Telefonica profit masks EU troubles

A successful diversification strategy and tight cost controls are quite literally paying dividends for Telefonica, with profits up 30% in 2010 despite weakness in some European markets.
The telco generated profit of €10.1 billion during the year, as a solid performance in Latin America and the bulk of Europe and higher mobile data income, drove revenues up 7% to €60.7 billion.
Telefonica’s regional operations have taken on greater importance in recent years as its performance in its domestic market has waned. The carrier says 68% of group revenues were generated by Telefónica Latinoamérica and Telefónica Europe last year, though it is optimistic that Spain has turned a corner, with subscriber additions six times higher than in 2009.
Group subscriber numbers grew by 19.2 million to 287.6 million during the year, with bundled services proving popular in Spain and Latin America. The telco ended the year with 22.2 million mobile broadband users – up 63.9% on 2009 – and 17.1 million retail fixed broadband customers (up 27%).
The firm notes the 2010 results are the eighth consecutive year it has beaten internal financial targets, with earnings per share of €2.25 higher than the €2.10 targeted.
However, the telco’s 4Q results disappointed analysts, with net profit down 45% to €2.4 billion on the back of poor performances in Spain and Ireland, noted.
For 2011, Telefonica expects to grow revenues 2% to €63.1 billion and OIBDA margin of 38%.