A poor performance at home failed to stop Telefónica posting net income growth of 42.2 percent in its first quarter results.

The Spain-based operator reported net income of €779 million for the three months to the end of March, driven by favourable foreign exchange rates, ongoing benefits from its wider business transformation and work on the balance sheet.

Revenues also grew, up five percent to €13.13 billion on a reported basis and up 1.5 percent organically.

Its customer base was flat at 347 million users.

However, it continues to push customers onto higher priced contracts, with ARPU up 2.1 percent organically, LTE customers up 1.7 times, contract customers up five percent, smartphone users up 18 percent and cable users up 21 percent.

In its native Spain, revenues were down 2.6 percent to €3.07 billion, due to lower service revenues, down 1.5 percent, and handset sales, down 29.9 percent.

Operating income hit €1.22 billion during the quarter, down 2.4 percent, although this excluded a one off restructuring cost of €76 million.

Germany was hit by the ongoing impact of reduced mobile termination rates, with revenues down 4.7 percent to €1.77 billion and operating income nidging up 1.4 percent to €400 million.

The UK's O2 business fared better, with sales up 2.1 percent to €1.60 billion and operating income up 0.6 percent to €416 million.

Telefónica said this was due to increased ARPU and loyalty with its British arm.

In Lat Am, sales rose 1.6 percent to €3.2 billion in Brazil and 9.2 percent to €3.3 billion across the rest of the region.

On infrastructure, the operator was buoyed by hitting almost 40 million premises with FTTx and cable, up 14 percent on last year.

LTE coverage increased by 64 percent, with 88 percent of that growth in Europe.

Telefónica also lauded its net debt increase of €171 million quarter-on-quarter to €48.77 billion, which it said was its smallest first quarter increase in three years.

José María Álvarez-Pallete, Executive Chairman of Telefónica (pictured), said: “First quarter results reflected a further step forward in our business model, which is focused on the pursuit of sustainable growth.

"The differential quality of our asset portfolio enables us to offer differential services, which translated into improvements in our results.”

Read more: How Telefónica is rebuilding its network around customer experience

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