Telefonica Q3 Earnings Surpass Estimates, Revenues Decline Y/Y

Core Insights - Telefonica, S.A. reported a significant decline in net income for Q3 2024, dropping 98.1% year over year to €10 million, although basic EPS increased slightly to €0.1 from €0.09, surpassing estimates by 50% [1][2] Financial Performance - Quarterly revenues decreased by 2.9% year over year to €10,023 million ($11,061 million), but still beat the Zacks Consensus Estimate by 0.1%. Currency fluctuations negatively impacted revenues by €429 million [2] - Adjusted EBITDA for the quarter was €2,946 million, down 11.5% year over year, with operating income falling 30.1% to €740 million [9] Business Unit Performance - Telefonica Espana: Revenues increased by 1% year over year to €3,182 million, with adjusted EBITDA growing 1% to €1,155 million, supported by high customer satisfaction and low churn rates [3] - Telefonica Deutschland: Revenues declined by 1.6% to €2,131 million, with a 33.1% adjusted EBITDA margin. CapEx rose by 6.3% to €332 million [4] - VirginMedia-O2 U.K.: Revenues fell by 0.7% to €3,197 million, with an adjusted EBITDA margin of 36.6% and CapEx increasing by 0.6% to €665 million [4] - Telefonica Brasil: Revenues decreased by 6.4% to €2,308 million, with adjusted EBITDA declining by 5.9% to €1,030 million, significantly impacted by currency depreciation [5] - Telefonica Infra (Telxius): Connected 24 million premises with fibre, with a 12% increase in traffic and a profitability ratio of 48.9% [6] - Telefonica Tech: Reported a revenue growth of 9.5% year over year to €1,453 million, with quarterly revenues increasing by 6.3% to €470 million, driven by significant private-sector contracts [7] - Telefonica Hispam: Revenues decreased by 6.2% to €2,100 million, with an adjusted EBITDA margin of 17.9% [8] Cash Flow and Liquidity - For the nine months ended September 30, 2024, net cash from operating activities was €7,120 million, down from €8,238 million in the previous year, with free cash flow totaling €1,030 million [10] - As of September 30, 2024, the company had €6,325 million in cash and cash equivalents, alongside €32,180 million in non-current financial liabilities [11] 2024 Outlook - The company expects revenue growth of approximately 1% and EBITDA growth of 1% to 2%. The CapEx-to-sales ratio is projected to be up to 13%, with free cash flow growth anticipated to exceed 10% [12]