Spain and Italy are making the headlines for all the wrong reasons as their economies teeter on the brink, but the countries’ incumbent operators are proving that it’s not all doom and gloom.
The latest financial results from Telefónica and Telecom Italia show both companies have increased revenue in the first nine months of 2011.
In both cases it is Latin America that is driving growth as domestic markets continue to suffer.
Spain-based Telefónica saw revenue rise 5.4 percent to €46.7 billion compared to the first nine months of last year. The company’s Latin America segment was the star performer with revenue rising 18.1 percent to €21.5 billion – it now accounts for 46 percent of the group’s total revenue.
By contrast, its Italian rival saw overall revenues increase by 10.9 percent to €22.1 billion. The boost was mainly thanks to the company’s Argentinian business unit being included in the figures for the first time.
While Argentina brought in a welcome €2.3 billion, Telecom Italia’s Brazil business also saw an increase – revenues there rose by 19.9 percent to €5.4 billion.
“Telecom Italia has caused a great deal of concern to the Italian telecommunications industry in recent years,” commented Frost & Sullivan senior industry analyst Saverio Romeo.
In particular he highlighted the reduction in the company’s debt – adjusted net debt fell by €1.5 billion to €29.9 billion during the first nine months of 2011 – as a reason to be optimistic.
“Telecom Italia can start breathing again and act with greater ease in terms of pursuing innovation and other market investments,” added Romeo.
Aside from the boost provided by Latin America, the only other real bright spot was an increase in handset sales in the company’s home market, which grew 11.2 percent to €189 million. Overall, however, mobile revenues in Italy were down 9.2 percent year at €5.3 billion.
By contrast, Telefónica’s decision to focus on mobile broadband was given as a key reason behind the company’s improved performance. Active users of mobile broadband increased to 34 million – growth of 76 percent year-on-year.
“Thirty percent of our mobile service revenues now come from data services,” revealed chairman César Alierta.
Of that 30 percent, over half comes from non-P2P SMS thanks to organic year-on-year growth of 38.8 percent.
Overall, Telefónica’s customer base grew by six percent in the first nine months of the year and now stands just 300,000 users short of 300 million.
Alierta was also keen to underline the importance of Telefónica’s new structure, announced in September, to face forthcoming challenges. “It will allow us to grow faster in a digital world and become more efficient, leveraging on our advantages: diversification, integration, scale and reach,” he said.
In particular, the chairman will hope the new structure adds profitability. For all the good financial data, Telefónica registered a fall of 30 percent to €14.2 billion mainly due to a dreadful performance by in its Spanish business.
By contrast, Telecom Italia saw an 8.3 percent increase in its profits to €9.2 billion.
“Should the debt reduction and positive performance continue, Telecom Italia will be in top form to recapture its role as global operator, which has partially faded in recent years,” concluded Romeo.