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O2's iPhone deal nudges up profits at parent Telefonica

SPANISH telecoms giant Telefonica said yesterday that it had seen a small increase in first-half profit, as a sharp downturn in its home market was offset by a strong performance in the UK and Latin America.<br /><br />Telefonica&rsquo;s UK arm, O2, put in a solid performance over the period &ndash; posting year-on-year growth of 6.6 per cent in its customer base to 20.7m users &ndash; thanks to its status as Apple&rsquo;s exclusive iPhone partner in Britain. Revenues at the division rose by 5.5 per cent to &euro;3.19bn (&pound;2.7bn).<br /><br />&ldquo;O2 is the only operator in the UK continuing to grow. We are clearly outperforming competitors again,&rdquo; said O2 UK chief executive Ronan Dunne.<br /><br />Latin America was once again the group&rsquo;s dynamo, accounting for almost 40 per cent of revenues, with mobile penetration there still growing.<br /><br />But second quarter revenues at Telefonica&rsquo;s Spanish arm fell 6.9 per cent to &euro;4.8bn due to the impact of the country&rsquo;s bitter recession.<br /><br />Europe&rsquo;s biggest telecoms company reiterated its full year guidance, in which it expects a one to three per cent increase in operating profit.<br /><br />Telefonica&rsquo;s 2010 target is for earnings per share of &euro;2.30, although some analysts were yesterday sceptical that the group will hit the figure.