Five things to watch May 8

Five things to watch May 8: BT suspends dividends amid FY 19/20 results, Liberty Latin America sees 2% growth in revenues, and MEA region leads growth for Orange Group

08 May 2020 | Natalie Bannerman

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Capacity shares 5 key finance stories from around the world making headlines today!

BT suspends dividends amid FY 19/20 results

BT Group has published its full year 2019 results as well as its decision to suspend the 2019/20 final dividend and all dividends for 2020/21.

The company reported revenues of £22,905 million which was down 2% for the same period last year, due largely to impact of regulation, declines in legacy products, strategic reductions in low margin business and divestments.

"BT had a positive year delivering results in line with expectations and completing our £1.6bn phase 1 transformation programme, one year ahead of schedule,” said Philip Jansen, Chief Executive, BT Group.

"In order to deal with the potential consequences of Covid-19, allow us to invest in FTTP and 5G, and to fund the major 5-year modernisation programme, we have also taken the difficult decision to suspend the dividend until 2022 and re-base thereafter.”

Adjusted EBITDA came in at £7,907 million down 3%, due to lower revenue and investment in customer experience, partly offset by cost savings from transformation programmes.

Additionally, capital expenditure was up £193 million to £3,960 million, excluding BDUK funding deferral, driven by network and customer investment.

At the same time the company announced its intention to suspend the 2019/20 final dividend and all dividends for 2020/21 due to the impact of Covid-19.

“… the board concluded that the prudent and proper decision was to suspend the 2019/20 final dividend and all dividends for 2020/21, and re-base future dividends to a more sustainable level.”

"We expect to resume dividend payments in 2021/22, rebased to 7.7p per share,” said Jan du Plessis, chairman, BT Group.

Veon reports strong results in Q1 2020

Veon reported revenues of $2,097 million for the period ended 31 March 2020.

Revenues were up 0.3% year-on-year (YoY) in local currency but down 1.3% YoY on a reported basis. Adjusted EBIDTA was down 1.8% YoY in local currency, totalling 920 million, which is also down 29.1% YoY on a reported basis.

“Veon is not immune to the economic impact of COVID-19. Operationally, this has resulted in divergent trends across our business, with greater demand for broadband and digital services offset by an inevitable decline in roaming revenues,” said Kaan Terzioglu and Sergi Herrero, co-chief executive officers at Veon.

“Given the impact and duration of this pandemic remain uncertain, we believe it is no longer prudent to give financial guidance for 2020 and it is clear that there is presently significant pressure on our operational performance.”

Additionally, the Group’s mobile subscriber base remained flat at a total of 211 million YoY. While operational capital expenditure totalled $368 million.

“Driving this performance is the strong demand we continue to enjoy for data, which grew 18.3% year-on-year in local currency during the first quarter as we progressed our 4G network investment program and deployed new digital services across our markets to enrich the experience of our customers,” they added.

Liberty Latin America sees 2% growth in revenues

For the first quarter of 2020, Liberty Latin America reported revenue growth of 2% totalling $931 million for the period.

“…our first quarter exceeded my expectations. Liberty Puerto Rico performed really well and VTR had a good quarter despite the social unrest in Chile.”

“C&W nailed it with record Q1 fixed adds and the best Q1 OCF performance since acquisition,” said Balan Nair, CEO, of Liberty Latin America.

The group also reported strong Revenue Generating Unit (RGU) additions of 60,000, C&W additions 22% higher year-over-year.

Operating revenues of $108 million were 5% lower compared to the same period last year.

As well as rebased OCF2 growth of 4% to $364 million, showing growth in all reporting segments.

Interestingly Nair also hinted at ongoing M&A activity, despite the market uncertainty cause by Covid-19.

“We are excited about the opportunities presented by the proposed acquisition of AT&T’s assets in Puerto Rico and the USVI and continue to work closely with our counterparts at AT&T to prepare for integration. We expect to close the transaction in the second half of this year.”

MEA region leads growth for Orange Group

Orange Group reported revenue growth of 1% in the first quarter of 2020, compared to the same period in 2019.

Topping €10,394 million, these figures are driven by solid growth in Africa and Middle East and improvement in the enterprise, France and Europe segments.

“During this first quarter, the final weeks of which were struck by an unprecedented crisis linked to the Covid-19 pandemic, the Group continued its growth momentum in terms of revenues (+1.0%) and EBITDaL (+0.5%),” said Stéphane Richard, chairman and CEO of the Orange Group.

“This growth has been underpinned by strong performances in our Africa & Middle East business, progress in the Enterprise market, in France and in Europe. We recorded a solid performance in our retail operations, although this was mitigated in the second half of March by the closure of the vast majority of our stores in Europe.”

Specifically, revenues in Africa and Middle East grew by 6.2%, and in France by 0.5%, with a 2.2% increase in retail services excluding public switched telephone network (PSTN).

While Enterprise revenues grew by 0.8% and Europe by 0.3%, Spain revenues fell by 2.4%.

EBITDAaL was up 0.5% year on year and EBITDAaL from telecom activities which reached 2.64 billion euros, was up 0.1%

Telefonica withdraws 2020 financial guidance due to Coronavirus

During Telefonica’s first quarter results of 2020, the company confirmed that it was withdrawing is 2020 financial guidance due to the current level of uncertainty caused by the pandemic.

Additionally, the company was able to confirm the announced €0.40 dividend for 2020, unlike many other telcos in the industry.

“… the resilience and flexibility of our business model and the strength of our company, allow us to maintain an attractive dividend for our shareholders, of €0.40 per share,” said José María Álvarez-Pallete, chairman and chief executive officer at Telefonica.

Revenues for the period reached €11,366m, which was a decline of 5.1% YoY and down 1.3% in organic terms; service revenue -1.4%.

In the company’s four core markets, Spain, Gemany, UK and Brazil, the group reported an increase of 0.1% organic growth in revenues.

“Telefonica is not immune to this crisis, but it is resilient. The crisis has had a limited impact on our first quarter financial results,” added Álvarez-Pallete.

“Our four key markets have performed well in a unique and challenging environment. Lower revenues from roaming, prepaid and business customers were partially compensated by lower commercial costs and lower customer churn.”

Net income totalled €406 million, resulting in €0.06 per share. While OIBDA came in at €3,760m, down 11.8% YoY and a decline of 1.7% organically.

OIBDA of the four core markets rose 0.8% organically and OIBDA-CapEx was up 3.2% in organic terms.