Telefónica has sent a message of confidence in the future, by returning to cash dividends, with a payment of 0.30 euros for each title, the same amount that until now it distributed in the ‘script dividend’ modality. The announcement of the teleco coincides with the publication of some accounts, corresponding to 2021, in which the Spanish group more than quintupled its profits compared to the previous year, to 8,137 million euros, 414% more than the profits of 1,582 million euros of 2020.
The boost in results is due to the extraordinary income obtained last year with the merger of in the United Kingdom (for an amount of 4,500 million euros) and the sales of the (3,500 million euros), together with fiber vehicles in Brazil and Chile (300 million) and the sale of Telefónica Costa Rica (1,000 million). All of the foregoing, discounting the expenses on staff restructuring (1,500 million) and impairments of Telefónica Peru and Telefónica Argentina (935 million), yields a balance of positive extraordinary impacts of 6,200 million euros. These are the second highest profits in the history of the telecom, only when the company pointed out the atypical ones related to the takeover of Vivo.
The results shared by Telefónica with the CNMV are lower than market forecasts (estimated at 9,197 million euros), since the consensus of analysts did not weigh , which last year resulted in more than 2,400 dismissals encouraged in the company. In addition, the group has recognized the fulfillment of the objectives set for the year, which included an organic increase in income and OIBDA of 2% and 1.4%, respectively, in the year as a whole, and a ratio of investment over sales of 14.2%.
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The multinational’s income is estimated at 39,277 million euros, which represents a decrease of 8.8% in year-on-year terms (11.3% less in the fourth quarter). This drop in billing is due to the different perimeter of the company between both periods, since in 2021 it stopped consolidating 50% of the British joint venture in Telefónica accounts. In comparable terms, the group’s sales in 2021 would have exceeded 42,900 million euros, compared to 43,076 million euros in 2020. The teleco indicates that organic revenues have increased 2% in organic terms (3.1% in the last quarter of last year), with a special boost from the terminal sales business, which has accelerated by 8.5% in 2021. The company has also set new goals for the year, which now point to ” achieving low single-digit organic growth in both sales and OIBDA, as well as an investment-to-sales ratio of up to 15%”.
In José María Álvarez-Pallete’s assessment of the results, the executive chairman of Telefónica explains that the results “have been reinforced by the acceleration in the growth of Telefónica Tech, whose revenues have increased by more than 30% year-on-year, as well as as well as the value creation operations carried out by Telefónica Infra, with the sale of the Telxius towers at record multiples and the development of fiber vehicles”.
The effort to improve sanitation maintains the evolution of previous years, to place debt without leases at 26,032 million euros, 26.1% less than the previous year (35,228 million) and half that in 2016. However, Net debt increased by 4,067 million in the fourth quarter of the year due to the financial investments made in that period of time, mainly due to the distribution of funds to minority shareholders of Telxius and the advance payment of taxes. However, the net financial debt for the year as a whole decreased by 8,900 million euros with the inclusion of three operations closed last January: the sale of Telefónica El Salvador, the creation of InfraCo Colombia, the recovery of the advance tax payment of Telxius, including the acquisition of Geprom, to which two other movements made in February will be added: the purchase of a third of Oi and an increase in participation in the Telxius submarine cable.
The company’s cash flow has contributed, which in 2021 stood at 2,648 million euros (1,273 million euros in the fourth quarter), a figure that would have reached 3,755 million euros if the payment for the purchase of radio spectrum carried out last year in many of its main markets. In reported terms, cash flow has decreased by 44.8% in 2021, compared to the previous year, in which the teleco generated 4,794 million euros. Among the factors that increase the debt, shareholder remuneration stands out for an amount of 1,460 million euros and for work-related commitments, valued at 844 million euros.
goodbye to the script
We must go back to , approved at the telematic meeting of shareholders in June 2020, when Telefónica appealed for reasons of financial prudence to implement the payment through the flexible dividend. This model offers all shareholders the option of receiving remuneration in shares or in cash. That decision provided flexibility in cash outflows in the crisis environment generated by Covid-19. Two years later, faced with an expectation of economic recovery and with the pandemic under the hopeful control of vaccines, Telefónica bets on cash based on two favorable indicators: an optimistic perception regarding the immediate macroeconomic future, and an upward trend in the main accounting magnitudes, such as profits, cash generation, solvency, liquidity, flexibility to undertake strategic investments and expectations of shareholders and investors. In addition, the group announces the redemption of 2.41% of treasury capital shares, which already includes the 1.65% announced last September
Telefónica will redeem 2.41% of treasury capital shares, which already includes the 1.65% announced last September
As already announced, the second tranche of the 2021 dividend (0.15 euros per share), will be paid in June 2022, through the voluntary flexible dividend modality, while the 2022 dividend of 0.30 euros per share in cash, will be paid in December 2022 (0.15 euros per share) and June 2023 (0.15 euros per share).
Telefónica’s organic revenues increased by 2% in 2021 and 3.1% in the last quarter of the year. In turn, OIBDA grew by 62.9% in the year as a whole, to 21,983 million, due to the aforementioned capital gains from the sale of towers and the joint venture in the United Kingdom. In organic terms, Oibda rose 1.4%, while the quarterly figure increased 0.4% from one year to the next. The organic Oibda margin fell 0.9 percentage points, to set it at 33.8%, while investment (CapEx) jumped 24% year-on-year to 7,267 million euros, due to the commitment to purchase frequencies in Brazil, Spain and Chile. Without these extraordinary efforts, Telefónica’s investment in 2021 grew 10.3% from one year to the next, with levels similar to those before the pandemic. The teleco points out that 45% of the total investment has been allocated to the improvement of new generation networks, fiber and 5G fundamentally.
Telefónica’s accesses also increased by 1.9%, to 369.1 million customers, thanks to the contracting of ultra-fast network connections (8% more) and fiber optics (23% more), as well as customers contract phones (5% more). At the end of last year, Telefónica exceeded 159 million real estate units passed through ultra-fast networks, 6% more than a year ago, and of which a total of 84.5 million passed through the company’s own network, 10 % more than at the end of 2020. Likewise, Telefónica’s deployment of fiber to the home (FTTH) reaches 55.8 million real estate units, with an annual growth of 17%.
Telefonica Spain
By markets, Telefónica Spain has once again grown in revenue (0.1%), up to 12,417 million euros, which represents 29% of the group’s sales. This boost in sales has been marked by the commercial dynamism of the sale of terminals, whose business volumes shot up 75% in the last year compared to the previous one. The Spanish subsidiary also generates 34% of the multinational’s OIBDA, with 3,377 million euros, although last year it fell by a third (5.3% in organic terms), weighed down by the increase in the cost of energy and, especially, for the aforementioned provision of 1,382 million euros from the Employment Suspension Plan.
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