Spanish telecom giant,
) reported third quarter 2013 earnings of 24 Euro cents per share
(32 cents per ADS), down 22% year over year.
The company recorded revenues of €14,063 million ($18,558
million) in the third quarter. Revenues fell 9.5% year over year
on a reported basis but improved 2.1% on an organic basis.
Adjusted operating income, before depreciation and
amortization (OIBDA), fell 12.6% year over year to €4,678 million
($6,173 million), resulting in adjusted OIBDA margin of 33.3%,
down 120 basis points year over year.
Telefonica Latin America
: Revenues were down 6.8% year over year at €7,101 million
($9,370 million) in the third quarter. In terms of countries,
Brazil declined 15.1%, Argentina declined 2.1%, Chile was down
7.3%, Peru was down 3.7%, Columbia slid 5.2% and Mexico fell
: Revenues from Europe slid 9.8% year over year to €6,708 million
($8,852 million). The reported downside was due to the operator's
Spanish revenues that slipped 12.1% year over year to €3,204
million ($4,228 million).
In Spain, wireless revenues fell 19.7% as a result of lower
mobile service revenues. Wireline revenues were down 5.2 % year
In the reported quarter, revenues from Ireland and Czech
Republic declined 11.1% and 7.6% year over year, respectively.
Revenues from Germany and the U.K. showed a 7.0% and 4.4%
At the end of the third quarter, total customer access reached
approximately 308 million, up 1.9% year over year.
On a year-over-year basis, mobile access rose 3% to 252.2
million customers. The total Internet and data access fell 1.3%
to 19.1 million, respectively. Pay-TV access was 3.441 million,
up 3.7% year over year. Fixed telephony access dropped 1.9% to
39.8 million subscribers.
Liquidity and Capital Expenditure
Telefonica exited the quarter with net debt of about €46.101
billion ($60.83 billion). The leverage ratio (net debt-to-EBITDA)
stood at 2.30 times. Capital expenditure was €6,019 million
($7,943 million) at the end of the reported quarter.
We expect Telefonica to benefit from its various strategic
measures to enhance its operations in the European markets. These
steps include expansion of broadband and data services, pricing
revision, network enhancements and collaboration with other
However, the company continues to face pressure from the
slowdown in Brazil operations, adverse regulations, a highly
leveraged balance sheet and growing competition from
Vodafone Group plc
America Movil S.A.B. de C.V.
Telefonica currently has a Zacks Rank #4 (Sell).
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