Telefónica in Mexico shows improvement in results

Telefónica in Mexico showed an improvement in its revenues in the first quarter of 2019, something that did not happen since five quarters ago despite the fact that in the last quarter of last year it had reported increases in its mobile clients.

Telefónica in Mexico showed an improvement in its revenues in the first quarter of 2019, something that did not happen five quarters ago.
Telefónica in Mexico showed an improvement in its revenues in the first quarter of 2019, something that did not happen five quarters ago.

Operating income of Movistar Mexico rose 1.2 percent (organic variation) year-on-year to 296 million euros, despite the competitive intensity of this market. If the reported in euros is taken into account, the increase was 6.8 percent.

Sales were leveraged by better revenues at terminals (+ 24% to 73 million euros) and by improvement in the trend of service revenues of 222 million euros, which although down by 4.5 percent in organic value (rose by 0.7% reported), moderated the fall they had suffered in the last quarter of 2018: -14 percent.

Operating expenses and Oibda were impacted by spectrum commitments at 2.5 GHz and 1,900 MHz (frequencies that the operator acquired last year).

Expenses increased 8.4 percent to 281 million euros. The Oibda decreased 92 percent to 22 million euros, also due to the drop in service revenues and regulation. According to its balance, Telefónica affirms that, without the impacts of spectrum and regulation, the year-on-year fall of Oibda would improve with respect to the previous quarter.

Capital investments were reduced by 11 percent to 12 million euros.

The mobile accesses reached March 31 to 25.5 million, which represents an increase of 1 percent, year against year. Postpaid customers rose 3.2 percent and already represent 9 percent of total mobile subscribers.

In prepaid, accesses rose 0.7 percent to 23 million. In this sense, he collaborated with the "loyalty plan" which aims to increase the loyalty of prepaid customers through bonuses for those who make recurring top-ups. In ARPU it dropped 7 percent to 2.3 euros.

At the end of the quarter, LTE clients grew 29 percent, which represents a penetration of the same percentage of total subscribers. While the population coverage of the 4G service already reached 56 percent. The penetration of the smartphone in this period reached 47 percent of the total of its subscribers.

Movistar, which was a pioneer in launching the fixed Internet service using the mobile network more than a year ago, reached 76 thousand users in this modality, after presenting a net gain of 7 thousand new accesses in the first quarter of 2019.

In this period, the operator also launched Movistar Play, which, added to the launch of the platform in Argentina, boosted video revenues globally, with 900 thousand users in just two months. In Mexico, the platform was launched on March 21.

By Agency

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Telefónica sells the business in Central America

In just over 3 years Telefonica will have reduced its debt by around 13 billion dollars; without counting a potential sale of your business in Mexico.

The announced disinvestments of the Spanish company Telefónica in low-profitability businesses and economies are aimed at reducing its bulky debt compared to the sector.

Today, various media reported that Telefónica closed the sale of 100% of its business in Costa Rica, Panama and Nicaragua to Millicom, an operator based in Luxembourg and whose main brand is Tigo. The operation - still not officially confirmed - would have closed at 1,450 million euros, some 1,639 million dollars.

The sale operation to Millicom, which mainly operates in Latin America and Africa, adds to the recent sale at the end of January of its operations in Guatemala and El Salvador for 570 million euros, to businessman Carlos Slim.

With this successful operation, for an amount much higher than initially estimated, Telefónica closes the sale of all its telecom businesses in Central America and only the Mexican operation remains in the north of the continent. In South America, Telefónica has a profitable business in Brazil, with net profits of 2.155 million euros (about 2.435 million dollars) during 2018, which practically doubled those of the previous year.

The Spanish company faces a bulky debt that at September 30 totalled 42,600 million euros, just over 48 billion dollars; it is the most indebted European telecommunications operator. Although, at the beginning of 2016, its debt was around 50 billion euros.

Investment bankers estimate that sales in Central America and other extraordinary income would put him in a position to reduce his debt below 40 billion euros towards March or April of this year.

The debt reduction plans also include its business in Mexico, which, in the last 3 years (2015 to 2018), has contracted by one third. Now the Mexican business of Telefónica is only superior to that of Ecuador and Uruguay in the continent. Everything seems to be a matter of price.