News > July 2007

Jul 30, 2007 Telefonica Profit Doubles; Annual Forecasts Raised
Jul 30, 2007 More Growth For Latin America, Caribbean 2007-2008
Jul 30, 2007 Latin Ad Boom Continues
Jul 26, 2007 Latin American and Caribbean Economies Register 5% Growth in 2007
Jul 20, 2007 North and Latin America at Juncture for Free Trade

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Telefonica Profit Doubles; Annual Forecasts Raised

Date: 2007-30-07
By Paul Tobin (Bloomberg.com)

Telefonica SA, Europe's second- largest telephone company, raised sales and earnings forecasts for 2007 after second-quarter profit more than doubled on broadband customer growth in Spain and Latin America.

Net income rose to 2.57 billion euros ($3.5 billion), or 54.1 cents per share, from 1.14 billion euros a year earlier, or 24.3 cents a share, Madrid-based Telefonica said today in a regulatory filing. Analysts had predicted profit of 2.39 billion euros, the median of seven estimates in a Bloomberg News survey.

Broadband subscriptions increased 35 percent in a year as Telefonica added services such as pay-television to win new customers and increase revenue from existing ones. To spur growth, Chairman Cesar Alierta has spent $80 billion on takeovers this decade. A one-time gain from the sale of Airwave O2 Ltd. also bolstered second-quarter earnings.

"The performance in Spain is surprisingly positive," said Juan Carlos Acitores, who helps manage the equivalent of $20 billion at Ahorro Corporacion Financiera SA in Madrid, including Telefonica shares. "The new forecasts are good news."

Sales rose 6.5 percent to 14 billion euros, in line with analyst estimates. Spanish fixed-line and mobile revenue increased 5.4 percent to 5.2 billion euros. Luis Padron, a Fortis Bank analyst, expected a 2.9 percent increase in Spanish sales.

Higher Sales Forecast

Telefonica forecast full-year sales growth of 8 percent to 10 percent, up from a previous target of 6 percent to 9 percent, it said today. Earnings before interest, tax, depreciation and amortization are forecast to rise 10 percent to 13 percent, up from an earlier goal of 8 percent to 11 percent. Operating profit is seen rising 19 percent to 23 percent, compared with a previous forecast of 14 percent to 20 percent. Shares of Telefonica fell 8 cents, or 0.5 percent, to 16.93 euros in Madrid. Before today, they had risen 2.8 percent in a month, leading gains in the 20-member Bloomberg Europe Telecommunication Services Index, which fell 5.4 percent.

"Quarter after quarter Telefonica continues to generate growth across the board," said Julio Cesar Hernandez, the managing director of Eurodeal AV SA.

Ebitda increased 34 percent to 6.16 billion euros in the second quarter. Analysts expected Ebitda to reach 6.2 billion euros. Ebitda was hurt by a 151.9 million-euro fine imposed by European regulators on Telefonica this month for abusing its dominant position. The former phone monopoly has appealed fine.

The company cut its revenue forecast for the German unit to growth of 7 percent to 10 percent, down from a previous forecast of 14 percent to 17 percent, citing ``challenging conditions.'' Telefonica raised sales forecasts for Spain and Latin America.

Regional Performance

Ebitda in Spain rose 10 percent to 2.28 billion euros in the quarter. Latin American sales increased 13 percent to 4.9 billion euros and Ebitda rose 14 percent to 1.68 billion euros. Telefonica O2 Europe's sales increased 3.4 percent to 3.5 billion euros, while Ebitda more than doubled to 2.17 billion euros, including the gain from the sale of Airwave.

Retail broadband customer growth in Spain was 30 percent in the year through June, and 37 percent in Latin America.

Total mobile customer growth was 15 percent, led by the addition of 5 million new clients in Latin America in the second quarter. Telefonica had a total of 212.6 million subscribers at the end of June, 11 percent more than a year earlier.

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