Telefonica Q4 Profit Down On Charges, Weak Revenues; Sees Revenue Growth Ahead

(RTTNews) - Spanish telecom group Telefonica S.A. (TEF, TDE.L) Wednesday reported a sharp decline in the fourth-quarter profit, hurt by hefty charges mainly related to Venezuela write-down and restructuring expenses, as well as weak revenues. Looking ahead, the company projects growth in revenues in the next 2 years.

For the fourth quarter, consolidated net income plunged 89.5 percent to 152 million euros from last year's 1.45 billion euros. Basic earnings per share were 0.02 euro, down 93.1 percent.

The latest quarterly results included extraordinary effects of 1.088 billion euros, including the impact of the adoption of the exchange rate set at SICAD II in Venezuela of 399 million euros, the provision for restructuring expenses of 405 million euros, the value adjustment of Telco, S.p.A of 257 million euros and other items.

Operating income fell 66.2 percent, while operating income before depreciation and amortisation or OIBDA dropped 35.9 percent to 3.19 billion euros. Excluding the negative impact of regulation, organic OIBDA grew 0.8 percent.

OIBDA margin stood at 25.7 percent, down 8.7 percentage points.

Revenue for the quarter declined 14.1 percent to 12.399 billion euros from last year's 14.436 billion euros, affected by the negative impact of exchange rate fluctuations and changes to the consolidation perimeter. The company noted that the change to SICAD II in Venezuela had a negative impact of 2.19 billion euros on revenues.

As reported earlier, Telefónica Deutschland posted a 62.4 percent increase in revenues. UK also posted higher results. But, these were more than offset by weak performances mainly in España, Brasil, and Hispanoamérica.

Organic revenue in the year grew 5 percent from last year. Excluding the negative impact of regulation, revenues in organic terms grew by 6.3 percent.

Total accesses reached 341.0 million as of December 2014, up 6 percent year-on-year, mainly after incorporating the customers of E-Plus in T. Deutschland.

Mobile accesses totaled 274.5 million, 8 percent higher than last year, driven by the strong growth of the mobile contract segment.

Smartphones grew 39 percent year-on-year and stood at 90.4 million.

Looking ahead, for fiscal 2015, the company expects revenues to grow greater than 7 percent, and OIBDA margin to have limited margin erosion of 1 percentage point. For fiscal 2016, the company expects revenues to grow greater than 5 percent, while OIBDA margin will be stabilizing.

Further, the company said that in 2015, it aims to amortise Treasury stock for a total of 1.5 percent share capital and distribute a dividend of 0.75 euros per share.

In 2016, the company aims to amortise Treasury stock for a total of 1.5 percent share capital and distribute a dividend of 0.75 euros per share in cash, in both cases subject to the closing of the proposed sale of O2 UK.

In Spain, Telefonica shares were losing 1.47 percent to trade at 13.37 euros.