Good morning, and welcome to Telefonica Conference Call to discuss January, January, 2019 results. I'm Pablo Yaron, Head of Investor Before proceeding, let me mention that financial information contained in this document related to the first quarter 2019 has been prepared under international financial reporting standards as adopted by the European Union. From the 1st January 2019, we implemented IFRS 16. In organic terms, the effects of the accounting change to IFRS 16 are excluded in 19. This financial information is unaudited.
This conference call webcast, including the Q And A session, may contain forward looking statements and information relating to the Telefonica Group. These statements may include financial or operating forecast and estimates based on assumption or statements regarding plans, objectives and expectations that make reference to different all forward looking statements involve risk, uncertainties and contingencies, many of which are beyond the company's control. Encourage you to review our publicly available disclosure documents filed with the relevant securities market regulators. If you don't have a copy of the relevant press release and the slides, please contact Fonika's Investor Relations team in Madrid London. Now let me turn the call over to our Chief Operating Officer, Mr.
Angel Villan.
Thank you, Pablo. Dear, investor and analyst community. Good morning, and welcome to Telefonica's 1st Quarter Results Conference Call. With me today is Lara Avasolo, Chief Financial And Control Officer. Following our presentation, we will host a Q and A session and invite you to ask any questions you may have.
I would like to start this call by sharing with you our main achievements during Q1. First, we continue increasing customer relevance by offering the best digital experience High value accesses continue to be the pillar and increasing accesses and penetration translates into tangible results. Average revenue per access accelerates its organic growth to 4.2% year on year amid stable churn. Customer satisfaction increased as Movistar ranked 2nd topmost valuable Spanish brand the only telco brand in the top 20. 2nd, connectivity is the foundation to allow the best customer experience smart connectivity on new high speed flexible secure and advanced networks featuring elements of artificial intelligence.
3rd, our growth is consistent and profitable. With revenue improving its growth rate this quarter to 3.8 percent organic, and revenues continue the transformation process with 56% of revenues already coming from broadband connectivity and digital services. Our OIBDA recorded positive growth, and our earnings are outstanding with net income and EPS growing strongly and free cash flow improving substantially. Finally, the clear deleverage path we initiated some years ago continues to be confirmed with 8 straight quarters of declining net debt, which stood below the EUR 39,000,000,000 mark at the end of the quarter when including the sale of both our Central American assets and data centers recently announced. Turning to Slide number 2, let me summarize our main financials.
Reported figures for the first quarter reflect the new IFRS 16 accounting standards, with a positive impact of EUR 414,000,000 in OIBDA and a negative impact of EUR 17,000,000 in net income. Let me remind you that 2018 figures have reported reported under IAS 17. As such, year on year reported changes reflect on 100 organic growth and are also affected by accounting changes by the negative evolution of FX regulation and other special factors like capital gains, among others. Reported revenues reached almost 1,000,000,000. OIBDA stood at EUR 4,300,000,000, a 35.6% margin, whilst net income exceeded EUR 900,000,000.
Free cash flow of EUR 1,400,000,000 is a remarkably strong number. 2 times 6 2.6 times larger than in the same period last year, and allowing to reduce our net debt by 5.7% on a yearly basis to EUR 40,000,000,000. On an organic basis, it is worth to highlight the acceleration in the revenue growth rate to 3.8% thanks to improving service revenue trends, while OIBDA posted positive growth of 1%. Next slide shows our 2019 guidance, which is well on track following Q1 result. And fully aligned with our expectations.
We also confirmed the dividends to be paid in the calendar year, and to be approved in the next AGM. Per share on the 20th June, which is the second tranche from the 2018 dividend. And per share on 19th December, which will be the 1st tranche for the 2019 dividend. The second tranche of 2019 dividend and other EUR 0.2 per share will be paid in June 2020. Let's move to Slide 4, where we detail the net income components and their evolution.
We have achieved 10.6 percent annual growth in net income, and surpassed the EUR 900,000,000 mark, despite FX headwinds and IFRS 16 negative impact. Reported earnings per share reached EUR 0.16 increasing a significant 33.8 percent versus the final quarter of 2018, reflecting our solid operational performance and further boosted by savings from Financial Management. And as mentioned at the beginning of the presentation, I would like to remark the better trend registered at the top line, plus 80 basis points sequential improvement versus Q4 2018 to 3.8 percent in organic terms and 4.6% excluding regulation. The mix of this improvement is important as well. Since service revenues ramped up by 130 basis points, to 2.6% positive growth year on year, and handset sales continued to post a robust increase of 15.6%.
By segments, there is growth across the board, and we are benefiting from our unmatched diversification Latin America being the main contributor to this better performance of revenues, increasing at the pace of 6.2%, on a yearly basis and accelerating versus Q4, 2018 by as much as 260 basis points. While Europe remains growing healthily at 1.6%. Now let me present the OIBDA performance in the first quarter, which we show on Slide 6. OIBDA grew by 10.3% in reported terms, reflecting mainly the positive impact of IFRS 6 in, while in organic terms, it increased by 1% or 1.7% ex regulation. Mid contributors to this organic performance, harrispam, South, Brazil and UK, with Spain improving trend versus the one registered the previous quarter.
Mexico facing tougher year on year comps. OIBDA margin topped 35.6 percent, growing 4 percentage points on a reported basis. As such, operating cash flow increased 14.6 percent from the same period last year in reported terms, while in organic terms declined 5.3% affected by CapEx phasing in this quarter, which is growing by 11.2% year on year. On slide number 7, you can see we are accelerating the deleverage path, bringing down net debt by almost EUR 700,000,000 in Q1, again driven by solid free cash flow generation. This is the 8th quarter in a row of debt decline.
