Germany Boosted Telefónica’s Core Operating Profitability in 4Q15
What Factors Drove Telefónica's Revenues in 4Q15?
Telefónica’s operating profitability
Organically, Telefónica’s (TEF) revenue rose by ~3.3% YoY (year-over-year) to ~11.9 billion euros during 4Q15. Key markets Hispanic America and Brazil mostly drove this revenue growth.
Organically, TEF’s revenue in Hispanic America rose ~8.1% YoY to ~3.6 billion euros in 4Q15. Additionally, in Brazil, the telecom player’s revenue rose by ~3.4% organically YoY to ~2.6 billion euros in the same period.
Now let’s turn to the company’s core operating profitability during the quarter. Organically, Telefónica’s OIBDA (operating income before depreciation and amortization) continued to grow in 4Q15. It rose ~3.8% organically YoY to ~0.4 billion euros. The company’s OIBDA margin was ~32.2% in 4Q15. This metric was strengthened by ~0.2% during the quarter.
Germany drove Telefónica’s OIBDA growth in 4Q15
Telefónica’s OIBDA in Germany (EWG) rose by ~35.5% YoY to reach ~0.59 billion euros in 4Q15. This growth came mostly from integration synergies. Meanwhile, Brazil’s and Hispanic America’s OIBDAs increased by ~7.4% and ~4%, respectively, to reach ~0.98 billion euros and ~1.1 billion euros, respectively, in 4Q15.
Instead of direct exposure to TEF, you can take diversified exposure to the company and some of its peers in Europe by investing in the iShares Global Telecom ETF (IXP). The ETF had ~4.1% of its holdings in TEF at the end of December 2015. It also held a combined total of ~15.7% in Vodafone (VOD), Deutsche Telekom (DTEGY), and Orange (ORAN) as of the same date.
Browse this series on Market Realist:
