Telefonica takes a hit in Venezuela

Telefónica has played down its exposure to the devaluation of the Venezuelan currency which has wiped more than $1 billion (€689m) in profits it has locked up in the country.
Europe’s largest market cap carrier Telefónica, reiterated its guidance for 2010 of earnings per share of €2.10 and its target to increase revenue at a compound annual growth rate of 1% to 4% until 2012.
Venezuela president Hugo Chavez announced Friday that his government would raise its currency peg to 4.3 bolivars to the dollar – up from 2.15 bolivars - for nonessential goods. The knock-on effect for Telefonica has been the devaluation of $2 billion in cash Telefónica has in bolivars.
Telfonica’s shares were rocked on the news yesterday dropping 2.6% to $27.

Telefónica has been dogged by challenges in South America, starting the new year with an €18 million fine from the Argentinia regulator over its sale of its Argentine arm. 
During the last quarter it was embroiled in a tense biding war for Barzil’s GVT which it lost to Vivendi.