EQS-News: Telefónica Deutschland: Confident FY24 outlook based on good business momentum and ‘Accelerated Growth & Efficiency Plan’
Source: EQS
Telefónica Deutschland – Preliminary Results for January to Confident FY24 outlook based on good business momentum and ‘Accelerated Growth & Efficiency Plan’
Operating performance Telefónica Deutschland consistently delivered growth throughout FY23 with robust commercial traction also in the final quarter of the year which marked the 25th birthday of the Company’s O2 network. Trading momentum is again underpinned by the Company’s ‘value-over-volume’ strategy including the market success of the ‘O2 Mobile’ portfolio in combination with its successful return to low churn levels. Telefónica Deutschland continued to make good progress with 5G roll-out and network densification. Three years after the 5G launch pop coverage already reached ~95% at year-end 2023. Hence, the Company is well on track for nationwide 5G coverage latest by year-end 2025. Continuous investments into network quality are paying off not only in low churn rates but are also consistently reflected in high network test ratings. The renowned connect magazine awarded Telefónica Deutschland’s O2 network with a ‘very good’ rating for the fourth time in a row despite tougher test criteria each year. In parallel, Telefónica Deutschland is continuously pursuing its ESG commitments to make a substantial contribution to a sustainable digital future. The Company was not only recognised as a finalist of the ‘16th German Sustainability Award’ (‘Deutscher Nachhaltigkeitspreis’), Telefónica Deutschland also further improved its low ‘Sustainalytics ESG Risk Score’, now being ranked #1 telco globally by Systainalytics. As part of its ESG agenda, Telefónica Deutschland strives to reduce its Scope 1 & 2 emissions by 95% and ultimately to neutralise any remaining emissions no later than 2025. Also, the Company is taking concrete actions to be net CO2 neutral along its entire value chain (Scope 3) by 2040. Mobile business Mobile postpaid recorded +284k net adds in Q4 23 vs. +264k in Q4 22 (+1,350k in FY23, up +9.9% y-o-y) with commercial success driven by the continued O2 brand momentum and a solid contribution of partner brands. O2 postpaid churn confirmed a low rate of 1.1% in Q4 23 (1.2% in Q4 22) respective 1.0% in FY23. Hence, the implied annual churn rate improved to 11.6% in FY23 (vs. 13.1% in FY22) on the back of the O2 brand appeal in combination with enhanced network and service quality as well the companies continued retention focus. M2M Posted +10k net additions in Q4 23 vs. -20k in Q4 22 (+164k in FY23, almost doubling y-o-y). Mobile prepaid net disconnections were -242k in Q4 23 vs. -2,911k in Q4 22 which included a revenue-neutral technical base adjustment[2] (-748k in FY23 vs. -2,698k in FY22). This development is mainly due to the unchanged German market trend of prepaid to postpaid migration. As a result, Telefónica Deutschland’s mobile customer accesses grew +1.7% yoy to 45.1m as of 31 Dec-23. This growth was mainly driven by a strong +5.1% y-o-y growth of the mobile postpaid base (ex M2M) to 27.7m accesses (61.4% of total mobile access base, up +2.0 p.p. y-o-y) on own-brand momentum in combination with low churn and a solid contribution from partners. M2M accesses grew even stronger at +9.7% yoy to 1.9m whereas the mobile prepaid base came down -4.6% y-o-y to 15.5m. O2 postpaid ARPU growth of +1.9% y-o-y in Q4 23 (+1.4% y-o-y in FY23) was similar to prior quarter, reflecting sustained customer demand for high value tariffs somewhat offset by the reduction of MTRs as of 1 Jan-23. Underlying[3] ARPU growth was even stronger at +2.5% y-o-y (+2.0% y-o-y in FY23). Fixed business Fixed broadband recorded +13k net additions in Q4 23 vs. +18k in Q4 22 (+90k net additions in FY23, almost tripling y-o-y) on strong customer demand for highspeed accesses within the technology agnostic O2 Home portfolio. Churn confirmed low levels of 0.8% both, in Q4 23 and FY23, improving 0.2 p.p. and 0.3 p.p. respectively. Fixed broadband customer base grew +3.9% y-o-y to 2.4m accesses as of 31 Dec-23, thereof 77.8% VDSL accesses, -1.9 p.p. y-o-y as cable and fibre are gaining further traction. Fixed broadband ARPU[4] showed consistent growth reflecting the steady increase of the higher value customer share in the base, +2.2% y-o-y to Financial performance Revenues posted strong growth of +4.6% y-o-y to Mobile service revenues[5] were -1.0% y-o-y to Handset sales recorded another quarter with a record growth rate +24.3% y-o-y to Fixed revenues growth accelerated to +3.7% y-o-y to Other income was Operating expenses[7] were up +5.2% y-o-y to
OIBDA[8] growth improved to +4.2% y-o-y at Depreciation & Amortisation was slightly higher y-o-y (+1.2%) at Operating income was Net financial expenses accounted for Income tax was positive at As a result, total profit for the period improved to CapEx[9] was higher +3.2% y-o-y at Operating cash flow (OIBDA minus CapEx9) rose by +11.7% y-o-y to Free cash flow (FCF)[10] amounted to Working capital movements were Consolidated net financial debt[12] as of 31 Dec-23 was FY23 overview Telefónica Deutschland consistently delivered growth throughout FY23 with robust commercial traction and sustained healthy financial performance. Hence, the company successfully over-achieved FY23 outlook. In-line with its minimum commitment for 2021-23, Telefónica Deutschland intends to propose a dividend of EURc 18 per share to the AGM.
