Telefónica hails progress despite tough times

Yanitsa Boyadzhieva
By Yanitsa Boyadzhieva

Feb 23, 2023

José María Álvarez-Pallete, Chairman and CEO, Telefónica

José María Álvarez-Pallete, Chairman and CEO, Telefónica

  • Telefónica is reaping the benefits of its transformation journey that began in 2019
  • It reported revenue growth across the board in 2022
  • The company will continue investing in connectivity projects in 2023 while exercising “financial discipline”, said CEO José María Álvarez-Pallete

Telefónica has reported improved financial performance across all of its markets in 2022, with the operator’s CEO José María Álvarez-Pallete (pictured above) citing the recent transformation of the company’s operations as a catalyst for the ongoing growth and its ability to withstand challenging macroeconomic conditions.

In its full year results for 2022, Telefónica reported a 1.8% year-on-year increase in overall revenue to €39.99bn thanks to growth in all markets, including a 0.6% revenue rise in Spain, as well as gains made in Germany, in its joint venture with Liberty Global in the UK (Virgin Media O2), in Brazil, and in its Telefónica Hispam unit covering Latin and Central America.

Notably, the company reported a 57% year-on-year increase in revenue for Telefónica Tech – its digital business that focuses mainly on cybersecurity, internet of things (IoT) and big data, as well as cloud services. The tech unit generated €1.48bn in revenue in 2022 and, according to the telco, “has consolidated its position as a leader in advanced digital solutions and has increased its capabilities and scale thanks to the strategic and value-added acquisitions made during the year”.

Its infrastructure-focused arm, Telefónica Infra, which manages its fibre-to-the-home (FTTH), datacentre and subsea cable operations, also made strides during the period. Telefónica claimed to “hold the top position in the world” when it comes to FTTH deployments (excluding China), with a total of 168.1 million premises passed across all of its operating markets at the end of December 2022, up 5% compared with the same period in 2021.

Its 5G network now covers more than 85% of the population in Spain and more than 80% in Germany, as well as more than 1,600 locations in the UK and 39 cities in Brazil. Its total group connections at the end of 2022 stood at 383.1 million, 4% higher than the level reported in December 2021.

Looking at 2023, Telefónica is following the broader industry trend of tightening the purse strings, and expects to bring its capex-to-sales ratio to around 14% compared with a ratio of almost 15% in 2022. The company is also bullish that it will achieve “low single-digit” organic revenue growth this year. Commenting on the results, Álvarez-Pallete expressed content with the transformation the company is undergoing. “We are well positioned to continue on this path of profitable growth. In 2022 Telefónica has once again demonstrated its strength, commitment to its objectives and its ability to weather the most challenging environments,” he said.

The company chief also reiterated that the telco will maintain its “current financial discipline” while prioritising investment in connectivity projects because “for Telefónica, responding to the new demands of the digital era is not an option; it is the choice.”

The company began its transformation journey in 2019 with a restructuring plan that included numerous consecutive moves, including the creation of Telefónica Tech and Telefónica Infra; sharpened focus on its operations in Spain, Brazil, the UK and Germany; spinning off the majority of its businesses in Central and South America; and offloading its tower sites in 2021.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV

Email Newsletters

Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.