Free cash flow reached 1,000,000,000, 2.6 times or 1000000 higher than the one posted in the same quarter last year. This remarkable performance and the tax refund obtained in Spain, despite usual negative seasonality impacts during this period of the year. For the rest of 2019, we expect working capital seasonality to swing and positively impact free cash flow Turning to Slide number 8, let me give you some more details for the B2C segment. Leveraging on a strong set of assets we can grow relevance through a continuous focus on delivering a better customer experience. All in all, a simple quality offer ready for tailor made personalization is the base of our value proposal.
Video is a key driver for ARPU and customer loyalty improvement, with IPTV accesses up 17% year on year, in this first quarter. And over the top video service, Movistar Play, being already present in all Espam countries after its launch in Mexican, Argentina this quarter. Ultra broadband speed with price premium increases both satisfaction and ARPU and its penetration over the total fixed broadband base reaches 63% at the group level 9 percentage points higher than a year ago. Mobile data use keeps on growing in both the prepaid segment thanks to recurrent plans and incentives to top ups and in contract. Once offers are enriched with new services as data sharing, data transfer or dedicated data for apps.
Finally, customized integrated handset offers focused on high value customer renewal are delivering very positive results. We now move on to Slide number 9 where we show how B2B, representing 20 percent of group revenues is speeding up its pace of growth. B2B revenues are growing 6% year on year on the back of improving trends in both corporate plus 10% year on year and SMEs plus 2% year on year. The evolution of the B2B portfolio around the digital core of communications, cloud and security services, with building blocks of best in class portfolio of own and third party digital services, deliver strong revenue performance, mainly in advanced digital services. Set on the best networks, the P2B proposal evolves towards customer centric end to end solutions with operational excellence Let me just highlight cloud and security services and our virtualized IoT platform, widely awarded and considered as an industry reference.
Moving to Slide 10. In the first platform, we already cover 85 1,000,000 premises with Ultra broadband and 78 of population with LTE, 95% in Europe. With an efficient network that enabled CapEx needs decreased by 40%. Network virtualization with Uneka was deployed in 10 countries and up to 66 percent of processes are digitalized and managed in real time. While 30% of customers offering with digital services revenues growing by 21% in the first quarter, leveraging on personalization in the residential business and becoming the best partner for the enterprises digitalization process.
The 4th platform enriches all the above with artificial intelligence and open platforms. New functionalities are available in Movistar Home and more use cases with big data and data analytics facilitate our decision making processes. On next slide, we show how we are advancing our digital transformation program, pushing for further efficiency gains. As such, the execution of the several initiatives set around sales customer service, digitalization and process automation is translating into higher use of digital channels better customer experience and additional savings In terms of organization, we are taking a step forward evolving into a simpler more agile and flexible way of working with an agile mindset methodology. As a result, we are progressing well on track and already capturing at the end of the first quarter, 20% of the targeted savings for this year of more than EUR 340,000,000.
Now I hand over to Rouda.
Thank you, Angel. On Slide 12, we start reviewing the performance of our Spanish operations, which again show growth in share of value, thanks to our premium quality differentiated offerings. Within a period of tariff upgrades, tend to impact commercial trading, we continue improving our customer base mix, growing in convergence, TV, FTTH and mobile contract during the quarter. Furthermore, trading for all our value accesses has improved throughout the quarter, which marks showing the best monthly data in the period. We have recently announced the launch of new commercial initiatives for the coming months, such as priority customer care service or broadband for 2 homes on our Fusion clients, which should help to carry on, which are more for more strategy in converged.
It is worth highlighting that Telefonica Espana is growing its share of net adds in Spanish fiber. Putting together, retail and wholesale customers, Telefonica Espanya, selling fiber net adds during the first quarter stands large both its overall market share with uptake growing significantly in wholesale. The combined take up of more than 26% in Q1 18. This brings in visibility and sustainability to our business. Moving on to Slide 13.
Service revenue grew by 0.8% year on year in the quarter, above the 0.8 growth seen in the previous quarter. This is the 7th consecutive quarter of service revenue growth at Telefonica Espana, quite a remarkable achievement. In a quarter of lower price increases that those seen in the same period last year, consumer revenues stayed flat year on year. An improving mix of customers and promotions expiry as from Q3 will continue driving B2C revenue growth this year. B2B revenues increased by 3% year on year, growing for 4 straight quarters already, with wholesale and other revenue starts in a reverse in trend, once drugs such as NTR cuts and MVNO agreements start to be removed.
We should expect this trend to turn even more evident in the second half of the year. OIBDA performance improved by as much as 3% points from the previous quarter. As we had anticipated, negative content and incremental savings in personal and digitalization allowed to partly offset growing content costs. Again, we should expect better margin outlook in the second half, once top line trends improved and content comparison based leases. Lastly, worth mentioning, Telefonica Espana remains a benchmark in CapEx over sales at 12.1% in Q1, despite facing impact in CapEx 9.2 percent year on year growth.
Moving to Slide 14, Telefonica Deutschland posted a strong commercial quarter. The company has launched new value added initiatives, improving ARPU and churn. The O2 free portfolio continues to drive usage and ARPU growth leveraging our improved network On Tuesday, we also announced a significant enhancement of our infrastructure portfolio with the addition of cable wholesale access through a long term agreement with both a on. This deal is subject to the completion of Vodafone's acquisition of Unity Media. Telefonica Deutschland registered 3 6000 contract net additions, 94 percent up year on year.
