Telefonica’s Q2 performance showed “a general acceleration in growth in main financial and operational terms”, as the company saw uplifts in revenue and profit off the back of strength in Latin America.
Revenue for the Spain-based operator amounted to just shy of €13 billion, a 1.9 per cent lift from the same quarter last year, “thanks to improved trends in all segments”, as net profit for the period hit €821 million, an 18.4 per cent increase from Q2 2016.
Mobile data revenue “continued to be a key growth driver”, said the company.
Telefonica’s debt load also reduced by €3.7 billion year on year, a figure which will increase to €5 billion once it completes the sale of its 40 per cent stake in tower unit Telxius, in a deal worth €1.3 billion.
Its debt currently stands at €48.5 billion.
Telefonica is known to be under pressure by investors to reduce its leverage, from investors, and had also previously considered the sale of its O2 unit in the UK to help the process.
It is now embarking on a strategy to reduce the debt organically, and improve its cash flow.
The strong performance saw the company also upgrade its guidance for 2017 to grow revenue by at least 1.5 per cent, compared to its previous forecast of “stable”.
“The strength and better business trends in the first half of the year, as well as being well-positioned to continue capturing sustainable growth in the coming quarters, allows us to upgrade our guidance for 2017,” said Jose Maria Alvarez Pallete, executive chairman of Telefonica.
Pain in Spain
Breaking down Telefonica’s operations, the company saw revenue in its home market Spain drop 1.9 per cent to reach €3.2 billion, largely due to lower gains from whole TV rights, as well as lower handset sales, which dropped 31.8 per cent.
In the UK, the company saw revenue drop 6.2 per cent to €1.6 billion on a reported basis, due to the weaker pound. On an organic basis, revenue rose 2.6 per cent.
Its German business, meanwhile, saw a revenue decline of 3.4 per cent, to €1.8 billion, which was put down to regulatory effects, including the end of roaming charges.
In Brazil, the company offset the fall in Spain, as the market “continued to show an acceleration in revenue growth”, with an organic rise of 1.8 per cent to hit €3 billion, with the Brazilian Real performing strongly.
Revenue from Telefonica’s other LatAm businesses was €3.1 billion, up 15.5 per cent, with notable positive contributions from Argentina, Colombia and Mexico.