Telefonica reported a dip in net profit for Q2 as negative foreign exchange movements and a large provision for tax litigation took their toll, while its UK unit revealed plans to launch commercial 5G services in October.
In the company’s Q2 results statement, Telefonica CEO Jose Maria Alvarez-Pallete (pictured) said its commercial strategy was “bearing fruits”, hailing the impact of ongoing digital transformation efforts at the operator group.
He also pointed to a ninth successive quarter where it cut the company’s debt pile, which stood at €40 billion as of the end of June.
In an attempt to find future cost savings, during Q2 Telefonica signed network sharing agreements in Brazil, Germany and the UK.
The UK deal, an upgraded agreement with Vodafone, will see the pair share some 5G infrastructure and is expected to speed rollout of the new network technology.
Alongside results from its parent company, UK unit O2 confirmed it would launch its first wave of six urban locations in October. It plans to increase this to 20 by the end of the year and 50 by Summer 2020.
This timeline will likely make it the last of the country’s four operators to light up the new network technology to customers.
Rivals EE and Vodafone switched-on services in their first locations in May and July respectively. The country’s other operator, 3 UK, expects to begin sales of its fixed-wireless 5G service next month.
Analyst Paolo Pescatore noted that O2 UK’s 5G launch “feels somewhat forced upon in light of moves by the other mobile operators” but stressed “it is still early days as the network [tech] is not widely available.”
“The move is good in the interests of UK and it will be one of the first countries in the world to have all mobile operators offering 5G connectivity.”
During Q2, Telefonica reported a 4.5 per cent year-on-year fall in net profit to €862 million on broadly flat revenue of €12.1 billion.
Its bottom line was hit by a €152 million provision for ongoing tax litigation, a €101 million adjustment due to hyperinflation in Argentina and several other one off items. It also booked a tax refund in Spain and earnings from the sale of assets in Latin America.Subscribe to our daily newsletter Back