Spanish communications giant Telefonica to cut 6,500 jobs by 2013


Spanish communications giant Telefonica said Friday it swung to a third-quarter loss as a result of costs related to continuing layoffs at its troubled domestic unit.

Madrid-based Telefonica--Europe's second-largest telecommunications company by market value after U.K.-based Vodafone Group PLC (VOD) -- posted a EUR429 million net loss for the quarter, compared with a EUR5.1 billion net profit in the same period last year. Then, Telefonica's bottom line was also inflated by extraordinary gains.

Earnings took a hit as personnel costs more than doubled to compensate outgoing workers. As many as 6,500, or close to 20% of Telefonica's Spanish unit's staff, will be made redundant by 2013, at an estimated total cost of around EUR2.7 billion before taxes.

The company's operating income before depreciation and amortization--its more closely watched measure of profitability--fell 69% to EUR2.95 billion, affected by the higher costs.

Telefonica's third-quarter revenue rose 3.7% to EUR15.79 billion, as lower sales in its troubled Spanish home market were offset by higher revenue in high-growth Latin American ones.

Source: Market Watch