Spanish telco giant Telefónica heralded Q1 2015 as the start of a new growth cycle for the company, having increased its net income by 162%.

As ever the devil was in the detail, however, as €1.3 billion of the €1.8 billion in profit was derived by recognizing tax deferred assets resulting from the estimated difference in between the tax value and the agreed value in the sale of Telefónica operations in the UK – i.e O2 UK. Additionally the currency volatility in Venezuela means year-on-year comparisons are difficult.

That aside reported revenues were up 12.6% to €11.5 billion (although the acquisition of E-Plus in Germany was a major factor in this increase), OIBDA was up 7.7% to €3.6 billion and subscribers were up 10%. Telefónica Executive Chairman, César Alierta, said the results “…reflect a solid beginning of this new cycle and are leveraged on the improved organic evolution of the business.”

Much of this new-found optimism seems to be based on the assumption that its Spanish business may have started turning around. “”Spain has already begun its return to growth after reporting in the quarter a year-on-year increase in accesses, which will gradually translate into growth in financials,” said Alierta.

The market, as you would expect, accounted for one-off and anomalous factors and delivered a flat response to the results. Despite the stated optimism about Spain the Spanish numbers were considered slightly disappointing, while Latin America was relatively strong. It seems Telefónica will need to deliver a few more solid quarters before the market buys into the ‘new growth cycle’ narrative.