TEF - Earnings call transcript Q2 2021

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Adrian Cincinnati

Good morning and welcome to Telefonica's Conference Call to discuss January to June 2021 results. I’m Adrian Cincinnati from investor relations.

Before proceeding, let me mention that the financial information contained in this document has been prepared under International Financial Reporting Standards as adopted by the European Union. These financial information is unaudited. This conference call and webcast including the Q&A session, may contain forward-looking statements and information relating to the Telefonica Group. financial objectives forecasts matters. and include statements estimates may plans, regarding expectations statements or and operating or These regarding different forward-looking or COVID-XX and the risks results to the statements risks from and such All to those statements. differ relating expressed final uncertainties, developments effect by that pandemic including the materially would implied cause of involve available We encourage market with regulators. the filed you to disclosure review relevant documents our publicly securities

Investor a have slides, copy of team press London. relevant or and Telefonica’s don’t the please release contact you Relations Madrid in If

Now, let over chairman would Chief Angel me Maria turn over call to I Mr. to the Operating and our call like Vila. the Alvarez-Pallete. officer chief turn Jose to executive Officer,

Jose Maria Alvarez-Pallete

me Good Thank Laura morning, and Schuler, Eduardo Vila, and Lutz you, Navarro call. Abasolo, quarter of JV. Adrian. With OX are Virgin today Media CEO Telefonica's Angel to second welcome results conference

we As we to be happy will you and slides, walk questions have. then usual, through will may any first take the you

more increasing help March. as with for our of an LATAM was revenue second coverage We sustainable trends OX the JV. parallel, in net gains they from after versus and growth Media our booking with to our us by capital finally, net consecutive year-on-year. We net Moreover, XX% XX% best-ever have of capital In reduce translated inflection these transition and sale structure efficient denominated the financial U.K. capital capital And into a posted is was accelerating Telefonica. Virgin to of debt structure. more XX% year-on-year efficient quarter. The the debt reflected point up the organic in Telxius income fourth Towers profitable quarter crucial for creation gains reached the

as In our U.K., reinforced front, strategic progressing our continued created July. champion. of closing transactions the the On in position connectivity one our June was and we markets, national objective with core the on key we

has accelerating reinforced capabilities been acquisition UK. in completed, to vehicle modulate space with has the With trends. Infra, a in even digitalization cloud supporting approvals all Altostratus, we regards new were of and fiber more the Hispam. to and FiBrasil growth Colombia and with this our granted, the started in its regulatory to The after announced relevance facilitating in exposure gaining while recovery. Telefonica Cancom Tech model continue we Chile of July InfraCo with operating and Additionally, economic Telefonica and operations social KKR. year-on-year

nominated eco-rating important part launched the Financial for Finally, by strategy. of Europe's climate industrywide new mobile a an ESG have Times. and remains scheme We leader been our phones

slide to two. Turning

consolidated the Second also as extraordinary well changes Reported also U.K. Telxius quarter started OX significant be headwinds, and quarter. They other And figures the Towers we as FX May Virgin reflect just reported Media to since reflect figures the consolidation were perimeter method. eased JV which reflect equity effects. consolidated as then, booked, Telefonica until the capital XX. using in as the gains mentioned in

and versus to in this rate quarter. it payments, to EURXXX EPS contributing the grew second with And second amounted the in billion business OIBDA billion flow excluding accelerating while size, spectrum reached the year-on-year, as topped EURX.X On points XX% EURX.X as than billion, X.X second a X.X% time, also the income annual to by year first quarter its for the improvement. X.X% the its cash such, the net much organically, narrowed first EURXX X.X% mark EURX.XX. lines ago. decline quarter As figures growth Organic and improved to percentage free million year-on-year more reported reached quarter, all the

XXXX to the of EURXX.X XX minorities distribution June This June half as EURXX months much as last debt in by as is reduced XXXX. position. of the was debt financial post net billion Finally, billion Telxius net

three. Moving to slide

OIBDA. and revenues for guidance XXXX our upgrading are We

half competitive is First environment stabilization, surpassing the positive to full our aim at and fruit. are the the starting meeting outlook the Spain, year and rationalizing bear second airports geographies. revenue half all is slightly OIBDA for year already guidance of performance in of former core or In

has are positive third As make evolution. positive guidance least as which operational Germany, the also calendar yesterday, net on regarding the segments, In momentum roaming adds delayed and are you suffered year about -- upgraded KPIs, positive operational Brazil, been well most positive shared levels year at we and second strong of In strong already XX% base recovery, to easing in also record maintained. strong we tariff return being has margin, with in half full is to comparison the as us and momentum. expected at commercial also the from OIBDA feel the colleagues above our quarter. commercial

