Telefonica talks up sales after profit slump

Spain's international telecommunications group Telefonica revealed slumping profits in the third quarter of 2013 on Friday but said underlying revenues were climbing and debt levels had dropped.

Telefonica talks up sales after profit slump
Telefonica, whose Madrid building is pictured here, reported a 2.1-percent increase in "organic" revenue, a measure of the underlying sales performance. Photo: Juan Antonio Flores Segal

Telefonica's net profit tumbled 21.1 percent from the same period a year earlier to €1.09 billion ($1.45 billion) — slightly better than market expectations — in the three months to September 30.

Overall sales dropped 9.5 percent to €14.06 billion in the same period, it said in a statement.

But Telefonica reported a 2.1-percent increase in "organic" revenue, a measure of the underlying sales performance which excludes one-off items such as company disposals and also strips out hyperinflationary accounting in Venezuela.

"On the operating front there are clear signs of recovery," executive chairman Cesar Alierta said.

"Organic revenue year-on-year growth accelerated again in the quarter to the highest level for the last 12 quarters. This revenue improvement is underpinned by the increase of high-value customers."

However, the group had been hurt by currency volatility, he added.

Telefonica said a strong acceleration in sales in Latin America, notably in Brazil, and improving trends in Europe, including stabilizing sales in Spain, helped to boost organic growth in revenue.

The group said it had cut net debt to 46.1 billion euros in September, a reduction of €9.9 billion from a year earlier.

Deals announced in the third quarter that have yet to take effect would cut the debt level further to €45 billion, it said.

Telefonica said this week it had agreed to sell a 65.9-percent stake in its Czech unit to Czech financial group PPF for €2.47 billion as part of the drive to slash debt.

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There are still 16,000 public telephones in Spain

Spain has a law to provide at least one payphone for every 3,000 inhabitants, even though an average of one call a day is made from them.

There are still 16,000 public telephones in Spain
Photo: pawpopa3336/Depositphotos

New data reveals that Spain currently has over 16,000 public payphone dotted around the length of breadth of Spain even though an average of one call a day is made from them.

Telefonica sources cited by news agency Efe revealed that Spain's biggest telecommunications company currently spends €4.52 million a year maintaining the phone booths.

Despite the fact that they are rarely used, Telefonica is tied to a “universal service obligation” imposed by the government to provide and maintain in working order a public payphone for every 3,000 inhabitants in each town of 1,000 or more and one cabin in all municipalities of less than 1,000 inhabitants.

The company estimates that of the 16,000 currently in use, half are almost never used and 12,000 ceased to be profitable years ago, losing the company some €3 million  a year.

The number of payphones has been vastly reduced since the  introduction of mobile phones. Twenty years ago there were almost four times as many payphones across Spain  –  55,000 payphones available in 1999 – and you could expect to find one on many a street corner.

Spain's communications regulator CNMC has called on the government to drop the universal service obligation for public payphones after a recent survey found that nearly 9 in 10 Spaniards (88 percent) admitted to never having used a public payphone in their life.

When was the last time you used one?

READ ALSO: Could technology be killing off Spain's sociable mealtimes?