Telefonica full-year profits hit by write-offs

Spanish operator group Telefonica has revealed that its profit for 2012 has been hit hard as it was forced to write down the value of subsidiaries in Italy, Ireland and Venezuela earlier in the year. As a result, the firm’s full-year net profit fell by 27.3 per cent to €3.92bn.

Revenues stood at €62.36bn, representing an 0.8 per cent year on year decline; a 0.7 per cent increase, excluding the impact of regulation.

Telefónica Latinoamérica’s revenues exceeded those of Telefónica Europe for the first time, while mobile data revenue for the group grew 12.8 per cent year on year.

“On the good news front, the performance of Latin America finally vindicates the group’s push into the region,” commented Emeka Obiodu, Telco analyst at Ovum.

“It has not always looked wise as Telefonica’s higher debt burden, compared to its peers, amassed partly in trying to build the Latin American footprint, began to threaten the viability of the group.”

Obiodu voiced his concern that the reliance on Latin America reflects the struggles of telcos in Europe, adding that we have now seen such concern for all European telcos who have published their results.

While Telefonica is bullish about its transformation and fight-back strategy in its home market of Spain, the group lost two million mobile customers in the country in early 2012, he added. Meanwhile, revenue decline in the UK may have slowed, but it is still falling.

“These all point to structural issues in Europe that need to be addressed. What the group needs most is to stabilise its revenues, sustain its incremental customer growth and utilize creative approaches  to get its European business on a stable footing.”

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