-line revenue increases by 6 percent
- OIBDA grows by 1.6 percent
- Company makes important contribution to society in the coronavirus crisis through stable networks and reliable service
“We have made a good start to the year, we are growing, and our network is getting stronger every day,” said Markus Haas, CEO of Telefónica Deutschland. “The coronavirus pandemic once again shows what a central role we play as a telecommunications provider for the people of this country, but also for our economy and society."
Impact of the coronavirus pandemic
Telefónica Deutschland's business was largely unaffected by the corona crisis in the first quarter. On the one hand, government measures to curb the pandemic did not take full effect until two weeks before the end of the quarter. On the other hand, demand for mobile and fixed-network services proved to be robust, especially in times of crisis. The closure of stores reduced both the number of incoming and outgoing customers. Telefónica Deutschland was able to maintain a high level of availability and quality in its telephone and Internet-based service. The company continued to expand the LTE network in urban and rural areas and at the same time prepared the construction of an energy-efficient 5G network.
Strong dynamics in both mobile and fixed business
Telefónica Deutschland again recorded strong growth in mobile postpaid accesses at the beginning of the year. Between the beginning of January and the end of March, 227,000 subscribers were added, including 39,000 SIM cards used by machines. With 42.4 million "human" connections, Telefónica Deutschland connects more people than any other mobile communications provider in Germany. At the same time, mobile communication is also playing an increasingly important role in the lives of customers. Mobile data usage in the first three months of the year again rose strongly compared with the same quarter last year - by 63 percent to 314,000 terabytes. And there were significantly more telephone calls: The number of minutes on the phone rose - particularly noticeable with the start of the Corona crisis – by 20 percent to 31.1 billion minutes in the same period. The growth trend in broadband connections continued. They increased by 25,000 to 2.23 million. Here, too, the strong demand for VDSL lines continued.
Revenue and OIBDA with significant growth
Video: Telefónica Deutschland CEO Markus Haas on the prelimary figures for the first quarter 2020 (in German)
Thanks to the strong development in lines and growth, particularly in higher-value tariffs, Telefónica Deutschland was able to boost its growth again in the first quarter. Revenue in the first quarter rose by 3.8 percent year-on-year to 1.85 billion euros, the strongest increase since the merger with E-Plus. This was guaranteed by the significant improvement in mobile services revenue, which increased by 2.4 percent to 1.31 billion euros in the reporting period. In addition to the increase in the number of lines, this reflected in particular the trend among O2 customers to switch to tariffs with higher data volumes. Revenue from terminal equipment also developed strongly: Here, revenues rose by 7.7 percent to 339 million euros. And the fixed network business also showed a strong improvement thanks to continuous growth in the number of lines with an increase of 6 percent to 193 million euros. Never before since the merger with E-Plus has business with residential accesses grown so significantly. The strong revenue growth in the first quarter also had a positive impact on the operating result. At the same time, Telefónica Deutschland continued to invest in the market in order to achieve sustained growth. As a result, operating income before depreciation and amortisation (OIBDA) adjusted for exceptional effects amounting to 8 million euros amounted to 532 million euros and was thus 1.6 percent higher in the first quarter than in the same period of the previous year.
Following the results of the first quarter, Telefónica Deutschland confirms its outlook for the full year but will continue to monitor and analyse the effects of COVID-19. Net income for the quarter improved noticeably to minus 44 million euros, after minus 107 million euros in the same period last year. Depreciation and amortisation in the course of network integration continues to have an impact here. Free cash flow (FCF) amounted to 241 million euros in the first three months, compared with 247 million euros in the first quarter of 2019, while rental payments, mainly for leased lines and antenna sites, totaled 259 million euros. The FCF "after lease" for the reporting period was thus minus 18 million euros.
Strong innovations even in the face of the corona crisis
In the first months of the year, Telefónica Deutschland continued to deliver continuous improvements and innovation for its customers. Particularly in the wake of the coronavirus crisis, the company took measures to make life easier for its customers and also to fulfil its social obligations:
- For the whole of Bavaria: Red Cross temporarily uses O2 Tower as location centre during the Corona crisis
- Television with O2 TV, learning fun with the Kidomi Kids App: Free entertainment offers for O2 customers (in German)
- Data anonymisation: Telefónica Deutschland supports Robert Koch Institute with mobility analyses in the fight against corona
- Telefónica focuses on resource conservation in mobile communications: O2 strengthens sustainability and transparency around smartphones (in German)
Further detailed information on the financial result is available at https://www.telefonica.de/investor-relations-en/publications/financial-publications.html