Telefonica Sa EBITDA surged on 14.3% in 2016 and EBITDA Margin increased on 5.0 pp from 24.1% to 29.1%
23 Feb 2017 • About Telefonica Sa (
$TDE) • By InTwits
Telefonica Sa reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Telefonica Sa is a company in decline: 2016 revenue growth was -5.2%, 5 years revenue CAGR was -3.7%
- Telefonica Sa has high CAPEX intensity: 5 year average CAPEX/Revenue was 17.5%. At the same time it's a lot of higher than industry average of 14.2%.
- CAPEX is quite volatile: 16,643 in 2016, 11,423 in 2015, 5,206 in 2014, 4,233 in 2013, 7,433 in 2012
- The company has potentially unprofitable business model: ROIC is at 7.0%
- It operates with high leverage: Net Debt/EBITDA is 3.6x while industry average is 1.7x
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Telefonica Sa ($TDE) key annual financial indicators
| mln. € | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 62,356 | 57,061 | 43,458 | 54,916 | 52,036 | -5.2% |
| EBITDA | 21,231 | 19,077 | 13,781 | 13,229 | 15,118 | 14.3% |
| Net Income | 3,928 | 4,593 | 3,001 | 616 | 2,369 | 284.6% |
Balance Sheet
|
|---|
| Cash | 9,847 | 9,977 | 6,529 | 2,615 | 3,736 | 42.9% |
| Short Term Debt | 10,054 | 9,387 | 8,693 | 12,625 | 13,977 | 10.7% |
| Long Term Debt | 53,410 | 48,366 | 47,457 | 45,134 | 43,562 | -3.5% |
Cash flow
|
|---|
| Capex | 9,481 | 9,674 | 8,305 | 10,256 | 9,187 | -10.4% |
Ratios
|
|---|
| Revenue growth | -0.8% | -8.5% | -23.8% | 26.4% | -5.2% | |
| EBITDA growth | 5.1% | -10.1% | -27.8% | -4.0% | 14.3% | |
| EBITDA Margin | 34.0% | 33.4% | 31.7% | 24.1% | 29.1% | 5.0% |
| Net Income Margin | 6.3% | 8.0% | 6.9% | 1.1% | 4.6% | 3.4% |
| CAPEX, % of revenue | 15.2% | 17.0% | 19.1% | 18.7% | 17.7% | -1.0% |
| ROIC | 12.1% | 11.1% | 7.7% | 4.4% | 7.0% | 2.5% |
| ROE | 18.7% | 22.1% | 14.2% | 2.0% | 12.5% | 10.5% |
| Net Debt/EBITDA | 2.5x | 2.5x | 3.6x | 4.2x | 3.6x | -0.6x |
Revenue and profitability
The company's Revenue decreased on 5.2% in 2016. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 5.0 pp from 24.1% to 29.1% in 2016.
Net Income marign increased on 3.4 pp from 1.1% to 4.6% in 2016.
Capital expenditures (CAPEX) and working capital investments
Telefonica Sa's CAPEX/Revenue was 17.7% in 2016. CAPEX/Revenue increased slightly on 0.70 pp from 17.0% in 2013 to 17.7% in 2016. For the last three years the average CAPEX/Revenue was 18.5%.Battling declining revenue Telefonica Sa invested a large share of EBITDA (60.8%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at good ROE (12.46%) while ROIC is low (6.96%). ROIC increased on 2.5 pp from 4.4% to 7.0% in 2016. ROE surged on 10.5 pp from 2.0% to 12.5% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.6x and Debt / EBITDA is 3.8x. Net Debt / EBITDA dropped on 0.6x from 4.2x to 3.6x in 2016. Debt showed almost no change in 2016 while cash surged on 42.9% in 2016.
