Telefonica adds 494,000 pay TV subscribers in 2Q 2014

Thursday, July 31st, 2014 
Telefónica logo

MADRID — Telefónica (Madrid and NYSE: TEF) has released its second quarter (January to June) 2014 results.

Pay TV access growth accelerated 32% year-on-year in organic terms to 4.2 million at the end of June, with 610 thousand net additions in April-June (excluding 131 thousand “TV Mini” accesses in Spain included in the second quarter of 2014 and including backlog – 116 thousand – in the quarter), posting positive net additions for five consecutive quarters. This strong momentum was primarily driven by Spain, after the launch of “Fusión TV” in April allowed for quarter net additions of 464 thousand (58 thousand in the previous quarter) and to nearly double the access base vs. previous year. In addition, T. Brasil and T. Hispanoamérica pay TV accesses maintained outstanding double-digit growth rates.

Telefónica España

Pay TV accesses almost doubled June 2013 figure reaching 1.2 million, driven by the success of the new convergent offer, with “Movistar TV” as the key differentiation lever in terms of quality, user experience and content.

In the second quarter 131 thousand “TV Mini” customers were included in the total access base (IP TV package with seven free channels included in the convergent fibre offer launched in September 2013). Excluding these customers, Pay TV net additions totalled 348 thousand accesses (464 thousand including the increase in backlog in the period), compared with 58 thousand in the previous quarter (406 thousand in the first half of the year; vs -78 thousand in the same period in 2013). Also noteworthy is the sequential and year-on-year reduction in churn (2.3%; -1.0 percentage points year-on-year and -0.3 percentage points quarter-on-quarter).

Telefônica Brasil

Pay TV accesses year-on-year growth accelerated to 28% in the quarter, standing at 688 thousand accesses following net additions of 43 thousand accesses in the second quarter (48 thousand in the first half); due to the positive reaction after the launch of high definition channels through satellite technology (DTH) and the good performance of IPTV accesses (61 thousand as of June 2014; x2.5 year-on-year).

Telefónica Hispanoamérica

Pay TV accesses totalled 2.3 million (+17% year-on-year), with record net additions for the Company posted in the second quarter (103 thousand accesses; 161 thousand in the first half) with an improvement in all the countries in the region offering the service and a penetration out of total traditional business accesses reaching 17% (+3 percentage points year-on-year).

Telefónica Chile

Pay TV accesses stood at 560 thousand, up 21% year-on-year, posting the highest figure of quarterly net additions of the last four years (+33 thousand in the quarter and +57 thousand in the first half) as a result of the focus on TV quality (including high-definition on an ample number of channels and a platform with a wide variety of services and applications).

Telefónica Perú

Pay TV accesses stood at 887 thousand customers in June (-3% year-on-year) with a net gain of 2 thousand accesses in the second quarter, reversing access net losses of last quarters (-10 thousand in the first half) leveraged on the broadcasting of the Football World Cup and thanks to the stepping-up of retention initiatives and the momentum of high-definition channels offer.

Telefónica Colombia

Pay TV accesses stood at 384 thousand at the end of June, with year-on-year growth accelerating to 22% and net additions of 20 thousand accesses in April-June (+37 thousand in January-June).

Telefónica Venezuela and Central America

Pay TV accesses continued their positive trend of previous quarters, rising by 67% year-on-year to reach 463 thousand at the end of June, with net additions of 48 thousand accesses in April-June (+78 thousand in January-June).

Pay TV accesses (000s)

                                                                                               Growth
                                                                            -------------------------
                      1Q 2013  2Q 2013  3Q 2013  4Q 2013  1Q 2014  2Q 2014  Quarter    Y-o-Y  Y-o-Y %
                      -------  -------  -------  -------  -------  -------  -------  -------  -------
Spain(1)                659.9    632.5    609.3    672.7    730.3  1,209.5    479.2    577.0    91.2%

Germany(2)               51.3     46.0     41.5        -        -        -        -        -        -

(Czech Republic(3)      140.9    142.8    147.6    156.0        -        -        -        -        -)

Brazil                  565.7    537.5    587.7    640.1    644.8    687.8     43.0    150.3    28.0%

Hispanoamérica        1,886.6  1,968.4  2,055.1  2,133.5  2,192.0  2,294.6    102.6    326.2    16.6%
 Chile                  441.8    464.5    480.5    503.2    527.1    559.9     32.8     95.4    20.5%
 Colombia               299.1    314.2    332.1    347.6    363.8    384.1     20.3     69.9    22.2%
 Peru                   907.8    912.5    904.8    897.1    885.7    887.3      1.6    -25.2    -2.8%
 Venezuela and
  Central America(4)    237.9    277.2    337.6    385.6    415.3    463.2     47.9    186.0    67.1%
                      -------  -------  -------  -------  -------  -------  -------  -------  -------
Total                 3,304.5  3,327.1  3,441.2  3,602.2  3,567.1  4,191.9    624.8    864.8    26.0%
 ex. Czech Rep.       3,163.5  3,184.4  3,293.6  3,446.3  3,567.1  4,191.9    624.8  1,007.5    31.6%

1. Since the second quarter of 2014, Pay TV accesses include 131 thousand “TV Mini” customers in Spain.
2. In the fourth quarter of 2013, all TV accesses were disconnected.
3. Sold to PPF Group N.V.
4. Central America includes Guatemala, Panama, El Salvador, Nicaragua and Costa Rica.