© Reuters. FILE PHOTO: The logo of Spanish Telecom company Telefonica is seen during GSMA’s 2022 Mobile World Congress (MWC) in Barcelona, Spain February 28, 2022. REUTERS/Nacho Doce

By Inti Landauro

MADRID (Reuters) -Spanish telecom company Telefonica (NYSE:) posted a smaller-than-expected fall in first-quarter net profit on Thursday helped by inflation-matching price rises, operating efficiencies and its cloud and cybersecurity business.

Shares in the company jumped 4.8%, outperforming the blue-chip IBEX-35 index which fell 1.4%, as Telefonica affirmed its forecast for “low single-digit growth” in full year core earnings and revenue excluding the effect of asset sales.

Chief Operating Officer Angel Vila told Reuters that he expected lower staff costs related to job cuts in Spain and Latin America, reduced costs of football rights in Spain, slower increases of energy prices and synergies in Britain and Brazil to further buoy profitability.

Net profit fell 20% to 706 million euros ($742 million) in the first quarter but beat the 470 million forecast by analysts in a company-provided survey.

Reported core earnings fell 6.4% to 3.2 billion euros on revenue down 9% to 9.41 billion, beating analysts forecasts of 2.96 billion and 9.07 billion.

“The results have exceeded forecasts in the main indicators,” analysts at brokerage Renta 4 said in a note to investors.

The consolidation process in Spain in which two of the company’s rivals MasMovil and Orange will merge, will also benefit Telefonica, Vila said, as the reduced competition will allow lower spending in marketing and fewer discounts to poach customers.

“We will monitor the evolution over the year to make, if needed, upside adjustments to the guidance,” he said on a conference call with analysts.

Spain’s largest telecom company also confirmed a dividend of 0.3 euros per share to be paid in two instalments in December 2022 and June 2023.

Excluding the effects of recent asset disposals, core earnings rose 2.1% on revenue up 3.2%, the company said.

Telefonica attributed the first quarter performance to its ability to adapt prices to inflation in most markets, favourable currency swings and the strength of its tech business, which provides cybersecurity, cloud, big data and internet-of-things services.

Digitalisation of operations also generated cost cuts, the company said.

The currency changes boosted revenue by 242 million euros and the tech unit contributed 299 million, 81% more than a year earlier.

($1=0.9517 euros)

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