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Telefonica, S.A. (TEF - Free Report) reported a third-quarter 2022 net income of €460 million, declining 34.9% year over year. Further, basic earnings per share were €0.07 compared with €0.11 in the prior-year quarter.
Quarterly total revenues increased 11.2% year over year to €10,343 million. However, organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.8% year over year to €11,825 million.
Telefonica Espana: Quarterly revenues in Spain increased 0.2% year over year on a reported basis to €3,119 million. This is due to service and handset revenue growth. The quarterly OIBDA margin declined to 36.9% from 38% in the year-ago quarter. Capital expenditure (CapEx) decreased 37.6% to €403 million in the quarter.
Telefonica Deutschland: Quarterly revenues rose 6% to €2,085 million. The improvement was driven by continued momentum in the mobile business owing to higher handset sales and growing traction for the O2 portfolio, partly offset by the accelerated MTR glidepath. The quarterly OIBDA margin was 31% compared with 31.7% in the year-ago quarter. CapEx rose 14.3% to €346 million in the quarter.
VirginMedia-O2 U.K.: Quarterly revenues of this newly formed segment decreased 0.5% to €3,018 million due to a decline in handset revenue and soft B2B revenues, partly offset by high-service revenue growth. The quarterly OIBDA margin increased 36.3% from 35% in the prior-year quarter. CapEx increased 19.7% to €717 million in the quarter.
Telefonica Brasil: Quarterly revenues in Brazil grew 29% to €2,310 million, mainly due to the rise in contribution from Oi's acquired accesses. The quarterly OIBDA margin decreased to 42.8% from 47.3% in the prior-year quarter. CapEx jumped 37.8% to €488 million in the quarter.
Telefonica Infra (Telxius): The pandemic-induced boost in traffic and the emergence of the new digital era had already helped the company in previous years, still Telxius' traffic in the third quarter increased by 16% year over year. It is expected to receive regulatory and competition approvals for the increased stake by early 2023.
In Brazil, FiBrasil has formed wholesale agreements with Sky Brasil and Vero to further improve its commercial position. In Spain, Bluevia plans to increase its fiber coverage to 5 million over the next two years.
Telefonica Tech: Revenues increased 68.6% year over year to €386 million. This was driven by the robust performance throughout businesses and the integration of operations in the last 12 months. The Cyber business unit is outperforming estimates, with year-to-date IoT revenues expanding in double digits.
Telefonica Hispam: Quarterly revenues in this segment rose 18.2% to €2,510 million, mainly due to increasing handset and service revenue. The quarterly OIBDA margin was 19.9% compared with 41% in the prior-year quarter. CapEx has increased 49.5% to €230 million in the quarter.
Other Details
Quarterly OIBDA was €3,249 million, down 13% year over year. Operating income was €914 million in the quarter under review compared with €1,579 million in the prior-year quarter.
Cash Flow & Liquidity
For nine months ended Sep 30, 2022, Telefonica generated €7,598 million of net cash from operating activities compared with €7,544 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €2,474 million, which includes principal payments of leases.
As of September 2022, the company had €7,275 million in cash and cash equivalents, with €37,009 million of non-current financial liabilities.
2022 Outlook
The company expects to achieve high-end of low-single-digit growth in revenues, mid to high-end of low-single-digit growth for OIBDA, and a CapEx-to-sales ratio of up to 15%.
In addition, the company announced a cash dividend of €0.30 per share for 2022, payable in December 2022 (€0.15 per share) and June 2023 (€0.15 per share). The company also announced the cancelation of €139 million shares as treasury stock.
The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 35.6% in the past year.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 12.1% in the past year.
The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8 in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have decreased 1.4% in the past year.
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Telefonica's (TEF) Q3 Earnings Down, Revenues Increase Y/Y
Telefonica, S.A. (TEF - Free Report) reported a third-quarter 2022 net income of €460 million, declining 34.9% year over year. Further, basic earnings per share were €0.07 compared with €0.11 in the prior-year quarter.
Quarterly total revenues increased 11.2% year over year to €10,343 million. However, organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.8% year over year to €11,825 million.
