Telefónica to focus on investment

February 27, 2014 09.30 Europe/London By Chris Dziadul

telefonica_campusTelefónica expects the acceleration in the deployment of fibre and pay-TV in Spain to be one of the main pillars of growth in its European operations in 2014.

In its latest set of results, the company says that its pay-TV customer total at the end of 2013 stood at 673,000 and showed a significant improvement in the fourth quarter.

This saw a net addition for the first time in 2013 of 63,000, underpinned by a successful Christmas campaign.

The fibre customer total meanwhile grew by 100,000 in the fourth quarter to end the year on 594,000.

This was virtually double the number a year earlier and represented 17% of households passed by the technology (3.5 million).

Telefónica aims to achieve 7.1 million homes passed by the end of this year and notes that fibre customers have 1.5 times higher ARPU than ADSL customers and a higher level of satisfaction, resulting in a lower churn rate (0.5 times).

Revenues in Telefónica’s Spanish business in 2013 amounted to €12,959 million, down 13.6% on 2012.

Operating expenses were €7,042 million (-17.6%) and OIBDA €6,340 million (-7.2%).

Elsewhere in Europe, Telefónica’s pay-TV customer total in the Czech Republic – a market it has now left – grew by 10% in 2013 to reach 156,000 at the end of 2013.

Commenting on the company’s results and strategy for 2014, César Alierta, executive chairman, said it will “reinforce the differentiation of its products and services through a non-replicable infrastructure. In 2014 Telefónica will double the fibre coverage in Spain to 7.1 million homes passed, reaching the highest coverage levels among the largest economies in Europe. In Brazil we will also increase fibre coverage to 2.5 million homes. In the mobile business, we will expand 4G usage in Europe reaching an average coverage of more than 50%, while we continue leading the mobile data market in Latin America with the progressive launch of 4G.

“This intensification in investments is compatible with our commitments to continue improving financial flexibility and to offer an attractive remuneration for our shareholders. Our targets for 2014 include an additional reduction of net debt, maintaining our dividend in €0.75 per share. For that purpose, we will continue executing our asset portfolio optimisation strategy, freeing non-strategic resources that will allow us to improve our positioning and growth potential in key markets, both inorganically and organically, through the increased investment in 2014.

“In parallel and in order to accelerate growth, we have announced a deep organizational transformation. The Digital revolution entails a huge opportunity and at the same time requires an evolution to take advantage of its full potential.
Telefónica pioneered the movement towards a Digital world and now, we will accelerate this transformation. The new operating structure will enable us to reinforce our commercial and technological profile, as well as to increase our differentiation thanks to the modernisation of our infrastructures, targeting revenue growth acceleration and data monetisation.

“Telefónica has always been a reference in terms of efficiency, and technological revolution, the strengthening of our technologic positioning and infrastructures, is compatible with the increase in our efficiency. As a result, we are launching a new synergy plan to generate savings totalling €1.5 billion per year in the following years.

“Overall, this new organisational structure implies one step further in the already defined strategy, being possible thanks to the goals achieved, and allowing us to be; more agile in decision making, faster in the implementation of the strategy, more flexible in satisfying our client needs and more efficient in the use of our resources, maximising this way the returns offered by the Digital revolution.”