Telefonica reports profit fall, but rising demand

Spanish telecom group Telefonica reported a sharp fall in net profit for the second quarter on Thursday but did better than expected with a strong performance in Latin America. The giant group said that net profit fell by 13.1 percent to 1.154 billion euros ($1.5 billion). This was better than the overall expectations of eight analysts polled by Dow Jones Newswires who had forseen a net figure of 1.053 billion euros. Telefonica said in a statement that it had achieved double-digit growth in Latin America and that it had benefited from an improvement of activity in Europe. On Tuesday, it was announced that Telefonica had bought E-Plus, the German subsidiary of Dutch group KPN, for 5.0 billion euros in cash and a 17.6-percent stake in Telefonica Deutschland. Analysts said that the deal was part of a strategy by Telefonica to develop in northern Europe to balance exposure to markets in recession-hit southern Europe.