Appendix 1: Peers in Fixed Line Telecommunications
Below we provide Telefonica Sa benchmarking against other companies in Fixed Line Telecommunications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Alternative Networks ($AN.) | | -0.4% | 17.5% | 9.2% | -7.5% |
| Syqic ($SYQ) | 37.6% | 20.5% | 126.5% | 9.2% | |
| Adept Telecom ($ADT) | | -4.1% | -0.8% | 5.8% | 30.9% |
| Verizon Communications Inc ($VZC) | | 4.1% | 5.4% | 3.6% | -4.3% |
| Telecom Egypt ($TEEG) | 1.6% | 11.0% | 9.2% | 0.2% | |
| |
|---|
| Median (13 companies) | 0.7% | -1.6% | -0.8% | -0.4% | 0.4% |
|---|
| Telefonica Sa ($TDE) | | -8.5% | -23.8% | 26.4% | -5.2% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Kt Corp ($KTCD) | 75.5% | 76.0% | 77.9% | 77.9% | 78.5% |
| Verizon Communications Inc ($VZC) | 60.1% | 62.8% | 60.7% | 60.1% | 59.2% |
| Telecom Egypt ($TEEG) | 41.4% | 41.9% | 44.2% | 41.6% | |
| Alternative Networks ($AN.) | 39.0% | 39.2% | 41.2% | 41.3% | 40.9% |
| Syqic ($SYQ) | 57.3% | 59.9% | 43.6% | 41.2% | |
| |
|---|
| Median (6 companies) | 49.4% | 50.9% | 43.9% | 41.5% | 50.0% |
|---|
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 46.0% | 42.4% | 37.6% | 39.2% | 44.8% |
| Verizon Communications Inc ($VZC) | 25.6% | 40.3% | 28.4% | 37.3% | 34.1% |
| BT Group ($BT.A) | 31.2% | 32.0% | 31.9% | 33.5% | 33.4% |
| Rostelekom ($RKMD) | 39.7% | 39.0% | 33.0% | 33.4% | |
| Koninklijke Kpn Nv ($0O8F) | 35.9% | 34.1% | 39.1% | 33.2% | 35.7% |
| |
|---|
| Median (13 companies) | 32.0% | 32.0% | 31.9% | 29.9% | 27.4% |
|---|
| Telefonica Sa ($TDE) | 34.0% | 33.4% | 31.7% | 24.1% | 29.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Ooredoo Qsc ($ORDS) | 21.9% | 27.5% | 25.3% | 26.5% | 17.2% |
| Telecom Egypt ($TEEG) | 5.1% | 6.8% | 13.0% | 21.4% | |
| Rostelekom ($RKMD) | 31.7% | 23.6% | 19.3% | 21.1% | |
| Orange Polska Sa ($OPLD) | 16.6% | 16.9% | 17.6% | 16.9% | 44.8% |
| Hellenic Telecom.Organization S.A. ($OTES) | 11.7% | 14.8% | 15.4% | 16.9% | |
| |
|---|
| Median (13 companies) | 13.5% | 13.7% | 12.9% | 14.0% | 13.0% |
|---|
| Telefonica Sa ($TDE) | 15.2% | 17.0% | 19.1% | 18.7% | 17.7% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| BT Group ($BT.A) | 23.6% | 27.0% | 34.7% | 37.5% | 21.6% |
| Syqic ($SYQ) | 38.9% | 3.2% | 33.9% | 22.9% | |
| Alternative Networks ($AN.) | 35.2% | 33.7% | 28.5% | 20.2% | 15.2% |
| Verizon Communications Inc ($VZC) | 8.0% | 16.7% | 10.1% | 19.3% | 15.4% |
| O2 Czech Republic As ($O2CZ) | 11.8% | 11.7% | 7.2% | 14.5% | 26.8% |
| |
|---|
| Median (13 companies) | 9.6% | 8.5% | 8.7% | 8.2% | 15.2% |
|---|
| Telefonica Sa ($TDE) | 12.1% | 11.1% | 7.7% | 4.4% | 7.0% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Koninklijke Kpn Nv ($0O8F) | 3.8x | 3.4x | 3.0x | 3.6x | 3.1x |
| Verizon Communications Inc ($VZC) | 1.7x | 0.8x | 2.8x | 2.1x | 2.4x |
| Ooredoo Qsc ($ORDS) | 1.6x | 1.7x | 2.0x | 2.0x | 1.7x |
| Rostelekom ($RKMD) | 1.7x | 1.8x | 1.8x | 1.8x | |
| BT Group ($BT.A) | 1.7x | 1.6x | 1.6x | 1.6x | 2.2x |
| |
|---|
| Median (13 companies) | 1.6x | 1.1x | 1.4x | 1.2x | 1.7x |
|---|
| Telefonica Sa ($TDE) | 2.5x | 2.5x | 3.6x | 4.2x | 3.6x |
