European phone giant Telefonica reported its first quarterly loss in nine years, as its main Spanish customer based switched to cheaper rivals' offers.
The third-quarter net loss was €429 million (nearly $600 million), which was not helped by a €2.7 billion in job-redundancy expenses for over 6,500 workers, the Madrid-based company announced today.
While analysts had predicted a loss, some were "shocked" as to why they had not lowered their guidance, a London-based analyst said, speaking anonymously to Reuters.
(Source: Flickr, CC)
Telefonica's sales in its home market of Spain slid by nearly 9 percent, as the company moves to halt major acquisitions and mergers, and cutting the company's debt in a bid to rekindle investor confidence. It stock price is down 18 percent this year before today, and fell just over 1 percent at market opening in Madrid.
However, due to the massive Latin America market that the company still has, the losses were offset by a 17.5 percent rise in revenue in the region. The Latin American market now accounts for nearly half of the group's revenue, acting as a measured balancing act between the two core regions.
Telefonica holds a massive share of the Spanish and Latin America market, and holds a heavy presence in Europe and the UK.
The company also owns O2, a UK mobile company with a headquarters near London, which announced today that its total access base was 23 million customers at the end of September, up 2 percent year on year.
The eurozone's largest telecoms provider in terms of market value, and one of the largest broadband and phone providers in the world, had previously promised a dividend of 1.75 euros per share in 2012.