Telefonica’s UK operations were reinstated in its Q2 results following the failure of a planned merger with 3 UK, as the Spanish group saw strength at home offset by weakness abroad.

The UK unit’s return did not lift the group’s overall performance. In fact, it underlined why its parent was seeking a merger in the first place.

While the business managed the strongest quarterly net mobile additions in six quarters, revenue fell by 12.3 per cent to €1.7 billion, although the fall was less drastic when viewed on an organic basis (4.4 per cent).

Better news came from Spain where the recovery continued as revenue in the quarter grew by 2.5 per cent to €3.2 billion.

On a group level, revenue decreased 7.7 per cent to €12.7 billion.

“The performance of the main financial variables in the second quarter was affected by the depreciation of the currencies against the euro, fundamentally the Brazilian real, Argentine peso and the sterling pound,” the company said.

Organically, second quarter revenue was flat.

The company pointed out that service revenue grew 1.5 per cent year-on-year in organic terms in Q2, and 2.7 per cent in the first half. Across all the business units, the year-on-year growth of service revenue was higher than that of total growth, it said.

The group was also eager to talk up diversification across its regions. Thus, its domestic operations contributed 25 per cent of first half consolidated revenue, followed by Telefonica Hispanoamerica (24 per cent), Telefonica Brasil (20 per cent), Telefonica Deutschland (15 per cent) and Telefonica UK (14%).

In terms of services, broadband connectivity and services continued to
increase their weight over the total, up to 35 per cent and 11.5 per cent respectively in the quarter.

Mobile data continued to be a key driver, growing 9.4 per cent year-on-year in organic terms in April-June and now representing 52 per cent of mobile service revenue, driven by demand for smartphones and LTE.

Net income fell by 54.5 per cent to €693 million, caused by a number of factors including a corporate income tax bill of €251 million, against a tax credit of €270 million in the year ago period. The prior-year period also included a gain related to the sale of a stake in Telecom Italia.

Telefonica reiterated its financial targets for 2016 and left the dividend unchanged.