(1) Revenues and OIBDA include non-recurrent special factors in the amount of (2) As updated in Jul-23 and unchanged incl. regulatory headwinds of ca. Financial Outlook FY24 In financial year 2024, Telefónica Deutschland aims to further pursue its sustained growth path. Building on recent years good momentum and its 3-year ‘Accelerated Growth & Efficiency Plan’ (2024-26), the Company is focusing on building a more resilient business model. The Company continues to leverage its multiple ‘very good’ awards winning O2 network as well as its multi-brand and multi-channel strategy as the backbone of the go-to-market strategy. Postpaid remains Telefónica Deutschland's strongest value generator with the high appeal of the O2 brand as a growth driver. In prepaid, the market trend of prepaid to postpaid migration continues. Within the technology-agnostic O2 Home portfolio, high-speed cable and fibre accesses are increasingly gaining traction. Telefónica Deutschland expects the market to remain dynamic yet rational in financial year 2024, with a robust pricing environment in both, the premium and the discount segment. Furthermore, Telefónica Deutschland expects regulatory changes to remain a headwind to its financial performance in financial year 2024. Revenues, and to a lesser extent EBITDA, will be impacted primarily by the reduction of the mobile termination rate from Sustained mobile service revenue growth remains the key driver of Telefónica Deutschland's revenue and profitability trends, mainly reflecting the O2 brand’s commercial success. In contrast, hardware revenues are expected to remain volatile and in particular dependent on market dynamics as well as launch cycles and availability of new smartphones. As before, hardware margins are largely EBITDA-neutral. Fixed broadband offers are complementing Telefónica Deutschland's tariff portfolio, promoting customer retention and loyalty. Hence, the Company can optimally meet customer needs through its technology-agnostic approach and expects continued growth in financial year 2024. Telefónica Deutschland will continue to pursue its path of digital transformation to generate revenue and efficiency gains. In doing so, the Company is emphasising sustainable growth and is pushing the execution of its ESG strategy. Digitalisation is playing a key role in tackling climate change and achieving CO2 neutrality targets. In summary, Telefónica Deutschland expects for financial year 2024:
Telefónica Deutschland’s assumptions are based on current economic conditions and current competitive dynamics as well as existing wholesale relationships including the launch of the fourth mobile network In
(1) In line with market standards and to improve comparability, Telefónica Deutschland is adapting its reporting to general market standards by renaming ‘OIBDA’ to ‘EBITDA’ with effect of 1 Jan-24. By definition, this is operating income minus D&A. (2) FY24 outlook includes regulatory headwinds of ca.
Further information Telefónica
(t) +49 89 2442 1010 www.telefonica.de/investor-relations
Disclaimer: 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. This document contains summarised information or information that has not been audited. In this sense, this information is subject to, and must be read in conjunction with, all other publicly available information, including if it is necessary, any fuller disclosure document published by Telefónica Deutschland. None of the Company, its subsidiaries or affiliates or by any of its officers, directors, employees, advisors, representatives or agents shall be liable whatsoever for any loss however arising, directly or indirectly, from any use of this document its content or otherwise arising in connection with this document. This document or any of the information contained herein do not constitute, form part of or shall be construed as an offer or invitation to purchase, subscribe, sale or exchange, nor a request for an offer of purchase, subscription, sale or exchange of shares / securities of the Company, or any advice or recommendation with respect to such shares / securities. This document or a part of it shall not form the basis of or relied upon in connection with any contract or commitment whatsoever. These written materials are especially not an offer of securities for sale or a solicitation of an offer to purchase securities in [1] Adjusted for exceptional effects. In FY23 exceptional effects amounted to [2] Introduction of a stricter active SIM-card definition in Q4 22 post some revenue neutral reactivations of SIM-cards over the course of FY22. [3] Excluding MTR-cut from EURc 0.55 to EURc 0.40 as of 1 Jan-23. [4] Definition adjustment of fixed BB (FBB) ARPU calculation as of [5] 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. [6] MTR-cut from EURc 0.55 to EURc 0.40 as of 1 Jan-23. [7] Operating expenses include impairment losses in accordance with IFRS 9 in the amount of [8] Adjusted for exceptional effects. In Q4 23 exceptional effects amounted to [9] 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. [10] 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. [11] +/- Proceeds/payments for investments in associated companies amounted to [12] Net financial debt includes current and non-current interest-bearing financial assets and interest-bearing liabilities as well as cash and cash [13] Leverage ratio is defined as net financial debt divided by OIBDA of the last twelve months adjusted for exceptional effects.
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Language: | English |
Company: | Telefónica |
Georg-Brauchle-Ring 50 | |
80992 München | |
Phone: | +49 (0)89 24 42 0 |
Internet: | www.telefonica.de |
ISIN: | DE000A1J5RX9 |
WKN: | A1J5RX |
Listed: | Regulated Market in |
EQS News ID: | 1841329 |
End of News |
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1841329 21.02.2024 CET/CEST