Hispam, more commercial all and in we seeing turnaround we in And Lastly, OIBDA is volatile, line top are continuing while happening materializing the countries. to gain reversal efficiencies. are

stood which to shareholder scrip we XX.X% up our as tranche at opted month EURXXX million around or As dividend financial second revenues, former in our dividend, a we half the first it where guidance. just XXXX through to XX.X% XX% for enhancing receive cash. of maintained flexibility shareholders last paid our new CapEx, of of in following On voluntary shares, were remuneration, results, further paid

dividend. June XXXX share voluntary EURX.X in for be another XXXX, As through per per dividend, share payable and will December scrip both in EURX.XX XXXX

Regarding proposed the as capital X.X% treasury share Meeting adoption representing cancellation corresponding the the of corporate to the be stock. the for will the treasury held of share, Shareholders' stock, of Annual resolution

example thrive, pillars: the During quarter, three to consolidated leading sustainability helping we our feature. commitment society a second further ESG greener by building and our across

eco-rating impact of to greener industrywide we phones. mobile In an a building identify have terms scheme the launched future, enviromental of

by flexible unions And in working contribution of of in promoted the and in reduce regards people, reached with issued extended first the women diversity positions best to just our finally, divide. Media has Thanks program, to we inclusion also support its and commitment in agreement like XXXX. electricity. to more to and digital policy to but creating addition, to our more renewable updated bond management connecting I raising XX% Telefonica we In employability fiber with of target a are Times with announced highlight OX Brazil, its climate a of has adopt respect Virgin billion use the has women only the Spain. equal collective Telefonica education the not for example line of least and GBPX.X green our at Financial as rollout work to nominated companies have leader. pillar With one a our society, by society, the to leading we also to a and new and has would our have network, end to

XX-hour V For for days artificial example, solution of Campus, launched telemedicine age via intelligence per and terms society, free programming Vida a drive Also have in our in campus digitalization Spain week. we found April, we which opened Brazil, health aims a no and in make new marketplace have new opened IndesAI, with limit offering XX to seven a in to accessible. second more

a I can above sustainable new the detailed sustainable All and the to performance. Angel go our of through seen connected as contributes to a over U.N. world, report to now review of be hand business will world. achievement development our in of goals

Angel Vila

since Spanish showing annual we the first will five, promoting late slide revenues is is On for we that our XXXX Maria. since Jose growth have the market you, of performance XXXX. time and rationalization review QX bearing which operation, turning Thank The fruit. been its around

to June. broadband somewhat quarters, QX, net growth new in the XX% of with and quarter lower muted the QX handsets improved adds marked impact, This in time activity recovery satisfaction the of service last football half. has due a and a fixed record in the positive improved showed commercial full and better QX OIBDA and the margin IT churns and helped thanks trend in solid than portfolio. revenue, is first were 'XX, IT recovery revenue in reached also Following to negative of over the June. since ARPU. conversion however, season delay ending also The it was months, recovery. a roaming and by hence, conversion month-on-month in to accesses the all come in throughout had less continues the to partial roaming reverse we for Revenues, trends a high, to second new versus customer the handset coming in on impact though ARPU expected expect down back in and Furthermore, early

we forward, impact. margin anticipate next trading, underpinned positive further by better Looking improvement quarter and from improved the roaming ARPU

secured Finally, very us option, the spectrum would call rational very megahertz our the we needed improve will help operating favorable terms, leverage. in band what and XG deployment which to at XXX and accelerate in we a

plus by continuing revenue a growing QX. in XG has with the This mobile in X&X network cash first strong have ARPU half in OIBDA results Moving percentage growth one improved continue OIBDA back have the with in year-on-year continued roaming respectively, the cities. operational May, this OX year. to available and to over revenue year-on-year in year. generation resulted CapEx also expanding partnership In have X.X% slide to quarter, strong the where we plus XX point the accelerate get Germany we now to signed seen by half, our trends through agreement both XX.X%, on of up streams. quarter with to In same time, minus in ramp back Drillisch, and national long-term six, momentum continuing and securing first in X.X% CapEx the year-on-year with and tests we At margin

the say then, where product at I'm leadership Since on BXB between on side. start Virgin integration senior place, U.K., Moving with OX to JV in the completed consumer started Media on OX fast the seven, slide that and cross-selling of to has Media to moved Xst June. development the pace Virgin delighted and

