Telefonica on Friday reported healthy third quarter revenue growth driven by a strong performance in Germany, while its domestic operation returned to growth for the first time in seven years.
"Telefonica’s third quarter results reflected further acceleration in organic growth figures derived from increased commercial momentum, mainly in high-value products and services," said César Alierta, CEO of Telefonica, in a statement.
In the three months to 30 September, the Spanish incumbent generated revenue of €11.92 billion, up 10.8% year-on-year on a reported basis. Operating income before depreciation and amortisation (OIBDA) came in at €3.69 billion, compared to €3.59 billion a year earlier.
"The improvement in the revenue line reflected the better performance of the Spanish business, which returned to year-on-year revenue growth after seven years of intense business transformation," Alierta said.
Telefonica generated revenue of €2.99 billion in Spain, a modest increase of 0.2% on Q3 2014, but significant nonetheless given that the telco last saw revenue growth at its domestic arm in the third quarter of 2008.
The telco attributed the performance to the continued growth in high-value customers. Its Spanish postpaid base increased to 14.39 million from 14.19 million a year ago, while fibre broadband subscribers increased to 1.95 million from 1.07 million. Its overall c ustomer base slipped to 35.79 million from 35.85 million, driven by declines in fixed telephony and prepaid mobile customers.
OIBDA in Spain fell 2.9% to €1.34 billion due to increased costs stemming from the purchase of TV content.
Meanwhile, the integration of E-Plus in Germany drove Telefonica Deutschland’s third quarter revenue up 62.4% to €1.98 billion, and OIBDA up to €403 million from €255 million in Q3 2014.
The performance by O2 UK, which has been listed as a discontinued operation since Telefonica agreed to sell it to 3UK parent CK Hutchison, was also encouraging.
The unit generated revenue of €2.02 billion in the three months to 30 September, compared to €1.81 billion a year earlier. Its mobile customer base increased to 25.04 million from 24.09 million.
In Brazil, revenue increased 5.2% on an organic basis to €2.74 billion, thanks to strong customer additions by the mobile business and the consolidation of fixed broadband provider GVT. On a reported basis, revenue was down 5.5%, while OIBDA came in at €831 million compared to €881 million a year earlier.
Telefonica Hispanoamerica, which encompasses the telco’s operations in the rest of Latin America, generated revenue of €3.63 billion, up 8.9% on Q3 2014 thanks to the growing adoption of postpaid mobile and bundled services. However, currency headwinds meant OIBDA declined to €1.08 billion from €1.10 billion a year ago.
Telefonica reiterated its full year guidance of revenue growth of more than 9.5%, and a 1.2 percentage point decline in OIBDA margin on 2014, when the margin came in at 32.7%.
