uploads///Telecom TEF Fixed Spain Revenue Q

Telefonica’s Fixed Services Supported Revenue Growth in Spain


Dec. 10 2015, Updated 1:05 p.m. ET

Telefonica’s revenue in Spain

In the next two parts of this series, we’ll look at Telefonica’s (TEF) 3Q15 performance in Spain (EWP). Note that Spain is also a market of Vodafone (VOD) and Orange (ORAN). Telefónica en España’s revenue increased slightly by ~0.2% YoY (year-over-year) to reach ~3.0 billion euros in 3Q15. According to the company, before 3Q15, its revenues in Spain had been falling YoY each quarter since 3Q08. The current YoY growth in Telefonica’s revenue from this geography came from fixed services.

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Telefonica’s revenue from fixed services in Spain increased sharply by ~4.6% YoY to reach ~2.2 billion euros in 3Q15. This was largely due to a solid YoY increase in revenue from the fixed broadband and new services component during the quarter. This revenue stream grew by a significant ~14.2% YoY to ~1.3 billion euros during the quarter.

The company’s voice and access revenues continued to shrink during the quarter. Telefonica’s fixed voice and access revenue in Spain decreased ~13.9% YoY to ~0.8 billion euros in 3Q15. During the quarter, the company’s retail fixed telephone connections continued to shrink.

Select customer metrics of Telefonica’s fixed services in Spain in 3Q15

In 3Q15, Telefonica added ~275,000 pay TV connections, ~45,000 fixed broadband connections, and ~230,000 FTTH (fiber-to-the-home) connections. Growth of the company’s converged integrated service, Movistar Fusion, remained robust.

During the quarter, Telefonica’s Fusion customers grew by ~13.8% YoY to ~4.0 million. The IPTV (Internet protocol television) and ultrafast broadband customers on speeds of 100 Mbps (megabits per second) or 300 Mbps increased YoY by ~76.5% and ~75.3%, respectively, to ~2.3 million and ~1.1 million, respectively, in 3Q15. Mobile add-ons for the Fusion service increased ~9.1% YoY to ~1.5 million during the quarter.

For a diversified exposure to Telefonica, you may consider the iShares Exponential Technologies ETF (XT). XT had ~0.4% of its holdings in Telefonica at the end of November 2015.


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