Monday, February 28, 2011

Telefonica posts 30.8 per cent rise in profit for 2010

Operator says strong growth from UK contributed to profits, but a weak performance in Spain and Ireland saw a drop in Q4 revenues

Telefonica has announced a 30.8 per cent rise in net profit for the year ending December 2010 to €10.2 billion following strong performances in the UK, Germany and the Czech Republic and Latin America.

Consolidated revenues reached €60 billion in 2010 – an increase of 7.1 per cent year-on-year , while operating income rose 21 per cent to €16.5 billion for the period.

Telefonica said its global customer base reached 56.3 million at the end of 2010 – 14.3 per cent higher than in 2009 after it added 7.1 million customers throughout the year.

However strength in the company’s home market of Spain was worrying – revenues there fell 5 per cent to €18.7 billion.

Telefonica blamed the dip on the economic crisis as well as a 20 percent unemployment rate in the country, government austerity measures which have affected consumer spending and strong price competition.

There was also a weak performance from O2 Ireland where year- on- year revenues slipped by 6.3 per cent to €848 million.

The performances in both these markets contributed to Telefonica posting a 45 per cent drop in Q4 profits to €1.3 billion, down from €2.4 billion for the same period in 2009.

In the UK revenue growth accelerated in Q4 to total €7.2 billion at the years end with revenues from mobile services topping €6.5 billion – an increase of 5.6 per cent on the previous year.

The continued growth of non P2P- SMS data revenues were highlighted by Telefonica, it said its UK business saw a growth in this market of 31.7 per cent year-on-year.

This meant total data revenues as a proportion of mobile service revenues stood at 40 per cent in 2010.

Telefonica Europe chairman and chief executive Matthew Key (pictured) said: “Strong results in a highly competitive environment fro Telefonica O2 UK were underpinned by the growth of mobile broadband and customers upgrading to smartphones, which now account for 70 per cent of new contracts .”

Telefonica said it predicted overall revenue growth would increase by 2 per cent in 2011.