Telefónica presented this Thursday its results for the first nine months of fiscal year 2024, marked by the confirmation of the company’s financial targets for the year as a whole and a cumulative profit of 989 million euros. On an adjusted basis, net income totaled 1,914 million euros through September, up 16.8% more.
These results allow Telefónica to to reiterate all of its financial targets for 2024 as a whole. These targets consist of the revenue growth of around 1%.Ebitda growth of between 1% and 2%, operating cash flow growth of between 1% and 2%, an investment-to-revenue ratio of up to 13% and an increase in free cash flow of more than 10%.
Telefónica has also confirmed the shareholder remuneration for 20240.30 per share, payable in two tranches: December 2024 (‘0.15) and June 2025 (‘0.15).
“Our GPS action plan is ambitious and continues to deliver results in moving in the right direction and consolidate profitable growth. In the first nine months of the year, against a global backdrop of uncertainty, Telefónica posted a profit of almost one billion euros and reiterated all of its financial targets for the year as a whole. We also confirmed our shareholder remuneration for 2024. We remain transforming networks with a strategic approach based on quality and robustness, and we do so with a higher degree of customer satisfaction. The opportunities ahead are enormous and Telefónica will continue to effectively leverage its resources to drive growth at the service of our shareholders and customers,” said Telefónica Chairman José María Álvarez-Pallete.
CURRENCY IMPACT
Favorable trading activity across all markets and growth rates in local currency were impacted in the third quarter results by the evolution of exchange ratesespecially the Brazilian real. Currency depreciation had a quarterly impact of €429 million on revenues and €159 million on operating income before depreciation and amortization (Ebitda). Thanks to the hedging strategy implemented the effect of exchange rate behavior on cash flow was limited to 25 million euros in the first nine months of the year.
Free cash flow has multiplied by 4.2 times its growth in the quarter compared with the previous three months, rising to €866 million, 89.5% more than in the third quarter of 2023. In the cumulative period through September, it reached €1.03 billion, up 27.7% year-on-year and therefore above the annual target of raising it by more than 10%.
As a result of foreign exchange performance, revenues in the third quarter were declined by 2.9%.10,023 million, to reach a total of 30,418 million euros in the first nine months of the year.
In addition, the 60% of quarterly revenues has came from the residential market (B2C); 21% from the business-to-business (B2B) segment; and the remaining 19% came from the wholesale business, partners and other revenues.
Due to the impact of foreign exchange, the Ebitda fell by 2.5% in the quarter.to 3,260 million euros. In the first nine months of the year, operating income before depreciation and amortization rose 0.4% to 9,684 million euros.
In relation to capital expenditure, the figure at the end of September was 3,642 million euros (-4.8%). and represents a 12% of revenuesin line with annual guidance. On the other hand, operating cash flow (Ebitdal-CapEx) was 1,253 million euros in the third quarter, in line with the figure for the same period of 2023, and reached 4,001 million euros in the first nine months, up 2.2%.
GROWTH AND INCREASED LOYALTY IN SPAIN
By countries, Telefónica España’s Ebitda has ratified its return to the growth path by 1% increase in the third quarter1,155 million euros, and by 0.6% in the first nine months, to 3,387 million euros. This performance is taking place against a backdrop of the acceleration in the growth of commercial activityThe company’s customer satisfaction improved, with a Net Promote Score (NPS) of 34 points, 2 percentage points higher than in June, and customer loyalty increased, with a churn rate of 0.8%, the lowest level in its history. In addition, average revenue per customer (ARPU) remained above 90 euros.
At Germany, Ebitda grew 3% in the quarter.694 million euros, and 3.9% between January and September, to 2,027 million euros. Customer loyalty in the German market also improved, with churn down to 1%. On Brazil, Ebitda fell by 5.9%. in the quarter, to 1,030 million euros, due to the impact of exchange rates, but in the first nine months it grew by 2.2% to 3,066 million euros.
In the United Kingdom, VMO2 has confirmed its financial targets for the year as a whole, a commitment that includes the distribution of dividends to shareholders, and Hispam’s strategy of reducing capital exposure in the region and continuing to operate more efficiently and with lower costs has been maintained.
PERFORMANCE OF THE MAIN GLOBAL UNITS
Telefónica Tech reported revenues of 470 million in the third quarter, for a total of 1,453 million euros in the first nine months of the year, 9.5% more than in the same period of the previous year, in a context of sustainable growth and commercial dynamism, reflected in a 40% increase in orders.
Telefónica Infrawhich continues to drive growth and accelerate digital inclusion through the efficient deployment of state-of-the-art infrastructures, closed September with 24 million real estate units passed with fiber. Telxiusthe submarine cable management company, has registered a new year-on-year traffic growth of 12%. in the first nine months and maintained its high profitability ratios (48.9%).
FAVORABLE COMPETITIVE POSITIONING
Telefónica closed September with 393 million accesses, an increase of 2%.. The fiber and mobile contract customers continue to increase, with cumulative growth of 11% and 3%, respectively, compared to September 2023. These good commercial data are supported, among other factors, by the quality and strength of the company’s networks.
Thus, in terms of network rollout, Telefónica maintains its global leadership in fiberThe international footprint of ultrafast networks as of September stands at 178 million real estate units (+4%), of which 81.6 million were FTTH (+13%). This figure includes a total of 24.1 million real estate units from the group’s various fiber vehicles (+19%).
Also at the end of September, 5G technology covered 90% of the population in Spain.97% in Germany, 57% in Brazil and 68% in the United Kingdom. Cumulative deployment in the Group’s four main markets reached 71% of the population, exceeding, more than two years ahead of the target set in the GPS strategic plan of reaching 70% by 2026.
SUSTAINABILITY
During the third quarter of 2024, Telefónica has led the design of a climate assessmentimplemented through the Joint Alliance for CSR (JAC) sector alliance, to address Scope 3 (value chain) emissions. The initiative also includes tailored training for approximately 1,000 key suppliers. In addition, the company has published the ‘Connected Life’ report, detailing how connectivity has helped its customers in Brazil, Germany and Spain avoid 69 million tons of CO₂ by 2023.
In the social area, Telefónica has made progress in diversity with. 33.6% of women in executive positionsachieving solid progress towards its target of 37% by 2027. Also during the quarter, Telefónica has been included in the ‘FT Diversity Leader’ for the sixth consecutive year, and has scored 81/100 in the latest EcoVadis report, placing the company in the 99th percentile among all companies assessed (around 130,000).
Lastly, in terms of governance, Telefónica has actively participated in the development of the code of conduct for the Office of Artificial Intelligence and has joined the European Union’s AI Pact for the development of reliable and safe AI. In addition, last October the company won the top award in the Reporting and Transparency category of the Reuters Sustainability 2024 Awards.