Telefonica, S.A. ( TEF Quick Quote TEF - Free Report) reported a second-quarter 2023 net income of €462 million compared with €320 million in the year-ago quarter. Further, basic earnings per share (EPS) were €0.07 compared with €0.05 in the prior-year quarter.
Quarterly total revenues increased 0.9% year over year to €10,133 million. Organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.3% year over year to €11,667 million.
Results by Business Units Telefonica Espana: Quarterly revenues in Spain increased 0.3% year over year on a reported basis to €3,095 million. This is due to momentum in service revenues coupled with rising commercial activity and IT revenues, partly offset by lower wholesale revenues. The quarterly OIBDA margin was 35.8%. Capital expenditure (CapEx) on a reported basis increased 19% to €413 million in the quarter. Telefonica Deutschland: Quarterly revenues rose 4.4% to €2,091 million. The improvement was driven by continued momentum in the mobile business, partly offset by the accelerated MTR glidepath. The quarterly OIBDA margin was 31.3%. CapEx declined 11.4% to €258 million in the quarter. VirginMedia-O2 U.K.: Quarterly revenues of this newly formed segment increased 3.6% to €3,116 million due to a rise in mobile revenues, partly offset by a decline in fixed revenues. The quarterly OIBDA margin stood at 34.8%. CapEx decreased 3.9% to €639 million in the quarter. Telefonica Brasil: Quarterly revenues in Brazil grew 4.7% to €2,362 million, mainly due to the momentum in mobile revenues and the progressive update on tariffs. The quarterly OIBDA margin was 41.5%. CapEx declined 17.3% to €401 million in the quarter. Telefonica Infra (Telxius): In the second quarter, Telxius continued the deployment of Tikal (by Telxius), a new ultrahigh capacity subsea cable connecting Guatemala and the United States.
Also, to improve defense against Distributed Denial-of-Service attacks on its network, Telxius has set up two new scrubbing centers in Latin America.
Telefonica Tech: Revenues increased 36.1% year over year to €456 million. The Cyber business unit outperformed estimates, with second-quarter IoT revenues expanding by double digits. Telefonica Hispam: Quarterly revenues in this segment decreased 5.2% to €2,251 million, mainly due to favorable foreign currency movement. The quarterly OIBDA margin was 17.3%. CapEx has decreased 33.3% to €209 million in the quarter. Other Details
Quarterly OIBDA was €3,144 million, down 0.1% year over year. Operating income was €948 million in the quarter under review compared with €919 million in the prior-year quarter.
Cash Flow & Liquidity
For the six months that ended Jun 30, 2023, Telefonica generated €5,289 million of net cash from operating activities compared with €4,739 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €1,296 million, which includes principal payments of leases.
As of June 2023, the company had €7,290 million in cash and cash equivalents, with €34,019 million of non-current financial liabilities.
The company expects revenues to grow by approximately 4% compared with the previous guidance of low-single-digit growth. OIBDA is expected to grow by approximately 3% compared with the previous guidance of low-single-digit growth. CapEx-to-sales ratio is unchanged at 14%.
In addition, the company announced a cash dividend of €0.30 per share for 2023, payable on December 2023 (€0.15 per share) and June 2024 (€0.15 per share).
Zacks Rank & Other Stocks to Consider
Telefonica currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader technology space are
InterDigital ( IDCC Quick Quote IDCC - Free Report) , Badger Meter ( BMI Quick Quote BMI - Free Report) and Woodward ( WWD Quick Quote WWD - Free Report) . Each of these companies presently sports 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 InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.