Bloomberg | April 13, 2011 | Manuel Baigorri
Telefonica SA (TEF), Spain’s former phone monopoly, forecast revenue growth of at least 1 percent annually through 2013 and budgeted as much as 27 billion euros ($39 billion) in spending as part of its Latin American push.
Group sales will increase at a range of 1 percent to 4 percent over three years from an adjusted base of 63.1 billion euros in 2010, Chairman and Chief Executive Officer Cesar Alierta told investors in London today. Operating margin before depreciation and amortization will be at “upper 30’s” percent, falling from 38 percent in 2010.
Madrid-based Telefonica is betting on higher dividends and Latin America’s rapid growth to win back investors discouraged by the Spanish government’s austerity measures and the highestunemployment rate in the euro region. Alierta raised his bid three times last year to convincePortugal Telecom SGPS SA (PTC) to sell its part of their venture that controlled Brazilian wireless operator Vivo Participacoes SA. (VIVO4)
“The top-line guidance is much more modest and reasonable than previous ones,” said Robin Bienenstock, an analyst at Sanford C Bernstein in London. “However Telefonica was bullish on its margin forecast and there’s a real big question on whether or not that’s manageable. If they’re to meet these numbers they need to find some pretty meaningful cost cuttings throughout their business.”
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