Competition hits Telefónica Móviles

10 Nov 2004

Spain’s largest cellular operator is being forced to cut its full-year sales and earnings forecasts following a drop in third-quarter profit. Telefónica Móviles says increased competition was behind a fall in net income, which was down 2.4% to EUR467.4 million in the three months to the end of September. The company says that the battle to retain its number one position in its domestic market coupled with growing competition in Latin America will see full-year revenue growth of between 12% and 13% and EBITDA growth of around 3%; earlier this year the telco predicted sales growth of over 13% and a 7% rise in EBITDA. Telefónica Móviles had revenues of EUR2.95 billion in the third quarter, up 10.5% on the same period last year, but operating costs jumped 19% to EUR1.69 billion.

Meanwhile, Telefónica has revealed that investment in its operations in Latin America will total around USD10 billion between 2003 and 2006. The Spanish telco says the planned investment should see its subscriber base in the region grow by 80%-85% over the same period. The USD10 billion spend includes the USD5.85 billion Telefónica is paying for BellSouth’s ten cellular subsidiaries in the region. The purchase of the US company’s assets in Colombia, Venezuela, Peru, Ecuador, Uruguay, Nicaragua, Guatemala and Panama has already been completed, while regulatory clearance is expected for the acquisition of BellSouth Chile and BellSouth Argentina before the end of the year.

The deal with BellSouth will add around 12.5 million cellular subscribers to the 37.35 million Latin American wireless customers Telefónica claimed at the end of September 2004. The company has another 21.27 million customers across its Spanish and Mediterranean operations.

Spain, Telefonica Moviles Group