Telefonica highlighted its Latin American and mobile data businesses as “growth drivers”, although its Q3 results still show some weakness among its European operations.
In a statement, Cesar Alierta, its executive chairman, noted that “there has been a consolidation of the recovery trend initiated in the second quarter”.
It said that it is seeing results from its “transformational initiatives and cost-reduction measures undertaken in all countries”, highlighting efforts such as its removal of handset subsidies for new customers in Spain, the gradual reduction of subsidies in the UK, network sharing agreements in Mexico and the UK, and “the focus on quality as a key lever to reduce churn”.
The company reported a Q3 net profit of EUR 1.38 billion, compared with a prior-year loss of EUR429 million, on revenue of EUR15.54 billion, down 1.6 percent from EUR15.79 billion.
For the nine months, it announced a net profit of EUR3.46 billion, up 26.4 percent from EUR2.73 billion, on revenue of EUR46.52 billion, down 0.3 percent from EUR46.52 billion.
Telefonica also said it has narrowed its debt by EUR2.3 billion during the quarter, to stand at EUR56 billion. It said that since the closure of the quarter, it has “executed an efficient asset portfolio management and a successful divestment program,” with an additional EUR3.2 billion debt reduction anticipated.
Quarterly revenue of EUR7.62 billion for the Latin America unit (up 3.8 percent year-on-year) exceeded that of its Telefonica Europe business, which saw revenue of EUR7.45 billion (down 6.8 percent).
Its home market of Spain weighed heavily on the European numbers, with revenue decreasing 15.3 to EUR3.64 billion – its wireless unit being particularly affected, with revenue decreasing 19.8 percent to EUR1.57 billion.
At the end of the period, on a group level the company had 245.64 million mobile subscribers, up 5.9 percent from 231.87 million at the end of September 2011.
Its prepaid subscriber base increased by 5.5 percent to stand at 165.77 million, equivalent to 67.5 percent of its total. Growth here was slower than the 6.8 percent recorded for Telefonica’s contract customer base, which now stands at 79.87 million.
The mobile customer base for Latin America increased by 10 percent to stand at 175 million, despite the disconnection of inactive prepaid customers in Brazil and the application of “more restrictive criteria” for net additions and disconnections in several markets.
Its European customer base shrank by 2 percent year-on-year to 70.4 million, although with an increased proportion of contract customers – accounting for 59 percent of the base at the end of the period.
On a group level, the company said that mobile broadband penetration was 19 percent of its customer base, up from 15 percent in the prior-year period, while smartphone penetration is 17 percent, up from 11 percent.