First quarter 2013:Telefónica Deutschland shows solid results in challenging market conditions

Telefónica Deutschland is facing demanding market and competitive conditions in the current year. The solid result in the first quarter 2013 was therefore influenced by a strong market dynamic, intense competition and the regulatory environment. With an increase of 1.3 percent over the first quarter of the previous year, the number of customer accesses (wireless, fixed network, wholesale) reached 25.3 million. The main contributor to this was the post-paid segment. Excluding mobile termination rate cuts, wireless service revenues, wireless revenues and total revenues saw a positive development. Compared with the first quarter of the previous year, wireless service revenues increased by 0.5 percent. Wireless revenues also increased by 4.2 percent (including hardware business). The level of total revenues remained nearly unchanged and amounted to €1.2 billion at the end of the first quarter 2013. When mobile termination rates are taken into account, revenues for wireless services declined. Wireless revenues rose by 1.0 percent but total revenue fell slightly. "The data business in combination with high-speed Internet and innovations are key factors for the company's success," says René Schuster, CEO of Telefónica Deutschland. "We therefore intend to continue our successful way forward: We are strengthening our convergence offer and further promote digital products." Data business continued to grow strongly in the first quarter 2013, supported by the increased use of smartphones. Compared with the first quarter 2012, smartphone penetration of O₂ contract customers rose by 15.4 percentage points to 65.0 percent. Measured on the basis of total customers, penetration was already 27.9 percent. Over the same period, data revenue excluding SMS increased by 24.1 percent. Development of non-SMS data revenues as a percentage of total data revenues remained positive. In the first quarter of the current year, the share was 63.4 percent, 9.5 percentage points above the same period of the previous year. The new O₂ blue tariffs meet the growing demand for mobile data. The great customer interest especially in the O₂ Blue All-In M tariff proves the high importance of data usage for the customers. In the first quarter of 2013, non-SMS data ARPU (average revenue per user) rose by 19.0 percent to €3.9 compared with the first three months of 2012. "2013 is notable for its particularly strong market dynamic," says Rachel Empey, CFO of Telefónica Deutschland. "Our solid results are the reward for our successful strategy. We effectively managed our customer base in a transition to the next wave of mobile data services to sustain our strong challenger position in the market." Operating income before depreciation and amortization (OIBDA) was at a similar level to that of the first quarter of last year, reaching €278 million. The development of OIBDA margin was positive, with an increase of 0.4 percentage points over the same period. The investment level rose when compared with the first quarter 2012. The 9.4 percent increase is driven by the intensive expansion of the LTE network. The new LTE mobile communication standard improves the data transfer rate and boosts data business.