Telefónica Q1 profit falls on FX, tax hit

Spanish telecom giant Telefónica's first quarter profit plunged 56.9% year-on-year to 776mn euros (US$888mn).

The firm cited unfavorable forex effects and a tax payment associated with the sale of its 02 UK subsidiary.

"The evolution of exchange rates deducted 16.0 percentage points and 14.8 percentage points from reported revenue and OIBDA performance, respectively," Telefónica said in a statement.

Still, both Brazil and Germany showed improvements in profitability thanks to "integration synergies" and a "data centric strategy."

As a result of the headwinds, net revenue fell 6.6% to 10.8bn euros. Growth of 8.6% was reported in Spain offset by declines in Germany (of 2.3%), Brazil (of 13%) and Hispanoamérica – or Latin America – (of 16.7%).

Organic revenue growth was 3.4%, Telefónica said, expanding 11.3% in Hispanoamérica alone.

Organic mobile data revenue grew 19.9% and represented 48% of mobile service revenues. Telefónica cited higher smartphone penetration and the "growing weight" of LTE customers.

Mobile data traffic was up 51%, driven by 15% of customers now on LTE.

Oibda increased 5.5% on an organic basis, thanks to growth in Brazil (8.2%) and Spain (2.0%), the firm said.

Capex declined 10.6% to 1.50bn euros while operating cash flow fell 3.3% to 1.88bn euros.

Telefónica's net debt grew 292mn euros in the quarter to 50.2bn euros, due to shareholder remuneration, payment of labor‐related commitments and net financial investments, the carrier said.