Revenue dropped 9 per cent at Spanish telecoms company Telefonica in the first quarter, hit by unfavourable exchange rates in Latin America and weakness in Europe.

Revenues at the former Spanish monopoly were €14.1 billion, in line with analyst expectations.

The decline was less marked in Latin America, which accounts for over half the group’s revenue, dipping 4 per cent, compared with a 12 per cent drop in Europe to €6.7 billion.

European peers like France Telecom, Swisscom and KPN also reported drops in revenue in the first quarter, with France Telecom hit by a price war in its home market.

Telefonica, which plans to cut debt to under €47 billion by the end of 2013, reported net borrowings of €51.8 billion at the end of March compared with €51.3 billion at the end of 2012.

The company said debt was hit by the devaluation of the Venezuelan bolivar and a €701 million investment in spectrum, but added that it was on track to meeting its 2013 target after shaving an additional €653 million from debt since the end of the first quarter to €51.2 billion.

Telefonica took steps to trim debt in the first quarter, including selling its treasury stock and disposing of 40 per cent of its Central American assets.

First quarter profit rose 21 per cent to €902 million, owing to better financing costs and a favourable comparison with last year when the company wrote down its stake in Telecom Italia.

Reuters