Telefonica announced plans to boost investment in 2014 in order to take advantage of demand for faster data services and accelerate its sales growth. The company forecast capital expenditure of 15.5-16 percent of revenues this year, versus 14.5 percent in 2013. Revenues are expected to show "positive growth" in 2014, after a 0.7 percent organic increase last year. The EBITDA margin will remain under pressure, after dropping 0.2 points last year and 1.4 percent points in 2012. Telefonica said the margin could start to stabilise this year or fall by as much as 1 point if the company decides to spend on commercial opportunities.
The Spanish operator also reiterated plans to pay shareholders a dividend of EUR 0.35 per share in stock in the fourth quarter of this year and another EUR 0.40 in cash by mid-2015. For 2013, Telefonica paid EUR 0.35 last November and will offer another EUR 0.40 in Q2 this year. The company’s free cash flow was down to EUR 5.4 billion in 2013, from EUR 7.0 billion in 2012, mainly due to a doubling of spending on spectrum, to EUR 1.5 billion. Telefonica still met its net debt target for 2013 with a reduction of EUR 5.9 billion to a total EUR 45.4 billion or 2.36x EBITDA at end-2013. The company said it expects debt to drop to under EUR 43 billion by the end of 2014.
For 2013, the company reported revenues down 8.5 percent to EUR 57.1 billion, and OIBDA fell 10.1 percent to EUR 19.1 billion. Net profit was up 16.9 percent to EUR 4.6 billion, including a EUR 350 million writedown of the stake in Telecom Italia. In the fourth quarter, the company recorded a 1.8 percent organic increase in sales, as 10.3 percent growth in Latin America offset a 7.9 percent fall in Europe. Due to negative currency effects, reported revenues were still down 8.9 percent for the group to EUR 14.4 billion, and OIBDA fell 8.7 percent to EUR 5.0 billion.
In operating terms, the 9.4 percent quarterly growth in the postpaid mobile sector and 8 percent rise in pay-TV access boosted the group’s customer base to 323.1 million accesses by the end of December, a 2.3 percent year-on-year rise. Mobile broadband subscriptions increased 38 percent and now account for 29 percent of the group’s total mobile base.
Earlier Telefonica announced a EUR 1.5 billion cost-savings programme and a reorganization that gives chief operating officer Jose Maria Alvarez-Pallete more executive responsibilities by overseeing operations across Europe and Latin America. The company intends to integrate its Europe, Latin America and digital divisions and create the new position of chief commercial digital officer.