Telefonica (TEF) Swings to Loss in Q4, Revenues Fall Y/Y
Telefonica, S.A. TEF reported a fourth-quarter 2023 net loss of €2,154 million against earnings of €525 million in the year-ago quarter. Furthermore, loss per share was €0.39 against earnings per share (EPS) of €0.08 in the year-ago quarter.
Quarterly total revenues decreased 0.5% year over year to €10,153 million. Organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 4.1% year over year to €11,765 million.
Telefonica SA Price, Consensus and EPS Surprise
Telefonica SA price-consensus-eps-surprise-chart | Telefonica SA Quote
Results by Business Units
Telefonica Espana: Quarterly revenues in Spain increased 3.3% year over year on a reported basis to €3,321 million. This is due to the momentum of higher handset sales and service revenues. The quarterly OIBDA margin was 37.4%. Capital expenditure (CapEx) on a reported basis decreased 9.5% to €457 million in the quarter.
Telefonica Deutschland: Quarterly revenues rose 4.6% to €2,219 million. The improvement was driven by continued momentum in the mobile business. The quarterly OIBDA margin was 30.2%. CapEx increased 3.2% to €317 million in the quarter.
VirginMedia-O2 U.K.: Quarterly revenues of this newly formed segment increased 3.9% to €3,265 million due to a rise nexfibre construction revenues, partly offset by a decline in mobile revenues. The quarterly OIBDA margin stood at 36.5%. CapEx decreased 25.5% to €537 million in the quarter.
Telefonica Brasil: Quarterly revenues in Brazil grew 7.5% to €2,538 million, mainly due to strong commercial activity and continued price updates. The quarterly OIBDA margin was 44.4%. CapEx decreased 11.9% to €438 million in the quarter.
Telefonica Infra (Telxius): In the fourth quarter, Telxius announced that it will extend the deployment of Tikal (by Telxius), a new ultrahigh capacity subsea cable and will now connect the East Coast of the USA to Las Toninas (Argentina). Also, the company announced additional landings in Prai Grande (Brazil) and Punta del Este (Uruguay).
Telefonica Tech: Revenues increased 19.2% year over year to €551 million owing to solid momentum across Cybersecurity and IoT business segments.
Telefonica Hispam: Quarterly revenues in the Telefonica Hispam segment decreased 21.4% to €1,653 million, mainly due to Peru's political and economic environment. The quarterly OIBDA margin was 22.3%. CapEx has increased 2.5% to €410 million in the quarter.
Other Details
Quarterly OIBDA was €1,795 million, down 44.9% year over year. Operating loss was €382 million in the quarter under review against operating income of €1,132 million in the prior-year quarter.
Cash Flow & Liquidity
For the year that ended Dec 31, 2023, Telefonica generated €11,649 million of net cash from operating activities compared with €11,763 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €3,988 million, which includes principal payments of leases.
As of Dec 31, 2023, the company had €7,151 million in cash and cash equivalents, with €53,829 million of non-current financial liabilities.
2024 Outlook
The company expects revenues to grow by approximately 1%. EBITDA is expected to grow by approximately 1% to 2%. CapEx-to-sales ratio is expected to be up to 13%.
In addition, the company announced a cash dividend of €0.30 per share, payable on December 2024 (€0.15 per share) and June 2025 (€0.15 per share).
Zacks Rank & Stocks to Consider
Telefonica currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the broader technology space are Cadence Design Systems CDNS, Woodward WWD and Watts Water Technologies WTS. Cadence and Woodward sport a Zacks Rank #1 (Strong Buy), while Watts Water Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cadence’s 2024 EPS has improved 1.9% in the past 60 days to $5.87. CDNS’s long-term earnings growth rate is 17.1%.
Cadence’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 3.4%. Shares of CDNS have gained 49.9% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has inched up 5.7% in the past 60 days to $5.20. WWD’s long-term earnings growth rate is 15.5%.
Woodward’s earnings beat the Zacks Consensus in each of the last four quarters, the average surprise being 27.2%. Shares of WWD have gained 38.5% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies fiscal 2024 EPS has improved 0.4% in the past 60 days to $8.35. WTS’s long-term earnings growth rate is 7.8%.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 13.5%. Shares of WTS have soared 12.6% in the past year.
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