Telefónica resists against the covid but its profit is reduced by half, weighed down by the business in Argentina

From January to September, the profit remains at 671 million (-50.1% year-on-year). The impact of the pandemic softens in the third quarter, with a write-off in ebitda (-315 million) lower than the depreciation of foreign currency (-358 million) and the Argentine deterioration (-785 million).


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Telefónica manages to reduce the impact of the pandemic on its accounts in the third quarter of this year, although revenues or ebitda suffer an inevitable erosion when compared with the figures for the same period in the previous year. Meanwhile, other problems arise, specifically a deterioration of the business in Argentina with a negative impact in the quarter that is double that caused by the pandemic.

The covid-19 has worsened the ebitda from July to September by 315 million euros, a punishment in the results well below the impact of 729 million registered from April to June. According to the results known this Thursday, in the first nine months of the year the ravages of the pandemic have had an impact of 687 million euros on the company’s ebitda.

However, resistance to the pandemic seems encouraging in this flagship company of the Spanish productive fabric. “In the third quarter, trends improve, with a clear recovery of commercial activity in our key markets“, has synthesized José María Alvarez-Pallete, president of the multinational.

Certainly, there are other factors that weigh down the operator’s results more than the coronavirus itself; Regarding the operating result before amortization, the quarterly impact is -315 million due to covid-19, while the currency depreciation represents -358 million and the impairment assigned to the Argentine division the voluminous sum of -785 million eurosAll this when comparing the data with those of the third quarter of 2019. This economy, “hyperinflationary” according to Telefónican’s own terminology,

The numbers inevitably decrease if you carry out year-on-year comparisons. Thus, the profit from January to September stood at 671 million euros, 50.1% below that registered in the first nine months of the previous year. However, there is no decline in billing and ebitda, with drops of -10.7% to 32,167 million) and -14.9% to 9,747 million, respectively.

The access base stood at 341.5 million lines at the end of September, a figure that breaks the continuous quarter-on-quarter decline and shows an improvement compared to the quarter of the confinement.

The revived commercial activity would have also favored the cash flow, which in the last quarter of the operator has risen from 988 million to 1,579 million euros. Likewise, one of the commitments that lvarez-Pallete monitors most closely continues to improve, largely thanks to this generation of free cash: financial debt totaled 36,676 million euros in September, when experiencing a reduction of 525 million with respect to the last official data, of June.

Fiber deployment in Germany

After communicating its results, Telefónica has formalized an agreement with the insurance company and investor Allianz to create a joint venture to deploy fiber to the home (FTTH) in Germany. The project foresees an investment volume of approximately 5,000 million euros, distributed over six years and framed within the German Government’s plan to have a national convergent internet infrastructure by 2025, a business line in which Telefónica has a great experience in Spain.

Under the JV formula, both groups will hold 50% to share control. The Spanish group will participate through its infrastructure subsidiary, Telefónica Infra, which will have 40%, and Telefónica Deutschland (O2), with 10%

The purpose of this union is to serve as Neutral wholesale operator in the planned extension of local fiber optic networks in rural areas, where high coverage is not usually enjoyed. Thus, the JV would offer FTTH wholesale access to all telecommunications service providers, so that they, in turn, can offer their services to end customers.

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