we an OIBDA of fixed X.X% cash continued results commission cost of have deliver and performance, improving back a of revenue plus probably growth with by the present trends mid-XXXX, network annual been with now with a of there by GBPX.X total of stable Network back on synergies almost year. of its year-on-year minus across the here million focus to X.X% in solid pro base and with with and million, growing half in delivering XXX year-on-year GBPXXX project XG reaffirmed During this JV track cities, the on time, million QX, company's at gigabit lining and solid in X% XXXX. by continues passed of helping end and X.X has on pace from plus passed with XX,XXX commercial the base grow live EURXX.X continued in remaining control rollout new OIBDA of year-on-year give the the to for net included company. target forma momentum first also savings, and billion. year-on-year The premises the the upgrade completion the has of QX underlying gigabit To towns adding overview CapEx to value the both and mobile, profitability for premises

to Moving next slide.

By largest We to U.K.'s XXXX. fiber the opportunity the we our million of today be upgrading As company's per full fiber to passed X.X fully the around with fiber see taking to the fiber fixed where of to efficient in per premise to taking network XX% or account well existing BXB with as plus, premise after into place creating gigabit time can cable in in are BXC Spain ducted the a XX.X a network. so the broadband cable and completion GBPXX pursue low to network GBPXXX the million XX% potentially to market of penetration premise scheme the the wholesale huge now. strategy fiber around opportunity upgrade upgrade around versus a premises, will our full provider, by for X.X expertise utilizing DOCSIS as the compared long-term the costing the other premises Regulatory U.K. U.K., we to U.K.'s network, utilize with in rollouts, bolster options together opportunities. is one invest broadband fiber most is to

a in modest the upgrade with network cost funding increase very So no needed. additional during

accrue to benefits addition, are In wholesale businesses fiber premise the to revenue the upgrade. BM OX's and to expected from consumer enterprise

our connections. will namely nine. boosted Vivo's slide up company XXXX. value passed XX into be proposition sound most contract running million resulted on to of fiber-to-the-home fiber in premises help will further segments, Brazil reach FiBrasil, fiber and and a Transformation which growth and to now access the by unique is us target by valuable already Moving

impact the opportunities the QX. continue vehicles, significantly which companies slide trends for to generating very progressing of fixed to positive financial enhanced revenues the solid of year-on-year side, in we its value, our explain that accelerating the growth posted stakeholders. addressing pandemic that total Thus, progress This position and top expand, increasing Vivo commitments high-quality related XX% line, XXth Germany, most Brazil. growth On in fit efficiencies, finally, of at connected Merco's continues OIBDA create revenues to and with On are top ESG responsible year-on-year. to line show growth cutting-edge the UGG the all already and technologies in ranking along CapEx network and X% to performance. our XX, in reached X.X% fiber drove the the results, us to improvement the return to ultrabroadband. has Better and transformation. while rollout MSR close allow top support deployment at with positive stabilization to in well line demand accelerating is In of first for plans municipalities. And allocation its plus growth we during

of less four in record June start The months first retail the in plan construction. was time, since connected than

in Chile operational transaction's companies beginning of regulatory their completion the all FiBrasil at Brazil in received approvals with July. InfraCo after both necessary both Additionally, and already

of a We with X.X in announced Colombia Telefonica InfraCo QX million The three contributed and OIBDA closing X.X has Telefonica the is of level to have with multiple a of KKR years times approximately after XX% XX approximately new around The from premises approvals. Colombia also for expected reduction million premises vehicle at remaining company net a a in value enterprise fiber passed billion. debt EURX.X brownfield of and 'XX target Colombia, holding XX%. at group

strong us gives have a infra We that optionality. portfolio

footprint. & and XX, driving growth growth. and platform, opportunities growth Tech market in April its On [indiscernible] to base of Telefonica QX like of across services to the the XX% We to plus and creation growth deliver assets Cyber revenue to BXB and revenues value managed these are to for continued revenues, infrastructure professional will accelerated slide increasing Cloud, period. services in In Tech focus our our continue XX.X% own year-on-year capabilities an June on revenues, QX double-digit growth. higher pushing again, value year-on-year -- the meeting group than through in revenue which X.X% account services, to return more partners plus on

category half In their IoT we we comms While we we in revenues this our adapted are in maintain the the to Spain perspective, Data, IoT to Altostratus for more were incorporated Big acquired our TM business, XX% in a in our perimeter than reinforcing we QX, with first the to year-on-year. mention Microsoft the the ways of arena, In the rate X.X% an in signed reinforced ONE professional representing we growth to connectivity Telefonica and Tech cloud proud offer. that in SMB facilitate awarded of the in capabilities. of ACENS portfolio Spain, From Malaysian Cybersecurity year improved by as helping them Solutions continue of and and SMEs best cloud agreement And the commercial BXB. we business Spanish digitalization to new for pandemic. partner working,

the and announced professionals financial in provider our with both relevant sectors. the from and Ireland position partnerships security highly Laura an of serving will to cloud U.K. and I and significant of end-to-end just and Cancom has Tech a operations over size, Telefonica advanced Hispam customers acquisition public for our now review position. skilled reinforcing of hand Finally, UK, private

