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Telefonica’s 3Q15 Revenue Grew Modestly YoY Organically

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Telefonica’s revenue in 3Q15

In the last part of the series, we looked at Telefonica’s (TEF) guidance for 2015 as well as the comparable performance in the first nine months of 2015. In the next parts of this series, we’ll look at how the telecom company performed in 3Q15.

In 3Q15, Telefonica’s revenue grew by ~10.8% YoY (year-over-year) to ~11.9 billion euros. On the organic level—taking out the impact of currency, mergers and acquisitions, asset sales, and some other one-off items—Telefonica’s YoY revenue growth was ~4.8% during the quarter.

As you can see in the above graph, the largest contributor to Telefonica’s 3Q15 revenue was its Hispanic America segment. In terms of revenue contribution, Telefónica España, Telefónica Brasil, and Telefónica Deutschland followed that segment during the quarter.

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Robust growth in mobile data revenue in 3Q15

Telefonica’s smartphone penetration increased from ~33.7% in 3Q14 to ~45.9% in 3Q15. LTE (Long-Term Evolution) penetration expanded from ~2.5% in 3Q14 to ~9.7% in 3Q15. Growth in the adoption of both of these variables is positively affecting growth of the company’s mobile services revenue. Note that users of smartphones such as Apple (AAPL) iPhones and Google (GOOG) (GOOGL) android phones tend to use more data.

During 3Q15, Telefonica’s mobile data revenue continued to grow robustly YoY. This revenue stream increased ~19.3% YoY and made up ~44% of Telefonica’s mobile service revenue during the quarter.

Instead of taking a direct exposure to Telefonica stock, you may consider taking a diversified exposure to the telecom company by investing in the WisdomTree Europe Hedged Equity ETF (HEDJ). HEDJ had ~5% of its holdings in Telefonica as of the end of November 2015.

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