CHICAGO, April 6, 2011 /PRNewswire/ -- Zacks.com announces
the list of stocks featured in the Analyst Blog. Every day the
Zacks Equity Research analysts discuss the latest news and events
impacting stocks and the financial markets. Stocks recently
featured in the blog include: Telefonica (NYSE: TEF),
France Telecom SA (NYSE: FTE), America Movil (NYSE: AMX), Vivo
Participacoes (NYSE: VIV) and Telesp (NYSE: TSP).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
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Here are highlights from Tuesday's Analyst Blog:
Telefonica Suffers Domestically
Spanish telecom giant Telefonica (NYSE: TEF) is seeing a
continuous decline in its domestic market share as customers are
switching to cheaper offers from its competitors. This will lead to
lower revenues and earnings for the company.
Spanish operations were weak again in February following
lackluster performances in January and the fourth quarter of 2010.
In the fourth quarter, the company's earnings missed the Zacks
Consensus Estimate as well as the year-ago earnings due to the
economic crisis in Spain that
affected its domestic wireless business.
Telefonica leads the Spanish mobile market, which includes both
mobile phones and datacards. The company is persistently losing
share in the mobile market, with 41.46% in February 2011 as compared with 41.58% in
January 2011 and 42.27% in
December 2010.
In February, Telefonica lost its market share to its rivals ––
Yoigo, a unit of Sweden's
Teliasonera AB and France Telecom SA's (NYSE: FTE). The
companies added 45,732 and 11,146 subscribers, respectively, in the
month. Telefonica was the biggest loser in the month shedding
42,623 customers.
We believe Spain is not working
in favor of Telefonica. The economic downturn in Spain has been more than expected and is
likely to drag the company's profits and liquidity. Margins are
expected to remain strained for the company's domestic business,
with EBITDA predicted to fall until 2014.
Further, the company's Spanish revenue continues to be affected
by the ongoing reduction in mobile termination rates, which is the
fee that operators charge each other to connect calls.
However, weak Spanish operations are expected to be fully offset
by strong growth in Latin America
and Europe. Latin Americais one of
the best performing regions and remains the principal growth region
for Telefonica. This segment continues to post healthy subscriber
additions on a quarterly basis. Telefonica is particularly well
positioned in Brazil and
Mexico, and is actively gaining
market share from its dominant competitor, America Movil (NYSE: AMX).
Moreover, the consolidation of Vivo
Participacoes (NYSE: VIV) in October
2010 enables Telefonica to offer full competitive bundled
services. Telefonica has merged Vivo with its Brazilian fixed-line
voice and broadband unit Telesp (NYSE: TSP).
We are currently recommending our long-term Outperform rating on
Telefonica supported by the Zacks #1 (Strong Buy) Rank.
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