TEF’s Fixed Services Positively Impacted Revenue in Spain in 4Q15
What Factors Drove Telefónica's Revenues in 4Q15?
Telefónica’s revenue in Spain
Now let’s look at the performance of Telefónica (TEF) in Spain (EWP) (HEWP) during 4Q15. It’s worth noting here that Spain is also a market for Orange (ORAN) and Vodafone (VOD).
Telefónica España’s revenue without the results of DTS (Distribuidora de Televisión Digital) continued growing in 4Q15. Without the results of DTS, this revenue stream grew ~0.8% YoY (year-over-year) and reached ~3.1 billion euros during the quarter. Meanwhile, according to the company, organically and after incorporating the results of DTS, its revenue in Spain fell ~2% YoY during 4Q15.
With DTS, Telefónica’s revenue from fixed services in Spain increased organically by ~0.5% YoY to reach ~2.5 billion euros in 4Q15. This marginal growth was despite modest YoY growth in revenue from its fixed broadband and new services component during the quarter. Organically, this revenue stream rose ~6.5% YoY to ~1.5 billion euros during the quarter.
Meanwhile, the company’s voice and access revenue continued to contract during 4Q15. Telefónica’s fixed voice and access revenue fell ~9.8% YoY to ~0.77 billion euros in Spain during the quarter. In 4Q15, the company’s fixed telephony connections in this market continued to shrink.
Select metrics of Telefónica’s fixed services in Spain in 4Q15
On a net basis in 4Q15, Telefónica added ~88,000 pay TV connections, ~56,000 fixed broadband connections, and ~273,000 FTTH (fiber-to-the-home) connections in Spain.
Meanwhile, the growth of the company’s converged, integrated service Movistar Fusion remained robust. During the quarter, Telefónica had net additions of Fusion customers of ~145,000 in Spain. At the end of 4Q15, total IPTV (internet protocol television) and ultrafast broadband customers, with speeds of 100 Mbps (megabits per second) or 300 Mbps, were ~2.6 million and ~1.3 million, respectively.
Instead of direct exposure to TEF, you can take diversified exposure to the telecom company by investing in the iShares Global Telecom ETF (IXP). IXP had ~4.1% of its holdings in TEF at the end of December 2015.
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