Most telecoms operators would have felt the pinch of the coronavirus pandemic, but it appears Telefonica is wearing bigger bruises than the majority.
Total revenues for the six-month period to June-end declined 10% year-on-year, while the second quarter, the three months of dramatic societal changes, saw revenues slashed 14.8%. Spain was one of the most severely impacted regions in Europe, but the pain has been spread throughout the telcos international footprint.
“Telefónica delivered a resilient performance in a quarter marked by the COVID-19 crisis, as we contained the impact on our revenues through strong operational management, cost control and CAPEX management,” said CEO José María Álvarez-Pallete.
| Impact of COVID-19 on Telefonica operations by market (in millions, €) | ||||
| Market | Q2 | H1 | ||
| Revenue | Impact | Revenue | Impact | |
| Spain | 194 | 6.1% | 213 | 3.4% |
| UK | 130 | 7.6% | 130 | 3.8% |
| Germany | 38 | 2.1% | 38 | 1.1% |
| Brazil | 99 | 5% | 116 | 2.6% |
| HISPAM | 255 | 9% | 293 | 5.3% |
Over the first six months of 2020, Telefonica estimates COVID-19 cost the business €806 million. This represents a 3.4% impact to organic growth, though the 10% year-on-year decline for revenues in H1, and 14.8% drop in Q2, is a difficult one for the executives to explain away.
Irrelevant as to how much of a positive spin you put on the figures, or if you launch a new digital strategy at the same time, Telefonica has been damaged more by COVID-19 than other telecoms operators who have reported results to date.
In Qatar, Ooredoo reported a 7% decline during the second quarter. Verizon’s revenues dropped 5.1%. AT&T saw an 8.9% dip. Vodafone’s results saw 2.6% lost to COVID-19, and KPN revenues were 4.9% lower. There are more to come, and while we suspect there might be a few more shocks, Telefonica’s financials are looking much more fragile than other telecoms operators.
Alongside these results, the Telefonica team has also unveiled a new strategy where it has promised to lead Spain into the 5G era and also achieve 100% full fibre broadband deployment by 2025.
“Now, more than ever, we need a Digital Deal that reflects the contributions, aspirations and desires of society as a whole. We now have a unique opportunity to fully enter into the Fourth Industrial Revolution and achieve effective cooperation between governments, business and civil society. This is the path to a more sustainable, fair, inclusive and digital society,” said Álvarez-Pallete.