Telefonica Profit hit by Write-downs

By Yomna Yasser On Feb 25, 2015

Telefonica SA on Wednesday reported a sharp drop in fourth-quarter net profit, weighed down by charges at its businesses in Venezuela, Germany and Italy.

Spain’s largest telecommunications company said net profit for the three months ended Dec. 31 was EUR152 million ($172.5 million), down from EUR1.45 billion a year earlier. Revenue during the quarter fell to EUR12.4 billion from EUR14.44 billion.

For Telefonica, it was a quarter of big write-offs. The Madrid-based company had announced earlier this month that it was lowering the value of its assets in Venezuela by EUR2.84 billion to reflect the sharp devaluation of the country’s currency, resulting in a EUR399 million hit to fourth-quarter net profit. Telefonica also charged EUR405 million to cover the cost of restructuring its German unit after it absorbed rival phone operator E-Plus. In addition, it wrote down the value of its Italian holdings, lowering profit by another EUR257 million.

For the full year, Telefonica said profit fell 30% to EUR3 billion, and revenue declined 12% to EUR50.4 billion.

Source: MarketWatch