Telefonica's revenues down; restructuring continues

Telefónica's net income and revenues fell in the first nine months as the Spanish operator continues its strategy of acquisition and sell-offs to focus on key European and Latin American markets.

The company's net income of €2.8 billion ($3.4 billion) for the nine months to end September is down 9.4 per cent year-on-year. Revenue fell 10.9 per cent to €37.9 billion.

In the third quarter, net income hit €947 million on the back of growth in mobile data services, Latin American operations, and rising broadband and pay-TV subscribers in Telefónica's home market. Third quarter revenue rose 2.8 per cent on an organic basis to €13 billion.

Telefonica is currently divesting non-core assets to focus on its European and Latin American markets. "The close of the consolidation activity in Germany and the acquisition of GVT in Brazil bring structural changes in the positioning of the company in two of its principal markets and reinforces the capacity for future growth," Telefonica's executive chairman, César Alierta, said in the company's results report.

The operator completed an €8.6 billion acquisition of KPN's German wireless carrier E-Plus in September, announcing a month later that it will cut 18 per cent of the workforce (1,600 positions). In September it announced a formal agreement to acquire Vivendi's Brazilian broadband business GVT, for about €7.2 billion in cash and shares according to Reuters. And in November it sold half of its 5 per cent stake in China Unicom for €687 million.

Alierta also emphasised the company's investment in modernizing its infrastructure. Telefonica increased capital expenditure 26.2% in the first nine months of the year to €5.7 billion as part of its aim to improve customer experience and network quality.

Telefónica's total accesses reached 316.1 million by the end of September, up 2 per cent year-on-year in organic terms. Mobile accesses totalled 249.4 million, up 2 per cent in organic terms compared with a year earlier, with mobile contract accesses growing 8 per cent year-on-year and now accounting for 36 per cent of all mobile subscribers.

Organic third quarter net additions reached 8.5 million accesses, with 5.8 million of those coming from Telefonica Brasil. Organic net additions in the first nine months totalled 19.3 million (up 28 per cent year-on-year).

Retail fixed broadband accesses totalled 17.7 million, with 52,000 net additions in the quarter in organic terms, while fibre accesses reached 1.4 million as a result of record quarterly net additions of 265,000 (208,000 in its home market). Pay TV accesses totalled 4.6 million on the back of 458,000 net additions in the quarter (370,000 in its home market).

For more:
- see Telefonica's earnings announcement

Related Articles:
Telefónica Deutschland net loss increases in opening 9 months
Telefónica Deutschland plans 1,600 job cuts after E-Plus merger
KPN chief bullish on full year despite Q3 losses
Ericsson enables VoLTE for Telefónica Deutschland
Deutsche Telekom's European operations hit by regulation in Q3

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