Spain's Telefonica Loses 51,000 Pay-TV Subscriptions in First Quarter

A slump in the telecom giant's domestic market was balanced by steady growth in Latin America, as overall earnings rose.

MADRID -- Spanish telecom giant Telefonica reported first-quarter earnings Wednesday, revealing that revenue fell 10 percent to €14.1 billion ($18.5 billion), even as net income grew 20.6 percent to €902 million ($1.1 billion).

The company reported that it lost 51,000 pay-TV subscribers in Spain in Q1. Revenue from Telefonica's financially-strapped home market dropped 16 percent in part due to record-breaking 27 percent unemployment in Spain and increased competition from smaller rivals offering cheaper packages of voice, broadband and TV. 

Telefonica CEO Cesar Alierta said the mixed results reflect "a progressive stabilization of the business and a greater degree of diversification, together with the constant improvement in the financial position."

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In Spain, the company said it lost 275,000 mobile clients and saw monthly bills shrink.

The decline was less dramatic in Latin America, which accounts for over half of the group's revenues, which slipped only 3.8 percent. Revenue throughout Europe dropped 12 percent to €6.7 billion ($8.8 billion).

Brazil became the company's biggest market for the first time with €3.26 billion ($4.3 billion), while the region's overall revenue dropped, largely due to the February devaluation of the bolivar in Venezuela and the sale of a call-center unit Atento.

Telefonica, which said it reduced its net debt to €51.2 billion ($67.2 billion) from €51.3 billion at the end of 2012, restated its target of a net debt of less than €47 billion ($62 billion) by the end of the year.

Telefonica stock dropped 1.3 percent to €11.14 ($14.60) just after the results were announced.