Telefónica Europe revenues hit by Euro-zone crisis

Telefónica Europe saw its headline revenues fall 1.3 per cent in the fourth quarter of 2011 as the company battled economic headwinds in its home market and elsewhere.

Cesar Alierta, CEO of Telefónica Europe told Bloomberg that he was continuing with plans to cut the company's Spanish workforce, and would halt major mergers and acquisitions to counter the effect of a weakening economy at home.

In spite of this, the Guardian reported that Telefónica Europe grew its mobile customer base to 48.3 million, up 3 per cent year-on-year.

"Despite a tough economic backdrop across our footprint and intense competition in a fast-evolving digital industry, Telefónica Europe delivered a solid financial performance in 2011," the company's European chief, José María Álvarez-Pallete told the Guardian.

At a more local level, O2 UK reported a decline in its customer base by 44,000 to 22.2 million, with 175,000 contract customers added in the fourth quarter and 220,900 prepay customers lost.

However, the company did add more contract customers. Contract customers increased 2 per cent to 49 per cent, compared with 2010.

Also of note, more than 95 per cent of handsets sold in the fourth quarter by O2 UK were smartphones, and 38 per cent of O2 UK's customers now own one, compared to 29 per cent in 2010.

This upsurge in smartphone usage helped push revenues from mobile internet access up 33 per cent, and are now they are almost on a par with income from text messages. Data now accounts for 45 per cent of all service revenues, but is failing to compensate for the revenues lost as the number of voice calls declines. ARPU in the U.K. subsidiary fell 6.6 per cent in the year, with voice down 15 per cent. By contrast, data ARPU rose just 5.1 per cent.

Overall, Telefónica's profits for 2011 fell almost 50 per cent to €5.4 billion, compared to the €10.8 billion achieved in 2010.

For more:
- see this Bloomberg article
- see this Guardian article
- see this Reuters article

Related Articles:
Rumour mill: Telefónica Spain to select Alca-Lu for LTE network
Telefónica drops separate Spanish unit in bid for growth
Telefónica's profit boosted by mobile, but Spain slides in Q4
Telefónica to launch mobile wallet service by mid-year

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