21.02.2024
Annual results 2023:Telecommunications provider O2 Telefónica delivers record year and expects further growth
- O2 Telefónica closes financial year 2023 with strong fourth quarter and achieves another record year financially
- More than 1.3 million postpaid net additions opted for the O2 Telefónica network in 2023
- Broad-based growth: mobile service and fixed-network revenues increase by 2.7 percent each, handset sales rises by 13.3 percent
- Record pace of expansion of the 5G mobile communications standard leads to 95 percent population coverage
- Based on the good business momentum, the company aims to further pursue its sustained growth path in 2024
O2 Telefónica grows in all key financial figures in the 2023 financial year
Telecommunications provider O2 Telefónica closed the 2023 financial year with a strong fourth quarter. Revenue increased by 4.7 percent to 8.614 billion euros and the operating result OIBDA by 3.1 percent to 2.617 billion euros. The company thus exceeded its own expectations for the 2023 financial year in terms of both revenue and operating result OIBDA. With a rapid expansion of the 5G network, O2 Telefónica now covers around 95 percent of the German population with the super-fast new mobile communications standard.
CEO Markus Haas | Credits: picture alliance / dpa / Sven Hoppe
“We had ambitious plans for 2023, and we have once again delivered. The growth momentum at O2 Telefónica remains strong. More and more people in Germany are opting for our very good network and excellent service. Together with our very good price-performance ratio, we are in an excellent position to gain further market share in the 2024 financial year. As the largest mobile telecommunications provider, we are driving digitalization in Germany. 2024 will be a decisive year for the digital future of our country. This applies above all to the political and regulatory course that will be set this year”, says Markus Haas, CEO of O2 Telefónica.
Record financial year 2023
O2 Telefónica grows in all key financial figures in the 2023 financial year. Revenue increased by 4.7 percent to 8.614 billion euros for the full year. The company had forecast a slightly positive development for the 2023 financial year compared to the previous year.
The positive sales trend was driven by the sustained momentum in mobile service revenues, which rose by 2.7 percent to 5.895 billion euros, as well as another record quarter for hardware sales. Handset sales climbed by 13.3 percent to EUR 1.872 billion in the financial year, and by as much as 24.3 percent in the 4th quarter. This is primarily due to continued customer demand for high-quality devices. Customer demand for accessories also increased.
O2 Telefónica gained more than 1.3 million additional mobile postpaid net additions in the 2023 financial year
In the fixed-line business, sales increased by 2.7 percent to 827 million euros. This was due to strong customer demand for fast broadband connections. With DSL, cable, fibre optics and 5G/LTE in its O2 Home portfolio, the company offers the broadest range of technologies on the market.
With a strong network, excellently positioned brands, award-winning service and excellent value for money, O2 Telefónica gained more than 1.3 million additional mobile postpaid net additions in the 2023 financial year. The monthly churn rate for the core brand O2 was 1 percent. This means that 1 percent of O2 customers switch to another provider each month. This emphasizes the attractiveness of the O2 brand in conjunction with improved network and service quality.
In addition to the strong core brand O2, the partner business also recorded a positive development. With its new partner Transatel, the company is expanding its ecosystem in the Internet of Things area, thereby further expanding its leading partner and wholesale business in Germany. The Business Customers division continued its growth trajectory in the 2023 financial year and acquired numerous new customers, particularly in the SME and public sectors.
The operating result (OIBDA) adjusted for exceptional effects rose by 3.1 percent to 2.617 billion euros in the reporting period. The company had forecast year-on-year growth in the low single-digit percentage range for the 2023 financial year. This development was driven by the strong operating performance and successful cost management in the reporting period. Profit for the period totalled 273 million euros after 232 million euros in the same period of the previous year.
Strong growth momentum in the 4th quarter
The very good development in the 2023 financial year was underlined by the dynamic growth in the fourth quarter. The number of mobile contract signings recorded strong growth with more than 284,000 net additions. Revenue increased by 4.6 percent to 2.291 billion euros in Q4 2023, mainly driven by the continued strong performance of the core O2 brand. Mobile service revenue fell by 1 percent to 1.501 billion euros. This is mainly due to a difficult year-on-year comparison due to a one-off special effect of 26 million euros in Q4 2022. OIBDA increased by 4.2 percent to 695 million euros.
