Spanish telecom giant Telefonica S.A. ( TEF ) reported fourth
quarter 2012 results, with adjusted earnings of 46 Euro cents per
share (60 cents per ADS) that rose 28.5% year over year.
Adjusted earning for the year was €1.44 ($1.85), down 11.9% year
The company recorded revenues of €15,837 million ($20,541
million) in the fourth quarter that dropped 2% year over year.
Revenues for the year declined 0.8% year over year to €62,356
million ($80,184 million)
In the fourth quarter, adjusted operating income before
depreciation and amortization (OIBDA) rose 7.6% to €5,976 million
($7,751 billion), resulting in adjusted OIBDA margin of 37.0%, up
10 basis points year over year.
In 2012, adjusted OIBDA declined 4.1% year over year to €21,741
million ($27,957 million), reflecting an adjusted OIBDA margin of
34.9%, down 130 basis points.
Telefonica Latin America : Latin
America continued to grow at a faster pace and remained one of the
best performing regions. Revenues increased 5.5% year over year to
€30.5 billion ($39.2 billion) in 2012, driven largely by Venezuela
(representing a growth of 24.2%), followed by Central America
(23.8%), Ecuador (20.3%), Peru (18.2%), Argentina (16.5%), Columbia
(13.0%), Uruguay (11.2%), Chile (11.2%) and Mexico (2.5%). However,
revenue from Brazil registered a decline of 0.8%, in 2012.
Telefonica Europe : Revenues from
Europe slid 6.5% year over year to €29.99 billion ($38.6 billion).
The reported downside was owing to the operator's Spanish revenues
that slipped 13.2% year over year to €14.98 billion ($19.26
In Spain, Wireless revenue fell 16.6% to €6.45 billion ($8.29
billion) resulting from a reduction in MTRs. Hurt by weak traffic
revenue and repositioning of the new tariff portfolio, Wireline
revenues stood at €9.5 billion ($12.21 billion), down 10.2% over
the year-earlier period.
Revenues from the Ireland and Czech Republic declined 13.1% and
5.7% year over year to €629 million ($808.8 million) and €2.01
billion ($2.58 billion) respectively in the reported period.
Meanwhile, revenues from Germany and UK showed a 3.5% and 1.7%
increase to reach €5.2 billion ($6.69 billion) and €7.04 billion
($9.05 billion) respectively.
In December 2012, Telefonica sold its call-centre
business-Atento to U.S. based alternative asset management and
financial services company-Bain Capital for €1,051 million. The
company generated a gain of €61 million from the sale of Atento
At the end of the first nine months of 2012, total customer
access reached approximately 310 million, up 2.9% year over
On an annualized basis, mobile access rose 3.6% to 247.3 million
customers. Total Internet and data access grew 1.4% to 19.4
million. Pay TV access reached 3.33 million, up 0.8% year over
year. Fixed telephony access dropped 0.3% to 40 million subscribers
at the end of the reported period.
Liquidity and Capital Expenditure (CapEx)
Telefonica exited the first nine months of 2012 with a net debt
of about €51.25 billion ($65.90 billion), down from €56.30 billion
($78.40 billion) recorded at the end of 2011. The leverage ratio
(net debt-to-EBITDA) improved to 2.36 times compared to 2.46 in
CapEx grew 0.3% year over year to €9.45 billion ($12.15 billion)
in the reported period. Operating cash flow (OIBDA-CapEx) was €
12.870 ($16.59) billion in the reported period, up 6.6% year over
For 2013, Telefonica expects revenue and Capex to remain at
similar levels as compared to 2012, with lower EBITDA margin
decline. Additionally, the company expects Net financial debt to be
less than €47 billion.
Telefonica continues to remain under pressure by intensifying
European woes, weak domestic operations, slowdown in Brazil,
adverse regulations, highly leveraged balance sheet and growing
competition from France Telecom S.A. ( FTE ), Vodafone
Group Plc ( VOD ) and
America Movil S.A.B. de C.V. ( AMX ).
Telefonica currently has a Zacks # 5 Rank (Strong Sell).AMER MOVIL-ADR (AMX): Free Stock Analysis
ReportFRANCE TELE-ADR (FTE): Free Stock Analysis
ReportTELEFONICA S.A. (TEF): Free Stock Analysis
ReportVODAFONE GP PLC (VOD): Free Stock Analysis
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