Telefónica posts revenue growth as efficiency drive kicks in

21 February 2020 | melanie mingas

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Telefónica has posted a 3.2% increase in revenue for the last calendar year, as the group looks to “sustainable and responsible growth” in 2020.

Telefónica has posted a 3.2% increase in revenue for the last calendar year, as the group looks to “sustainable and responsible growth” in 2020.

Revenues increased to €48.42m in 2019, driven by performance in key markets. Spain, which generates 26% of total revenue, has now posted 10 straight quarters of revenue growth, while in Brazil “macro momentum is gaining speed” and market share has reached its highest rate in recent memory. Brazil currently generates 21% of all profits.

Elsewhere, the UK has now recorded 14 straight quarters of consecutive growth, with the customer base also growing, and in Germany operational performance and trading momentum also “gained speed”. Both markets represent 15% of total company revenue.

The group's digital services revenue totalled €2 million in Q4, up 11.5% YoY, and €7.7 million for the year, up 17.1% on 2018 full year results.

In an earnings call on 20th February, COO Angeil Vila Boix disclosed that in the December/ January period, 55% of total revenues derived from broadband and services beyond connectivity, a year-on-year increase of 3 percentage points.

In the business segment, Q4 revenues increased 3.6% YoY to reach €2.4 million rising to €9.5 million for the full year, again driven by digital services such as cloud, IoT/Big Data and security.

"2019 was an important year for Telefónica. We met our guidance, with all our core markets growing in organic terms,” said chairman and CEO José María Álvarez-Pallete.

“We delivered very strong free cashflow in 2019, leading to a continued reduction in debt for 11 consecutive quarters, also helped by disposals and other actions to improve return on capital employed.

“We continue to invest in next generation networks, cementing our leadership in fibre networks in both Europe and Latin America. Thanks to years of investment, our CapEx to sales ratio peak is behind us,” Álvarez-Pallete added.

In late 2019, Álvarez-Pallete unveiled a new strategy to spin off company assets and LATAM operations, and prepare for industry 4.0 with the launch of tech and infra units. Priority and focus will be placed on markets in the UK, Spain, Brazil and Germany as well as overall group-wide efficiency.

Calls to contact centres were reduced by 13% compared to 2018 and more than 1,500 robots were deployed over the course of last year, creating “significant impact on both quality of service and efficiency”, according to a statement.

“We begin 2020 with good momentum and focus on executing the plan we announced at the end of last year,” Álvarez-Pallete said.

“The operational spin-off of Hispam will open opportunities to crystallise value and finally, we are increasing agility and efficiency across all units. Looking to our 2020 guidance, we are expecting stable growth in the main metrics, a stable and attractive dividend, with a long-term commitment to a sustainable and responsible growth,” he added.

The firm is also making progress in its “non-financial objectives”, including employee and customer satisfaction, and shareholders will receive a dividend of €0.40 per share in December 2020 and in June 2021 (€0.20 per share).