Venezuela blocks Telefonica's price hikes
MADRID Oct 17 (Reuters) - Venezuela's consumer agency has blocked a move by telecoms firm Movistar to raise prices, dealing a blow to Spanish parent Telefonica as it battles to cope with rampant inflation in the South American country.
"It doesn't make any sense that on the one hand they say they will give you free seconds, minutes and messages for every top-up and on the other they increase your tariff," Eduardo Saman, president of the Indepabis agency, said in a statement published on its website.
Analysts said Telefonica's accounts would likely take a hit because of decision.
"Naturally this adds risk to the business profile of this unit, namely in terms of profitability considering that Telefonica is not able to pass onto consumers the inflation levels it is seeing on the cost side," Espirito Santo analysts said in a note to clients.
Venezuela's annual inflation rate rose to 49.4 percent in September, the highest since the government changed the formula used to calculate the figure five years ago.
Telefonica, like other foreign companies operating in the Latin American country, has difficulty repatriating money made in Venezuela, where it reported revenues of 1.5 billion euros ($2.02 billion) in the first half of the year.
The company said its first-half results were also impacted by the devaluation of the Venezuelan currency.
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