Spanish telecom giant Telefonica S.A.TEF reported weak financial results in the third quarter of 2015. Quarterly net income decreased 1.8% to €884 million (approximately $983 million) on a year-over-year basis. Meanwhile, third-quarter earnings per ADS (American Depository Share) came in at 12 cents, down a substantial 52% year over year.
Telefonica recorded total revenue of €11,919 million ($13,259 million) in the third quarter, up 10.8% year over year. However, revenues fell considerably short of the Zacks Consensus Estimate of $13,443 million.
Operating income before depreciation and amortization (OIBDA) came in at €3,693 million ($4,108.2 million), up 2.9% on a reported basis and 4.8% on an organic basis. This resulted in OIBDA (operating income before depreciation and amortization) margin of 31%, down 2.4% year over year on a reported basis but flat on an organic basis. Consolidated operating income declined 12.6% on a reported basis to €1,589 million ($1,767.6 million) owing to higher personnel expenses. However, the figure increased 6.3% on an organic basis.
Telefonica Latin America: Revenues in Brazil decreased 5.5% on a reported basis but increased 5.2% on an organic basis to €2,736 million ($3,043.6 million), while in the Hispano-American markets, revenues grew 8.9% on a reported basis and 12.6% on an organic basis to €3,634 million ($4,042.6 million). OIBDA margin in Brazil and the Hispano-American markets stood at 30.4% (down 0.1% year over year) and 29.7% (down 3.3%), respectively. In Brazil, Telefonica operates through its subsidiary Telefonica Brasil SA VIV .
Telefonica Europe: In Spain, revenues fell 0.2% to €2,998 million (approximately $3,335.1 million) owing to a decline in wireless revenues. Wireless revenues grossed €1,089 million ($1,211.4 million), down 2.6% year over year, while wireline business grew 4.6% to €2,232 million ($2,482.9 million). OIBDA margin in Spain was 44.5% compared with 46% in the year-ago quarter.
Revenues from Telefonica Deutschland were up a whopping 62.4% on a reported basis but down 1.1% on an organic basis at €1,979 million ($2,201.5 million). Revenues from Other companies climbed 14% to €856 million ($952.2 million).
As of Sep 30, 2015, total customer access lines reached approximately 327.196 million, up 12.1% year over year on the back of T. Brasil's and T. Hispanoamérica's solid growth pace. Notably, in the Latin American markets, Telefonica competes with large global telecom operators like AT&T Inc. T and America Movil SAB AMX .
On a year-over-year basis, mobile access increased 11.6% to 251.3827 million customers. Total Internet and data access grew 18% to 21.4104 million users. Pay-TV access totaled 8.1543 million, up 75.4% year over year. LTE customers stood at 23.6 million, up an astounding 430% year over year and representing 9.7% of total mobile accesses. Fiber access was 5.8297 million, up a massive 303% year over year.
Liquidity and Capital Expenditure
Telefonica exited the third quarter of 2015 with net debt of about €61,449 million (about $69,085 million), up from €45,087 million ($51,078.2 million) recorded at the end of 2014. Telefonica ended the reported quarter with cash and cash equivalents of €3,047 million (around $3,390 million) compared with €6,529 million ($7,396.6 million) at 2014-end. Net cash provided by operating activities in the first nine months of 2015 declined 0.5% year-over-year to €10,041 million (approximately $11,170 million).
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