Lat Am businesses booming as Europe lags behind for international operators

Details: James Barton; Category: Investment; 18 May 2012; 9331 views

Latin America’s burgeoning telecoms sector is outstripping Europe’s, according to the financial reports of two major groups with operations in both markets...

Latin America’s burgeoning telecoms sector is outstripping Europe’s, according to the financial reports of two major groups with operations in both markets.

Global firm Telefonica saw its profits drop in Q1 2012 although revenue increased marginally, with the firm’s Latin American operations offsetting its flagging European business. Net profit was down by over 50% compared to the corresponding quarter the previous year, down to EUR748 million from €1.62 billion.

According to Telefonica, the drop in profit resulted from it selling some of its holding in Telecom Italia. Revenue grew by 0.5%, reaching EUR15.5 billion – an amount that was “in line with internal estimates,” according to the firm’s chairman, Cesar Alierta.

Of the operator’s total consolidated revenue, 48% was generated by its “main growth engine”, Latin America. With revenue for Brazil and Argentina respectively hitting €2.2 billion and €561 million – as well as a rise in revenue for Chile, Colombia, Mexico, Peru and Venezuela – Telefonica’s total consolidated revenue for the region hit €7.5 billion.

Meanwhile, the firm’s revenue in Europe has seen a year-on-year fall of 6.6%, with connections dropping by 1.7%.

Telecom Italia has also seen its European offering be outstripped by its Latin American business. In the first quarter, the firm’s domestic revenue fell 2.4% to €4.49 billion; meanwhile, its subsidiaries TIM Brasil and Telecom Argentina grew their revenues by 19.1% and 24% respectively, reaching €1.75 billion and €893.5 million.

The Brazil and Argentina businesses are responsible for 38% of the group’s total revenue. The group’s CEO, Franco Bernabe, said “The excellent performance of Latin America continues.”