Record pace of network expansion
Since October 2023, O2 customers have been able to surf and make calls on the new 5G Plus network (5G Standalone) for the first time
In the 25th anniversary year of O2 Telefónica's network, the company continued to make great progress in 5G expansion and network densification. Just over three years after its launch, O2 Telefónica's 5G network already reaches 95 percent of the population. Since October 2023, O2 customers have been able to surf and make calls on the new 5G Plus network (5G Standalone) for the first time. The company plans to achieve nationwide 5G coverage by the end of 2025 at the latest.
Continuous investment in network quality is not only reflected in low churn rates, but also in consistently high network test ratings. The renowned connect magazine has rated O2's network as “very good” for the fourth time in a row, despite tightening its test criteria every year.
Contribution to a sustainable digital future
O2 Telefónica receives the best ESG rating in the industry worldwide
ESG commitment remains an integral part of O2 Telefónica's corporate strategy. Especially in geopolitically and macroeconomically challenging times, the company is demonstrating that sustainability and corporate success go hand in hand. O2 Telefónica is continuously working to make a significant contribution to a sustainable digital future. External rankings confirm O2 Telefónica's leading sustainability role in the telecommunications industry. The company was able to further improve its Sustainalytics ESG Risk Score and is now number 1 in the telecommunications services category worldwide according to the analysis company Sustainalytics. O2 Telefónica also made it to the finalists of the German Sustainability Award 2023.
Setting the right course for the digital future
“2024 will be a decisive year for the country's digital future. This applies above all to the decisive political and regulatory course that will be set this year”, says CEO Markus Haas. In recent years, O2 Telefónica has invested massively in the development and expansion of the digital infrastructure in Germany. “Whether frequency extensions, the development of additional frequencies for mobile communications, simplified approval procedures or the financial participation of large tech companies in network expansion – these are all issues whose decisions are crucial for Europe's digital future”, says Markus Haas.
Dividend of EUR 0.18 per share
In view of the good operational and financial development and in line with the existing dividend policy, O2 Telefónica intends to propose a dividend of EUR 0.18 per share for the financial year 2023 to the Annual General Meeting.
Profitable growth through “Accelerated Growth & Efficiency Plan”
With its “Accelerated Growth & Efficiency” strategic plan for the years 2024 to 2026, O2 Telefónica has a clear plan to continue generating profitable growth and make its business model more resilient. “I am confident that with our 'Accelerated Growth & Efficiency Plan' we will make our business model even more resilient and capitalize on the growth opportunities in the German market”, affirms CEO Markus Haas.
O2 Telefónica plans to continue its growth path in 2024
In financial year 2024, O2 Telefónica aims to further pursue its sustained growth path. Building on recent years good momentum and its 3-year “Accelerated Growth & Efficiency Plan” (2024-26), the Company is focusing on building a more resilient business model. The plan is an integral part of Telefonica S.A.'s GPS strategy. GPS stands for “Growth, Profitability and Sustainability”.
In summary, O2 Telefónica expects for the financial year 2024:
- Slightly positive year-on-year revenue growth
- Low to low-mid single-digit percentage year-on-year EBITDA-growth, including regulatory headwinds of ca. EUR -20m to -25m.
- A Capex-to-Sales ratio (C/S) of Option 13% - 14%.
Financial outlook
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| O2 Telefónica is a leading full-service provider of telecommunications services for consumers and business customers. The portfolio of the core brand O2 and various secondary and partner brands includes not only traditional telephony and Internet connections but also innovative digital services in the area of the Internet of Things and data analysis. In mobile communications, O2 Telefónica serves more than 45 million mobile lines (incl. M2M - as of December 31, 2023). No other network operator connects more people in this country. The company's high-performance, award-winning mobile network reaches over 99% of the population. In the fixed network, O2 Telefónica offers its customers the greatest technological diversity and geographical availability of any provider in Germany. Telefónica Deutschland Holding AG has been listed on the Frankfurt Stock Exchange since 2012. In fiscal year 2023, the company generated revenues of EUR 8.6 billion with around 7,500 employees. The company is majority-owned by the Madrid-based Spanish telecommunications group Telefónica S.A., one of the largest telecommunications groups in the world. |