It meets all its financial objectives for 2023 and confirms a cash dividend for 2024 of 0.3 euros
Telefónica recorded accounting losses of 892 million euros in 2023 after the provision of the restructuring plan of Telefónica Spain and the deterioration of goodwill in its United Kingdom subsidiary, although its income grew by 1.6%, to 40,652 million euros, as reported by the operator, which has met all its financial objectives for 2023 and has confirmed a cash dividend of 0.3 euros for this year.
Specifically, Telefónica’s ordinary net profit, which excludes provisions and extraordinary items, reached 2,369 million euros in 2023, 17.1% more than in the previous year.
Including the provision of 1,320 million euros corresponding to the restructuring plan of Telefónica Spain and the impairment of goodwill of 1,786 million euros in Virgin Media O2 – its 50% subsidiary in the United Kingdom with Liberty -, derived from the rise in discount rates and macroeconomic conditions in the United Kingdom, among other extraordinary events, the net losses recorded in 2023 stood at 892 million euros (compared to profits of 2,011 million euros in 2022).
In terms of billing, in 2023 the company experienced widespread growth in income in the main markets in which it operates, so its turnover of 40,652 million euros (1.6% year-on-year) is the highest since 2020.
Likewise, the ordinary operating result before depreciation (Oibda) (excludes the impact of extraordinary items) stood at 13,121 million euros, which represents a year-on-year increase of 1.4%.
However, in reported terms, Telefónica’s Oibda has also been impacted by extraordinary events and in 2023 it stood at 11,390 million euros, which is 11.4% less than the previous year (12,852 million euros).
Regarding corporate tax, it represented an income of 884 million euros in the fourth quarter of last year and 899 million euros in 2023, compared to an expense of 326 million euros in the last quarter of the previous year and 641 million euros in the year.
The ‘teleco’ has explained that this is fundamentally due to the recording of the tax effect of the provision associated with the employment regulation file (ERE) for 3,420 employees that the company has recently applied in its three main subsidiaries in Spain and the recognition of assets for deferred taxes for the “future use of tax credits” in Spain.
On the other hand, the company also exceeded its free cash flow forecasts, which stood at 4,227 million euros, above the estimated 4,000 million.
“Telefónica continues to execute its roadmap, without stopping in the face of global macroeconomic uncertainty, with the ambition and determination necessary to complete the operational transformation process launched in 2016. In 2023, Telefónica has met all its financial objectives and faces with determination the commitments set in our strategic plan GPS (acronym in English for growth, profitability and sustainability) to continue building a new Telefónica and lead the new digital era,” said the president of Telefónica, José María Álvarez-Pallete.
“The operator has returned to growth, with greater profitability and, furthermore, in a more sustainable way. Revenues increase and cash flow generation remains robust, which allows us to comfortably cover the dividend of 0.30 euros per action entirely in cash,” he added.
DIVIDEND
Regarding shareholder remuneration corresponding to 2024, the company has confirmed the distribution of a cash dividend of 0.3 euros per share payable in two tranches, one in December 2024 (0.15 euros) and the other in June of 2025 (0.15 euros), in line with what is established in its ‘GPS’ plan.
“Additionally, it will amortize 1.4% of the company’s share capital, the equivalent of the treasury stock existing as of June 30, 2023,” Telefónica explained.
In relation to the 2023 dividend, also of 0.30 euros per share in cash, the company already paid the first tranche (0.15 euros) last December and plans to pay the second (0.15 euros) next June.
DEBT
On the other hand, the operator closed 2023 with a net financial debt of 27,349 million euros, which represented a debt ratio of 2.6 times. It increased by 662 million euros despite a positive free cash flow generation of 3,988 million euros.
The factors that increased net debt in 2023, as explained by Telefónica, were: shareholder remuneration (2,320 million euros), net financial investments (688 million euros, mainly due to the acquisition of Telefónica Germany shares), the commitments of labor origin (854 million euros) and “other net factors” (788 million euros).
In this sense, in 2023 the company undertook financing efforts amounting to 5,296 million euros, which allows it to maintain a liquidity position of 19,531 million euros.
Thus, Telefónica has the maturities of the next three years covered, of which around 80% are at a fixed rate and maintains an average life of the debt close to 11.6 years.
IMPROVE FORECASTS
Regarding the forecasts for 2024, Telefónica expects revenue growth of around 1%, Ebitda between 1% and 2% and operating cash (Ebitdaal-CapEx) also between 1% and 2%. .
Likewise, it contemplates an investment figure on income of up to 13% and an increase in free cash flow of more than 10%.
“With respect to the cash growth objective for this year, it will have as a reference the 2,308 million euros achieved with the new definition that Telefónica will apply starting this year,” the operator explained.
