Telefónica sticks by guidance for growth
Telefónica has sought to reassure investors that it will not be knocked off-course by the economic downturn by confirming previous guidance for solid growth in revenue and operating profit during 2008.
Spain’s largest telecoms company, which is also a leading telecoms provider elsewhere in Europe and Latin America, wooed investors by extending its share buyback programme.
In a further statement of confidence, Telefónica’s top six managers, led by Cesar Alierta, chairman, each spent €1m ($1.35m) on Monday buying 400,000 of the shares. Telefónica closed up 9.6 per cent at €15.11.
Telefónica’s shares have fallen about 30 per cent this year partly because many investors have concluded that telecoms companies will get hurt by the downturn.
Vodafone and Telecom Italia have cut their group guidance for 2008. BT has warned of a possible fall in profitability at its division serving large companies. Vodafone’s shares have fallen about 40 per cent this year, BT’s, 50 per cent, and Telecom Italia, 60 per cent.
Telefónica will report its third-quarter results on November 14. On Monday it said: “Preliminary results for the third quarter of the year reflect the continuity of the trends recorded in the first six months of the year across main markets, leading the company to remain fully on track to fulfil 2008 guidance, both at group and regional level.”
In February, Telefónica said group revenue would grow by 6-8 per cent in 2008 against 2007, and operating profit by 7.5-11 per cent. Telefónica said on Monday it was maintaining a “sound balance sheet”; at September 30 net debt was at the “bottom end” of its target range of 2-2.5 times operating profit.
Telefónica increased its leverage during a series of acquisitions that peaked in 2006. The group has since been reducing its debt.
Analysts will study Telefónica’s third-quarter performance in Spain, which is on the brink of a recession.
Telefónica declined to say how much it had spent buying back 100m shares. But it said the average share price between January 1 and October 10 was €18.25, which implies €1.8bn was spent.