Telefónica reports net income of $1bn in Q1 of 2018

27 April 2018 | Natalie Bannerman

Strong numbers across the board as we run down the latest Q1 2018 figures from the likes of Orange, Verizon, Telenor, Tele2 and Telefónica.

Orange Group reports growth in its revenues and adjusted EBITDA for the period, as well as an increase in operating cash flow. The company says that the increase in revenues is driven by operations in France, which reported growth of 2.1%, Spain which is up in revenues by 4.3% and Africa and the Middle East which is up 6.2%. Adjusted EBITDA rose by 4.4% for the period, while EBITDA margin improved 0.6% percentage points. Orange says that its strategy focused on convergence and high-speed broadband contributed to its positive results for the period.

Commenting on the results, Stéphane Richard, chairman and CEO of the Orange Group, said: “In this first quarter we successfully built on the positive momentum from 2017, with growth in revenues of 2.0%, adjusted EBITDA growth of 3.8% and a strong commercial performance across all our geographies. Over 90% of the population across our European countries now have access to 4G, this includes 97% coverage in France. Having maintained a steady rhythm of deployment, we remain the European leader in fibre, bringing connectivity to 27.7 million households.

"This unmatched connectivity will be the basis for our transformation from a pure play telecommunications operator to a multiservice digital operator. The first achievements in moving towards this goal included the creation of Orange Cyberdefense as part of our Enterprise segment and the launch of Orange Bank last autumn. In order to make this transformation a success, we have renewed our executive committee, with the new team in place from 2 May. Strengthened by our renewed executive committee and the loyal commitment of our employees, we will have all the tools to successfully pursue this plan.”

Verizon also reported strong figures for the period. Overall the company showed a total consolidated growth of 6.6% with operating revenues reaching $31.8 billion while consolidated revenues were $29.9 billion, up 3.2% on an adjusted basis. In the revenue statement the company cited a “solid performance in the wireless business with improved service revenue results” as the main driver of the positive figures. In the wireless side of the business total revenue grew by 4.7% with a retail post-paid phone churn of 0.80% for the fourth consecutive period of customer retention.

“We began 2018 with strong momentum, and we expect it to continue throughout the year,” said Lowell McAdam, Verizon’s chairman and CEO. “We are positioning Verizon for long-term growth while executing our strategy today and leading the way for the next cycle of growth for the industry.”

For Telenor digital transformation is the name of the game. "Entering 2018, I am pleased to see that we continue to grow and renew ourselves. We added close to two million customers in the first quarter; subscription and traffic revenues increased by 1% and EBITDA grew by 10%. Our digital transformation and focused efforts on efficiency improvements continue to deliver significant results,” said Sigve Brekke, CEO of Telenor Group.

Reported revenues for the group fell by 2% to NOK 27.1 billion ($3.3 billion), organic EBITDA grew by 10%, operating expenditure fell by NOK 0.8 billion ($99.9 million), net income attributable to Telenor equity holders amounted to NOK 5 billion ($624 million), capital expenditure excluding spectrum and licences amounted to NOK 3.1 billion ($387 million), while free cash flow reached NOK 2.6 billion ($324 million).

Tele2 also reported great results for the period net sales went up by 5%, like-for-like on the previous year, mobile end-user service revenue went up by 4% and EBITDA growth of 6% was also like-for-like on the previous year. The rolling 12 months operating cash flow grew by 26%.

”The first quarter of 2018 marks the beginning of a year of major transformation for the Tele2 Group. Our business momentum continued with growth in revenue, EBITDA and operating cash flow. Looking forward to the merger with Com Hem, we are today also announcing an updated shareholder remuneration and leverage policy, which we believe is highly attractive to all shareholders of the combined company,” said Tele2 CEO Allison Kirkby.

Kirby also announced an additional merger happening in Netherlands in the near future pointing the company towards a period of acquisitions.

“In the Netherlands, we are preparing for the merger with T-Mobile to create a stronger competitive force in a market where we faced intensified competition in the quarter, both from MVNOs and, as expected, from FMC bundles,” added Kirkby. “Preparations for the two transformative transactions in Sweden and Netherlands are well underway. The regulatory approval processes are on track – we are in the pre-notification phase with constructive dialogues with the EC, and look forward to filing the formal merger notifications during the second quarter”

Telefónica reported strong results for the period with net income increasing by 7.4% totaling €837 million ($1 billion). Revenues were €12.1 billion ($14.6 billion) down 7.2% on the same quarter in 2017, operating income before depreciation and amortization (OIBDA) reached €3.8 billion ($4.5 billion), while net debt stood at €43.9 billion ($52.9 billion) which is great news for the Spanish telco as it’s down 9.8% year-on-year, also down for the first quarter in the last four years.

“First, in connectivity we continued to grow our value accesses at a significant pace, which translated into higher average revenue and greater customer loyalty, associated with a continuously increasing demand for data and personalised offers," said José María Álvarez-Pallete, executive chairman of Telefónica.

"Second, all our business units grew in revenues and OIBDA in organic terms, excluding the negative impact of regulation.Third, we further strengthened our positioning as a platform Company by taking a step forward in our digital transformation, leveraging on digitalisation and data monetisation, and continue leading in innovation with the launch of Aura in 6 countries.Furthermore, revenues, OIBDA and operating cash flow grew organically and net debt continued to decrease. This quarter’s results are in line with our expectations and allow us to reiterate our objectives set for the year.”

The same day as publishing its results the company announced the appointment of María Luisa García Blanco as an independent director, replacing Eva Castillo Sanz who will leave at the end of 10 years on the board of directors at Telefónica.

Commenting on Blanco’s appointment, Jose María Álvarez-Pallete, chairman and CEO of Telefónica, said: "I want to express my gratitude to Eva for her great contribution during the many years of work and collaboration with the Telefónica Group, and for her key role in the various executive positions she has held in the company”.