Telefónica(US:TEF)2020-10-29 20:26Financial Data and Key Metrics Changes - Reported revenues for Q3 2020 reached €10.5 billion, with a year-on-year decline of 12.1%, improving from a 5.6% decline in Q2 [17][23] - Free cash flow for Q3 was €1.6 billion, representing a 13.2% year-on-year increase, with free cash flow per share at €0.30 [21][24] - Net income for the first nine months of 2020 surpassed €2 billion, resulting in an EPS of €0.36 [24] Business Line Data and Key Metrics Changes - In Spain, fixed broadband net adds were the highest since Q3 2018, with fiber net adds exceeding 100,000 in Q3 [7][35] - In Germany, OIBDA returned to growth, increasing by 0.7% year-on-year in Q3, supported by enhanced cost efficiency [40] - Brazil saw record mobile market share with the highest prepaid net adds in eight years, and OIBDA minus CapEx grew by 22.2% in Q3 [43][45] Market Data and Key Metrics Changes - The decline in revenues across the four core markets was limited to 3.9% in Q3, with significant impacts from roaming and handset release delays in the U.K. [25][42] - In Hispam, revenues decreased by 6% year-on-year, showing improvement compared to a 11% decline in Q2 [52] - The negative impact from currency depreciation was significant, with an 8.1 percentage point drag on revenue year-on-year [54] Company Strategy and Development Direction - The company is focusing on technological leadership in infrastructure and digitalization, with 5G services launched in all core markets [9][11] - A joint venture with Allianz in Germany aims to develop fiber-to-the-home, indicating a strategy to enhance fiber penetration in underserved areas [69][70] - The company is also exploring similar projects in Brazil and Chile, aiming for substantial growth in fiber reach [73][74] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing impacts of COVID-19 but highlighted improved financial and operational trends, maintaining guidance for slightly negative to flat year-on-year organic OIBDA minus CapEx [33][64] - The company is committed to net debt reduction, with a focus on maintaining a robust liquidity position exceeding €22 billion [56][58] - Management emphasized the importance of digitalization in addressing climate change and set a target to achieve net zero emissions by 2025 [60][61] Other Important Information - The company confirmed a dividend of €0.40 per share for 2020, with a first tranche to be paid in December [32] - The company is implementing significant cost containment measures, with lower commercial expenses and improved bad debt management [30][31] Q&A Session Summary Question: About the agreement with Allianz - The joint venture with Allianz aims to capitalize on the low fiber penetration in Germany, structured as a neutral vehicle to avoid overbuilding [69][70] Question: On working capital changes - Working capital was negatively impacted by deferred payments for the German spectrum, but excluding this, consumption is stable [81][82] Question: On content costs in Spain - Content costs have stabilized, with expected deflation starting next season, and savings were realized in Q3 due to lower contracted content [90][91]