Telefónica misses Q4 EBITDA estimates due to 'unexpected' one-off costs

Telefónica reported EBITDA that was below analyst estimates for the fourth quarter of 2015 because of several one-off costs that analysts said were not known in advance.

According to Jefferies International, EBITDA -- which Telefónica refers to as OIBDA -- was well below the consensus estimate of €764 million ($822 million) at €401 million because of various costs that had not been anticipated by analysts. These included a €325 million provision for the financing needs of Telefónica Foundation and a €30 million provision in Spain for restructuring distribution.

The company also posted an operating loss of €1.76 billion for the quarter, which was higher than consensus estimates of €1.36 billion. The net loss was €1.83 billion, down from a net income of €303 million a year previously.

Telefónica noted that the annual results and particularly those of the quarter were affected by various non-recurring impacts, and said a provision of €3.12 billion was booked in this regard.

There were some positive one-offs, however, including a €102 million E-Plus purchase price adjustment; €98 million from the 'expiration of account payable' in Brazil; €79 million from a Mexico spectrum swap; and €22 million from the sale of domestic real estate. Revenue in the fourth quarter was unchanged year-on-year at €11.88 billion, which Jefferies said was 0.5 per cent above consensus.

In 2015 as a whole, revenue increased 8.7 per cent in reported terms to €47.22 billion, while OIBDA was 17.2 per cent lower in reported terms at €11.41 billion. Group net income was 8.5 per cent lower at €2.74 billion. However, in underlying terms net income reached €5.78 billion, which was 29.7 per cent higher than in 2014.

In organic terms, a more positive picture is presented for 2015 as a whole, with revenue growth accelerating to 4 per cent year-on-year, OIBDA increasing 3.6 per cent -- boosted by the efficiencies stemming from the integration synergies in Germany and Brazil and the simplification program of the group -- while the operating cash flow in the year returned to growth of 1.9 per cent.

For 2016, the Spain-based operator expects to see group organic revenue growth of more than 4 per cent with a stabilisation of the OIBDA margin. The company remains broadly optimistic, with chairman and CEO César Alierta saying: "If 2015 has been a very positive year, in 2016 growth and data monetisation will accelerate, while we maximise the efficiencies from integration and simplification, and we boost our innovation and big data capabilities."

For more:
- see the Telefónica results release
- see the Telefónica figures

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