O2 contract churn improved 0 point two percentage points year on year. O2 contract LTE customers accelerated their average data usage to 4.2 gigabytes per month, up 52% year on year. It is worth highlighting the sustained revenue growth of 0.7 year on year, mainly supported by another quarter of strong handset sales, up year on year. E OIBDA year on year trend has improved 3.8 percentage points compared to last 4 CapEx in the quarter broad loaded LTE rollout, a trend expected to normalize over the year. Telefonica UK continued delivering good growth in its main financials and overall customer The company maintained its market leading position as UK's favorite mobile network, increasing the O2 contract customer base by 4 percent year on year and improving churn to 0.9%.
It is also worth highlighting that O2 has been recognized as best network performance and mobile news awards and best sponsorship of the last 25 years for the Revenue were up 5.3% year on year, mainly driven by the continuous access its flexible tariff offerings, high value handset sales and other revenue, which also supported OIBDA growth of plus 3.4% year on year. The company continued to invest efficiently in network capacity and customer experience and operating cash flow showed strong improvement of 5.8% year on year. On Slide 16, we can see how our more formal strategy is reaping benefit in our Brazilian operations, where we are delivering profitable value growth. First, as regards to the mobile business, we have implemented different price increases during the last starting with fewer post state and hybrid in the last few months of 2018 and following with Sunrise in prepaid packages during March April. These coupled with a better base mix contract ARPU is as much as four times higher than that of a prepaid customer feeds through to mobile ARPU, which grows by 2.6% year on year in the 1st 3 months of the year.
As for the fixed business, we continue speeding up our transformation journey, seeking for a major ARPU increase. We have already passed 9,000,000 homes with FTTH 2,000,000 homes already connected, which allows fixed broadband ARPU to post as much as 14% annual growth in the quarter. Fiber ARPU is 1.4 times higher than DSS. We already offer our IPTV service in all cities with FTTH 130 were 121 at the end of Q4, which should be of further driving force to future revenue growth. IPTV ARPU is some 20% higher to profitable value results into improving top line trends.
Service revenue trend improves again, mostly due to a strong growth in contract at plus 8.2% in the quarter versus plus 6.9% in Q4 twenty eighteen, which leads to total mobile service revenue growing by 1.6% year on year, a marked improvement from flat performance seen in the last quarter of 2018. In fixed, a growing weight of high value accesses, fiber and high TV helped to reduce to further offset declines in traditional voice, which coupled with sequential improving B2B revenue helped Brazilian operation, total revenue to show a significant sequential improvement. As regards to profitability and no matter we have been expanding margins for the last 9 consecutive quarters, we have seen again we have been again able to beat inflation. OpEx rose by 2.3% year on year, which compares with 4.6 percent inflation rate, and so 0.5 percentage points annual improvement in ROE. Margin.
Moving on the review of our Hispam operations and starting with Southeast Pan on Slide 18, we could highlight revenue trends acceleration in the quarter, driven by positive mobile contract net adds for straight quarters with a stable OIBDA evolution despite salaries catch up taking place in Argentina during the period. Our revenue increased by 15% year on year in organic terms, with Argentinian revenue growth accelerating on tariffs increases and Peru showing better year on year performance than in the previous quarter. In the latter, we have recently launched our convergent offer Movistar Total. The 1st and only truly convergent of in the market, which is showing promising results so far. OIBDA, so similar growth rates, thus in the previous quarter, even despite salary catch up in Argentina on efficiencies and lower subsidies in Chile and Peru.
As for North Hispam, on next slide, negative revenue trend has been reversed in this first quarter of the year. Thanks to Colombia accelerating its top line growth rate. CECO growing by 1.2% year on year. First time in five quarters on the back of ARPU improvement and lower regulatory impact versus previous quarter. OIBDA performance is nevertheless penalized by a charge in the booking change in the booking criteria of spectrum fees and regulation in Mexico.
Should we exclude those OIBDA would have maintained similar year on year trend versus the previous quarter. On Slide 20, we see how Telxius premium infrastructure continues bearing fruits. 75 new towers being added to the portfolio in the quarter, mainly in Spain, Brazil and Peru with a tenancy ratio increasing to one point 37 times from one 0.34 times in March 2018. Revenue and OIBDA were positively impacted the sale of exceptional capacity in the MARIA submarine cable that connects Spain and the United States. Excluding this impact, top line could have grown by 6% and 9.1% year on year, respectively, sequentially improving in both cases.
On the other hand, CapEx declined more than 80% from the first quarter of 2018 after the completion of the Brusa and Maria cables that came into service last year, driving operating cash flow up by 2.9 times higher, excluding the one off aforementioned. Let's now move to balance sheet metrics on Slide 21. One more quarter, we continue to progress on our deleveraging path, relying on a strong free cash flow generation stood at EUR 1,400,000,000 in the period and comfortably allows to cover all our commitments and continue bringing down which is reduced by 700,000,000 in this quarter, continuing with previous year's strength. Should we include post closing events, net debt could come down by EUR 2,400,000,000, bringing total net debt figure down $38,700,000,000 at the end of the quarter. Hybrid liability management exercise had a temporary effect on the coming mainly from the positive effect of issuing hybrids in excess of the amount of hybrids referred Overall, the 2 high reliability management exercises in March 2018 will reach use our annual hybrid coupons by more than EUR 70,000,000.
