Bloomberg News

Telefonica Sees Sales Growth in Home Market 2012, Chief Says

December 13, 2011

Dec. 1 (Bloomberg) -- Telefonica SA, Europe’s largest phone company by market value, predicts revenue from its Spanish operations will grow in 2012 as efforts to stop customers from switching to rivals start to pay off.

Telefonica, whose sales in Spain have declined since the fourth quarter of 2008, may report a boost in sales in its home market next year, said Luis Miguel Gilperez, president of Telefonica Spain.

“There is a change in consumer habits toward telecommunications and we are at the base of the consumption pyramid,” Gilperez said in an interview in Madrid yesterday. “2012 is our year of growth,” he said, referring to revenue. This may be “derived from our market revival or from our competitors being in a worse position.”

Chief Executive Officer Cesar Alierta is counting on economic growth in Latin America, which accounts for 47 percent of sales, to attract investors discouraged by Spain’s unemployment rate, the highest in the euro zone. The Madrid- based operator is also slashing jobs and identifying underperforming assets for sale to cut debt and stem an 18 percent slide of its stock this year.

Telefonica posted a third-quarter net loss of 429 million euros ($579 million), weighed down by 2.6 billion euros in job- cut expenses. That was the first quarterly loss since 2002. Third-quarter revenue in Spain, where it is the biggest operator, slid 8.8 percent to 4.31 billion euros from a year earlier, while total sales climbed 3.7 percent to 15.8 billion euros.

Shuffled Heads

Gilperez, who formerly led Telefonica’s operations in Brazil, was named head of Spain in September as the former monopoly folded its struggling domestic unit into a European division and shuffled the heads of its regional businesses amid efforts boost the business.

“Trends are still complicated because we probably reached bottom in the third quarter and from there we made the firm decision of trying to recover our position in the market,” Gilperez said after a joint event in Madrid with Microsoft Iberian President Maria Garana. “I don’t think sales are falling. I’ve got more activity than ever. I’m confident that, without a doubt, 2012 won’t be as bad as expected or forecast.”

Jose Maria Alvarez-Pallete, head of the company’s European operations, told investors on Nov. 11 he doesn’t expect any short-term improvement in Telefonica’s domestic market as it will continue to face pressure from competitors.

--Editors: Kim McLaughlin, Simon Thiel

To contact the reporters on this story: Manuel Baigorri in Madrid at mbaigorri@bloomberg.net;

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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