Telefonica raises 2021 outlook after record quarterly profit

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The logo of Spanish Telecom company Telefonica is seen on a sewage cover outside in Madrid
FILE PHOTO: The logo of Spanish Telecom company Telefonica is seen on a sewage cover outside its headquarters in Madrid, Spain, May 12, 2021. REUTERS/Sergio Perez

July 29, 2021

MADRID (Reuters) – Spanish telecoms group Telefonica raised its outlook for the full year on Thursday, after posting a record net income of 7.74 billion euros ($9.2 billion) thanks to the sale of its Telxius tower unit and the UK tie-up of O2 and Virgin Media.

Telefonica said it now expects revenue and core profit to be “stable” or to see “a slight growth” in 2021, buoyed in part by its Brazilian and German markets which reported strong results on Wednesday. It had forecast a “stabilisation” three months ago.

For the second quarter, the company posted core profit of 13.47 billion euros, an organic 3.3% increase compared with the same quarter last year, but a 3.6% drop in real terms as it continues to struggle with high costs and competition.

The Spanish telecoms group said its second quarter results were helped by the sale of its Telxius mobile mast division, adding Telefonica UK was no longer accounted for under the full consolidation method.

The operator also announced its technology unit, Telefonica Tech, had bought cloud and security service provider Cancom Ltd for 340 million pounds ($473.99 million), betting on the fast-growing market segment as businesses digitise their operations en masse amid the pandemic.

Telefonica, like European rivals, has been facing growth issues aside from the impact of the pandemic and has been selling assets to cut debt and fund an upgrade to next-generation 5G networks.

Telefonica’s net financial debt shrank by around 30% to 26.2 billion euros.

($1 = 0.8436 euros)

($1 = 0.7173 pounds)

(Reporting by Inti Landauro and Clara-Laeila; additional reporting by Jesus Aguado; editing by Uttaresh.V and Emelia Sithole-Matarise)