Telefonica SA Price, Consensus and EPS Surprise
Telefonica SA price-consensus-eps-surprise-chart | Telefonica SA Quote
Results by Business Units
Telefonica Espana: Quarterly revenues in Spain increased 0.2% year over year on a reported basis to €3,119 million. This is due to service and handset revenue growth. The quarterly OIBDA margin declined to 36.9% from 38% in the year-ago quarter. Capital expenditure (CapEx) decreased 37.6% to €403 million in the quarter.
Telefonica Deutschland: Quarterly revenues rose 6% to €2,085 million. The improvement was driven by continued momentum in the mobile business owing to higher handset sales and growing traction for the O2 portfolio, partly offset by the accelerated MTR glidepath. The quarterly OIBDA margin was 31% compared with 31.7% in the year-ago quarter. CapEx rose 14.3% to €346 million in the quarter.
VirginMedia-O2 U.K.: Quarterly revenues of this newly formed segment decreased 0.5% to €3,018 million due to a decline in handset revenue and soft B2B revenues, partly offset by high-service revenue growth. The quarterly OIBDA margin increased 36.3% from 35% in the prior-year quarter. CapEx increased 19.7% to €717 million in the quarter.
Telefonica Brasil: Quarterly revenues in Brazil grew 29% to €2,310 million, mainly due to the rise in contribution from Oi's acquired accesses. The quarterly OIBDA margin decreased to 42.8% from 47.3% in the prior-year quarter. CapEx jumped 37.8% to €488 million in the quarter.
Telefonica Infra (Telxius): The pandemic-induced boost in traffic and the emergence of the new digital era had already helped the company in previous years, still Telxius' traffic in the third quarter increased by 16% year over year. It is expected to receive regulatory and competition approvals for the increased stake by early 2023.
In Brazil, FiBrasil has formed wholesale agreements with Sky Brasil and Vero to further improve its commercial position. In Spain, Bluevia plans to increase its fiber coverage to 5 million over the next two years.
Telefonica Tech: Revenues increased 68.6% year over year to €386 million. This was driven by the robust performance throughout businesses and the integration of operations in the last 12 months. The Cyber business unit is outperforming estimates, with year-to-date IoT revenues expanding in double digits.
Telefonica Hispam: Quarterly revenues in this segment rose 18.2% to €2,510 million, mainly due to increasing handset and service revenue. The quarterly OIBDA margin was 19.9% compared with 41% in the prior-year quarter. CapEx has increased 49.5% to €230 million in the quarter.
Other Details
Quarterly OIBDA was €3,249 million, down 13% year over year. Operating income was €914 million in the quarter under review compared with €1,579 million in the prior-year quarter.
Cash Flow & Liquidity
For nine months ended Sep 30, 2022, Telefonica generated €7,598 million of net cash from operating activities compared with €7,544 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €2,474 million, which includes principal payments of leases.
As of September 2022, the company had €7,275 million in cash and cash equivalents, with €37,009 million of non-current financial liabilities.
2022 Outlook
The company expects to achieve high-end of low-single-digit growth in revenues, mid to high-end of low-single-digit growth for OIBDA, and a CapEx-to-sales ratio of up to 15%.
In addition, the company announced a cash dividend of €0.30 per share for 2022, payable in December 2022 (€0.15 per share) and June 2023 (€0.15 per share). The company also announced the cancelation of €139 million shares as treasury stock.
Zacks Rank & Stocks to Consider
Telefonica currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology space are InterDigital (IDCC - Free Report) , Pure Storage (PSTG - Free Report) and Jabil (JBL - Free Report) . InterDigital and Jabil currently sport a Zacks Rank #1 (Strong Buy), whereas Pure Storage currently holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks.
The Zacks Consensus Estimate for InterDigital’s 2022 earnings is pegged at $2.45 per share, up 2.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
InterDigital’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 81.9%. Shares of IDCC have decreased 35.6% in the past year.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 12.1% in the past year.
The Zacks Consensus Estimate for Jabil’s fiscal 2023 earnings is pegged at $8.18 per share, rising 3.8 in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 9.3%. Shares of JBL have decreased 1.4% in the past year.