Telefãnica boosted by deals in Europe

European acquisitions and customer growth in Latin America has helped Spainð# to post a 40 per cent year-on-year increase in first-quarter net profits, to òá.27bn.

The company, among the worldð# largest telecommunications operators, said on Friday consolidated group revenues climbed 45 per cent, to òá2.04bn. Of these, nearly òâ.5bn came from Telefãnica O2 Europe, which brings together businesses acquired or consolidated by the Spanish group since the end of the 2005 first quarter.

The company said that on a strictly comparable basis, sales growth was 8.9 per cent and operating income ahead 6.2 per cent. Operating margins suffered a deterioration of 2.3 points, to 38.9 per cent.

Telefãnica late last year paid òâ6bn for 02, the UKð# second biggest mobile telephony operator, in a deal which consolidated an emerging strategy aimed at diversifying the geographical profile of the company, which is built on Spain and Latin America. With its relatively low rates of fixed-line and internet penetration, Latin America remains an important growth driver at the group.

Non-wireless revenue from the region surged 30 per cent year-on-year, to òâ.32bn in the first quarter. Telefãnica Moviles, meanwhile, reported a 17.7 per cent rise, to òä.33bn, in first quarter revenues, thanks to new customers and favourable currency movements in Latin America.

The acquisition of 02, the UKð# second mobile operator, followed the purchase of a controlling stake in Cesky Telecom after Telefãnica won a privatisation contest in the Czech Republic. The company remains keen to build its European business, though a scarcity of acquisition opportunities, coupled with a stretched balance sheet, makes a big deal unlikely in the short term.

The company said on Friday total customer connections had climbed 42 per cent on the year-ago stage, with mobile access up 61 per cent to 131m. This includes the 33m customers incorporated through 02, and 4.7m from Cesky. The shares slid nearly 1 per cent in a market affected by heavy falls yesterday on Wall Street.

http://news.ft.com/