Telefonica SA (TEF), Europe’s largest phone company by market value, reported its first quarterly loss in nine years on costs to eliminate jobs and lower revenue from Spain as customers switched to cheaper rivals’ offers.
The third-quarter net loss was 429 million euros ($584 million), compared with a profit of 5.1 billion euros a year earlier, Madrid-based Telefonica said in an e-mailed statement today. Analysts had predicted a loss of 213 million euros, the average estimate of 11 analysts compiled by Bloomberg showed.
Chief Executive Officer Cesar Alierta is slashing the operator’s Spanish workforce, halting major mergers and acquisitions and cutting the operator’s debt to revive investors’ confidence. The stock is down 18 percent this year, more than double the decline in the Bloomberg Europe Telecommunication Indexin the period.
In September, Alierta folded Telefonica’s domestic unit into its European division and shuffled regional chiefs, putting Jose Maria Alvarez-Pallete in charge of Europe and Santiago Fernandez Valbuena for Latin America. Telefonica also created a digital division in London run by Matthew Key.
Sales climbed 3.7 percent to 15.79 billion euros, compared with the 15.73 billion-euro average estimate.
Alierta is betting on Latin America’s economic growth to win back investors discouraged by Spain’s unemployment rate, which at 22.6 percent is the highest of the euro countries.
Telefonica’s mobile-phone market share in Spain slipped to 40.47 percent in September from 40.65 percent in August, according to the telecommunications market regulator. France Telecom SA (FTE)’s Orange unit and TeliaSonera AB (TLSN)’s Yoigo division gained market share. Fixed-line rival Jazztel last month reported net income that almost doubled from a year earlier.
To contact the reporters on this story: Manuel Baigorri in Madrid at firstname.lastname@example.org;
To contact the editor responsible for this story: Kenneth Wong at email@example.com