Telefonica Slows Sales Decline in Spain as Economy Gains

By Rodrigo Orihuela

Telefonica SA (TEF), the last major European phone company to report earnings, slowed its pace of revenue decline in Spain, confirming a regional trend shared by Vodafone Group Plc and Deutsche Telekom AG.
Third-quarter sales in Spain, Telefonica’s largest market, dropped 6.6 percent, following a 9.1 percent decline in the first half. Operating income at the company fell 8.7 percent to 4.27 billion euros ($5.3 billion) stripping out interest, depreciation and amortization, topping analysts’ estimates.
Spain’s economy is growing at the fastest pace since 2008, helping Madrid-based Telefonica to slow a shrinkage of its domestic business. While Telefonica lost more than 100,000 mobile customers in the country during the quarter, users of its combined wireless, broadband and
TV packages reached 3.6 million.
Chief Executive Officer Cesar Alierta is using acquisitions to accelerate growth in Brazil and turn around the company’s business in Germany. Telefonica in August agreed to buy Brazilian broadband provider GVT for about $9 billion, and last month completed the takeover of German wireless carrier E-Plus. In Spain, Telefonica is expanding a fiber network to lure consumers to its packages of Internet, mobile and TV services.

Photographer: Antonio Heredia/Bloomberg

Cesar Alierta, Chief Executive Officer of Telefonica SA, is using acquisitions to... Read More

Telefonica shares rose 0.5 percent to 12.21 euros at 9:01 a.m. in Madrid, valuing Europe’s second-largest phone company at 55.7 billion euros. They had risen about 3 percent this year through yesterday. Deutsche Telekom AG is the region’s biggest carrier by revenue.

Industry Recovery

Third-quarter net income dropped 13 percent to 947 million euros as sales fell 7.4 percent to 13.02 billion euros.
Analysts had predicted Oibda of 4.19 billion euros on sales of 12.97 billion euros, according to the average of estimates compiled by Bloomberg.
Telefonica had 32.1 percent of Spain’s wireless market in August, compared with 33.9 percent in December, according to data compiled by the local telecommunications regulator.
Net debt was about 44.9 billion euros, including proceeds from the sale of a stake in China Unicom (Hong Kong) Ltd. announced this week.
Vodafone, Deutsche Telekom, BT Group Plc, Orange SA and Telecom Italia SpA all reported revenue that topped estimates. In Spain, Vodafone’s revenue decline slowed to 9.3 percent last quarter from 15 percent for the previous period.
Telefonica Brasil SA (VIV) yesterday reported a 7 percent increase in third-quarter earnings before interest, taxes, depreciation and amortization. The operator of the Vivo brand is Brazil’s largest wireless carrier. Telefonica Deutschland Holding AG had a 15 million-euro net loss during the same period.
To contact the reporter on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.n