MADRID: Spanish telecoms giant Telefonica registered a sharp rise in profits in 2021 thanks to a major asset sale that allowed it to reduce its debt levels. The group posted net income of 8.1 billion euros ($9.1 billion), a five-fold increase on its figure of 1.6 billion a year earlier, but lower than the 9.2 billion euros expected by FactSet analysts.
The shortfall resulted from the inclusion of a 1.4-billion-euro allocation to fund a voluntary redundancy scheme in Spain that meant Telefonica posted a 1.2 billion euro net loss in the fourth quarter.
Telefonica’s results were boosted by the sale of its mobile phone masts unit Telxius to American Tower Corporation, one of the world’s largest tower companies, for 7.7 billion euros.
It also benefited from the fusion of its British unit O2 with Virgin Media, creating a company worth more than £31 billion (38 billion euros). Both transactions helped the telecoms group to continue reducing its huge debt, which fell by 26.1 percent last year to stand at 26 billion euros.
Annual turnover fell in 2021 by 9.3 percent to 39.3 billion euros. This fall is linked to the change in the scope of Telefonica’s operations due to its sale of assets — if left unchanged, turnover would have reached 42.8 billion euros, compared with 43 billion in 2020, a company statement said.
In Spain, its main market which accounted for some 30 percent of sales, turnover reached 12.4 billion euros, the same as in 2020. “Telefonica has once again delivered on all its targets in 2021. The strength of our results demonstrates the success of our strategic priorities,” said chairman and CEO Jose Maria Alvarez-Pallete, describing the group as “leaner, more efficient and stronger”.
Telefonica was very slightly higher in late morning trade, up 0.17 percent on Spain’s Ibex 35 index, which like markets across Europe, was weighed down by the Russia-Ukraine crisis, trading 3.81 percent lower.
Since the end of 2019, Telefonica has been in the throes of a major restructuring plan to refocus its energies on its most important markets, namely Spain, Germany the UK and Brazil.
At the end of December, it reached an agreement with unions to slash around 2,700 jobs under a voluntary redundancy plan, affecting around 15 percent of its staff in Spain.
The departures, expected in the first quarter of 2022, mark Telefonica’s third such voluntary redundancy plan in five years and will produce annual savings of more than 230 million euros, starting in 2023. This year, the group said it was expecting to see a slight growth in revenues and operating income (OIBDA).