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Spain’s Telefonica Q3 core profit drops but revenue…

Spain’s Telefonica Q3 core profit drops but revenue outlook improves

MADRID, Oct 31 (Reuters) – Spain’s Telefonica reported a 1.4 percent fall in third-quarter core profit on Wednesday, citing currency volatility in Latin America, but it raised its revenue target for the year due to a brighter outlook for its domestic market.

Currency turbulence in Brazil and Argentina have dented the telecoms group’s results in recent quarters, even as its dual strategy to aim for both the upper and lower ends of the Spanish market has shown signs of bearing fruit.

The company upgraded its 2018 revenue target to a 2 percent rise on an organic basis on Wednesday, compared with a previous forecast for a 1 percent increase.

Operating income before depreciation and amortisation (OIBDA) was 4.04 billion euros ($4.58 billion) which, stripping out currency effects, was a 4.1 percent rise from a year earlier.

In Spain, which accounts for just over a quarter of its core earnings, 81,000 customers signed up in the quarter to the premium Movistar Fusion package, which includes broadband, pay TV and mobile.

Rights to broadcast Spanish soccer – an expensive asset which British rival Vodafone recently relinquished – are also starting to attract high-paying customers.

But the good commercial results are yet to translate into earnings success in Spain as reported core income sagged 1.2 percent in July-September to 1.29 billion euros.

Earlier this month, Telefonica warned that rising prices in Argentina would reduce its core profit there by around 215 million euros in the first nine months of 2018. ($1 = 0.8817 euros) (Reporting by Isla Binnie and Andres Gonzalez; Editing by Paul Day and Louise Heavens)

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