Telefonica's profit falls to $5.14BN on write-offs

MADRID (AP) -- Spanish telephone company Telefonica said Thursday its net profit last year plunged 27.3 percent to €3.9 billion ($5.14 billion), driven lower by a series of write-offs even though its Latin American business flourished and overtook recession-hit Europe for the first time in terms of revenue.

Telefonica said that "extraordinary impacts" wiped €2.5 billion off its profit margin. Those included the adjustment of the value of stakes in its European companies Telecom Italia and Telefonica Ireland, and the consequences of Venezuela's currency devaluation.

Telefonica's total revenue last year fell by 0.8 percent, to €62.4 billion. Overall, the company blamed the drop on difficult conditions in some markets, both economic and those resulting from tougher competition, as well as negative consequences from market regulation.

In Latin America, which provided more than half the company's revenue in the fourth quarter, revenue grew 6.7 percent over 2012.

Operations in Europe, where the region's financial crisis has shrunk customer spending, accounted for 48 percent of total revenue. However, the company said Telefonica Europe recovered some momentum towards the end of last year with the launch of new tariffs, especially in Spain.

The company reported healthy growth in mobile data revenue, which was up 12.8 percent on 2011, and said it reduced its financial debt by more than €5 billion to €51.3 billion.

Telefonica shares were up 1.96 percent at €10 on the Madrid stock exchange in early trading.