EQS-News: Telefónica Deutschland Holding AG: FY22 outlook upgrade on continued strong commercial traction & financial performanceSource: EQS
Telefónica Deutschland – Interim statement for January to
FY22 outlook upgrade on continued strong commercial traction & financial performance
Telefónica Deutschland continued its growth path in Q3 22, delivering another quarter of strong commercial traction and sustained financial performance. The company is regaining mobile market share in a dynamic yet rational environment. Ongoing core business momentum is building on high O2 brand appeal including strong customer demand for the innovative O2 Grow tariff, network parity and ESG leadership.
The 2022 mobile network test of
The widely acknowledged network quality improvements and sustainability roadmap are the foundation for Telefónica Deutschland’s ‘more for more’ pricing strategy evidenced by first initiatives already launched in the market. Since early October, the O2 Grow tariff is positioned at
Telefónica Deutschland continues to drive its ESG roadmap. The company is delivering on its climate protection targets, well on track to reduce its CO2 emissions by 90% while neutralising residual emissions latest by 2025. Also, Telefónica Deutschland takes concrete measures to be net CO2 neutral along its entire value chain by 2040.
At the same time, the company is helping society to strive. Telefónica Deutschland has been one of the first European MNOs responding to a request for support from the
As a result of the focused execution of the ‘investment for growth’ programme, Telefónica Deutschland has made excellent progress with its network modernisation and 5G roll-out. 5G pop coverage reached ~75% at the end of September and has already over-achieved the year-end target due to roll-out efficiencies within an unchanged Capex envelope.
Mobile postpaid continued its growth momentum in Q3 22 leveraging the high O2 brand appeal in the market. The company’s successful tariff innovation O2 Grow was a major driver of strong core brand gross additions. Contribution of partner brands was again solid. As a result, net additions totalled +304k in Q3 22 (+415k in Q3 21) and +965k in 9M 22 vs. +1,009k in prior year period.
M2M recorded +32k net additions in Q3 22 vs. +40k in Q3 21 (+103k in 9M 22 vs. +164k in 9M 21).
Mobile prepaid posted -58k net disconnections in Q3 22 (-104k in Q3 21) and +213k in 9M 22 vs. -122k in 9M 21. These developments reflect the German market trend of prepaid to postpaid migration and some seasonality including the reverse effect from revenue neutral SIM card reactivations in the prior quarter.
Churn rates in Q3 22 are reflecting the anticipated temporarily slightly higher churn on the back of the European Electronic Communications Code (EECC). Still, postpaid churn in the O2 brand stood at low rates of 1.2% in Q3 22 vs. 1.0% in Q3 21 (1.1% in 9M 22, +0.2 p.p. y-o-y) leveraging network parity.
Telefónica Deutschland’s mobile customer accesses increased to 47.0m (+3.6% y-o-y) as of 30 Sep-22, driven by the ongoing strong growth of the mobile postpaid base (+6.0% y-o-y), reaching 26.1m accesses (up +1.3 p.p y-o-y to 55.5% of the company’s total mobile access base). M2M accesses were 1.7m as of 30 Sep-22, a strong +9.0% y-o-y increase while the mobile prepaid base was flattish at 19.2m (+0.1% y-o-y).
O2 postpaid ARPU was -1.3% y-o-y in Q3 22 (-0.8% y-o-y in 9M 22) reflecting a combination of the accelerated MTR glidepath and some enhanced focus on customer loyalty including retention and bundle benefits while high value tariffs remained popular. Underlying O2 postpaid ARPU was -0.7% y-o-y Q3 22 and -0.1% y-o-y in 9M 22 mainly reflecting y-o-y trends in international roaming. Prepaid ARPU was
Fixed broadband (BB) registered +19k net additions in Q3 22 (+14k net additions in 9M 22) driven by the popular cable tariffs within Telefónica Deutschland’s technology agnostic O2 my Home products. As a result, fixed BB customer base came to 2.3m accesses (+0.9% y-o-y) as of 30 Sep-22 with VDSL (1.8m accesses) as a major contributor (80.2% of fixed BB customer base, -0.7 p.p. y-o-y). Customer demand for the 4G/5G based fixed-mobile substitution (FMS) offer also remained strong.
Fixed churn was marginally up by +0.2 p.p. y-o-y to 1.1% in Q3 22 mainly driven by legacy DSL net disconnections in combination with the anticipated effects from the EECC implementation.
