Wednesday May 14, 02:23 PM
Telefonica Europe Q1 sales, income down on forex, Airwave exit UPDATE
(Adds detail from conference call)
LONDON (Thomson Financial) - Telefonica SA Europe, the Spanish telecoms giant's O2 mobile operations, posted a decline in first-quarter sales and operating income on exchange rate impacts and the sale of Airwave last year, but on a like-for-like basis sales and profits rose while the group's beleaguered German operations swung to positive revenue for the first time in four quarters.
Reported revenues declined 1.7 percent year-on-year to 3.472 billion euros, while operating income before depreciation and amortisation (OIBDA) fell 2.3 percent to 912 million euros, due to a weaker sterling/euro exchange rate and the exit of Airwave from the group.
On a like-for-like basis, revenue grew 6.4 percent, and OIBDA increased 5.3 percent, which Telefonica (Madrid: TEF.MC - news) said is towards the high end of guidance.
Telefonica Europe maintained its 2008 guidance targets of 4 percent to 7 percent revenue growth and 2 percent to 6 percent OIBDA growth.
In Germany, Telefonica Europe posted its first revenue growth for four quarters, up 1.5 percent to 655 million euros, although the market remains challenging and the average revenue Telefonica gets from each mobile customer (ARPU) fell 13.4 percent to 17.7 euros.
The company added over 500,000 mobile customers during the quarter, 205,000 of whom were net contract customer additions.
In the UK, where the group has a multi-year exclusive deal to sell Apple Inc (NASDAQ: AAPL - news) 's. iPhone, O2 added over 206,000 net contract customers in the first quarter, helped by the iPhone and 'strong traditional handset connections'.
Matthew Key, European chief executive, told reporters on a conference call that Telefonica group would be making a joint announcement with Apple in the coming weeks, although he would not explicitly say it was related to the launch of a 3G enabled iPhone.
The UK business posted a 12.6 percent rise in sales in local currency to 1.754 billion euros, and total ARPU rose 5.5 percent in the third quarter to 31.1 euros.
O2's UK broadband offering, which launched in October last year, now has 131,000 customers, and Key (NYSE: KEY - news) said the company, which has just started a major advertising campaign for its home broadband service, is sticking to its target of signing up 1 million customers by 2010.
UK OIBDA for the quarter was 423 million euros, up 13.1 percent year-on-year in local currency, with lower acquisition costs offset by increased retention spend, along with additional broadband-related costs.
Revenues at O2's Irish operations fell 2.1 percent to 232 million euros in the quarter and ARPU was also down 1.9 percent to 43.4 euros.
Key called the company's performance in Ireland 'still very competitive' with the iPhone driving traffic and protecting O2 from the very sharp high-street downturn.
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