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TELEFÓNICA: 1Q’20 ESTIMATES (ANÁLISIS BANCO SABADELL)

We expect the 1Q’20 results to be penalised by the negative FX performance (BRL -14%; ARP -45%) and by one-offs seen in 1Q’19 (net impact of €~130 M on the EBITDA level). With this in mind, the 1Q’20 sales would fall -4.7% (+1.4% organic variation), with drops in Spain (-1.4%, hit by the lower sales of handsets), Brazil (-11.1% reported and +1.5% in local currency) and HispAm (-9.5%). 1Q’20 EBITDA would slide -11% (+0.4% organic), due partially to the impact from the one-offs in 1Q’19 mentioned and the FX.
TEF Germany (16% total saels) has just released its results, reporting +3.8% sales growth (+2.5% above our estimate) and € 524 M of EBITDA in 1Q’20 (-2% below our estimate), with a 28.8% adjusted margin, sliding -0.6pp vs. 1Q’19.
The key to these results will lie in the messages to be given on the impact from Covid-19 on its businesses (increased traffic and balancing clients in different packages, portabilities, etc.) as well as how the asset review plans are going (sale of HispAm?, merger with Liberty in the UK?), which from our point of view is the main driver for the stock.