Lat Am 1H performance validates Telefonica's Vivo chase

A strong performance in Latin America, the UK and Germany carried Telefonica to a 9.4% rise in 1H net profit, despite continued weakness in its domestic market and other European operations.
The firm reported profits of €3.78 billion for the period this morning after growing group revenues 5.4% to €29 billion in the first six months of the year.
Its European business posted the greatest increase in revenues during the period, growing 10.8% to €7.2 billion as its operations in the UK and Germany posted rises of 6% and 8% respectively.
Businesses in the Czech Republic and Ireland continued to suffer from a “challenging economic environment,” but showed signs of reversing downward trends, Matthew Key, chairman and CEO of Telefonica Europe said.
Revenues from Latin America grew 10.2% to €12 billion, validating the firm’s dogged determination to secure control of Brazilian cellco Vivo – a deal confirmed only yesterday.
Telefonica chairman Cesar Alierta said Vivo would be combined with Telesp, the firm’s fixed-line business in Brazil, and expects the €7.5 billion acquisition to have an immediate positive impact on earnings and cash-flow in the region.
The strong performance in Europe and Latin America more than offset a 4.5% fall in revenues at Telefonica Espana – the telco’s domestic business – to €9.3 billion during 1H10.
However the unit improved its quarterly performance, with revenues down 3.4% during 2Q10 compared to a 5.7% fall in 1Q.
The group’s 1H net profit was higher than the €3.68 billion analysts polled by Reuters forecast.

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