Telefonica provides revenue cheer

A marginal 1.1% annual increase in Telefonica Europe’s 2009 revenues will fan the flames of speculation regarding a merger with Telecom Italia.

Telefonica’s revenue grew to €13.5 billion year-on-year in 2009, as it increased its subscriber base across the board, and tough trading conditions in Europe began to ease during Q409.
 
In contrast, Telecom Italia saw revenues dip 5.6% to €27.2 billion in 2009, on the back of lower income from services, handset sales, domestic landline subscriptions, and lower mobile interconnection rates (see separate story).
 
Telefonica states lower mobile termination rates in Germany, UK, and Czech Republic impacted revenues during 2009, however a 34% year-on-year rise in data revenues helped the firm to overall growth.
 
The increase in revenue couldn’t stop a slight dip in operating income, however, which fell from €1.1 billion at end-2008, to €1 billion in 2009. On the flip side, operating expenses were reduced from €10.5 billion to €9.8 billion year-on-year.
 
Total subscriber numbers were up 6.9% to 49.1 million through 2009, 2.9 million of which were mobile subscribers, resulting in 6.5% growth in total mobile subscribers to 44.1 million.
 
Matthew Key, chairman and chief executive of Telefonica Europe, said revenue growth accelerated during 2H09, on the back of higher data ARPU and subscriber numbers. “More customers are now coming to us for products like mobile broadband...as well as new services such as O2 Money in the UK.”
 
The results mean Telefonica is the only European telco to report revenue growth in the past two days. Yesterday Deutsche Telekom reported a 4.8% fall, France Telecom a 1.8% dip, and Telecom Italia a 5.6% decrease.
 
The Italian carrier’s problems lie mostly with a falling mobile subscriber base, and will do little to avert speculation that it could merge that division with Telefonica, which is the largest investor in the Telco consortium that holds a controlling 24.5% stake in Telecom Italia.
 
Telecom Italia’s three main shareholders have reportedly already started talks regarding the deal, which would see a decision made by the summer.