Spanish telecommunications group Telefónica has reaffirmed its 2023 financial guidance, following a solid Q1 revenue growth. The company projects low single-digit growth in both revenue and operating income before depreciation and amortisation (OIBDA) for the full year, with a capex to sales ratio of 14%. Additionally, Telefónica has confirmed its dividend for 2023.
Telefónica CEO José María Álvarez-Pallete stated, “We have made a strong start to the year despite ongoing challenges. We continue to execute on our strategic plan and delivered another quarter of accelerated revenue growth, both in reported and organic terms. We have achieved steady organic OIBDA growth driven by top-line growth and efficiencies. As such, we are well on track to meet our 2023 financial guidance and I am pleased to confirm our dividend for 2023.”
As of March, Telefónica served 383.6 million customers, which includes both fixed line and mobile users, a 4% increase from a year ago. Its fiber-to-the-home (FTTH) base experienced 16% growth, boosting group revenue 6.7% compared to last year, reaching €10.05 billion.
The company saw growth in every subsidiary, with standout performances in Germany, where strong mobile momentum led to 8% top-line growth, and Brazil, where a 12.1% sales growth was driven by customer additions and high-end tariff uptake. In Spain, revenue experienced modest 0.3% growth thanks to a better tariff mix, which helped service revenue grow by 1%, offsetting declines in handset sales and lower wholesale revenue from football.
Group OIBDA saw mixed results, with a 1.1% increase in organic terms, but a 2.4% decline in reported terms, falling to €3.12 billion. This can be attributed to declines in Spain and operations across Central and South America (excluding Brazil). However, Brazil experienced OIBDA growth, reaching €924 million due to strong customer additions and increased service and handset revenues.
Telefónica highlighted its management of net debt, which currently stands at €26.44 billion, representing a 3.5% decline compared to the end of March 2022. Over 80% of this debt is at fixed rates, helping the company to mitigate the impact of rising interest rates. Telefónica has also secured coverage for all debts maturing in the next three years. The company’s current liquidity is close to €21.4 billion.
Álvarez-Pallete noted, “From a capital structure standpoint, our net debt continues to decline and is now lower than in Dec-22, which demonstrates the financial strength and the cash generation of the business.”
While Telefónica’s results indicate a strong financial performance, the market appears less enthusiastic. At the time of writing, the company’s shares were trading in Madrid at €3.88, a 3.7% decline from the previous day.
