AUS
NZ
UK
CA
USA
IND
Summary
- Telefónica Deutschland released its strategy update and outlook for FY 2020, confirming that the core business momentum remains intact.
- The company entered a 5G era in 2020, aiming to accelerate sustainable growth.
Telefónica Deutschland Holding AG (LON:0QAL) released a strategy update on 19 January and proposed an increased dividend confirming a successful start to the year.
Telefónica Deutschland, popularly known as O2, has delivered strong results for the nine months of FY 2020, showcasing an improvement in trends in the Q3 2020, resulting from the robust traction of the O2 free portfolio.
Operational Updates
- The German telecom company accelerated the rollout of its 4G network. It has covered 98 per cent of households across the nation and a minimum of 97 per cent households in each of the 16 federal states at the end of 2020.
- The 5G network of the company went live in the 15 of the largest cities of Germany.
- Telefónica O2 was awarded “very good” rating in the connect magazine test, which confirms that the company has strong network enhancements.
- Today, Telefónica announced a Memorandum of Undertaking with Deutsche Telekom and also signed an agreement with Vodafone PLC (LON: VOD) for bilateral active network sharing in grey spots.
- The company also stated that they are aiming a minimum of 1.2k combined sites.
- Telefónica O2 also participated in the trilateral passive sharing agreement of the German MNOs.
- A 10 per cent minority stake of Unsere Grüne Glasfaser (UGG), which will offer attractive long-term returns was also announced.
Financial Highlights
- As on 30 September 2020, the company's leverage ratio was 1.6x, which is well below its self-defined target of 2.5x.
- At its annual general meeting in May, the telecom company is planning to propose a higher dividend of EUR 0.18 ($0.22) per share for the FY2020.
Outlook
The company expects a minimum of 5 per cent growth in the cumulated revenue in the next three years (2020 -2022). The revenue so generated is expected to benefit the operating income before depreciation and amortization, adjusted for exceptional effects, without the coronavirus pandemic's impact.
A strong balance sheet continues to be Telefónica Deutschland's target, with significant financial flexibility and low leverage. The company's commitment to an attractive shareholder remuneration remains intact. Further, it is aiming a high pay-out ratio to Free Cash Flow after leases (FCFaL).
Stock Performance
The shares of the Telefonica Deutschland quoted EUR 2.30 at 12:22 PM GMT on 19 January, trading lower by 0.97 per cent from the previous trading session's close.
