Telefónica disappointed analysts with its first-quarter earnings, with the operator's domestic performance detracting from an overall increase in net income compared to the same period of 2014.
The Spain-based carrier generated a profit of €1.8 billion ($2 billion) in the first quarter, a significant rise on the €688 million generated in the same period of 2014. Telefónica adjusted its Q1 2014 figures to account for the planned sale of its O2 UK mobile business, the 2014 acquisition of E-Plus in Germany and a drop in the value of Venezuela's currency to enable a clearer like-for-like comparison with its recent figures.
Group revenues grew from €10.2 billion in Q1 2014 to €11.5 billion in the recent quarter. A breakdown by market shows the operator made year-on-year gains in all of its markets except for Spain and Colombia during the quarter.
Telefónica's domestic operating income before depreciation and amortisation (OIBDA) fell from €1.4 billion in Q1 2014 to €1.2 billion in the recent quarter as revenue declined 3.8 per cent year-on-year to €2.8 billion.
BNP Paribas analyst John Jackson declared the results "disappointing" in a research note, referring to Telefónica's inability to improve its performance in Spain despite a wider economic recovery in the country, the Wall Street Journal reported. Jackson also noted that Telefónica may struggle to achieve anything but modest growth in its Brazilian revenues moving forward. OIBDA at the business grew 1.4 per cent year-on-year to €840 million.
Jackson's view on Telefónica's domestic performance was echoed by Mirabaud analysts, the Financial Times reported. However, group OIBDA for the opening quarter of €3.6 billion was slightly higher than analysts predicted, the newspaper added.
Telefónica's CFO Angel Vila revealed the company will focus on its overseas operations for growth moving forward. In a call to discuss the company's results with analysts, Vila said Telefónica is happy with its current footprint in Europe and has no major expansion plans for the region, the WSJ reported.
For more:
- see Telefónica's earnings statement [PDF]
- view the operator's Q1 figures [PDF]
- see this Financial Times article [registration req.]
- view this Wall Street Journal report
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