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Telefonica SA ADR - Stock Quote TEF

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Morningstar's Telefonica SA ADR Stock Analysis

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Telefonica Beats Expectations but Management Cautious Given Macroeconomic Outlook; Maintaining FVE

Javier Correonero Equity Analyst

Analyst Note

| Javier Correonero |

Telefonica recorded a solid beat of consensus expectations in revenue, EBITDA and free cash flow. This was due to healthy performance in all geographies and currency effects acting as a strong tailwind, as Brazilian and Latin American currencies recently appreciated. Organic revenue growth was 3.2%, with the largest contributors being Germany and Brazil (5.2% and 4.6% growth respectively), and with Spain remaining stable at 0.9% organic growth. Group EBITDA grew less than revenue at 2.1%, hit by cost inflationary pressures. Despite the beat, management preferred to maintain its guidance of low-single-digit growth in sales and EBITDA, given current macroeconomic uncertainties. We maintain our EUR 4.90 fair value estimate and view shares as fairly valued.

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Telefonica SA ADR's Company Profile

Business Description

Telefonica operates mobile and fixed networks in Spain (where it is the incumbent telephone operator), U.K., Germany, Brazil, and other Latin American countries. The company derives more than 30% of its revenue from Spain, close to 20% from Germany and 20% from Brazil. Its U.K. operations are held through a joint venture with Virgin Media. In Latin America Telefonica operates in Mexico, Argentina, Chile, and Peru, among others.

Distrito Telefonica, Edificio Central. Planta 3, Ronda de la Comunicacion S/N
Madrid, 28050, Spain
T +34 914828700
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 104,150

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