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Telefónica beats forecasts
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February 29, 2000: 7:56 a.m. ET
Spanish telecom leader posts 38% rise in 1999 profit, helped by mobiles, asset sales
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LONDON (CNNfn) - Spain's Telefónica posted a better-than-expected 38 percent rise in annual profit for 1999 as booming profit in its cellular and data-transmission businesses outweighed a decline in income from fixed-line telephone calls.
Spain's largest telecom operator said net profit rose to 1.81 billion euros ($1.77 billion) from 1.31 billion euros the previous year, surpassing the 1.73 billion consensus among analysts polled by Reuters. Sales climbed 31.4 percent to 22.96 billion euros.
Excluding the one-time gains, profit grew 18.8 percent last year, more than four percentage points higher than growth in 1998. Telefonica sold stakes in its Terra Networks Internet access arm as well as its phone directory division.
The company's cellular unit posted the strongest profit gains, with a 15.8 percent rise in operating earnings as subscriber numbers jumped 86 percent to 19.58 million. It's share of the domestic wireless market rose to 22.6 percent.
Analysts were upbeat about the prospects for this year. "2000 is going to be very good for Telefónica thanks to the new push in mobiles, the recovery in Latin America and extraordinary results from listing of new units like Telefónica Media," analyst Maria Rotondo at Banco Santander Central Hispano told Reuters.
The company is expected to float part of its cellular unit later this year and may also list its Telefónica Media unit. Telefónica's data-services arm produced a 6.8 percent advance in operating earnings.
Intense competition in fixed-line telecommunications pushed the division's operating earnings down 4.4 percent to 5.04 billion euros. The company said the launch of two competing services last year cut tariffs by 19 percent, sending its domestic unit to a net loss of 161 million euros compared to a 724 million profit in 1998
The economic slowdown in Latin America, where Telefónica has invested heavily in recent years, sent net profits in the region down 53.6 percent to 156 million euros, though the company said the outlook for the region was improving.
Telefónica shares were 0.7 percent higher in at midday at to 29.56 euros, valuing the Madrid-based company at 79.1 billion euros. The stock has doubled over the past five months. Terra Networks, Europe's most valuable Internet access provider, posted a 173 million-euro net loss Monday. Terra is valued at 27 billion euros. 
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Telefónica
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