Telefónica takes €438m hit on Venezuelan currency devaluation

Spain’s Telefónica said late Friday that the Venezuelan Government’s recent decision to devalue its currency will result in a charge of €438m against its full year earnings for 2012. Earlier this month the South American nation reset the exchange rate from 4.3 bolivars to the dollar to 6.3 bolivars.

In a filing to the US SEC Telefónica added that its net assets in Venezuela will decrease in value by roughly €1bn.

This is particularly bad news for Telefónica at a time when it is looking to Latin America for a positive balance to the difficulties it is enduring in its domestic and European markets, as it seeks to reduce its debt burden.

In November last year the operator reported that its Latin American revenues outstripped European revenues in the nine months to end September 2012, for the first time in the country’s history. The region generated €22.58bn in revenues for the nine  month period, up 5.9 per cent year on year.

Venezuela accounted for €2.3bn of this amount, Telefónica said in November, with year on year growth of of 26.9 per cent.