Telefonica Q2 net down 6 percent

MADRID - Spanish telecommunications company Telefonica said Thursday its second quarter net profit fell 6 percent from a year earlier due to higher taxes and lower revenues in recession-stricken Spain and Europe, offsetting a strong performance from the company's Latin American division.

The company said profits fell to euro1.93 billion ($2.72 billion) between April and June compared to euro2.06 billion in the same period in 2008.

Net profit for half year edged up by 1 percent to euro3.62 billion ($5.11 billion) from euro3.59 billion a year earlier, Telefonica said.

The negative impact of exchange rate fluctuations and the impact of capital gains booked in 2008 resulted in revenue in the second quarter dropping by 2.6 percent to euro13.88 billion ($19.58 billion) from euro14.25 billion in 2008, the company said.

Sales from Telefonica's Spanish division fell 6.9 percent to euro4.8 billion ($6.77 billion) euros, amid a serious recession that has driven unemployment as high as 17.9 percent. Revenue in Europe decreased 5.9 percent to euro3.3 billion ($4.65 billion), the company said.

Telefonica said the Latin American businesses continued to grow at a fast pace and remained the Group's growth driver. Sales at the Latin American unit climbed 3.6 percent to euro5.57 billion ($7.86 billion).

The company said income taxes jumped 4.1 percent to euro816 million ($1.15 billion) from euro784 million ($1.10 billion) in the second three months of last year.

Operating income before depreciation and amortization fell by 2.8 percent in the second quarter to euro5.59 billion ($7.88 billion) compared to euro5.74 billion in 2008.

Shares on the Madrid bourse closed up 2.1 percent at euro17.84 in Madrid.

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