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November 13, 2005

Telefonica outperforms rest of European operators

Telefonica SA is on course to comfortable outperform its European peers and has lifted its revenue growth target for the year from a 12% to 15% range to a rise of more than 15%, which would lifted the final figure to more than 34.9bn euros ($40.9bn).

By CBR Staff Writer

This will be an easy attainment because growth has been accelerating all year, and in the third quarter to September 30, net income rose 53.5% to 1.4bn euros ($1.7bn) on revenue 32.3% higher at 10bn euros ($11.7bn).

The main factor behind the expansion has been a 37.8% increase in its customer base to 147.7 million, helped by the purchase of 10 BellSouth operators in Latin America, and the acquisition of Czech operator Cesky Telecom.

Telefonica said the figures reflect the diversification of being an integrated operator, with the cellular business being to main contributor to revenue while fixed operators are the main contributor to profitability.

With its geographic expansion, its Spanish homeland represents only 53.6% of total revenue. Now it is turning its attention to Europe with the Cesky buy and its agreed $32bn purchase of O2 Plc, which gives it mobile operations in the UK and Germany.

Net debt of 28.7bn euros ($33.6bn) set for a substantial increase after the O2 deal, but the group is generating sufficient cash to keep this under control.

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