Telefonica suffers revenue and profit fall in Q1 – Mobile World Live

Telefonica suffers revenue and profit fall in Q1

09 MAY 2014

Testing results for the first three months of 2014 from Telefonica were blamed on a number of culprits including falling exchange rates in Latin America as well as ongoing struggles in Spain and Germany and the sale of its Czech business.

Revenue fell by 18 per cent to €12.23 billion, while net income dropped by 23.2 per cent to €692 million.

In the spotlight were a number of currencies in Latin America – including the Argentine and Chilean peso – whose depreciation hit the company.

Telefonica also suffered from a familiar struggle in Spain where revenue fell by 8.8 per cent to €2.99 billion, although this performance actually represented an improvement.

The company believes a turnaround in Spain will come through a quadplay strategy which combines mobile and fixed voice with broadband and pay TV services.

To this end, Telefonica this week had a €725 million offer accepted by media group Prisa for its controlling stake in Digital Plus, the country’s largest pay-TV platform.

Falling sales also hit Telefonica Deutschland with Q1 seeing a fall by 8.8 per cent to €1.12 billion. In Germany, the company sees a solution through consolidation (as well as the take-up of LTE).

Telefonica is pursuing a merger with rival E-Plus in Germany but is waiting on acceptance by regulators. Telefonica-E-Plus has become a test case for consolidation in Europe’s mobile market.

Differentiating its services through network investment is another part of the Telefonica strategy, which involves significant capex expenditure. Capex costs rose organically by 29.5 per cent compared to the first quarter of 2013.

The company also pointed to the more encouraging news that mobile data revenue growth accelerated compared with the previous quarter. Year-on-year growth was 8.8 per cent. It now accounts for 40 per cent of total mobile service revenue.

Finally, net debt fell by €2.66 billion during the first quarter to stand at €42.72 billion, thanks to asset disposals such as its business in the Czech Republic which raised €2.47 billion but hit quarterly revenue and profit.

Author

Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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