The benefits of Telefónica in 2014 decrease one 34,7%, reaching the 3.001 million euros

With an income of 50.377 million euros and a profit of 3.001 million, the markets of Spain, Brazil and Germany have consolidated during 2014 as the main markets of the Telefónica Group where the company has strengthened its position.

In 2014, Telefónica has consolidated its strategy to transform into a digital telco. Both investment and asset portfolio management have focused on increasing their positioning in higher value segments and markets., resulting in an acceleration of revenue growth throughout the year.

The income obtained by Telefónica has been 50.377 million euros, and 11,7% less in reported terms and a 2,6% in organic terms; while its net profit has been 3.001 million euros, and 34,7% less than in 2013, affected by several impacts that have occurred especially in the fourth quarter.

The non-recurring provisions for the period between October and December remain 1.088 million euros to this item and include the impact of the adjustment in Venezuela, the provision for restructuring expenses and the adjustment in Telco's valuation. In this way, The company's consolidated net profit has reached 4.462 million euros (-18,6%).

Telefónica attributes several extraordinary impacts, which have occurred especially in the fourth quarter, the sharp drop in net profit. Among them, the impact of the adoption of the new exchange rate (Saad II) in Venezuela (-399 million euros), the provision for restructuring expenses (-405 million euros) and the adjustment in Telco valuation, the holding company of the stake in Telecom Italia (-257 million euros).

For services, Mobile data revenue continues to be one of the company's main growth levers, by increasing a 9,9% organic in 2014 and represent the 41% of mobile service revenue. Non-SMS data revenue grows 23,9% organic, assuming the 73% of data input.

Telefónica's total accesses reached 341 million as of December 2014 and they grow a 6% year-on-year after incorporating E-Plus clients in T. Deutschland and record solid growth in Latin America, Brazil and the United Kingdom. For services, highlights the high commercial activity with a focus on valuable clients, which is reflected in a sustained growth of the mobile contract (smartphones y LTE), fiber and pay television.

Mobile accesses amount to 274,5 million and increase the 8% in front of 2013, supported by the strong growth of the mobile contract (+11%), who continues to increase his weight until 36% of mobile access. Smartphones maintain a strong growth rate (+39%) and are located in 90,4 million, reaching a penetration of the total accesses of the 35%, reflection of the company's strategic focus on the growth of data services.

Retail broadband access reaches 17,7 million and present a positive net profit of 11.000 accesses in the quarter (138 thousand accesses in 2014). For your part, fiber accesses as of December 2014 are located in 1,8 million (2,1 times compared to December 2013), achieving a quarterly net profit of 308 thousand accesses. For your part, pay television access reaches 5,1 millions and grow 48% organic.

Besides, during 2014, The company has continued to advance in the modernization and differentiation of networks, dedicating the 75% of the total investment, excluding spectrum, in the year of transformation and growth. CapEx grows 16,9% year-on-year in organic terms and totals 9.448 million euros, including 1,294 million euros of spectrum acquisition (mainly in Brazil, Argentina and Venezuela in the fourth quarter and in Colombia and Central America in the first quarter).

Business areas

During the last year, in the consumer area (B2C) revenue from the video business has reached 954 million euros with a growth of 29% interannual; while the Global Device Management area continues to promote the adoption of smartphones, with special focus on LTE terminals. So, in the fourth quarter, he 75% of the total devices acquired by the company were smartphones and the 41% LTE.

In the Business area (B2B), M2M revenue in 2014 totalize 183 million euros in the January-December period and increase the 41% interannual. Revenue from the cloud business is at 342 million, he 25% more than in 2013, while in the field of Information Security the income reaches 115 million euros and accelerate their year-on-year growth to a 57%.

The Global Network and Operations area continues to accelerate the deployment of ultra-broadband infrastructure (UBB). So, real estate units passed with fiber reach 14,7 million as of December, doubling compared to the previous year, LTE sites in service exceed 20.100 (10.500 in 2013) and more of 80% of 3G and LTE base stations are connected at high speed to the transmission network. And 4G, coverage in Europe reaches 60% and increases LTE deployment in Latin America up to 10 countries, secured during the fourth quarter LTE spectrum in Argentina and Venezuela.

The IT area continues to manage and execute the simplification and transformation through processes, applications and system integrations. The result of the simplification in 2014 in IT it translates into reduction of applications, with more than 430 deleted apps, and the increase in virtualized servers to the 46%), supported by the consolidation process of data center infrastructures, which reduces by a 13% physical servers.

Telefónica Spain

In Spain, The last year marks a turning point, consolidating income stabilization, that reach the 3.038 million euros between October and December, with a total in 2014 of 12.023 million euros, registering a year-on-year drop in 7,2%. In the fourth quarter, revenues improve their trend until -4,9%, mainly due to the better performance of service revenues. Operating expenses are at 6.965 million euros in 2014 and are reduced by 1,1% interannual.

The year-on-year increase reflects the greater connection rate of fiber and TV clients, and the rapid deployment of the fiber and LTE network, differential assets of the Company to maintain leadership in quality.

Telefónica Spain manages 41,2 million accesses, and 1% less than at the close of 2013 due to the deactivation of 569 one thousand inactive M2M lines of mobile contract in the first quarter of the year. Movistar Fusion, with a park 3,7 millions of customers and 1,4 million additional mobile lines, has grown a 27% in front of 2013 and increasing penetration levels (73% fixed broadband and 57% mobile contract in the residential segment). Retail broadband accesses amount to 5,9 million, with a growth of 1% year-on-year after adding 13 thousand accesses in the fourth quarter.

Brazil and Germany

Apart from Spain, The company's other two leading markets are Brazil and Germany. In the first, Telefónica has strengthened its position in the market, especially in higher value segments, which will be consolidated with the closing of the purchase of GVT. In 2014, has captured more than half of the new contract mobile customers and the 38% of the LTE on the market, while accelerating fiber deployment (4,1 million units) and has increased pay TV access (+20%).

The income is at 5.522 million euros in the period January-December 2014, and 12,4% higher than the same period of the previous year due to the consolidation of the E-Plus Group since 1 October 2014. In the fourth quarter, income amounts to 2.019 million euros. The objective of the new company is to become the leading Digital telecommunications operator in Germany, starting from a clear first place in mobile clients, con 42,1 million accesses at the end of December.

At the end of December, Telefónica Germany's total accesses are at 47,7 million, with strong commercial activity in mobile contracts in the quarter and a better trend in retail DSL accesses, reflecting increased demand for higher speeds.

The company anticipates the generation of more than 5.000 million euros of synergies, with an annual contribution to the operating cash flow of 800 million euros from the fifth year since its integration, coming mainly from the combination of networks, the reduction of stores, staff reduction and new revenue opportunities.

The income is at 5.522 million euros in the period January-December 2014, and 12,4% higher than the same period of the previous year due to the consolidation of the E-Plus Group since 1 October 2014. In the fourth quarter, income amounts to 2.019 million euros, practically stable year-on-year compared to the combined revenues of both companies in the same period of 2013.

The fourth quarter of 2014 is significantly affected by a restructuring provision, no cash impact, of 401 million euros, after the acquisition of the E-Plus Group (409 million euros throughout the year). Operating expenses reach 4.817 million euros in 2014 and are located in 2.006 million euros in the fourth quarter of 2014.