Venezuela’s consumer agency has blocked a move by Telefonica’s Movistar to raise prices. The clampdown comes at a time when the country’s annual inflation rate is nudging 50 per cent.

“Naturally this adds risk to the business profile of this unit, namely in terms of profitability considering that Telefonica is not able to pass onto consumers the inflation levels it is seeing on the cost side,” Espirito Santo analysts said in a note, quoted by Reuters.

Eduardo Saman, president of the Indepabis agency, is unsympathetic. “It doesn’t make any sense that on the one hand they say they will give you free seconds, minutes and messages for every top-up and on the other they increase your tariff,” he said in a statement.

Venezuela is proving to be an awkward market for the embattled Telefonica Group.

Like other foreign companies, Telefonica has difficulty repatriating money made in Venezuela. More worryingly, it is seeing a rapid decline in the foreign exchange value of profits.

According to a report from Bloomberg, Telefonica had accumulated $3 billion in dividends from its Venezuelan operation, over seven years, by 9 April 2013.

But that represents a recent drop of $1.4 billion in value, not helped by devaluation of the Venezuelan currency in February.

More frustratingly for the Spanish giant, Venezuelan law says foreign companies can only repatriate dividend cash back home if it exceeds $12 billion.

Revenues for the Telefonica Group totalled €14.4 billion in H1 2013, of which Venezuela contributed €1.5 billion.