Telefónica Q3 Profit Drops On Adverse Currency, Backs 2014 Operational Forecast

(RTTNews) - Spanish telecom group Telefónica S.A. (TEF, TDE.L) Wednesday reported a drop in the third-quarter profit, as revenues declined over 7 percent from last year. However, revenues improved organically, and the company backed its operational targets set for 2014.

Net income dropped to 947 million euros ($1.18 billion) from last year's 1.089 billion euros.

Revenue declined 7.4 percent to 13.021 billion euros from last year's 14.063 billion euros. Organic revenue grew 2.8 percent from last year, driven by a steady Average revenue Per User or ARPU improvement related to the expansion of high-value services and the intense commercial activity in recent quarters.

Operating income before depreciation and amortisation or OIBDA dropped 8.7 percent to 4.269 billion euros, but improved 0.8 percent organically.

The net addition of high-value customers accelerated in the quarter, with over 8.5 million new smartphone clients, close to half a million new Pay TV customers, or 265 thousand new fiber accesses.

In Telefónica España, revenues were 6.6 percent lower at 2.993 billion euros, and Telefónica UK revenues were 1.805 billion euros, up 5.1 percent from last year.

Revenue slipped 0.5 percent in Telefónica Deutschland to 1.219 billion euros, while it expanded 1.8 percent in Brasil to 2.896 billion euros.

Telefónica Hispanoamérica reported revenues of 3.845 billion euros, down 9 percent from last year, but up over 14 percent organically.

César Alierta, Executive Chairman, said, "In the third quarter of 2014, Telefónica's transformation process made significant progress with the closing of the consolidation deal in Germany and the acquisition of GVT in Brazil... These transactions imply structural changes in the Company's competitive position in two key markets and strengthen, in both cases, our future growth potential. In parallel, our quarterly results showed an overall improvement in both operating and financial growth rates."

Further, Telefónica reiterated all its operational targets set for 2014, such as the dividend promised in its shareholder remuneration policy.

The stock closed in Madrid on Tuesday at 12.18 euros.