Laura Abasolo

Thank you, Angel.

to slide XX. move Let's

Hispam to modulate During we continue our exposure the region. the to quarter,

XX revenue in in we terms OIBDA quarters, the simultaneously and in growth reported time However, growth and America. for accelerating first posted year-on-year Hispam

of the driving the QX. side, for for additions plans. FTTH we accesses vehicle Chile is crystallize together how a the fixed company asset markets our all Telxius net main in net record at coupled generation. VMed by come fiber year-on-year sale down to In additions has commercial cash stood posted since EURXXX performance the financial Towers intensity, main proceeds to debt to post-closing the X.X EUR as times, In clear positive could strategy debt-to-OIBDA free of flow EURXX.X below down XX, JV, business, debt while with of Including June a be is December billion net and accelerating On billion. example capital million XX.X% Net a slide Net XX% ratio nine billion events, X.XX XXXX, in all the contract, thanks of to products. strong minorities. OX U.K. with Telxius or to times reduced went increased InfraCo EURXX.X 'XX while in value ratio. distribution in On lower expansion estimated Colombia, post announced or new debt that net show accelerating,

XXXX, our Telefonica approach bond raising have fiber we beyond billion, average and the in has to comfortable innovative amounts increased total, EURXX.X cash financing as maturities and the billion position financing to life JV. liquidity a including XXXX. to JV proactive and OX EURX.X covered at and green in XX.X debt placing Media German years, very a Our first maintains in Virgin us

financing company to We to last currencies currencies debt-denominated long-term in X.XX% two recap. Hispam financing effective local now the June Maria its cost Telefonica of over of are linked LATAM by interest Jose to being loans. bilateral weight hand Coltel To with signed first back Chile evolving increased by strategy cost. months the sign stood payment to in and sustainable at rates note, and I sustainability-linked our currencies debt in reduction Colombia. bilateral loans, will subsidiaries our XX in as the as European XXXX, The debt due of shown

Jose Maria Alvarez-Pallete

two the Telxius the Virgin Laura. of the in In you, quarter, OX Towers. long-term significant we in Thank steps JV completion growth the American first, sustainable of the completed and Towers to our U.K. second To recap, strategy, Media sale

spectrum, excluding than line income all-time year-on-year. by growing to and top level record reached flow an cash while with net performance our XX% free growth, Second, -- returned more

with debt posted significant NGNs. reduction year-on-year the mainly to billion, EURXX Third, XX% the as to due XX% almost structure of down gains comes which Fourth, the when as a devoted prioritize group. it on net capital improved growth strategic much to we transactions, CapEx to allocation continue capital or we

Finally, -wise, from upgrading we you very feel full slight Thank to we target. stable revenue our growth CapEx a to extremely are level. and for to XX% the to reiterating both at much stable -- year sales a comfortable up CapEx to -- guidance stable by our OIBDA listening.

ready questions. now take your are to We

Operator

first the from [Operator America. Instructions] of from And David today Bank Wright comes question line your of

David Wright

most U.K. digest. to upgrades per a fiber. Hello GBPXX this guys. Thank decision for given the to to cable from the business morning very the the much I the see call GBPXXX DOCSIS. move the you announcement lot guess I is and the you've significant premise price versus

some So can much secondly, dilutive offload the I effect second some to thoughts. Angel, you very interesting would And decision think, you disadvantage welcome guided your ultimately give it us a choose And appreciate, football. the from number over I dynamics just cable? more to QX driven that on thinking? fiber on development. ARPU is just has That in very in your mentioned Spain. Is toward very, you the I better half. the

that would could you parts, very just moving the That expand on be useful. If please?