Finally, let me mention under IFRS 16, net debt could be impacted by EUR 7,400,000,000 worth of lease within the low end of the range provided in February 2019. 2 shows how Telefonica keeps on increasing its financial flexibility through actively assessing debt capital markets, including the of the first green bond in the telecommunications sector worldwide during the quarter. With over 5,300,000,000 long term financing completed year to date in 2019. By issuing, long tenors extended our average debt life in excess of 10 years while keeping a comfortable liquidity position over 4,000,000,000 that exceeds next 2 years of maturities. And all, this happened while lowering our interest payments effect discussed of 3.39 percent as of March 2019, 18 basis points lower than in March 2018.
Moving to Slide number 23. We share more details with regards to FX impacts on our results. FX headwinds in the 1st 3 months of 2019 dragged close to 5 percentage points to the year on year variable on revenue and OIBDA. Argentinian peso and Brazilian real are the currencies that depreciated the most during the quarter. This negative effect of EUR 180,000,000 at the OIBDA level translated into just EUR74,000,000 in free cash flow terms, once CapEx and tax payments in local currency largely mitigated the impact.
As regards net debt, in the 12 month rolling period to March 2019, FX had a small positive impact. Meanwhile, organic contribution the reported figures continue to be very solid on a yearly basis. I will now hand back to Angel.
Thank you, Laura. To summarize, first, today's results showed a solid start of the year, advancing in our strategic positioning and delivering a consistent profitable and sustainable growth, demonstrated with a strong improvement in revenue growth trend. 2nd, we have achieved double digit net income and EPS growth 3rd, we further deleverage de risk our balance sheet and improve returns with asset sales. We have brought down net debt by 8 straight quarters. 4th, best in class infrastructures continue to be key for ensuring top quality customer experience.
And 5th, monetization of the core and extended offering along with digitalization efficiencies are translating in higher efficiencies. This allowed us to confirm the outlook for 2019. And to continue returning value to our shareholders through our proposed 0.4 euro dividend per share. Thank you very much for listening, and we are now ready to take your questions.
You. We will kindly ask you to ask about book up two questions per participant. There will be a short silence when questions are being registered. Our first question comes from the line of the Tayas Robilliard from Barclays. Please go ahead.
Yes, good morning. Thank you very much. I had two questions. First on Spain, in terms of the different revenue dynamics. So I think wholesale did a bit better probably than what you were flagging at the end of last year.
If you could explain the different moving parts there. And when I look at consumer, do you think that the recent recent initiatives that you announced, I'm talking about, for example, the premium service called priority and other ones can have a contribution that is meaningful to the top line already in 2019? And then I had a question on Brazil. So obviously, improved mobile performance there. But when we look at fixed despite all the investment, that you're doing, it is still tough in terms of the KPIs.
I understand there's more competition from small players in different areas. Is this a business line? I'm talking fixed Brazil that you think can revert to growth or stabilization in the short term or or is it more delayed? Thank you very much.
On Spain, revenue dynamics, you have seen that we are posting revenue growth again, and service revenue growth for a 7th quarter in a row. This is consistent with what we have been expecting and communicating in the previous conference call. The components here on B2C, which accounts for a bit more than 50%, actually 55% of service revenues. It has a flat performance in the quarter mainly due to the different phasing of price or tariff upgrades in this first quarter of this year compared to the first quarter of last year and also to a more muted commercial performance in the quarter. At the same time, B2B, which accounts for 28% of service revenue is growing 3% for a 4 or 5th quarter in a row.
Here, I would like to highlight the very strong growth of IT at 18.5%, which more than offsets the decline on the traditional communications part in IT. And this is due to all the digital services efforts that we are doing in B2B, not only in Spain, but all across the footprint. And third, the component of wholesale and other which accounts for 17% of service revenue. It has turned around and is growing at 0.2% in this quarter. The reduced impact of MVNO loss and the regulatory impacts that we saw last year and absorbed by growth in NEBA and TV and roaming revenues.
We think and we had been expecting this turnaround of the trend. It is true that in the previous call, I got a question whether this would turn to growth. And at that point, we were cautious in, in, projecting forward what could be a trend but what we have seen in the first quarter, we think that we can continue seeing in additional quarters. I think you were also asking about, commercial initiatives, new commercial initiatives that we are working in in Spain. Here, we have And this is linked to our more for more strategy.
We are enriching the offer that we have for our customers. And we are launching different services targeted to improve and increase engagement of the customers with some support more for more strategies. As such, we have been launching services like Movistar, which include connectivity SOS safety card diagnosis, for the vehicles of our customers. We have launched security or services like Connexion Segura, Movistar Cloud, services, which are quite interesting for, for families like Movistar Junior or parental projection. Especially for large families like Pablo's family, I should say.
And then we are also giving devices with more intelligence for the home like Movistar Home. And we are getting into financial services with Mobistar Money. Soon, we are going to be launching also additional services like priority Movistar, a premium, service treatment for our more valued customers And also, we are launching Fusion for 2nd residences, which is a segment where we see high potential in Spain, you have to take into account that there are almost 3,000,000 second homes in this country. Regarding, Brazil and the revenue trends in Brazil, what we have seen is an improvement of the top line. This has been driven by acceleration of and positive acceleration performance of the revenues in mobile and a better, a better trend in the fixed revenues.
Here, we're working in a big effort of transformation in which businesses such as voice, DTH, copper are declining while what we're seeing is ultra broadband and fiber growing strongly double digits. So the trend that we are seeing quarter by quarter in this transformation of the revenue function of the fixed business within is going to continue in the same direction and probably, produce positive results in the future. I don't know if that would address your question.
And thank you, Matija, for the question. Next question, please.
We will now take our next question from Ivan Lial from BBVA. Please go ahead.
