Telefonica Posts Record Profit on Tower Sale
Spanish based operator Telefonica raised its full year outlook after posting an all-time record net income. The company was boosted in the second quarter by key strategic moves to sell off its Telxius tower unit and a tie-up of its O2 UK mobile arm with Virgin Media.
The company reported net income of €7.7 billion in Q2, up from €862 million year-on-year, mainly driven by an exceptional impact of €7.4 billion following the completion of tower asset sales in Europe and Latin America. The sales also contributed to a 30 percent reduction in net debt by €11 billion to €26.2 billion. Revenue for the period was however down 3.6 per cent to €9.9 billion, reflecting unfavourable foreign exchange trends, in addition to rising costs and competition across its key markets.
Telefonica chairman and CEO Jose Maria Alvarez-Pallete commented the strength of its performance represents an inflection point in our transition to sustainable and profitable growth. He pointed to the completion of the UK joint venture, which strengthens its exposure to the UK’s largest converged players, complementing our leading positions in Spain, Brazil and Germany, while adding the tower sale significantly boosts its balance sheet. Looking ahead, both moves contributed to upgrade guidance for 2021 revenue and core profit from stabilisation, which it forecast three months ago, to stable to slight growth.