Telefonica Wins $380 Million Dispute With Colombia

The most oversold stocks in the communication services sector presents an opportunity to buy into undervalued companies.

The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered oversold when the RSI is below 30, according to Benzinga Pro.

Here's the latest list of major oversold players in this sector, having an RSI near or below 30.

PLDT Inc ADR

• On March 27, PLDT filed 2023 annual report on Form 20-F with the U.S. Securities and Exchange Commission. The company's stock fell around 12% over the past month and has a 52-week low of $22.01.
• RSI Value: 25.90
• PHI Price Action: Shares of PLDT fell 1.8% to close at $22.90 on Monday.
• Benzinga Pro's real-time newsfeed alerted to latest PHI news.

European equities traded in the US as American depositary receipts were moving higher late Monday morning, rising 0.35% to 1,339.76 on the S&P Europe Select ADR Index.

From continental Europe, the gainers were led by internet browser company Opera and pharmaceutical company Ascendis Pharma , which rose 4.8% and 3.3% respectively. They were followed by pharmaceutical company Novo Nordisk and internet advertising firm Criteo , which were up 2.9% and 2% respectively.

The decliners from continental Europe were led by accommodations booking company trivago and biotech firm Evaxion Biotech , which fell 2.4% and 1.8% respectively. They were followed by medical device maker Edap and telecommunications operator Telefonica , which were down 1.7% and 1.6% respectively.

From the UK and Ireland, the gainers were led by biopharmaceutical companies NuCana and Akari Therapeutics , which climbed 6.3% and 5.2% respectively. They were followed by financial services company Barclays and software firm Endava , which increased 3.6% and 2.7% respectively.

The decliners from the UK and Ireland were led by biopharmaceutical company TC Biopharm and biotech firm Trinity Biotech , which lost 5.9% and 3.7% respectively. They were followed by mining company BHP Group and biopharmaceutical company Amarin , which were off 2.8% and 2.1% respectively.

By Sabela Ojea

Telefónica Venezolana agreed to pay $85.2 million to resolve an investigation conducted by the Justice Department into an alleged bribery scheme to obtain U.S. dollars.

The subsidiary of Spanish telecommunication company Telefónica allegedly agreed to bribe government officials in the Latin American country to exchange its Venezuelan bolivars to U.S. dollars in a currency auction in 2014 and maintain its position in the Venezuelan communications market.

"Telefónica Venezolana chose to support a corrupt regime to circumvent the difficulties of conducting legal business in Venezuela," said Nicole Argentieri, head of the Justice Department's criminal division.

Telefónica Venezolana, which entered into a deferred prosecution agreement as part of the settlement, recruited two suppliers to make corrupt payments of about $28.9 million to an intermediary, knowing that some of those funds would be paid as a "commission" to Venezuelan government officials, the DOJ said Friday.

The subsidiary then covered the bribes by purchasing equipment from two suppliers, who then paid the bribes on the company's behalf. This allowed Telefónica Venezolana to receive more than $110 million through the currency auction, representing over 65% of the funds that the Venezuelan government awarded in the 2014 currency auction, according to the DOJ.

Telefónica Venezolana and its parent company have agreed to continue cooperating with the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of New York in any investigation arising during the term of the deferred prosecution agreement.

Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix

Telefonica, S.A. TEF reported a third-quarter 2024 net income of €10 million, which plummeted 98.1% year over year. Furthermore, basic earnings per share (EPS) were €0.1 (12 cents) compared with €0.09 in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 50%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Quarterly revenues fell 2.9% year over year to €10,023 million ($11,061 million). However, the top line beat the Zacks Consensus Estimate by 0.1%. Currency volatility notably impacted TEF’s revenues, with a €429 million reduction due to foreign exchange rate movements.

