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Telefónica Group’s net profit drops 16.3% in first-half 2011, but Latin America grows 18.4%

In Spain, Telefónica reported a drop of 16.3% in first-half 2011 net profit to 3.162 billion euros. In the second-quarter, net profit dropped even more: 27%. According to company, it’s due to rising operating costs and a writedown of the value of its stake in Telecom Italia SpA. The carrier took a charge of 353 million euros to write down the value of its stake in Telecom Italia.

Telefonica’s capex was down 10.6% in the first half to 3.838 billion euros, due in part to spending on spectrum in Germany last year. Cash flow reached 7.466 billion euros.

The operator’s revenues in the first half of the year grew 18.4% year-on-year to 30.886 billion euros, led by its activities in Latin America, which grew 18.4%, in part because of an increase in mobile data services. In Spain, revenue felt 6.1%, while in the rest of Europe rose 2.2%. In Latin America, Vivo consolidation in Brazil, with integration between its fixed and mobile activities, helped increase group’s revenue.

Profit raises in Brazil
Telefónica Brazil reported an increase of 45.9% in its net profit in the first half of 2011, compared to the same period last year. By the ending of June, company counted 79.3 million of fixed and mobile line clients, 12.2% up. That makes Telefónica the biggest telecom company in Brazil.

In mobile, subscribers rose 14.4% to 64 million, allowing Vivo to keeps its market-share leadership.

From January to June, Telefónica invested in Brazil R$ 2.56 billion, 56.6% higher than first semester 2010. Company reported earnings before interest, taxation, depreciation and amortization (EBITDA) of R$ 5.35 billion, a 10.2% increase.

Chile drops
In the first half of the year, Telefónica Chile reported a net revenue of US$ 72 million, 7.5% lower compared to the same period in 2010. The drop may be caused by falling voice services and long-distance revenues, which have decreased 5.9% and 6.6%, respectively.

However, broadband business generated revenues of US$ 143 million between January and June 2011, a 5.8% growth in the number of broadband access lines. About half of the connections sold have speeds equal or greater than 4 Megabytes per second.

Pay-TV income grew 40% over the same period in 2010, reaching US$ 79 million, due to a 21.5% increase in customers.

Increased investments in Peru
In Peru,  Telefónica has confirmed its plan to invest US$ 1.5 million in the country. But its revenue during the first half of 2011 dropped 0.7% to US$ 691 million. The carrier’s fixed-line business in Peru dropped 14.8%, while long-distance service fell 32.9%, compared to the same period in 2010.

During the last quarter, Telefónica Peru reached Cusco with fiber optical. The project, called Fiber Optic of the Andes, aims to provide high-speed Internet access in the city.

Customers
The group finished June with a total 227.3 million mobile customers, up 8% from a year earlier. This was supported by 13%  organic growth in the postpaid base, which accounted for 32% of total customers at the end of the period.

Mobile broadband users reached 29.8 million (13% of the customer base). In the fixed-line business, retail broadband customers were up 8% from a year earlier to 17.6 million, and pay-TV subscribers rose by 16% to 3.1 million.

Fixed telephony customers fell 3% to 40.7 million.

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ABOUT AUTHOR

Roberta Prescott
Roberta Prescott
Editor, [email protected] Roberta Prescott is responsible for Latin America reporting news and analysis, interviewing key stakeholders. Roberta has worked as an IT and telecommunication journalist since March 2005, when she started as a reporter with InformationWeek Brasil magazine and its website IT Web. In July 2006, Prescott was promoted to be the editor-in-chief, and, beyond the magazine and website, was in charge for all ICT products, such as IT events and CIO awards. In mid-2010, she was promoted to the position of executive editor, with responsibility for all the editorial products and content of IT Mídia. Prescott has worked as a journalist since 1998 and has three journalism prizes. In 2009, she won, along with InformationWeek Brasil team, the press prize 11th Prêmio Imprensa Embratel. In 2008, she won the 7th Unisys Journalism Prize and in 2006 was the editor-in-chief when InformationWeek Brasil won the 20th media award Prêmio Veículos de Comunicação. She graduated in Journalism by the Pontifícia Universidade Católica de Campinas, has done specialization in journalism at the Universidad de Navarra (Spain, 2003) and Master in Journalism at IICS – Universidad de Navarra (Brazil, 2010) and MBA – Executive Education at the Getulio Vargas Foundation.