Telefónica, S.A. (TEF) Q1 2022 Earnings Call Transcript

For the period ending March 31, 2022

May 12, 2022 4:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Adrián Zunzunegui

Thank you. Good morning, and welcome to Telefónica's conference call to discuss January-March 2022 results. I'm Adrián Zunzunegui from Investor Relations.

Before proceeding, let me mention that the financial information contained in this document has been prepared under International Financial Reporting Standards as adopted by the European Union. This financial information is unaudited. This conference call and webcast, including the Q&A session, may contain forward-looking statements and information relating to the Telefónica Group. These statements may include financial or operating forecasts and estimates or statements regarding plans, objectives, and expectations regarding different matters.

All forward-looking statements involve risks and uncertainties that could cause the final developments and results to materially differ from those expressed or implied by such statements. We encourage you to review our publicly available disclosure documents filed with the relevant securities market regulators. If you don't have a copy of the relevant press release and the slides, please contact Telefónica's Investor Relations team in Madrid or London.

Now let me turn the call over to our Chief Operating Officer, Mr. Ángel Vilá.

Ángel Vilá Boix

Thank you, Adrián. Good morning, everybody, and welcome to Telefónica's first quarter results conference call. With me today are Laura Abasolo, Eduardo Navarro, and Lutz Schüler. As usual, we will first walk you through the slides, and we'll then be happy to take any questions.

I would like to start highlighting our clear strategic execution, while delivering growth in Q1 '22. First, we reported another quarter of sustainable growth, which accelerated sequentially and for the first time in many quarters, supported by local currency appreciation. Our new operating model is also adding digital capabilities and efficiency levers. All this allowed us to manage inflationary pressures extremely well this quarter.

Second, we reinforced our position in our core markets. In Spain, we launched last week, miMovistar, the new portfolio through which B2C customers will be able to choose the products and services they need in a simple, customizable and flexible way. We also signed a five year agreement with DAZN to secure the highly valuable La Liga content with a 15% net cost deflation.

In Brazil, we gained further scale after closing the acquisition of the Oi mobile assets and expect to capture synergies of R$5.4 billion. This game-changer deal happens at a time when service revenue growth accelerates and legacy exposure is reducing. In the U.K., synergies are starting to kick in, we'll remain in the gigabit leader in the market. And Germany, further enhanced its network quality, supporting its growth and profitability momentum.