Telefónica sees quarterly loss for first time since 2002

Telefónica registered a sharp 69.1-percent fall in net profit to 2.7 billion euros in the first nine months of the year, the company said in a statement on Friday. The Spanish-based telecom giant blamed the significant losses on the impact of a 2.67-billion-euro extraordinary charge due to a labor adjustment plan (ERE) that will cut around 6,500 jobs over the next three years.

Between June and September, Telefónica posted losses of 429 million euros in what constitutes the group's first negative quarterly results since 2002.

Nevertheless, the former telephone monopoly said that leaving out the effects of the labor adjustment plan and other extraordinary items, the "underlying" net profit would have only fallen 10.6 percent from the same period last year. Ebitda (earnings before interest, taxes, depreciation and amortization) dropped 30 percent to 14.25 billion in the first nine months.

Despite these figures, the company chaired by César Alierta confirmed that it will maintain its shareholder dividend policy intact and that its earnings targets for the year will be met. Telefónica is promising a dividend of 1.75 euros per share in 2012.

At the close of the third quarter, Telefónica's revenues grew 5.4 percent to 46.67 billion euros, thanks mostly to accelerated growth in mobile data services and the solid evolution of the Latin American market, where revenues increased by 18 percent. This market now represents nearly half of the telecom's revenue.

The Spanish market brought the worst results of all for the telecom due to strong domestic competition, with Ebitda falling 50 percent to 6.67 billion euros. In Latin America, the drop was 27.9 percent to 7.76 billion while the European market saw a 6.2-percent improvement in Ebitda.

Net financial debt was reduced by 163 million euros from December 2010 to end September 2011 at 55.43 billion. In the third quarter net financial debt went down by around a billion euros.

Meanwhile Telecom Italia, which is participated by Telefónica, posted losses of 1.2 billion euros in the first nine months of the year compared with profits of 1.8 billion over the same period last year.