Telefonica slipped to a net loss and experienced a revenue dip in Q4 2019, largely due to struggles in its Central and South American markets, where an overhaul of operations is underway.

The operator reported a €202 million loss compared with a €610 million profit in Q4 2018, with performance in the recent quarter hit by impairment costs in Argentina and Mexico, along with provisions for restructuring costs.

Revenue dipped 4 per cent to €12.4 billion, attributed to currency headwinds. On a constant currency basis, the company said revenue rose 2 per cent.

In Spain, revenue was essentially flat (up 0.4 per cent) at €3.3 billion, with an increase in convergence customers a highlight, while its performance in Germany was similar, with revenue of €1.97 billion up a negligible 0.2 per cent.

O2 UK was notably brighter, as revenue hit €1.9 billion, a 4.3 per cent increase, due to the popularity of custom tariffs.

Spin-off
The company’s issues in the quarter centered on Latin America, as it restructures its interests in eight markets in the region.

Telefonica said in November 2019 it was looking to spin-off the markets from its core operations in a bid to reduce its exposure in the region, and focus on Spain, the UK, Germany and Brazil.

Reported revenue in its South Hispam unit, comprising operations in Chile; Peru; Argentina; and Uruguay, dropped 19.5 per cent to just shy of €1.6 billion. In North Hispam, covering Ecuador; Mexico; Colombia; and Venezuela, revenue fell 11.7 per cent to €916 million.

In Brazil, the only Latin America unit exempt from the spin-off plan, revenue dipped 2.1 per cent to €2.5 billion.

Aside from the Latin America restructure, the company is also pursuing a wider transformation plan, which did show signs of progress.

It captured more than €420 million in digital transformation savings in 2019, while it expects to generate €2 billion in additional revenue from its new Telefonica Tech unit, grouping together its cloud, IoT, big data and cybersecurity activities, by 2022.

Its total access base at the end of December 2019 stood at 344.3 million, down 4.3 per cent year-on-year.