Telefonica Delivers The Goods

Pan-European carrier Telefonica shone a little ray of sunshine on the telecoms investment community on Thursday, turning in a respectable set of financials for 2008.

Group net income for the year was down 14.8 per cent on 2007 to Eur7.6bn, but fourth quarter profit jumped 88 per cent year on year to Eur1.99bn. Annual revenues were up 2.7 per cent to Eur57.9bn in 2008, while fourth quarter revenues climbed 2.6 per cent year on year to Eur14.8bn.

The company’s Latin American region delivered the goods once again, racking up a 34.8 per cent increase in annual operating income to hit Eur4.8bn, offsetting a 28.1 per cent decline in European operating income, which fell to Eur1.1bn for the year. Telefonica’s domestic operation, Telefonica Espana, recorded a 13.9 per cent increase in annual operating income however, reaching just over Eur8bn.

The results won praise from analysts, with Michael Kovacocy, European telecoms analyst and sector strategist at Daiwa Securities noting that “Faith in Telefonica’s diversified business model and superior management execution has been rewarded with what we believe to be a very good set of results in the current macroeconomic environment.”

Kavacocy believes that good growth in the Latin American region and a decent enough fixed-mobile integration strategy in Europe marks Telefonica as a safe bet in these straitened times.