Telefonica Chile profit falls as costs rise

SANTIAGO, Jan 31 (Reuters) - Telefonica Chile, the nation's largest telephone company, said on Thursday its net profit fell by more than half in 2007 as it spent more on aggressive marketing and packaging of services.

The company, controlled by Telefonica Spain (TEF.MC), said net profit for the year was 10.85 billion pesos ($21.8 million), 56.7 percent less than the 25.081 billion pesos it reported in 2006.

Telefonica Chile CTCa.SN invested $291 million in 2007, 22.8 percent more than in the year before that, as it focused on its broadband and digital television services.

"The transformation plan being undertaken by the company requires an exceptional effort in the short term to build solid supply that can win new clients," Chief Executive Jose Moles said in a statement.

Telefonica sales for the year were 632.572 billion pesos, up 2 percent versus the year ago period.

In the same period, operating costs rose 6.2 percent as it bolstered its packaged services. (Reporting by Monica Vargas; writing by Pav Jordan; editing by Louise Heavens)