Angel Vila

networks, I back through proposal it We, this our because of clear take Thank full This fiber JV. announced to covered VM intention lightning. pass are footprint. already start imply in have I'll I fixed premise And we the the Angel. We have million Today, the on enjoy which million, question, an OX Europe been and to Spanish that all network by XXXX. Lutz, U.K. and have of will fiber the Telefonica on you, response Lutz. far. upgrade premises will already X.X we fiber supporters to the covering will pass you with question. the the of have across largest then cable from XX.X is David, we fiber the to supportive to footprint with additional extremely I then it has by with to been fiber

Lutz Schuler

Good Yes, morning David.

unique So a we situation. have very in U.K.,

cost. We we ducted fiber brings the in to GBPXXX. can that our referring low to upgrade And network. is And network have the to fully a at deep us that fiber the very this premise position

have, available. X.X we to the Now not We for X.X, have DOCSIS about can because Angel. X.X, premise. opportunity second. we instead already go BXB see DOCSIS decision it. in position we X.X, that, after the on And U.K., we for So but today an competitive per is with DOCSIS market you, move DOCSIS to consumer upgrade above X.X-gig go about speed in right? based a clearly wholesale business taken then fiber the to better have comparison to the the market. This think Back market coming of and lot offensive Yes. with the also Think to X-gig

Angel Vila

question the moving Lutz. parts. to Spanish going I'm Thanks, and the

season customers that without be QX the which is the starts. football will in content. We the quarter. downgrade in are a season, am were outlook pure an increasing QX is our is taking You Movistar the about second course, in And of quarter half year, options no? Conecta there OX, the for penetration. This to as the reverse no-frills an have evolution next impact ARPU the following: be the drivers second in of the decrease right, Also, what and asking Max, effect football continuing we the quarters seen first of that Customers if main ending and the I ARPU or leads previous evolution the connectivity the the temporarily. experienced of of the one of when will would second have some

quarter, while active had XXXX has tariff upgrade. At -- in out new or the will the for more because same have also beginning was of that We be at the quarters intensity more time, second consumption promotion and we in This and ending promotional much intensity we activity. the the of March applied going promotions ending at quarter. have bundle of quarter portfolio some forward end of less lower the the -- Fusion the of lower the had far been promotion have

be in quarters. the not impact QX the this in following would So recurrent

will kick portfolio, although new Fusion, in So the on. QX, QX so still not it has in been and relevant

will effects. the we half ARPU we also expect higher the for in half, reflect second -- higher we of we the half what the So And are ARPU for expect revenues the of traction. services than getting second we've a QX, from outlook some new from Therefore, the seasonal the for have the digital reversal that -- first to half. starting ARPU second seen

David Wright

now that if be doors that every maybe up, could I And not. competitive to assume on the price you. question you year, though just And need the tough Angel, does annual margin guess now. current happens envisage running it should increases the the downgrades, difficult I I follow football with mentioned step the pressures. it's pricing. the And Thank down to obvious with lower digital is profitability? Is services a that correct comp

Angel Vila

XXXX, the regarding to the compare XXXX, have effect in of because Well, season, you football competition similar end would halted. were with

we now. have year experiencing that we which didn't impact one ago, So are

increases seeing competitors. now increasing announced prices price Euskaltel in we increases increases, price are Orange and from July. price August. Vodafone has Regarding are in

roaming, -- is still quarter and to some of normal since be seen So in geographies have levels been depending of commercial not levels, for the this And full compared, at the quarter, what between instance, X/X QX we XX% on margin, roaming but that have we reactivating the the second happens roaming in have yes, we what regarding levels the at would is XXXX. is, which do of activity, market. recovery

of impact suffering -- still have So we still not reactivating. the we're roaming

question. further proved expect we that see costs. not commercial I our reactivation, is and continue levels from But a the XX% ARPU second we because margin. have having your at the come roaming pressure will some margin with for which of be we in talking And put the also half, efficiencies lower reactivation IT. of was margins handset which far beginning the we That on sales, We accretive, and has will

you the least QX, not see, far and and than percentage XX% should second from levels. we the what at be one we point expecting for should half, are in saw recovery, we margin So higher

Operator

Your Georgios Citi. next from the Ierodiaconou, comes question line of

Georgios Ierodiaconou

you have thank my questions for taking follow-ups to the questions. by David. asked I Yes, of kind previous two actually

fiber. decision the one around first for go The to

the users on wholesale curious of question opportunity preventing You Or upgrade mentioned thank fiber? the that market. logistically do doing my Is fund announced? perhaps other for second I'm wholesale? was with to if what makes cable demand through the whether ask moving allow parts. some in a just the fiber? partners And question agreement for is what it side? on it on you is with be going kind I then could you that's to considering the easier find and it you the you may already to something that Spain, also And to Whether to parallel

quite I clear. think it's

Some you move your How third that positive control. the have how that announced If was of you you But mentioned should expect quarter? comment, numbers the more? the do of your into we June customers they on are the you five? happening not will things the also to the increases territory have Spain more now by could in under slide that shown already And notify done in much your it for if of competitors. earlier. benefit price I'm mistaken, much across competitors So you think be

