Reporting only a two per cent rise in its first quarter profits, Telefónica O2 European head, Matthew Key, claimed that the company hadn't felt any negative impact from the loss of iPhone exclusivity.
The slight increase in profit--up to €1.66 billion from €1.62 billion a year earlier, but below analysts' forecasts of €1.8 billion--was said to be mainly due to strong results from the company's Latin American operations and some European countries, with O2 Germany being very strong. However, revenues from Telefónica Spain fell by nearly six per cent as the country continued to suffer from economic woes.
One financial analyst, ING's Georgios Ierodiaconou, said that Telefónica's results were disappointing, noting that Spain was particularly weak. He added that the earnings now make meeting its targets difficult, particularly a previous commitment to pay a €1.75 per share dividend in 2012. "Flexibility for acquisitions, spectrum auctions, buybacks and dividends is becoming limited."
Regardless of this gloomy prediction, earlier this week, Telefónica made a €5.7 billion offer to buy Portugal Telecom's shareholding in the joint venture both companies control in Brazil. However, the bid has been unanimously rejected by Portugal Telecom, claiming its Brazilian cell phone operator, Vivo, is a core part of its business and leaving Brazil would threaten its long-term growth prospects.
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