Telefónica net profit up 20.6 percent in first quarter

Revenues fall due to weakness in Europe

Spanish telecoms giant Telefónica said Wednesday its net income in the first three months of the year climbed 20.6 percent to 902 million euros, in line with the company’s own internal forecasts.

The company took the opportunity to reiterate its guidance for this year, which includes growth in revenues in organic terms and a slight erosion in its gross operating profit in the form of OIBDA of below the 1.4-percent fall registered last year.

After excluding exceptional items both for this year and the previous one, net income in the quarter was down 7.9 percent.

Operating revenues declined 8.8 percent to 14.141 billion euros, while OIBDA was down 10.1 percent at 4.567 billion, with both items impacted by, among other elements, exchange rate factors, particularly the devaluation of the bolivar in Venezuela, and the sale of its call-center business Atento.

For the second quarter in a row, Latin America contributed more than half of the group’s operating revenues, with Brazil becoming Telefónica principal market in terms of sales for the first time.

Latin America’s performance was offset by a fall in revenues of Telefónica Europe of 10.5 percent as a result of the recession in the euro zone, heightened competition and the impact of regulatory changes. Telefónica España’s operating revenues declined 16.4 percent to 3.260 billion euros.

The company ended the quarter with financial debt of 51.809 billion euros, 550 million more than at the end of 2012. This reflected one-off developments such as the bolivar devaluation, which added 873 million euros to debt, and a payment of 701 million for spectrum.

Telefónica had 315.7 million lines in operation at the end of March, up two percent from a year earlier. The figure included 247.3 million mobile lines, a year-on-year increase of three percent.

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