A series of write-downs following restructuring in Europe and a sharp devaluation of currencies in overseas markets saw profits at Telefónica down nearly 35 percent last year. 

The Spain-based operator’s net income reached €3 billion for 2014 following a terrible fourth quarter that saw profits drop nearly 90 percent, due to a devaluation of local currency in Venezuela wiping off €399 million.

Sales dipped 14.1 percent in the three months to December, meaning Telefónica’s full-year revenues were down 11.7 percent to €50.4 billion.

However, the company said it made “key progress and achieved tangible results in its transformation strategy towards becoming a digital telco” during the year after adding 1.6 million Pay TV customers and doubling fibre accesses to 1.8 million.

Total customer numbers were up 5.5 percent to 341 million after the operator incorporated E-Plus’s 42.1 million subscribers.

It said it expected revenues to grow seven percent this year.

In 2014, sales were down 7.2 percent in Spain to over €12 billion but declined just 4.9 percent in Q4.

As a result, Telefónica said its home market had reached “an inflection point”.

Sales in Brazil fell 8.1 percent to €11.2 billion in 2014, but the operator said when the “significant” reduction of MTRs in February were stripped out, revenues were up 0.5 percent.

In the rest of Latin America, sales were down 22 percent.

There was better news in Europe. The UK, where Telefónica is in negotiations with Hutchison Whampoa about selling O2, saw sales grew 5.5 percent to €7.1 billion after it added 854,000 customers.

In Germany, Telefónica saw revenues increase 12.4 percent to €5.5 billion thanks to the inclusion of the newly acquired E-Plus.

Restructuring costs owing to the incorporation of the ex-KPN subsidiary cost Telefónica €405 million, however.

Capex rose 0.6 percent to €9.4 billion last year while debt fell 0.6 percent to €45 billion.

Commenting on Telefónica’s performance, Executive Chairman César Alierta, said: “In 2014 alone, we have doubled the reach of our fibre network to 15 million premises passed and we have reached a 4G coverage of 60 percent in Europe, while in Latin America this service is already available in 10 countries.

“The execution of our transformation strategy in recent years, coupled with the evident change in trends which is underway, lead us to upgrade the level of our ambition for the next two years.“

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