Hello. Good morning, everybody. Just thanks for these two questions. The first one is is on that announced that announcement to launch an LTT offering in Spain in June. I don't know if you could give us a bit more detail on that because I guess that's a meaningful change in your strategy.
So I don't know if you could tell us about the timing if I understand correctly, I think everything except football is going to be offered to to all of the market. And eventually, if that strategy is going to be exported to other countries? And the second one is on competitive landscape in Spain. ARPU has basically stabilized in the last two quarters. This week, we had used Codel basically blaming competition, for margin pressure.
And the same day, I think Masmobi was dismissed in that. So it would be interesting to know your view on how ARPU is going to evolve in Spain going forward and how competition has kicked off in 2019? Thanks so much.
Thank you, Ivan. On the first question on the OTT launch, that that we've announced in Spain and whether this means a change of approach, which the short answer is no, but let me elaborate a video remains core for our customers. What we see is that at the core of our strategy of offering the best pay TV and the best billion this is delivering good results. We have more than 8,000,000,000 daily audience, growing 8% year on year, on Movistar Plus platform with a daily consumption, which is growing sequentially, 2 more than 200 minutes per day. The TV offer, convergent differential and complete increases loyalty.
It's a TV customer have a churn, which is 25% lower to non DB customers. So TV evolution is key to defend a very strong market position. At the same time, what we see is a low penetration of pay TV in Spain, which stands according to different sources, between 35%, 45%, which compares to most other European markets around 60% to even 100% penetration. So we see a growth opportunity. So with these two elements, we have announced the launch of our OTT to take place in June at the cost of €8 per month.
This will include a limited tasting of our content. So it will include, generally, channels produced in house, Vamos and 0. Some limited linear channels, it will include sorry, Movistar Series and Seriesmania and some video on demand of in house content. It will not include to be for sure any football it will not include a big part of our premium and offer sport. So it will allow in a rational move to capture a complementary part of the significant growth opportunity that we see in the Spanish TV market.
This is an online product, which will be linked to an app download It seemed to appeal to a big number of online followers that are following already our content or some programs online, especially those of our own production included in channels like 0. So we aim to take them as a 1P OTT product and allow them to taste the tasting a preview of the of the Movistar Plus content that will allow us later to attempt to upsell those customers into our full convergent pay TV services. We see 0 cannibalization risk, It does not detract value from our Fusion offering. It does include no football, includes no functionalities, no add ons possibilities. And regarding competitive landscape in Spain, we think or we see that overall dynamics remain rational and competitive.
We had a softer competitive quarter in Q4 following a quite intense Q3. And what we have seen in first quarter of the year was a quiet beginning of the quarter, which saw later higher promotional activity. Promotional intensity was mostly concentrated in the low end, mainly through extra mobile data allowances, and what we saw also, Vodafone in the final quarter of the year for a head of their foreclose were quite active in promotions. It's not unusual since Vodafone has been, for a while, the most active promotional player in the market. At the same time, we have seen that market portability continues to slow down and remains in line with minimum levels seen in 2018, signaling a rationale competitive environment.
We see, again, competition intense in the low end, including prepaid, where we are less exposed. And we expect having seen the Vodafone new portfolio of offers, which include some more formal elements that their promotional activity, would cool down and they would focus on their new proposal. Summing up, we see a rational environment in the high end, with value bundles, with Ultra broadband connections, pay TV services, value added content, but new added functionalities, where it is where we focus and where we still see room for selective, more for more. And this is the segment that takes more of our B2C revenues. So yes, competitive and rationale at the same time.
Great. That was very clear, Ankez. Thanks much.
Thank you, Ivan. Next question, please.
We will now take our next question from Michael Bishop from Goldman Sachs. Please go ahead.
Thank you. Good morning. Just two questions for me. Firstly, just moving to the UK there was some headlines around O2 UK potentially looking at fixed line again during the quarter. And also whilst it's very slow in terms of the uptake of convergence as a market, both Virgin Media and BT yesterday talk about potentially moving forward a bit more with fully converged products.
So it'd be good to get your latest thoughts on that. And then secondly, in terms of working capital. I was just wondering whether you could just build on the comments around working capital unwinding through the rest of the year. Where you potentially see the direction of working capital for the whole of 2019?
On the UK. We think that convergence is It remains supply led rather than demand led. It's, not being demanded and is not growing at the speed that we have seen in other countries. What we have seen is that the majority of the market remains or what we think remains mobile focused, being the UK 1 of the highest loyalty markets. Also, the telecom pricing and margins in the UK are already leaning towards some of the lowest in Europe And since convergence to take traction, sometimes entails a discount to the bundles, we think that there is little scope and also the penetration of services like pay TV that allow to build convergent bundles the penetration is already very high in the UK.
So one of the critical elements that we have seen for convergence to take up probably does not have upside in the UK as it has had in other places. So we see convergence still as as supply led not demand led and having relatively little traction. However, of course, market conditions can change. If the convergence segment was to grow, we have already a hedge with 1 of the largest converged players whose MVNO is on us, being Sky and there could be elements where we could access converged place. However, I have to say regarding what has been speculated is that we are delighted with Telefonica UK's mobile first strategy.
You can see that this been very affected by delivering top line, bottom line customer growth, customer loyalty, And we made a choice to exit the fixed market in 2013, and we have currently no plans to change this course and this decision that we took already in 2013.
Regarding working capital, Q1 has had a consumption of minus 1,000,000 which is due to seasonality impacts as it's usually useful in this first quarter of the year, a net of working capital measure the consumption in Q1 has been slightly lower than the consumption in of last year. But we will see, throughout the year that that consumption diminishes, with seasonality playing more in favor and continuing with working capital measures. So for the full 2019 year, we will expect a positive contribution of in our free cash flow. And that's why we commented that this will be unwinding throughout the year, which is usually what happens every single year. So we usually see this trend.
