Telefonica chairman and CEO Jose Maria Alvarez-Pallete cited a negative impact from regulation in Europe on the operator’s Q3 earnings, specifically the removal of roaming fees.

The company reported a net profit for the quarter of €896 million, down 14.7 per cent from €983 million in the comparable period of 2016. Revenue of €12.75 billion was down 2.5 per cent from €13.1 billion.

Despite the declines, Alvarez-Pallete said Q3 numbers “reflected the solid execution of the main strategic priorities set for the year” including a focus on digital transformation “amongst the company’s different operating areas”, which played a part in increasing “our differentiation” and drive towards improved efficiency.

The transformation “will enable us to pave a new way to interact with our customers through cognitive intelligence while improving resource allocation,” the chairman and CEO continued.

Revenue was impacted by regulatory changes, including the removal of roaming charges for customers in the EU. Service revenue increased by 3.3 per cent in organic terms (excluding the regulatory impacts), which was attributed primarily to improvements in the company’s home market of Spain.

The Spanish performance was boosted by “the focus on value and the results of the two new Fusion+ options launched in July”, which bundle television into its convergent packages. Telefonica Germany “maintained solid operational momentum” for the three months, although its mobile business was hit by regulation and “OTT trends”.

Mobile-focused Telefonica UK was also impacted by the roaming reductions, although service and wholesale revenue both registered positive growth.

Telefonica Brazil “posted solid revenue and OIBDA growth”, with the company stating the business is “the benchmark operator in terms of quality and customer satisfaction”. For the rest of Latin America, revenue increased despite tough competition in Argentina and Colombia due to the seasonality of tariff updates.

Net debt of €47.2 billion was down 4.8 per cent year-on-year. This will be reduced further in the fourth quarter due to the sale of a 40 per cent stake in Telefonica’s Telxius business, which closed this week.