Business | Telecoms

Telefonica net rises after Brazil buyout

Net income rose to 2.12 billion euros from 1.83 billion euros a year earlier

  • Bloomberg
  • Published: 00:00 July 30, 2010
  • Gulf News

Madrid: Tele-fonica SA, Europe's second-largest phone company, posted a better-than-expected 16 per cent gain in second-quarter profit on operations in Latin America, where it closed a $9.8 billion (Dh35.98 billion) deal on Wednesday.

Net income rose to 2.12 billion euros (Dh10.12 billion) from 1.83 billion euros a year earlier, Madrid-based Telefonica said yesterday in a regulatory filing. Analysts had predicted a 1.94 billion-euro profit, the average of 13 estimates in a Bloomberg survey. Sales climbed 9 per cent to 15.12 billion euros.

Chairman Cesar Alierta is expanding abroad to fuel growth as revenue at home diminishes. The company agreed Wednesday to buy out Portugal Telecom SGPS SA's stake in Brasilcel, a venture that controls Brazil's biggest wireless operator. The purchase will add to profit from the first year, it said.

Shares rise

Telefonica rose 0.7 per cent to 17.01 euros in Madrid yesterday. The shares have fallen 13 per cent this year, more than the 0.7 per cent decline in the 24-stock Bloomberg Europe Tele-communication Services Index.

Sales from Telefonica's Spanish division fell 3.2 per cent to 4.69 billion euros, while revenue elsewhere in Europe rose 14 per cent to 3.79 billion euros. Sales at the Latin American unit climbed 16 per cent to 6.4 billion euros.

The company repeated its earnings and dividend goals in yesterday's statement. Telefonica has pledged to pay a 2012 dividend of at least 1.75 euros.

Operating income before depreciation and amortization rose 4 per cent to 5.79 billion euros. Analysts predicted Oibda of 5.52 billion euros on sales of 14.53 billion euros.

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