Thank you, Michael. Next question please.
Our next question comes from the line of Mandeep Singh from Redburn. Please go ahead.
Hi, thank you for taking the question. I have a couple, please. First of all, relates to the Spanish sort of fixed line trends and broadband. Trends. Obviously, I know you put price increases through and your trading improved sequentially through the quarter, but quite a big line loss number and a decline in broadband subs.
So I mean, can broadband net has returned to stability in sort of Q2 and beyond? That's the sort of, and also we'll see for line losses is quite a big decline in Q1. So just linking that and how relative to the sort of big content investments you've made Is it surprising to see these sorts of trends given your how much better your content offerings are versus everybody else? So that's the sort of first question. And the second question is whether the outlook for wholesale is sort of negative or positive on the basis as copper declines nebuh growth take the strain for copper declines.
So those are the two questions, please.
Thank you Mandeep. Always a pleasure to talk to you again. On the Spanish on the Spanish trends, and you were asking on the fixed, no, which is more I'm going to deal with the commercial trends because as you know, on revenues, we are looking at the bundles in a converged way. I should say that it's not unusual to see, software KPIs in a quarter in which we updated tariffs. We updated in January that is for fixed only, for mobile only.
And in February, we have updated tariffs for convergence. But if one looks at the evolution inside the quarter between the January, February March, what we have seen is that an improvement takes once the tariff upgrades affect vanishes and actually the month of March as an month of the quarter is quite positive. So for instance, in conversions, we've got 13,000 net adds, of which 13,000 positive net adds were in the month of March. In mobile contract, as well in TB. This happened as well as also in fiber.
We expect this trend to continue improving. As you can see, on Slide 12, we continue improving our customer base mix. We are growing in Convergent in TV, we're growing fiber, and we're growing in mobile contract. But more in particular to what you were asking in fiber, you can also see on Slide 12 that we are growing our share of fiber net adds, both on the retail side and both on the wholesale side. And we're also growing the uptake, the number of homes connected to Homes Pass both on retail and wholesale side.
And on wholesale fiber, net adds were 197,000. So yes, it's been a more muted quarter, but we are seeing trends that are supportive of what, of the commercial traction. And in any case, the decline that the decline in fixed broadband has been more significant in non converged than actually in converged. We have launched, as I was talking in a previous question, a new portfolio of digital services, we have external expectations of commercial traction And we also see potential for selective more, for, more moves. Regarding wholesale, the different moving pieces I also spoke about in a previous question.
We have seen and we are seeing the feeling away of what we had seen adverse moves or impact from MVNO loss. We see lower impact of regulatory impacts. And then we are seeing growth in NEBA. We're seeing growth in wholesale TV And we are seeing growth in roaming revenues, which has made the drag that we had in the wholesale line fade away and turn actually to slight positive revenue performance in the first quarter. Which given the trends that we see, I'm more confident now about the sustainability of this performance.
Thank you.
Thank you, Mandeep. Next question please.
Our next question comes from the line of David Reich from Bank of America. Please go ahead.
And also on getting this report out given your new additions. Just a question on Spain and O2, please. Obviously, that is now a contributing factor to convergent revenues. I just wondered if you would be willing to give us any KPIs perhaps throw to any line adds? What kind of ARPU it is coming in at?
Just so that we can maybe start to model some of the convergent dynamic. It's tempting to just see the convergent ARPU reflecting the Fusion momentum clearly now, there is a diluted effect from O2 ads. So I wondered if you could give us any granularity on that that I haven't that I may have, unless I've missed anything. Thank you.
Thank you, David. O2 is progressing according to the expectations that, that we have for this proposition. It's a way to without cannibalization address some segments that were not fully addressed by our converts Fusion bundles. It's reaching some base around 50,000, 50,000, 50,000 fixed broadband subscribers. Is around 120,000 mobile subscribers.
80% of those would be converged The ARPU is now we are when we are publishing the converged ARPU used to be before the We include only the Fusion ARPU. Now we are including Fusion and O2 ARPU. And obviously, also in the mix of converged customers between high end, mid end and low end. We are including the O2 customers. This obviously are leaning towards the low end and are affecting the ARPU increase that we see year on year converged functions, which I have to say is still is still, sorry, is still a growing ARPU.
In this sense, I would take advantage of your question to point out something. Which is the mix of our converged customers. We are seeing, in convergence, in addition, to ARPU growth year on year of 0.6%. We are seeing that the mix, 30% of the customer base continues to be high value packages. Here, we're which is up 2 percentage points year on year.
Here, we're talking about an average ARPU of what we call what we call sorry, mid value, which is a 33% of the mix. It's an ARPU of 85% and what we call low end of converged customers, which account for 37%. And this includes the O2 customers, such an average ARPU of 60. Bear in mind, sorry, sorry, I have taken voice. Bear in mind that what we call low end with an ARPU average ARPU of 60 is what is the average ARPU of our closest competitor, which stands at 58.
So I would like to say that, yes, O2 is increasing the mix in the, in what we call the when, yes, O2 is got ARPU in that category, but what we call low end ARPU. Is what our closest competitor calls average ARPU. Okay. So yes, we're getting traction, but it's not, it's not something that is not expected in our projections.
Okay. If I could maybe just follow-up then if given those broadband subs. I guess it launched, late last year. I'm just trying to understand what is the sort of net adds O2, which could imply a slightly higher net loss perhaps in the Fusion base. Would that be right or is that not really the way to read this?