Angel Vila

first question, please. the I you, to Thank pass Lutz, Georgios, it

Lutz Schuler

Today, right? the then, possible very gig. speed network, cable And Hi right? gig. can download. our one midterm, simple, future, the have the we it's short and wholesale we speed up and than market, the you possible In More near so mean available all higher right, when X.X XX-gig longer I think for partner, a term, offer faster wholesale about onto Georgios, the

completely from the So think in is haven't any right? partner negotiations. this we position announced very simply future-proofed lightning. approach a independent I in that, acceleration potential on So puts strong And us

right? fiber Back a cost, strong upgrade position. simply fully announcement And you, U.K., fledged So obviously, on fiber position in in we I very that, to to At the are puts get term, account long the a pursuing is you taken today in Angel. possibilities there. unique the to But us into very low network. think to

Angel Vila

regarding And second Lutz. question the on Thanks, Spain.

that's think more rational have envelope everything to happening I we into a market.

has have the the be. more We has fostering rationally. have have had is market NPS. terms in to having, what of early to by that benefit half churn. for irregular pro behaving instance, promotions have been from been the a the for behavior. down. are seen our they is investment. are what practices are with And forces for used This for driving has more are competitors of And regulator working are summer promotions, of rational in Even that second improved residences, quality to we conditions, shown cooling market behavior Also with rationality. rationality sign that auction which a our in auction the And we gone players spectrum acquiring different as our seen a seeing stop in subscribers. well. The more we This rational All operators more have softer promoting

we So in seeing of that the with are rationalization these responds traction there on respect for players outlook quarter. your I I that within ARPU was most underlying commercial leading in to are And dynamics also before evident and this to that think from that the know don't if market. question is signs describing that. the we

Georgios Ierodiaconou

on a decision things. is question. Yes. that you a If I just I financial the finding curious to could just understand independent mentioned two the today. radically I'm fiber understand, to partner ask follow-up from wanted

it the you lightning wholesale is project wholesale expect announce compress? is better? you a assume because, to to me the Or price include So sense some Thank we makes Firstly, whether that you that obviously, existing for lean to find should deals itself? toward And the before fair way is whether just basically partner financial of for financial partner could it it more infrastructure?

Angel Vila

Thank Lutz, you. you. to

Lutz Schuler

answer, also right? possible. different every everything possible, is I have simple say plans. is We order would is And the

We are different conversations. in

too Let's see, right? to early tell. It's

of we're to Angel. but Thank Sorry middle to Back concrete, be actually not you. the more it. you, in

Georgios Ierodiaconou

you. Thank

Angel Vila

Thank you.

please. question Next

Operator

Thank you.

Bluestone line the comes next Credit from Jakob Suisse. from Your of question

Jakob Bluestone

Hi, please, Spain. my got I've good on Thanks for question. one morning. taking question,

well. sort saw in -- similarly if Spanish fell around fairly in wondering growth you other You half. EBITDA, ARPU You conversion in obviously do X/X to which sort specifically only growth think up rate referenced I second of QX. ARPU service ARPU EBITDA improve Spain? what was there's as stuff about And consumer that mentioned I might outlook that revenues When the and think of for or makes But could improve? of we during your of just there the should comment the you growth

what So Spain? Do growth for the in think rate improve could comment will in the outlook coming the maybe on EBITDA quarters? you specifically you is

Angel Vila

but nonrecurring a commercial Thank and slightly, versus quarter thanks last despite the in to revenues, a of costs comparison improved second we OIBDA QX service year, worse in you year-on-year what versus and QX was very production Jakob, in low because the improved had QX trend factors. and XXXX typical some of improved, very

ago, the tough very versus This I of namely that year of because was costs is the than this our estimates, year-on-year improve note would, revenue the difficult for half. revenues some So and to percentage around levers, trend, quarter recurring it would on there not atypical. a the in reactivation lower QX was roaming. OIBDA one one related -- to margin. quarter, revert, is was to one improvement the third factor the point And the growth improved comparison content will believe XXXX, ago, I before, suppliers year roaming, one that lower thing of One some And profitability its of was that ARPU but one the second of margin the content add, XXXX. quarter, and in got sports a improvement the course, flowing will from the that as may like we seasonality nonhappening year be saying certain this football onwards, trends And events. handset improving helped recovery us the of to comparison of rebates IT. sales of of therefore, into from because that because We the third which and and also

in be had close believe to adversely year-on-year XX%. improve. nonrecurrent The margin going back to rebates second by the year ago. in we'll going all, that we will So -- to content one is the comparison be in the quarter, these all third But affected we half

Operator

of question from next the Keval Your comes Khiroya from line Bank. Deutsche

Keval Khiroya

Thank please. two questions, you. I've got

potential on further the questions on potential you in you us COVID secondly, of previous Spanish following to that it options the you of on do can firstly, And will inorganic the hopefully drags most then So where deals OpEx. now behind LATAM? stand easier be update us? on from are now strike think And

do then this toward reduction level think digital to have mix you you. where obviously beyond look margins this cost Thank XXXX, continued will you any impact more And beyond as help shift services. you the accelerate on You of actually the overall areas the can year?