Fixed broadband ARPU continued to benefit from the increasing share of high value customers in the base and grew +3.3% y-o-y to
Revenues continued to show strong growth, up +6.0% y-o-y to
Mobile service revenues maintained their growth path, posting +3.7% y-o-y growth in Q3 22 to
Handset sales recorded a record Q3 as a result of the ongoing strong demand for high value devices and good device availability at Telefónica Deutschland. Handset revenues in Q3 22 grew +18.9% y-o-y to
Fixed revenues were up +0.5% y-o-y to
Other income reached
Operating expenses were up +7.5% y-o-y to
OIBDA expanded +4.7% y-o-y to
Depreciation & Amortisation was lower -4.4% y-o-y reaching
Operating income stood at
Net financial expenses accounted for
Income tax was at
As a result, total profit for the period reached
Underlying operating cash flow (OIBDA minus CapEx8) was flattish y-o-y (-0.6% y-o-y)
Free cash flow (FCF) amounted to
Working capital movements were
Consolidated net financial debt amounted to
Financial Outlook FY22
Telefónica Deutschland built on previous financial years’ momentum in the final year of its three-year ‘Investment for Growth’ programme, delivering strong commercial traction and sustained financial performance in 9M 22. The company thus is regaining its mobile market share in a dynamic yet rational environment.
Telefónica Deutschland’s sustained core business momentum is building on high O2 brand appeal including strong customer demand for the innovative O2 Grow tariff launched in
The ongoing recovery of international roaming revenues compared to previous year, which especially in the first half was characterised by COVID-19-related restrictions, somewhat mitigated the expected drag from the regulatory reduction of termination rates for mobile voice minutes to EURc 0.55 as of
Telefónica Deutschland further improved operational leverage mainly in mobile on the back of continued own brand momentum, with further efficiency gains from transformation as well as regaining market share. The strong growth of the more volatile handset business was as expected largely OIBDA-neutral.
At the same time, Telefónica Deutschland continues to drive its ESG roadmap with digitalisation as a key enabler for addressing climate change and achieving CO2 neutrality targets. The company’s business model is proving resilient, despite a significant increase in inflation.
In this context, Telefónica Deutschland upgrades its financial year 2022 outlook for both, revenues and OIBDA, to ‘low mid-single digit percentage growth’ including anticipated energy costs of around
Telefónica Deutschland's assumptions are based on current economic conditions and competitive dynamics as well as existing wholesale relationships. At the same time, management is continuously monitoring and analysing the impact on the company from the further developments of the COVID-19 environment as well as macro-economic and geopolitical changes related with the war in
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This document contains statements that constitute forward-looking statements and expectations about Telefónica
Analysts and investors, and any other person or entity that may need to take decisions, or prepare or release opinions about the shares / securities issued by the Company, are cautioned not to place undue reliance on those forward-looking statements, which speak only as of the date of this document. Past performance cannot be relied upon as a guide to future performance.
Except as required by applicable law, Telefónica Deutschland undertakes no obligation to revise these forward-looking statements to reflect events and circumstances after the date of this presentation, including, without limitation, changes in Telefónica Deutschland’s business or strategy or to reflect the occurrence of unanticipated events.
The financial information and opinions contained in this document are unaudited and are subject to change without notice.
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 Adjusted for exceptional effects. In Q3 22, exceptional effects amounted to
 Excluding MTR effects. MTR-cut from EURc 0.78 to EURc 0.70 per minute as of 1 Jul-21 and from EURc 0.70 to EURc 0.55 per minute as of 1 Jan-22.
 Mobile service revenue includes base fees and fees paid by the company’s customers for the usage of voice, SMS and mobile data services; it also includes access and interconnection fees as well as other charges levied on partners for the use of the company’s network.
 MTR-cut from EURc 0.78 to EURc 0.70 per minute as of 1 Jul-21 and from EURc 0.70 to EURc 0.55 per minute as of 1 Jan-22.
 Operating expenses include impairment losses in accordance with IFRS 9 in the amount of
 General pay-rise of +1.75% effective 1 Dec-21 and +3.4% effective 1 Sep-22 as well a one-time payment of
 Adjusted for exceptional effects. In Q3 22, exceptional effects amounted to
 CapEx includes additions to property, plant and equipment and other intangible assets while investments for spectrum licenses and additions from capitalised right-of-use assets are not included.
 Free cash flow pre dividends and payments for spectrum (FCF) is defined as the sum of cash flow from operating activities and cash flow from investing activities and does not contain payments for investments in spectrum as well as related interest payments.
 Net financial debt includes current and non-current interest-bearing financial assets and interest-bearing liabilities as well as cash and cash
 Leverage ratio is defined as net financial debt divided by OIBDA of the last twelve months adjusted for exceptional effects.
 Adjusted for exceptional effects.
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1477889 03.11.2022 CET/CEST