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Telefónica Reports A Significant Improvement In Net Profit And OIBDA In The Second Quarter Compared To The First Three Months Of 2012

By regions, Telefónica Latinoamérica's total access base grew 10% year-on-year, after recording 8.5 million mobile net additions during the first half of the year (excluding the disconnections mentioned above), up 36% year-on-year.

Analysis of the income statement

Revenues in the first half of 2012 totalled 30,980 million euros, with a year-on-year growth of 0.3%, underpinned by higher sales at Telefónica Latinoamérica (+7% year-on-year), which more than offset the lower revenues from the European operations (-6.1% year-on-year). Excluding the negative impact of lower mobile termination rates, revenues rose 1.5% year-on-year. Exchange rate fluctuations contributed with 0.8 percentage points to the growth.

The Company's focus in capturing the high-growth in the mobile data business was reflected in the sustained growth of mobile data revenues (+15.7% year-on-year), accounting for more than 34% of mobile service revenues in the first half of the year (30% over the same period in 2011). There was also a sharp increase in non-SMS data revenues (+26.6% year-on-year), accounting for more than 56% of total data revenues (+5 percentage points vs. January-June 2011).

The Company's high diversification was reflected by the increased contribution of Telefónica Latinoamérica, which accounted for 48% of consolidated revenues during the first half of the year (+3 percentage points year-on-year) and remains the main growth driver (+3.2 percentage points year-on-year). On the other hand, Telefónica Europe accounted for 49% of consolidated revenues and, within the former, Telefónica España's contribution fell by 3.4 percentage points to represent 25% of consolidated revenues.

Consolidated operating expenses amounted to 21,268 million euros, up 4.7% vs. the first half of 2011, decelerating significantly their growth rate in the second quarter (+3.6% reported vs. +5.9% in the first quarter) mainly due to a lower increase in commercial costs and higher efficiencies achieved. Supplies during the first half of the year totalled 9,060 million euros, up 1.9% year-on-year. Nevertheless, the year-on-year growth eased in the second quarter compared to the first quarter (+2.7% reported; +1.9% in organic terms in the first quarter of 2012). Subcontract expenses (6,708 million euros) rose by 6.3% year-on-year, decreasing its year-on-year growth with respect to the first quarter of the year (+8.7% reported; +8.4% organic in the first quarter of 2012). Personnel expenses stood at 4,377 million euros, up 5.7% year-on-year, decelerating with respect to the first quarter (+6.7% reported; +6.6% in organic terms in the first quarter of 2012).

The average headcount was 287,437 employees (2,348 employees more than the average for the first half of 2011), mainly due to the higher workforce at Atento. Excluding Atento, Telefónica's average workforce stood at 132,667 employees, 948 fewer than in the same period of 2011.

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