As Telefonica S.A. (ADR) (NYSE:TEF) registered a 13% rise in sales to $13.1 billion (€11.5bn) in the Q12015. However, the profits dipped on increased marketing spending of the company. Earning 3.62 billion euros in the operating system at a 7.7% increase is also good news. Spain has proved to be a great market for the company despite the revenue falling by 3.8% that was better the 4.9% dip in Q42014. Telefonica is looking to expand further into the Spanish territory as improving economic sentiment is expected to help the company achieve better results.
Raymond James analyst Stephane Beyazian said that the company had a decent quarter. Even though there was some improvement in Spain, the margins were still under a lot of pressure. Another analyst Banco Espirito said that the company was working hard at controlling the revenue in Spain. The company saw a growth of 1% with 41.2 million services being assessed in the country, and this was a positive sign. Integrating DTS Distribuidora de Television Digital SA can lend some respite in Spain.
Revenue Improvement On Cards
Meanwhile, the company registered over 4% growth in Brazil and is looking at acquiring GVT. The earnings from the buyout will help Telefonica to reduce its debt by 31.7 billion euros. Telefonica’s Chief Operating Officer Jose Maria Alvarez-Pallete said that they needed to generate over 3 billion euros of revenue in Spain every quarter to register growth.
The Q22015 looked bit tough though as worker strikes and approval delays in its acquisition may affect the growth. The overall net profit saw a 162% rise to 1.8 million euros owing to the sale of O2 UK. The current focus of the company is to improve the domestic sales. The prices of most of its products were raised this year to boost sales growth in Spain.
The company is optimistic that investment in best speed networks and premium services will help them in keeping the existing customers happy and adding new clients as well. It is still left to be seen the impact that the strategies of the company will have on the sales in Spain in 2015.
