Telefonica 4Q profit dips by 12%

1 Mar 2007

Telefonica has reported that its 4Q profit fell by 12% because of the cost of early retirement programs. Net income dropped to EUR1.05 billion (USD1.38 billion) from EUR1.19 billion a year earlier, the Madrid-based company said today in a statement. Sales rose 37% to EUR14.2 billion, helped by the acquisition of O2. Fourth-quarter operating costs rose 55% to EUR9.87 billion with personnel costs rising 72% to EUR2.42 billion.

For the full year ending 31 December 2006 Telefonica reported a 40.2% rise in its net profit to EUR6.23 billion. Operating income before depreciation and amortisation rose 27% to EUR19.13 billion, while total revenue grew 41.5% to EUR52.9 billion. Results are not directly comparable with 2005 as they include a number of purchases – most notably UK-based mobile operator O2 and Czech telecoms group Cesky Telecom – and more than EUR1.5 billion in capital gains from the sale of directories arm TPI to Britain’s Yell.

Telefonica announced mid-month that it had held talks to buy a stake in the largest shareholder of Italian rival Telecom Italia. Telefonica was reportedly offered a share in Olimpia, with reports suggesting it would pay EUR3 billion for a 30% stake. Olimpia holds 18% of the Milan-based Telecom Italia.

Spain, Telefonica