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Telefonica Equity Lower On VM02 Results, Spreads Muted

COMMUNICATIONS
  • VM02’s FY23 results saw revenue in line with company-provided consensus though with a miss on adj-FCF (GBP 722mn vs. consensus of GBP 829mn).
  • FY24 guidance disappointed; stable to declining revenue vs. consensus of +1.3%, low-to-mid single digit decline in adj-EBITDA vs. consensus of +1.3%, adj-FCF of GBP ~500mn vs. consensus of GBP 923mn.
  • 2024 outlook focused on continued growth investment and marketing costs, the likely drivers of the misses on guidance.
  • Noting that VM02 is a bigger component of the Liberty Global group than it is to Telefonica so likely a bigger impact there.
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  • VM02’s FY23 results saw revenue in line with company-provided consensus though with a miss on adj-FCF (GBP 722mn vs. consensus of GBP 829mn).
  • FY24 guidance disappointed; stable to declining revenue vs. consensus of +1.3%, low-to-mid single digit decline in adj-EBITDA vs. consensus of +1.3%, adj-FCF of GBP ~500mn vs. consensus of GBP 923mn.
  • 2024 outlook focused on continued growth investment and marketing costs, the likely drivers of the misses on guidance.
  • Noting that VM02 is a bigger component of the Liberty Global group than it is to Telefonica so likely a bigger impact there.