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2014 fiscal year results

Main highlights

  • Fulfilment of operating guidance set for 2014.​
  • Recovery of the commercial drive in 2014, focused on high-value services.
    • Strong year-on-year growth of pay TV accesses (1.5 times organic), mobile contracts (+11%), smartphones (+39%) and fibre (2.1 times).
    • The average revenue per access increased 0.3% compared to 2013 in organic terms (+2.6% year-on-year in the fourth quarter).
  • Acceleration of growth in revenue in the fourth quarter (+5.0% organic year-on-year) in nearly all countries.​
    • Improvement in the monetisation of data, with a significant increase in revenue from mobile data in the quarter (+10.6% year-on year), driven by non-SMS data revenues (+22.8%).
    • T. Latin America (+18.2% organic year-on-year) remains the main lever of growth in the quarter.
    • In 2014, revenue reached 50,377 million euros (+2.6% organic year-on-year).
  • Strong profitability; return to OIBDA organic growth in 2014.​
    • In January-December, OIBDA was 15,515 million euros (+0.2% year-on-year in organic terms) and the year-on-year margin was only 0.8 p.p.
    • The OIBDA in the fourth quarter (3,190 million euros) was significantly affected by non-recurring effects, with a negative net impact of 1,379 million euros, mainly associated with the adoption of the SICAD II rate in Venezuela and a provision for restructuring costs. 
  • Growth in Capex in 2014 (+16.9% year-on-year organic) aimed at accelerating the modernisation and differentiation of the networks and increasing the customer base.​
  • The creation of free cash flow climbed to 3,817 million euros in 2014 and to 4,748 million euros, excluding spectrum investments.​
    • The free cash flow per share reached 0.83 euros in 2014. In terms of the dividend, the Company credited 0.35 euros per share through the 'scrip dividend' method in December (84.2% take-up rate) and will pay 0.40 euros per remaining share in cash in the second quarter of 2015, where the cash dividend pay-out will assume just 55% of the cash flow per share.
  • Significant improvement in the financial position after recently announced operations.​
    • Net financial debt was reduced by 294 million euros in the last twelve months to 45,087 million euros, affected by the adoption of the SICAD II fixed exchange rate in Venezuela, which involves a debt increase of 1,231 million euros.
    • The debt would be 31,705 million euros and the debt ratio (net financial debt over OIBDA) 2.15 times that, after the expected completion of the sale of O2 UK and the currency adjustment in Venezuela.
  • The net profit increased to 3,001 million euros in 2014 (4,462 million euros underlying) and the basic earning per share to 0.62 euros (0.93 euros underlying).​
    • In the fourth quarter, net profit was affected by extraordinary endowments, notable among these: the impact of adopting the SICAD II rate in Venezuela (-399 million euros), the provision of restructuring costs (-405 million euros) and the adjustment in the valuation of Telco, S.p.A (-257 million euros).
  • Active participation in the consolidation of the main markets (Brazil, Spain and Germany), strengthening our competitive positioning and improving on a local scale.​
  • The results of Telefónica España in 2014 are an important turning point for the Company, having improved the competitive positioning and the differentiation in the commercial offer. The Company is the leader in the pay TV market with 1.9 million customers (x3 year-on-year); fibre customers exceed 1.3 million (>x2 year-on-year) and the mobile contract platform showed positive annual net gains for the first time since 2011. Thus, this revenue confirms a gradual recovery in the last quarter (-4.9% year-on-year; +1.7 p.p. compared to the previous quarter), supported in the service revenue, while there is an improvement in the evolution of the OIBDA in organic terms (-7.8% year-on-year in the fourth quarter; -14.4% in the third).
  • In Brazil, the Company reinforced its leadership in the contract segment by capturing over half of new accesses in the market, fibre rollout accelerated to 4.1 million wireless units restored and pay TV customers grew by 20% year-on-year. Revenue reached 11,231 million euros in 2014 (+0.5% year-on-year organic) and the OIBDA (3,543 million euros) returned to year-on-year growth (+0.9% organic), despite the negative regulatory impact. Furthermore, the purchase of GVT (subject to final approval by regulatory authorities), will consolidate Telefónica Brazil as an integral operator with national coverage.
  • In Germany, the fourth quarter of 2014 was the starting point for the new Telefónica Deutschland, with the integration of E-Plus from October 1. The new Company leads the market in mobile accesses (42.1 million to December), after registering a high level of commercial activity in mobile contracts. Revenue stabilised in the fourth quarter, emphasising the strong advance in the monetisation of the data fundamentally driven by higher LTE coverage (62% to December) and the demand for LTE handsets.

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