July 27, 2017 / 6:59 AM / 2 years ago

UPDATE 1-Telefonica lifts revenue target despite Spanish weakness

(Updates with details, Colombia fine)

By Julien Toyer and Andrés González

MADRID, July 27 (Reuters) - Spanish telecoms firm Telefonica on Thursday lifted its revenue target for 2017 after its second-quarter earnings beat analysts’ forecast, helped by a buoyant Latin American business that more than offset persistent weakness in Spain.

It now expects revenues to grow by at least 1.5 percent year on year compared with a previous guidance of stable. It aims to increase its core profit margin by 1 percentage point and have a capital expenditure to sales ratio of around 16 percent.

The company also reiterated its intention to pay a 0.4 euro per share dividend fully in cash.

Revenues rose 1.9 percent to 12.96 billion euros ($15.21 billion) in the second quarter, above a 12.90 billion euros forecast, while core operating income before depreciation and amortisation (OIBDA) increased 6.1 percent to 4.16 billion euros, compared with the 4.02 billion expected in a Reuters poll of analysts.

This was mainly the result of a 23 percent jump in core profit in Brazil, helped by a stronger real. That compensated for a 5 percent decrease in Britain, where a weaker pound hit the local business, and a 1.6 percent fall in Spain.

After a slow recovery in 2016, core profits in the Spanish domestic market have been down for two consecutive quarters so far this year, forcing the company to review its strategy.

Telefonica launched earlier this month cheaper offerings to try to convince more households to sign up for its bundled packages of phone, TV and internet services.

This was a departure from its earlier focus on the mid- to high-end market that had left the group exposed to stiff competition from Orange, Vodafone and MasMovil .

The group said it could take its dispute with Colombia over local networks and infrastructure to the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) after a Colombian tribunal on Tuesday fined its Movistar unit $529.1 million.

$1 = 0.8523 euros Editing by Paul Day and Mark Potter

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