Telefonica`s Q1 earnings missed analysts expectations. Net profit slumped 23%, down to $957,5M. Revenue fell 14% to €12,2B. Sales in Spain are dropping down -8,2%. In Germany the sales are dropping down 8,8%, and in the U.K -0,3%.
Telefonica has two-third of its customers in Latin America and their revenue plunged -18% in Brazil and -13% in the rest of the region. Operating income (OIBDA) dropped -14% to €3,93B. Shares are down -3% in Madrid.
They try to expand and has reached a deal to buy Spanich media giant Prisa`s 56% stake in pay-TV provider Canal+ for €725M ($1 B). Their stake will increase to 78%. The mobile service demand is declining.
Canal+ owns lucrative soccer broadcasting rights which is good for Telefonica. The deal could pave the way for them to include Canal+ offerings in phone/TV/broadband bundles. Telefonica is also waiting for regulators to sign off on its $11,9B deal to acquire German carrier E-Plus.
Regulators are worried about diminished competition because the deal will lower the number of German mobile network owners to three, and that is Telefonica, Deutsche Telecom and Vodafone. As the French government say, there is a growing willingness among continental regulators to support a measure of consolidation.
They hope that merging weaker players will create entities more willing to make big network investments. The EU plans to rule on Telefonica/E-Plus next month (June 23). Telefonica hopes to sign the deal in Q2.
This business need to thing different. Getting paid for phone calls and messages are out. Its only internet access left and its all about price. This industry has a huge potential for growing business, but the fact is that they don`t know it themself.
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