Vladimír Urbánek (Kurzy.cz)
World markets  |  January 16, 2013 12:05:16

Telefónica SA still has problems on the domestic market, clients are fleeing to cheaper competition

Spain's Telefonica SA, the parent company of domestic Telefónica O2, in a presentation to investors indicated that despite all, and relatively successful effort to stabilize their overall still has major problems in the domestic Spanish market. According to the management the dominant local telecommunications companies so far failed to stop the outflow of clients to cheaper operators due inter alia to the plight of the Spanish economy with the highest unemployment rates in the euro area. Clients generally seek price discounts and advantageous offer, which, together with the outflow of clients reduces total revenues and resultant margins.

According to statistics CMT only company in October last year, has lost 284,290 paying customers and its overall market share dropped to 36.8% at the expense of growth and the share of Orange Yoiko.

Telefónica has previously announced plans to reduce its number of staff by a further approximately 27,000 by the end of this year. In 2011, the company released 35,000 employees.

Wrinkles on forehead lines does also decrease the growth rate of profits in Latin America, which had until then been the "golden egg". According to statistics, sales in this region grew in Q3 by 3.8% and profit by 4.8% compared to 2.7 mld.EUR sales growth at 5.8% in Q2 of last year. It is estimated that the situation will worsen in the course of this year.

Shares of the company in the second half of the year declined by only 1.7% compared to Vodafone drop by 14% and France 20% T.. This development reflects the relatively successful efforts companies reduce costs and efforts for selling unwanted assets. The operator is also looking at the possibility of special deals to lure again lost clients.The management reduced dividend paid and canceled share buyback program, reduced sales outlook and reduce salaries to senior management. To compensate shareholders operator promised to double payment of 75 cents per share in 2014.

Telefónica has reduced its debt, which still remains the highest in the sovereign sector, approximately 52.8 mld.EUR from 58.3 billion in June 2012. Target for the end of the year allowed to drop to the 50 mld.EUR.
AT the end of 3Q12 net debt stood at 2.84 times EBITDA. To further reduce the indebtedness of the company, among other things considers IPO in Latin America.

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Telefónica SA má stále problémy na domácím trhu, klienti utíkají k levnější konkurenci

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