Telefónica Deutschland Holding AG

Q4 2023 revenue was €2.291 billion, up 4.6% year-over-year. Q4 OIBDA was €695 million, up 4.2% year-over-year, with OIBDA margin broadly stable at 30.3%. Full-year 2023 revenues grew 4.7% year-over-year; mobile service revenues grew 2.7%, fixed broadband service revenues rose 5.3%, and handset sales grew more than 13%. Full-year OIBDA grew 3.1%, CapEx fell 6.3% to €1.133 billion, CapEx/sales was 13.2%, operating cash flow rose 11.7% to €1.468 billion, free cash flow improved by close to 20% to €1.304 billion, and free cash flow after lease rose 23% to €557 million. Net financial debt declined to €3.2 billion and leverage was 1.2x. Guidance for 2024 calls for revenues to grow slightly positive year-over-year, EBITDA to grow low to low-mid single-digit year-over-year, and CapEx/sales to be between 13% and 14%.

Markus Haas described 2023 as a year of strong execution, market-share gains, and healthy financial performance, saying the company consistently grew across segments and successfully overachieved its full-year outlook. He framed the next phase around an accelerated growth and efficiency plan tied to Telefónica Group’s GPS strategy, with three priorities: rebalancing the revenue mix, improving network quality, and accelerating transformation. His tone was confident and constructive, with a clear message that the business enters 2024 with momentum and with measures for 2024 already “locked in,” while work on 2025 and 2026 is underway.

Markus Rolle focused on the quarter’s financial mechanics and cash conversion. He highlighted Q4 revenue of €2.291 billion, Q4 OIBDA of €695 million, and a broadly stable 30.3% OIBDA margin, while noting cost pressure from supplies and personnel expenses but also lower other OpEx. For the full year, he pointed to CapEx of €1.133 billion, free cash flow of €1.304 billion, free cash flow after lease of €557 million, lease payments of €747 million including some prepayments for 2024, and net financial debt of €3.2 billion with 1.2x leverage; he also said the current lease run-rate many investors modeled around €700 million was the underlying basis. He emphasized that the 2024 outlook already incorporates the 1&1 contractual and roaming transitions, including revenue effects but limited EBITDA impact.

Analysts pressed management on slower underlying mobile service revenue growth, the rationale for new family plans and temporary promotions, lease prepayments, and the impact of losing 1&1 traffic. Management said underlying Q4 mobile service revenue growth was “north of 2%,” family plans are meant to boost profitable growth through lower acquisition costs, and promotions are temporary and targeted to capture high-value customers. On 1&1, they said the impact is already included in 2024 guidance and that 2025/2026 measures are in advanced stages, with freed-up network capacity expected to be marketed on commercial terms. They also said B2B is growing faster than consumer, though still a single-digit share of mobile service revenue, and that the fixed broadband growth was mainly cable-centric.