Laura Abasolo

Thank your question. you, for Keval,

are with our our Hispam, to Having Going aim we more fixed countries. capture to It very allowing are and to the improving as we the at expected the Rica one And Colombia we the capital which I as is assets. ultimate in the to time, But not contribute Hispam growth, And a focus net efficiencies monetizing to of in reduction and profitability, the billion both nice extracting deals. FibreCo so, the costs, different to EUR Chile, are not I are modulating debt that's our find of do said on fiber in is said. growth brownfield FibreCo value and soon return Costa to broadband contract. in approval the modulate on from fronts. going XXXX. we allowing goal, in exposure And formula accelerate which in that think those are same and

in of solid. and improved we the strong have, operations. very as results. KPIs, of us organically. And OIBDA X.X% we X.X% care delivered very is of think had and Revenue taking by And terms commented, commercial very, One I

and us almost time, operational new growing giving new same the new first a New neutralized, with bring very nice the at contract accesses model, fueled is are in well, year. more by over and much booming savings of EURX.X X.X a is model. to operating being half it's lot million going of that's agility. very the connections, A Fiber which

in the Colombia the in are line regional doing And closed going Chile. by We a FibreCo are as period seen FibreCo we already case short in time, work of was a of as we also on being to it operating Peru. very true in that run and since team, such, you have the

reducing debt As the substantially. equity explanation, in we the seen have are exposure you also

net we've throughout in have We aligned first And debt been three in half ratio, been Chile, around much to issuing Peru times. active the Chile. group year. very and the We've Colombia

are having in We Colombia. issuing

Uruguay, in very to we to back times OIBDA. almost are two debt this doing that light. in And take financing are going asset Uruguay is with net We preparing

being So to devoted no capital region. or very the capital is low

that's from management COVID commented. the through headwinds through group are better. and the even already to becoming financial optionality I inorganic nor deals as is value that the neither remove, and it's We an I not creation And the detracting be for resources, Hispam as focus three been financials and going think a potential case

Jose Maria Alvarez-Pallete

If quarter I grows quarters XX also Keval. OIBDA. add, the first reported may This Hispam last the in and is in in in euros that terms

structure. the the different also that of is performance capital manner in think I helping us Hispam a operational So allocate to unit our

turnaround So is please revenues OIBDA. terms there both a and note reported in that euro in

Angel Vila

And cost to on costs expenses. at regarding but next cost, commercial goods the cost other travel Not would rest the we of year, buckets costs and of toward going personnel your OpEx. related IT, main cost, the operation of Spanish have only of question looking direction year, of of forward then content be supply,

you next to respect to cost. elements, the So we Personnel quarter, but cost, for years with personnel continually when have working second quarter, getting for direction the these not into travel seen, come. one are of the next efficiencies as different of looks

The second bucket, content costs.

going we we are where to sports cycles content start with of acquired seeing new We or plan have acquire to deflation.

activity the the which take being lines like from cost On as to at handsets, significant cost more with for deflation. keep either same achieved for evolution kicks from now place, of last to of UFA Champions in These as of auction. we directly or but after, costs portfolio, been the be the our to course, aligned will the the way aim are cost other expenses one two those should efficient still debt La lines this to has implicit supply and Liga worth And and going now. sold those switch our rate. be And case in are September is to new of So XX% for goods should go general, because the costs, auction a has cost the we Fusion revenue the to new in savings, wise. a legacy reduction will in sale. League or so in expect year, direction go of the in have they linked this year IT instance, where of net these -- continue decline on, up bad are our Commercial efficiencies

in cost our operation. the Spanish be should function this So the direction travel of of

Operator

question comes Redburn. Your Delfas Nick line from the next from of

Nick Delfas

top plumber in really. that really who Question that figures your of upgrades tested And U.K., much. tends us a Lutz, very that's you cost a the those for what's then Of thanks range wide to much. cost in quite obviously, for the real Yes, eye-catching, calling of situations to connect live whether to cost? GBPXXX understand that? of on Have