Results by Business Units

Telefonica Espana: Quarterly revenues in Spain increased 1% year over year on a reported basis to €3,182 million, driven by momentum in mobile handset sales and retail sales. The quarterly adjusted EBITDA grew 1% to €1,155 million due to an increase in customer satisfaction. The company achieved the highest customer additions in six years and a Net Promoter Score of 34 points. With churn rates at a historic low of 0.8%, the segment is poised for continued growth, as customer satisfaction and loyalty contribute to sustainable revenues.

Telefonica Deutschland: Quarterly revenues declined 1.6% to €2,131 million, driven by sluggish trends across the mobile business amid growth in the fixed business. The quarterly adjusted EBITDA margin was 33.1%. Capital expenditure (CapEx) rose 6.3% to €332 million in the quarter.

VirginMedia-O2 U.K.: Quarterly revenues fell 0.7% to €3,197 million. The quarterly adjusted EBITDA margin was 36.6%. CapEx inched up 0.6% to €665 million in the quarter.

Telefonica SA Price, Consensus and EPS Surprise

Telefonica SA price-consensus-eps-surprise-chart | Telefonica SA Quote

Telefonica Brasil: Quarterly revenues in Brazil decreased 6.4% to €2,308 million, impacted by currency depreciation. A slowdown in the mobile and fixed businesses led to the contraction. The quarterly adjusted EBITDA declined 5.9% to €1,030 million. The company’s operations in Brazil were affected by the depreciation of the Brazilian real, which also led to a €159 million reduction in EBITDA. CapEx decreased 15.9% to €414 million in the quarter.

Telefonica Infra (Telxius): The unit, responsible for next-generation infrastructure deployment, ended the period with 24 million premises connected with fibre. Telxius, Telefonica’s submarine cable company, experienced a 12% increase in traffic over the first nine months with a high profitability ratio of 48.9%.

Telefonica Tech: The segment reported revenue growth of 9.5% year over year in the first nine months to €1,453 million, supported by a 40% increase in orders. Quarterly revenues increased 6.3% year over year to €470 million. The healthy growth in bookings was enhanced by significant private-sector contracts in finance, healthcare and manufacturing. This growth adds high-value, recurring contracts to the backlog, supporting long-term revenue sustainability.

Telefonica Hispam: Quarterly revenues in the Telefonica Hispam segment decreased 6.2% to €2,100 million. The quarterly adjusted EBITDA margin was 17.9%. CapEx fell 11.1% to €169 million in the quarter.

Other Details

Quarterly adjusted EBITDA was €2,946 million, down 11.5% year over year. Operating income was €740 million in the quarter under review, which decreased 30.1%.

Cash Flow & Liquidity

For the nine months ended Sept. 30, 2024, Telefonica generated €7,120 million of net cash from operating activities compared with €8,238 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €1,030 million.

As of Sept. 30, 2024, the company had €6,325 million in cash and cash equivalents, with €32,180 million of non-current financial liabilities.

2024 Outlook Reconfirmed

The company expects revenues to grow approximately 1%. EBITDA is expected to rise 1% to 2%. CapEx-to-sales ratio is likely to be up to 13% and a growth in free cash flow of above 10%.

In addition, the company reiterated the cash dividend of €0.30 per share, payable on December 2024 (€0.15 per share) and June 2025 (€0.15 per share).

TEF’s Zacks Rank

Telefonica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Itron Inc ITRI reported non-GAAP EPS of $1.84 for third-quarter 2024, which beat the Zacks Consensus Estimate by 62.8%. The company reported earnings of 98 cents in the prior-year quarter.

Shares of ITRI surged 77% in the past year.

Watts Water Technologies, Inc. WTS reported third-quarter 2024 adjusted EPS of $2.03 compared with $2.04 in the prior-year quarter. The bottom line topped the Zacks Consensus Estimate by 2%.

Shares of WTS have gained 5.2% in the past year.

Western Digital Corporation WDC reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.

Shares of WDC have gained 51.1% in the past year.

Note: €1 = $1.09893 (period average from July 1, 2024, to Sept. 30, 2024) €1 = $1.11602 (as of Sept. 30, 2024)

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