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Telefonica's (TEF) Q4 Earnings and Revenues Increase Y/Y
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Telefonica, S.A. (TEF - Free Report) reported a fourth-quarter 2022 net income of €525 million against a net loss of €1,198 million in the year-ago quarter. Further, basic earnings per share were €0.08 against a loss per share of €0.22 in the prior-year quarter.
Quarterly total revenues increased 5.4% year over year to €10,200 million. Organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.9% year over year to €11,751 million.
Telefonica Espana: Quarterly revenues in Spain increased 0.2% year over year on a reported basis to €3,214 million. This is due to higher revenue growth in B2B and B2C businesses. The quarterly OIBDA margin was 36.8%. Capital expenditure (CapEx) increased 12.3% to €505 million in the quarter.
Telefonica Deutschland: Quarterly revenues rose 6.6% to €2,190 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 30.4% compared with 30.6% in the year-ago quarter. CapEx declined 35.1% to €307 million in the quarter.
VirginMedia-O2 U.K.: Quarterly revenues of this newly formed segment decreased 1.7% to €3,141 million due to a decline in hardware and fixed revenues, partly offset by a rise in mobile revenues. The quarterly OIBDA margin increased 34.4% from 32.4% in the prior-year quarter. CapEx decreased 0.6% to €720 million in the quarter.
Telefonica Brasil: Quarterly revenues in Brazil grew 31% to €2,361 million, mainly due to the continued commercial momentum and the progressive update on tariffs. The quarterly OIBDA margin decreased to 43.6% from 45.1% in the prior-year quarter. CapEx declined 53.4% to €498 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 fourth quarter increased by 20% year over year.
Telxius received the necessary approvals at the beginning of 2023, enabling Telefónica to boost its ownership to 70% and reinforce its collaboration with Pontegadea, which raised its share to 30%. Moreover, Telxius and América Móvil disclosed their joint project, Tikal (by Telxius), a new ultrahigh capacity subsea cable connecting Guatemala and the United States. There is a potential option for an additional landing in Cancún, Mexico, and the anticipated year for launching the service is 2025.
In Brazil, FiBrasil 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 by 2024.
Telefonica Tech: Revenues increased 33.7% year over year to €462 million. This was driven by robust performance throughout businesses and value addition through acquisitions. The Cyber business unit outperformed estimates, with 2022 IoT revenues expanding in double digits.
Telefonica Hispam: Quarterly revenues in this segment declined 8.2% to €2,105 million, mainly due to unfavorable foreign currency movement. The quarterly OIBDA margin was 17.2% compared with 3.4% in the prior-year quarter. CapEx has increased 23.3% to €399 million in the quarter.
Other Details
Quarterly OIBDA was €3,259 million, up 139.2% year over year. Operating income was €1,132 million in the quarter under review against an operating loss of €740 million in the prior-year quarter.
Cash Flow & Liquidity
For the year that ended Dec 31, 2022, Telefonica generated €11,763 million of net cash from operating activities compared with €10,268 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €2,093 million, which includes principal payments of leases.
As of December 2022, the company had €7,245 million in cash and cash equivalents, with €35,059 million of non-current financial liabilities.
2023 Outlook
The company expects low-single-digit growth in revenues and OIBDA and a CapEx-to-sales ratio of up to 14%.
In addition, the company announced a cash dividend of €0.30 per share for 2023, payable in December 2023 (€0.15 per share) and June 2024 (€0.15 per share). The company also announced the cancelation of 0.4% of share capital held as treasury stock.
The Zacks Consensus Estimate for Arista Networks 2023 earnings is pegged at $5.76 per share, rising 11% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 11.9% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings is pegged at $2.69 per share, rising 16% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 53.4% in the past year.
The Zacks Consensus Estimate for Pegasystems 2023 earnings is pegged at $1.31 per share, rising 111.3% in the past 60 days.
Pegasystems earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 42.1% in the past year.
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Telefonica's (TEF) Q4 Earnings and Revenues Increase Y/Y
Telefonica, S.A. (TEF - Free Report) reported a fourth-quarter 2022 net income of €525 million against a net loss of €1,198 million in the year-ago quarter. Further, basic earnings per share were €0.08 against a loss per share of €0.22 in the prior-year quarter.
