Telefonica reports fourth quarter profit jump

Spanish telecommunications giant Telefonica on February 24 posted a fourth-quarter net profit of 2.67 billion euros, double the figure for the same period of 2010, but showed an overall fall for the year. Net profit for 2011 was 5.4 billion euros ($7.2 billion), a drop of 46.9 percent from 2010 when Telefonica was boosted by the revaluation of its stake in the Brazilian operator Vivo.
The 2011 performance, marked by a sharp rise in subscribers, was driven by from Latin America as its home Spanish market and Western Europe generally suffered from the austerity measures adopted to fight the eurozone debt crisis.
The fourth-quarter figure was far better than expected, as analysts polled by Dow Jones Newswires had pencilled in a net profit of 1.68 billion euros.
Quarterly sales of 16.17 billion euros were 1.8 percent higher on a 12-month basis, and exceeded a forecast of 15.99 billion euros, while core earnings gained 10.2 percent to 5.96 billion euros, somewhat better than expected.
Annual sales were 3.5 percent higher at 62.84 billion euros but core earnings were 21.6 percent lower at 20.21 billion, the group said. Telefonica is the second-biggest telecom operator in Europe by capitalisation.
Telefonica said that Latin American operations accounted for 47 percent of consolidated sales and were driving growth in the company.
In the fourth quarter, the group gained 7.5 million subscribers on a net basis in the region, an increase of 66 percent in 12 months.
In September, the group announced a restructuring around four pillars, with Spanish activities becoming a component of the European business and another focus being on Latin America.
In April, the group said it would shed 20 percent of its workforce in Spain, or about 6,500 people, owing to a fall of sales although it remains the biggest operator on the Spanish market.
The cost of this programme amounting to 2.7 billion euros pushed it into loss in the third quarter and weighed also on the annual results.
At the end of December, the group had 30.1 million customers throughout the world, an increase of 6.5 percent from 2010.