Telefónica well placed to weather the storm

Telefónica reported a 50% year-on-year drop in Q3 profits, but the Financial Times says, one-off factors masked strong underlying growth in Latin America.

Telefónica is the third-biggest operator by market value and announced net income for the three months to the end of September was just over €2 billion, compared with €4 billion last time. However, last year's figures included the €1.4 billion gain from the sale of Endemol, the television production company which makes the "Big Brother" series. The figures were in line with analysts' estimates.

The FT reported that JP Morgan, in a note to clients, said the figures "demonstrated the strength of [the company's] diverse asset base".

Revenues for the quarter were up 5.7 per cent, at nearly €15bn, as expansion in most business sectors across Latin America offset some weakness in Spain and other parts of Europe. The company said it signed up 4.8 million new mobile clients in the region during the quarter, to give it a total of 118.3 million. For the group as a whole, there were a net 6.2 million new mobile connections, said Telefónica.

Telefónica said O2, the UK mobile business it bought in 2005, "registered its best third quarter ever".