Telefónica’s Q1 profits up 36% on BellSouth acquisition

16 May 2005

Telefónica of Spain reported a 36% rise in net income for the three months to 31 March 2005 to EUR912.2 million (USD1.15 billion), up from EUR671.4 million a year earlier, thanks in part to its USD5.85 purchase of BellSouth’s Latin American mobile assets and better than expected sales from its fixed line business. The Madrid-based company said that group sales rose by 17% to EUR8.28 billion and operating income climbed 26% to EUR1.89 billion. Commenting on the results, Telefónica chairman Cesar Alierta reaffirmed his company’s commitment to acquisitions and investments in the broadband sector as a key factor in future growth. It completed the purchase of cellcos in ten countries in January and in April signed a USD3.6 billion deal to buy a controlling stake in Czech operator Cesky Telecom.

The Telefónica group ended March 2005 with more than 131 million fixed telephony, internet, data access, Pay TV and cellular customers, up 28.6% year-on-year. At the same date it had 3.5 million residential ADSL subscribers – a growth of 56.6% over the same period of 2004. ADSL accesses in Spain reached 2.1 million (up 43.2%) representing a 54.2% share of the total broadband market. Retail ADSL accesses in Latin America rose from 815,268 to 1.5 million, with Telesp accounting for 880,183 (+69.9%).

The group’s cellular businesses went from strength to strength, adding three million new users in the first quarter to end the period with a managed customer base of 81.4 million, up 50.3% on 2004. Of the total, 59.1 million were from Latin operations, 19.1 million for Telefónica Móviles Espana and 3.2 million for Medi Telecom in Morocco.