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Telefonica (TEF) Q4 Earnings Beat Estimates, Revenues Miss
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Spanish telecom giant Telefonica S.A. (TEF - Free Report) reported mixed financial results in the fourth quarter of 2016, wherein the top line lagged the Zacks Consensus Estimate while the bottom line outpaced the same.
Quarterly net income was €145 million (approximately $157 million) compared with a net loss of €1,832 million (approximately $2,006 million). Moreover, fourth-quarter earnings per ADR (American Depository Receipt) came in at $1.12, up an astonishing 646.7% year over year surpassing the Zacks Consensus Estimate of 18 cents.
Telefonica recorded total revenue of €13,721 million (roughly $14,816 million) in the fourth quarter, down 1% year over year. Further, it fell short of the Zacks Consensus Estimate of $14,829 million.
Operating income before depreciation and amortization (OIBDA) came in at €3,187 million ($3,442 million), up a whopping 694.8% on a reported basis but up 9.4% on an organic basis. Quarterly OIBDA margin was 23.2% compared with a mere 3.4% in the year-ago quarter. Operating income was €669 million (around $722.5 million) in the reported quarter compared with an operating loss of €1,760 million ($1,927.2 million) in the prior-year quarter.
Segmental Detail
Telefonica Latin America: Revenues in Brazil increased 18.2% on a reported basis and 1.1% on an organic basis to €3,058 million ($3,302.6 million). Meanwhile in the Hispano-American markets, revenues fell 5.2% on a reported basis but improved 10.9% on an organic basis to €3,435 million ($3,709.8 million). OIBDA margin in Brazil and the Hispano-American markets was 35.5% and 23.4% in comparison with the year-ago figures of 33% and 15.8%, respectively. In Brazil, Telefonica operates through its subsidiary Telefonica Brasil SA (VIV - Free Report) .
Telefonica Europe: In Spain, revenues decreased 0.1% both on a reported basis and on an organic basis to €3,216 million (approximately $3,473.3 million). OIBDA margin in Spain was 15.9% compared with a negative 50.7% in the year-ago quarter. Revenues from Telefonica Deutschland were down 6% on both a reported and organic basis to €1,936 million ($2,090.8 million). OIBDA margin in Deutschland was 24.8% compared with 21.2% in the year-ago quarter. Revenues from Telefonica UK were down 14.4% on reported basis but up 2.4% on organic basis to €1,721 million ($1,858.7 million). OIBDA margin in the UK was 19.4% compared with 17.6% in the year-ago quarter.
Subscriber Statistics
As of Dec 31, 2016, total customer access lines were approximately 350 million, up 1% year over year. Notably, in the Latin American markets, Telefonica competes with large global telecom operators like AT&T, Inc. (T - Free Report) and America Movil S.A.B. de C.V. (AMX - Free Report) .
On a year-over-year basis, mobile access increased 1.6% to 276.45 million customers. Total Internet and data access grew 1.3% to 21.6521 million users. Pay-TV access totaled 8.289 million, up 0.2% year over year. LTE customer count was 66.2957 million, up an astounding 77.4% year over year, representing 25.3% of total mobile accesses. Fiber and VDSL access was 9.1629 million, up a substantial 23.9% year over year. Broadband access was 21.1949 million, up 1.1% year over year.
Liquidity and Cash Flow
Telefonica ended 2016 with cash and cash equivalents of €3,736 million (around $4,034.9 million) compared with €2,615 million (roughly $2,198 million) at 2015-end. Telefonica exited 2016 with total debt of about €74,554 million (about $80,518 million), up from €60,087 million ($67,057 million) recorded at the end of 2015.
In 2016, Telefonica generated €16,130 million (around $17,420.4 million) of cash from operations, down 3.7% year over year. Free cash flow in the reported period was €4,143 million (approximately $4,474.4 million), up 24.4% year over year.
Telefonica expects revenue to remain flat with the 2016 figure. OIBDA margin will expand by 0.01% and capital expenditure will be around 16% of total revenue.