Well, what we're seeing is that the portabilities from Movistar to our are quite reduced. More than 85% of the capture of O2 is not from us.
Okay, that's very useful. Thank you.
Thank you, David, and thank you for your comment. Next question please.
Our next question comes from the line of Jacob Blumst1 from Credit Suisse. Please go ahead.
Hi, good morning. I've got couple of questions, please. Firstly, just on your guidance and how you're sort of tracking against that, you're guiding for about 2% EBITDA growth for the full year. You did about 1% in Q1. And just sort of trying to understand which of the bits you expect to accelerate during the course of the year, obviously flagged Spain gets better later in the year.
But just sort of wanted to understand, is that really what's driving that implied acceleration during the course of the year? Or are there other parts of the business as well that you think will pick up in terms of EBITDA growth during the course of 'nineteen? So that's the first question. And then just secondly, just to follow-up from David's question, As you highlighted, I guess, the two bits was driving your Fusion ARPUs, one of them, clearly being this mix effect. And then on the other side, you've been putting through various price hikes.
And I guess the sort of evolution of convergent ARPUs is really the balance of those 2. I mean, is it fair to say that the mix effect is becoming bigger? So could we actually start seeing converging ARPUs decline from here? Just because of more and more of what you referred to as as the low end, becoming a sort of bigger share of it or do you think convergent ARPUs can continue to grow because of the pricing power that you have? Thank you.
On guidance, on OIBDA guidance, we have guided for OIBDA growth around 2% for the year. And in the first quarter, it's growing around by 1%. We expect group OIBDA growth to accelerate along the year, with better growth in the second half pursued the first half fostered by several factors. Spain is one that we've been flagging with reiteration in previous calls. Service revenue, we expect service revenue acceleration in the second half fostered by the end of football promotions, by, IT revenues, acceleration, new B2C, digital opportunities that I was talking in a previous question.
And the wholesale revenues acceleration. On the in Asia revenues, the lower year on year growth of channels, call centers, network, IT costs from digitalization and automation. So Spain is a clear area. We'd also expecting better performance in second half in OIBDA in other geographies, Germany according to their own guidance, as they stated in their call yesterday, but Brazil, as was also stated in their call yesterday, And what we see is that the drags that we have seen in Espana American units to be lower all So we remain, confident and rated our guidance of OITA growth around 2%. Regarding Fusio Narpo, we are not expecting to see a decline going forward.
In the first quarter, Fusion ARPU increased 0.6% year on year from 87.8to88.2. To explain this improvement, it has a had a positive impact from tariff upgrades, positive impact from upselling and dilutive impact from promos dilutive impact from mobile add ons migrating to Fusion multi line backs and dilutive effect from convergent offers as in the multi run segment as I spoke about regarding O2. We see we see potential for additional, selective more for more moves in the market, especially in the high end. And, we are launching new commercial initiatives where we aim to improve the engagement or further improve, I should say, the engagement with our customers, which make us be confident that the positive ARPU convergent ARPU evolution should be here to stay.
Thank you.
Thank you, Jacob. Next question please.
Our next question comes from the line of Carol Burdock Spitz from Berenberg. Please go ahead.
Hi, thank you. Just almost following on from Jacob's question asking on the other side of the convergence KPIs. I suppose taking a longer term view of convergence churn, 5 years ago, it was at Now it's a 1.7%. Given the strength of your brand, the improvements you've made to mix and proposition, So I suppose that's quite a surprise over that 5 year period and just kind of taking a longer term view. Do you think that churn will now stabilize at that kind of level or looking forward 5 years would you expect given the increase competition in the market, that convergent churn as you push through the penetration will still continue to trend up over the years to come.
Thank you for your question. First, I would want to state that converged products being a bundle of, of, several products, ones there is a move in any of the products that make part of the bundle that is accounted for as churn does not meet that the customer churns But it could be that the customer drops some product or some part of the churn. 2nd, for the last quite a few quarters, churn has been moving in a relatively stable band around 1.5%, 1.6%. Yes, in this quarter, we've seen a spike slight to 1.7% But we think that this is within, control range as should imagine, this is one of the KPIs that we measure very carefully within our commercial moves and marketing moves in the converged world. So we are looking at the number of converged customers that are booked the mix and the churn.
And this is something that if we see any deviation that would be concerned, we can clearly adjust our proposition in order to manage the situation, which at this point we do not think that should be of concern.
So in response to Jacob's question, you said that you thought that convergence ARPU would still go up. Are you willing to say that you think convergent churn can stabilize around this level or should I expect it to trend upwards on a kind of a multiyear view?
We would expect Fusion churn to move in a band around these levels, but not spike up.
Our next question comes from the line of Jerry Dulles from Jefferies. Please go ahead.
Yes, good morning. I had a couple of questions, please. First one to do with Spain, I noticed that in Spain, your pay TV intake this quarter was about sort of 4000, Q1 last year, it was about 80,000 Obviously, recently you revamped the Fusion lineup. To segment, in particular, the football content in a different way. I think Netflix also became available as an upsell for Fusion customers from December onwards.
So to understand the TV dynamic would be interesting, please. And also to understand whether the sort of promotional pressures that you were seeing during the first quarter have extended into the sort of the first half of the second quarter as well? And then my second question has to do with the UK. You've reported a mobile service revenue growth rate of positive 0.5% today. And previously, as you reported on a different basis, the mobile service revenue trends that we had previously were on an IAS 18 basis.
