Domestic operations drag down Telefonica’s 2010 results

25 Feb 2011

Spanish telecoms giant Telefonica has revealed a 30.8% increase in full-year net profit, but the company noted that fourth quarter net income had been significantly dented by the continued economic malaise in its home territory. For the twelve months ended 31 December 2010 Telefonica posted a net profit of EUR10.17 billion (USD14 billion), up from EUR7.78 billion, but in the last three months of the year the company said net income fell by more than 45% year-on-year to EUR1.33 billion. In 2010 Telefonica said that across all of its operations it generated revenues of EUR60.74 billion, representing a 7.1% annual increase, with the company’s Latin American and European (excluding Spain) units reporting turnover of EUR26.04 billion and EUR15.26 billion, up 13.3% and 12.7% respectively. By comparison, amid increased competition in the Spanish wireless sector and the country’s inhabitants cutting back on non-essential expenditure, Telefonica Espana reported revenues of EUR18.7 billion, down 5% y-o-y; the parent company did, however, attribute the decline in part to lower revenues related to Universal Service (EUR95 million in 2010 compared to EUR223 million in 2009). Group operating income before depreciation and amortisation (OIBDA) meanwhile was EUR25.8 billion, up 14% compared to EUR22.6 billion a year earlier.

In terms of subscribers, Telefonica said that its total accesses were up by 7.2% year-on-year in organic terms (up 8.7% in reported terms) at 287.6 million. Group mobile accesses stood at 220.2 million at end-2010, up 8.9% against end-2009, with Brazil reporting the biggest rise in its customer base, signing up some 8.5 million net additions in 2010. Overall the number of mobile customers across Telefonica’s Latin American operations rose by 10.8% y-o-y to 149.3 million, while European (bar Spain) rose by 6% to 46.7 million. Despite the difficult trading conditions in Spain Telefonica reported that wireless customer numbers in the country were up by 3.3% compared to end-December 2009 at 24.3 million accesses, up 3.3% on the December 2009 figure; in the last three months of the year however Movistar Espana reported a decline in mobile subscribers. Group-wide meanwhile Telefonica reported that retail fixed broadband accesses reached a total of 17.1 million at end-2010, up 10.9% y-o-y in organic terms, and while fixed telephony accesses continued to decline, falling 2.7% to 41.4 million, it said that the rate of decrease was slower in the fourth quarter than in previous periods.

Spain, Telefonica