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Telefonica (TEF) Q4 Earnings Beat Estimates, Revenues Miss
Spanish telecom giant Telefonica S.A. (TEF - Free Report) reported mixed financial results in the fourth quarter of 2016, wherein the top line lagged the Zacks Consensus Estimate while the bottom line outpaced the same.
Quarterly net income was €145 million (approximately $157 million) compared with a net loss of €1,832 million (approximately $2,006 million). Moreover, fourth-quarter earnings per ADR (American Depository Receipt) came in at $1.12, up an astonishing 646.7% year over year surpassing the Zacks Consensus Estimate of 18 cents.
Telefonica recorded total revenue of €13,721 million (roughly $14,816 million) in the fourth quarter, down 1% year over year. Further, it fell short of the Zacks Consensus Estimate of $14,829 million.
Operating income before depreciation and amortization (OIBDA) came in at €3,187 million ($3,442 million), up a whopping 694.8% on a reported basis but up 9.4% on an organic basis. Quarterly OIBDA margin was 23.2% compared with a mere 3.4% in the year-ago quarter. Operating income was €669 million (around $722.5 million) in the reported quarter compared with an operating loss of €1,760 million ($1,927.2 million) in the prior-year quarter.
Segmental Detail
Telefonica Latin America: Revenues in Brazil increased 18.2% on a reported basis and 1.1% on an organic basis to €3,058 million ($3,302.6 million). Meanwhile in the Hispano-American markets, revenues fell 5.2% on a reported basis but improved 10.9% on an organic basis to €3,435 million ($3,709.8 million). OIBDA margin in Brazil and the Hispano-American markets was 35.5% and 23.4% in comparison with the year-ago figures of 33% and 15.8%, respectively. In Brazil, Telefonica operates through its subsidiary Telefonica Brasil SA (VIV - Free Report) .
Telefonica Europe: In Spain, revenues decreased 0.1% both on a reported basis and on an organic basis to €3,216 million (approximately $3,473.3 million). OIBDA margin in Spain was 15.9% compared with a negative 50.7% in the year-ago quarter. Revenues from Telefonica Deutschland were down 6% on both a reported and organic basis to €1,936 million ($2,090.8 million). OIBDA margin in Deutschland was 24.8% compared with 21.2% in the year-ago quarter. Revenues from Telefonica UK were down 14.4% on reported basis but up 2.4% on organic basis to €1,721 million ($1,858.7 million). OIBDA margin in the UK was 19.4% compared with 17.6% in the year-ago quarter.
Subscriber Statistics
As of Dec 31, 2016, total customer access lines were approximately 350 million, up 1% year over year. Notably, in the Latin American markets, Telefonica competes with large global telecom operators like AT&T, Inc. (T - Free Report) and America Movil S.A.B. de C.V. (AMX - Free Report) .
On a year-over-year basis, mobile access increased 1.6% to 276.45 million customers. Total Internet and data access grew 1.3% to 21.6521 million users. Pay-TV access totaled 8.289 million, up 0.2% year over year. LTE customer count was 66.2957 million, up an astounding 77.4% year over year, representing 25.3% of total mobile accesses. Fiber and VDSL access was 9.1629 million, up a substantial 23.9% year over year. Broadband access was 21.1949 million, up 1.1% year over year.
Liquidity and Cash Flow
Telefonica ended 2016 with cash and cash equivalents of €3,736 million (around $4,034.9 million) compared with €2,615 million (roughly $2,198 million) at 2015-end. Telefonica exited 2016 with total debt of about €74,554 million (about $80,518 million), up from €60,087 million ($67,057 million) recorded at the end of 2015.
In 2016, Telefonica generated €16,130 million (around $17,420.4 million) of cash from operations, down 3.7% year over year. Free cash flow in the reported period was €4,143 million (approximately $4,474.4 million), up 24.4% year over year.
Telefonica SA Price, Consensus and EPS Surprise
Telefonica SA Price, Consensus and EPS Surprise | Telefonica SA Quote
Outlook for 2017
Telefonica expects revenue to remain flat with the 2016 figure. OIBDA margin will expand by 0.01% and capital expenditure will be around 16% of total revenue.
Telefonica currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>