Telefonica nine-month net profit down 28.7%; up 23.5% excluding one-offs

14 Nov 2008

Spain’s Telefonica Group has posted a 28.7% year-on-year drop in consolidated net profit in the first nine months of 2008 to EUR5.596 billion (USD6.99 billion), on revenues that rose 2.7% to EUR43.141 billion. The figures were affected by one-off gains of EUR2.6 billion from asset sales in 2007; excluding extraordinary items, net profit would have risen by 23.5% year-on-year in the first three quarters, Telefonica said in a statement. Relatively slow revenue growth in its domestic market and a slight turnover decline in its wider European markets were offset by strong performances from the group’s Latin American subsidiaries. Consolidated operating income before depreciation and amortisation (OIBDA) in January-September 2008 fell by 6.7% y-o-y to EUR17.026 billion. The operator reiterated its full-year 2008 guidance for organic revenue growth of between 6% and 8% and OIBDA growth of 7.5% to 11%.

For the third quarter Telefonica reported revenues of EUR14.99 billion, up 5.7% from a year earlier, largely driven by the continuing strong growth of Latin American mobile operations. 3Q 2008 OIBDA fell 15.4% year-on-year to EUR 5.90 billion, and net profit fell by 50.1% to EUR2.00 billion.

Telefonica’s worldwide retail internet broadband accesses stood at twelve million at the end of September, a year-on-year increase of 24.5%, driven by the growing penetration of triple-play voice, ADSL and pay-TV bundles. Of the 1.7 million total net additions for the first nine months (up 1.5% year-on-year), 800,000 came from Latin America, 500,000 Spain and 400,000 the rest of Europe. Broadband accesses in Latin America at the end of the period reached 5.8 million (up 24.9% year-on-year), compared to over 5.1 million in Spain (up 16.8% year-on-year), and just over a million in Europe (year-on-year growth of 80.8%).

The Telefonica Group’s total wireless customers reached approximately 189 million at the end of September, with 6.2 million net additions during the third quarter (year-on-year organic growth of 17.4%), and 17.22 million net adds in January-September (year-on-year organic growth of 14.2%). In Spain, Telefonica Espana’s wireless business posted net adds of 210,533 customers in the third quarter of 2008 (down from 317,038 in the third quarter of 2007), largely underpinned by the contract segment, which accounted for 93.4% of the total additions. At the end of September 2008, the Spanish mobile customer base topped 23.4 million, up 4.5% year-on-year, fuelled by the take-up of contract customers (9.0% increase), which now make up 61.7% of the total customer base (up 2.5 percentage points versus September 2007). Latin American wireless accesses reached 118.27 million at 30 September 2008, up from 93.33 million a year earlier and 113.46 million at end-June 2008. Main Latin American markets covered include Brazil, Argentina, Chile, Peru, Colombia, Mexico, Venezuela, Ecuador and Uruguay. Mobile customers at the European division (UK, Germany, Ireland, Czech Republic and Slovakia) reached 40.45 million at end-3Q08, up from 37.24 million y-o-y and 39.60 million three months earlier.