Telefonica reported flat revenues for the second quarter, at €15.5bn ($18.77bn) but net profit fell, to €1.33bn ($1.57bn) from €1.54bn a year earlier. Latin America was the growth driver, as it has been for several quarters, delivering a 7% rise in sales, but this was virtually cancelled out by a 6.1% decline in Europe.
The company cancelled its dividend payments to shareholders and plans to buy back shares to help reduce its €57bn debt mountain. The company also has cut director pay by a total of 30% in cash and share options.
Despite debt and eurozone pressures, and rising competition, the Spanish giant saw its customer base rise by 6% to 312m across its territories, driven by a 7% increase in mobile subscribers. Mobile net additions in the first half of 2012 totalled 8.3m, up 18% year-on-year. Contract customers grew by 8%, and are now 32% of the total. Even the fixed broadband base was up, by 5% to 18.4m customers, with healthy increases in Latin America.
Chairman Cesar Alierta said: ‘Telefonica’s second quarter results showed an improvement quarter-on-quarter, especially at OIBDA level’, thanks to recent cost cutting measures, and also highlighted ‘the strong diversification of our business’ as the main growth driver. Telefonica has been one of the most aggressive major telcos in moving into new web-oriented businesses, creating its UK-based Telefonica Digital unit to house activities such as mobile payments and web services.
Alierta also highlighted the ‘increasing contribution from Telefonica Latin America to consolidated results’ as well as ‘increased efficiency and improved profitability’ at the pressurized home base in Spain. Latin America accounted for 48% of revenues in the first half of the year, up three percentage points year-on-year, while Spain fell by 3.4 percentage points to 25% of consolidated revenues.