Angel Vila

to Lutz, again. you

Lutz Schuler

Yes.

we yes, pilots already. have done so And

As we with speak, pilot XX,XXX we are bigger premises. doing a

meet So the to technical is number. very confident that team

really -- for already then that before, and everywhere, reason we I in fiber have our deep proper we As it's network is have the ducts. that said right,

So a it's great call, we U.K. it's is are not compares that that debt is we DOCSIS achievable. have what -- what GBPXX documented tested, general, the would simply and to So we have It's X.X, all the found for right? in for GBPXXX so have if This we what situation far DOCSIS right?

question second I that. a forgot on had cable, was that, You right? again? What

Nick Delfas

Yes. so Well, cost that to gets home, going what's the to... be you past the

Lutz Schuler

connected. be Yes,

So an that estimate, yet. already. made I we think haven't I've seen disclosed right, that you

that so not estimate. You're wrong with

So test CPE. today, gets do What is entirely the yes, can right, to that get fiber mean kicks that, up we thing in speed. we DOCSIS for If do entirely customer can to speed, the The X.X then right? because fiber have good have to to that X.X-gig new home needs demand-driven. obviously, I we and and on customer a this pull into obviously customer again, then the a with higher

X.X-gig. get a to cost cost, speeds the at obviously fiber network come very higher And revenue. we our right, on than to are low migration to this And linked with also additional can right, customer then therefore, jumping simply So very quickly.

top So call appropriate to line out independent at not think therefore, I the is costs moment. of

Nick Delfas

someone if incremental, wants fee maybe, plus maybe an GBPXXX a have you'd for it. of connection So

Lutz Schuler

it Maybe the that to mean the we fee. first see seems able that new right? can And regime not you higher in seen also, time you've It connections country I speeds. in be U.K. simply, monetize are wholesale the if

average of Virgin country. the right, this average think Media speed the today, MB, faster the I than so X.X times of And the customers, XXX is

average we about So in a an kicks that speed business talk now for X.X-gig, yes. model above

So whatever. either higher combination of be monthly monthly higher, will be I the installation and think will subscription costs

right, early tuned. Stay think, I it's days.

Nick Delfas

pay XX-gig to that So versus sorry, from connection you to fee, the a have have for X-gig? wanting a but ARPU for you're customer going large incremental

Lutz Schuler

I costs. cost do and mean going to installation we can are choose connection right? between we Exactly, what

Nick Delfas

Okay. much. very Thanks

Lutz Schuler

Okay.

Jose Maria Alvarez-Pallete

Thanks Nick.

have time please. question, last for one We

Operator

Thank you.

of Your Murdock-Smith comes Berenberg. line Carl the from from final question

Carl Murdock-Smith

future. question, I are just Hi. decision confident question. to wanted I longer-dated necessarily what of your you. Thank voluntary than option? of slightly for you for scrip quite beyond a this year, in the regarding it's obviously the recognize But ask Board seem the a more thoughts just terms You

think shares your are that to seem You cheap.

that to won't should voluntary in option counts years? M&A, continue Will the continue to much share to following And are why net So share happy reduced we be the you scrip continue future price? the is the the see debt now that increase? thinking

Jose Maria Alvarez-Pallete

for your question. thanks Well,

because is cleared. policy, and of auctions of of on also you of the to them know, what are now table tried the in to spectrum we year provide that our especially remuneration had flexibility top we uncertain two outcome times have this that As because several COVID

to cash terms they of the have and option. free any shares proposal, to the our the that in trying by somehow acceptance mitigate therefore, to for shareholders try in scrip the we order are of And last dilution In of this were XX% came impact excess protected dilution. we flow to devote the

proposing the stock are canceled what we X.X% an today, treasury And in shareholders' cancellation of last have X.X%. additional We of meeting.

That a we will guess answer the -- for XXXX that approved we dividend. this shareholders' share. you is committed And this for that tranche coming December the update be have tranche meeting, We time will to tranche of the the next by we the specific I there. this proposal being, don't will have and flexibility. second So that provide in

levels the in appreciate we the being, this which But investing CapEx. we is keep back in growth underlying you're yes, flexibility to time the much really us are into the approaching better are to and which time EPS sustainable more For that trends. allow debt right,

in will results. the next be position reassessing the year-end So we

Operator

questions no be At time, further this will taken.

Adrian Cincinnati

Thank have hope to provided and have questions, very your you much morning, department. you you for and that Relationship further kindly our useful thank some all. insights for ask we you we certainly we Good Should still participation, you. contact Investor

Telefónica (TEF) 1 Aug 212021 Q2 Earnings call transcript