The giant group said that net profit fell by 13.1 percent to €1.154 billion ($1.5 billion).
This was better than the overall expectations of eight analysts polled by Dow Jones Newswires who had forseen a net figure of 1.053 billion euros.
Telefonica said in a statement that it had achieved double-digit growth in Latin America and that it had benefited from an improvement of activity in Europe.
On Tuesday, it was announced that Telefonica had bought E-Plus, the German subsidiary of Dutch group KPN, for €5 billion in cash and a 17.6-percent stake in Telefonica Deutschland.
Analysts said that the deal was part of a strategy by Telefonica to develop in northern Europe to balance exposure to markets in recession-hit southern Europe.