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Spain holds back Telefonica's turnaround

Thursday, May 14, 2015 - 01:52

Telefonica posts higher first-quarter sales and core profits thanks to growth abroad. As Hayley Platt reports it's a sign that an expected turnaround at the Spanish company is underway even though its home market shrank again.

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Europe's third biggest telecoms company is getting bigger. Spain's Telefonica beat expectations in the first quarter thanks to growth abroad, particularly in Germany and Latin America. Revenues rose almost 13 percent with core profit up 7.7 percent. But the company struggled in its home market, which accounts for around a quarter of its revenues, despite the economy overall growing. It plans to tackle that by raising prices on most of its phone, internet and television packages. Jane Foley is from Rabobank SOUNDBITE: Jane Foley, Senior Currency Strategist, Rabobank, saying (English): "We have seen Spanish growth improve and Telefonica has pointed to this as perhaps improving the results for Spain as we look ahead. And certainly in the first quarter the place of the losses has declined so there is an improvement there." Telefonica's been focussing on new and more profitable markets. Recent acquisitions include rivals in Germany and Brazil. But the $10.25 billion deal to sell off its UK mobile phone operator O2 to Hong Kong's Hutchinson Whampoa is still awaiting regulatory approval. SOUNDBITE: Jane Foley, Senior Currency Strategist, Rabobank, saying (English): "At the moment the analysts are expecting that the sale of this will reduce Telefonica's debts quite remarkably in the region of around 31 billion euros, so clearly if that deal did not go through Telefonica's bottom line will look very different in a few months time." Europe's telecoms sector is becoming increasingly competitive - as consolidation becomes a global trend. Russia's Vimplecom and Hutchinson Whampoa are currently in talks to merge their Italian mobile phone businesses. The deal to bring mobile network operator Wind and 3 Italia together will be an equal joint venture It will also cut the number of companies in the sector in Italy to three.

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Spain holds back Telefonica's turnaround

Thursday, May 14, 2015 - 01:52