But you reported growth of 2.8% in Q4 and I think about 3.5% in Q3. Is the slowdown between the revenue growth rates that were reported previously and the one you've reported today, is that purely an accounting effect? Is it possible to get any pro form a sense of of what the underlying development in UK revenue trends has been, please? Thank you.
Thank you for your questions. Regarding Spain pay TV, we continue to see an opportunity in the market. We see that penetration is still low compared to 2 other markets. What we also think is that this has to be a segmented approach. The number of net adds parais along quarters, depending on factors, for instance, at the start of the sports season.
So the same way that you saw in Q3 last year. An important push ahead, one would expect another type similar type of of movements in the third quarter and this year. The difference of this first quarter versus last year is that 1 year ago, we included TV in some packages that were not having some contents before and didn't have TV that make a jump in the first quarter last year, which has not been repeated this year. Regarding the promotions, what we see is less intensity of promotions on some players that have moved to innovative approaches such as Vodafone, more based on speed and less working on promos, albeit we don't think that is disruptive And maybe, tactically, some other players, maybe doing some promotions now who saw lower commercial performance in the first quarter. Potentially, Orange could be promoting a bit, but this is not unusual, unusual.
This is a regular dynamics that we see in the Spanish market. Regarding the UK, sorry, one second. Sorry. Regarding the UK, we continue to have a strong revenue, revenue performance. Revenues have grown in the first quarter 5.3%.
This is driven by the continuing success of flexible 34 offerings, like custom plans, also traction on handset sales of value handset sales, and we continue to have revenue growth in other segments like the SMIP IoT elements in MVNO and in business ICT. Here, when one looks at the revenue function in the UK, The split between mobile service revenue and handset sales has been affected by IFRS 15. And accounting between these two elements. That's why, one would should look at the total revenue rather than these two components. There have also been some elements, such a decrease in out of bundle traffic.
Once bundles become larger, you have lower out of bundle traffic. And some slowdown in interconnect and outbound roaming. But we see that we continue to have a strong total revenue trend in the UK and we expect to continue to continue outperforming the the market. At the same time, we are displaying the benchmark churn in the market of just 0.9%.
Thank you very much.
Thank you, Jerry. We have time for one last question please.
Our last question comes from the line of Fernando Cordero from Santander. Please go ahead.
The first one is regarding Latin America. In that sense, we have seen network sharing deals, mobile network sharing deals here in Europe in the in the recent weeks. And I would like to know, at which extent, what could be your thoughts, particularly thinking on Latin America and ahead of the potential capital to come from 5G? And the second question is related with your your balance sheet and at which extent after seeing the disposals of Central America businesses as well as the disposal of some of your data center assets, I would like to know how far are you from your desired capital structure in terms of leverage or should we expect any further asset disposals Thank you.
Thank you, Fernando. I'll take the first question and of course Laura's second one. On network sharing, we are firm believers in network sharing. 80 percent of CapEx and 20 percent of OpEx in network are due to infrastructure, sites, transmission rentals. So network sharing is an opportunity to reduce network costs.
While maintaining the objectives of coverage and quality and therefore improve the return on capital employed, which is a critical objective for us. And I would say it should be for the industry. We think that this will be especially relevant in the upcoming deployment of 5G technology due to the to the pressures coming from a much denser network both in radio access and in transport. Typically for Espana America or Latin America, but we're sharing, in many of our geographies where we have sharing of infrastructure of transport of fixed access, of mobile access in different degrees. And different flavors in different countries.
But we have, sharing of infrastructure, in Brazil, in Argentina, we have a sharing in Chile, we have also in Nombia very significantly with Tigo. We have sharing of transport as well in mobile, which probably is what you're focusing Already, we have some experiences of 3G, 4G run sharing with OI, with team and with Claro. In Argentina, we are sharing 3G and 4G with Clari in some cities. We have signed an agreement also in sharing in Colombia with with Tigo and in Central American assets that we are now in the process of divestment. We had also shared agreements with Millicom.
Willingness to explore sharing in 5G, of course, without any doubt, but it takes to tango. So we will approach partners in due course. It's early days for 5G and especially in Espana America. But yes, we are ready. We recently announced in the UK the extension of our sharing agreement to with Vodafone to 5G.
And we will explore opportunities if they create value and they do not erode competitive position in every other geography.
Thank you, Fernando, for your question. It is worth mentioning that after the disposals of Central America And the Data Center. We have accelerated the net debt reduction substantially. No, and today, we are at 1,000,000,000 after post closing events. Let me highlight the evolution because we have decreased 1,000,000,000 just since the beginning of the year.
And if we look at since June 2016, we have almost reduced our net debt by EUR 14,000,000,000 in 11 quarter. That's more than EUR 1,000,000,000 per quarter. And that has been done on the back of many levers. The most important being a from free cash flow coming from operations, but also optimization of our tax and interest payment in organic measures. As you mentioned, which have been return on capital driven, despite having a very strong CapEx intensity this past year, and also despite having spectrum payments every single year.
From that point, our intention is to continue reducing debt and leverage going forward on the back of a strong cash flow generation. And we could consider inorganic measures, always based on return on capital employing and with no need to sell anything in a rush that does not create a strategic value. I definitely think we are approaching the moment when net debt will be less of a concern for the investment community, and that gives us flexibility. But I also want to say that we are fully committed to maintain solid investment grade credit rating, and we will keep taking debt down organically and also inorganically.
At this time, no further questions will be taken.
Thank you very much for your participation. And we certainly hope that we have provided some useful insights Should you still have further questions, we kindly ask you to contact the Investor Relations department. Good morning, and thank you.