Quarterly total revenues increased 5.4% year over year to €10,200 million. Organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.9% year over year to €11,751 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 €3,214 million. This is due to higher revenue growth in B2B and B2C businesses. The quarterly OIBDA margin was 36.8%. Capital expenditure (CapEx) increased 12.3% to €505 million in the quarter.
Telefonica Deutschland: Quarterly revenues rose 6.6% to €2,190 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 30.4% compared with 30.6% in the year-ago quarter. CapEx declined 35.1% to €307 million in the quarter.
VirginMedia-O2 U.K.: Quarterly revenues of this newly formed segment decreased 1.7% to €3,141 million due to a decline in hardware and fixed revenues, partly offset by a rise in mobile revenues. The quarterly OIBDA margin increased 34.4% from 32.4% in the prior-year quarter. CapEx decreased 0.6% to €720 million in the quarter.
Telefonica Brasil: Quarterly revenues in Brazil grew 31% to €2,361 million, mainly due to the continued commercial momentum and the progressive update on tariffs. The quarterly OIBDA margin decreased to 43.6% from 45.1% in the prior-year quarter. CapEx declined 53.4% to €498 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 fourth quarter increased by 20% year over year.
Telxius received the necessary approvals at the beginning of 2023, enabling Telefónica to boost its ownership to 70% and reinforce its collaboration with Pontegadea, which raised its share to 30%. Moreover, Telxius and América Móvil disclosed their joint project, Tikal (by Telxius), a new ultrahigh capacity subsea cable connecting Guatemala and the United States. There is a potential option for an additional landing in Cancún, Mexico, and the anticipated year for launching the service is 2025.
In Brazil, FiBrasil 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 by 2024.
Telefonica Tech: Revenues increased 33.7% year over year to €462 million. This was driven by robust performance throughout businesses and value addition through acquisitions. The Cyber business unit outperformed estimates, with 2022 IoT revenues expanding in double digits.
Telefonica Hispam: Quarterly revenues in this segment declined 8.2% to €2,105 million, mainly due to unfavorable foreign currency movement. The quarterly OIBDA margin was 17.2% compared with 3.4% in the prior-year quarter. CapEx has increased 23.3% to €399 million in the quarter.
Other Details
Quarterly OIBDA was €3,259 million, up 139.2% year over year. Operating income was €1,132 million in the quarter under review against an operating loss of €740 million in the prior-year quarter.
Cash Flow & Liquidity
For the year that ended Dec 31, 2022, Telefonica generated €11,763 million of net cash from operating activities compared with €10,268 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €2,093 million, which includes principal payments of leases.
As of December 2022, the company had €7,245 million in cash and cash equivalents, with €35,059 million of non-current financial liabilities.
2023 Outlook
The company expects low-single-digit growth in revenues and OIBDA and a CapEx-to-sales ratio of up to 14%.
In addition, the company announced a cash dividend of €0.30 per share for 2023, payable in December 2023 (€0.15 per share) and June 2024 (€0.15 per share). The company also announced the cancelation of 0.4% of share capital held as treasury stock.
Zacks Rank & Stocks to Consider
Telefonica currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are Arista Networks (ANET - Free Report) , Perion Network (PERI - Free Report) and Pegasystems (PEGA - Free Report) , each presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks 2023 earnings is pegged at $5.76 per share, rising 11% in the past 60 days. The long-term earnings growth rate is anticipated to be 14.2%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 14.2%. Shares of ANET have increased 11.9% in the past year.
The Zacks Consensus Estimate for Perion’s 2023 earnings is pegged at $2.69 per share, rising 16% in the past 60 days. The long-term earnings growth rate is anticipated to be 25%.
Perion’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 31.7%. Shares of PERI have increased 53.4% in the past year.
The Zacks Consensus Estimate for Pegasystems 2023 earnings is pegged at $1.31 per share, rising 111.3% in the past 60 days.
Pegasystems earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, the average surprise being 11.2%. Shares of the company have declined 42.1% in the past year.