Spanish telecom major Telefónica reports first quarterly loss in nine years

Spanish telecommunications major Telefónica reported its first quarterly loss in nine years, after making provisions for a one-off payment of €2.7 billion following an agreement with unions to lay off 6,500 workers in Spain.

The company reported a net loss of €429 million in the third quarter of the fiscal, against a profit of €5 billion in the same quarter last year. The company, which also owns the O2 mobile network in the UK where it has 23 million customers, is the largest telecoms group in the Eurozone by value.
 
The company reported strong growth in customer numbers, with a total of 300 million accesses, an increase of six per cent compared to the same period the previous year, on the back of a successful strategy to capture customers in the contract and fixed and wireless broadband segments

Revenues totalled €46.67 billion as on September 30. The company said Latin America and mobile data were the main drivers of growth. Telefonica Latinoamerica reported an 18.1 per cent rise in revenue and now accounts for 46 per cent of the group's total. Mobile data revenues rose by 19.6 per cent year-on-year in organic terms. Telefónica also paid a dividend of €0.77 per share.

However, the company faced problems in its domestic market in Spain, where it had signed an agreement with the union to slash 6,500 jobs. It has also decided to abolish its domestic market as a stand-alone division. Sales in Spain, which has an unemployment rate of 21 per cent, fell 8.8 per cent.

The group invested €6.62 billion euros in the first nine months of 2011, with more than 30 per cent of it allocated to the business in Spain. The group focused on achieving growth through developing the digital world with fixed and mobile internet and services that go beyond connectivity as the main pillars.

More than a quarter of consolidated revenues derive from these segments and the new organisational structure announced in September is expected to increase these revenues as a part of Telefonica's global business, while also improving efficiency. The company reduced its net financial debt by around €1 billion during the last quarter.