Page last updated at 16:44 GMT, Thursday, 30 July 2009 17:44 UK

Profits fall at phone companies

O2 shop
Telefonica owns O2 in the UK

Three of Europe's biggest telecoms firms have reported falling profits, but the results came in ahead of analysts' expectations.

Spain's Telefonica saw second-quarter net profits drop 6% to 1.93bn euros (£1.65bn), while BT's pre-tax profits fell 45% to £272m in the same period.

France Telecom reported a 4.3% fall in net profits for the first half of 2009.

Shares in all three companies closed higher, as the results were better than expected after they had cut costs.

Telefonica rose 2%, BT was up 12.6% and France Telecom gained 3.3%.

"These are fairly strong results from all three," said Mark Giles, analyst at research firm Ovum.

"It shows what we have been talking about for a while - telecoms seem to be more resilient."

Cost reductions

In the second quarter of the year, Telefonica, which owns O2 in the UK, cut its operating expenses by 6.6%, while BT cut 2,300 jobs from its global IT services division, as the firms tried to reduce costs

France Telecom, which owns Orange, warned that trading in the rest of the year would remain tough.

"For the second half, with the economic environment remaining difficult, the group will continue with targeted marketing programs and cost-reduction efforts," chief executive Didier Lombard said.

"We are confident we can adjust to current conditions while preparing to take maximum advantage of the recovery when it occurs."



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