Telefonica withdraws 2020 guidance after first-quarter profit fall

MADRID (Reuters) - Spanish telecoms company Telefonica SA <TEF.MC> withdrew its 2020 financial guidance after reporting a sharp fall in first-quarter net profit on Thursday.

Net profit fell to 406 million euros ($438 million) from 926 million a year earlier on revenue of 11.37 billion, in line with forecasts from analysts polled by the company.

Europe's fourth-largest telecoms firm by market value said the impact on profits of the coronavirus was limited, as lower revenues from roaming, prepaid and business customers were partly offset by lower commercial costs and lower customer churn.

Operating income before depreciation and amortisation fell to 3.76 billion euros from 4.26 billion, missing a forecast of 3.84 billion euros provided by the company.

The company confirmed a 0.40 euro dividend for 2020.

Separately, it said it would merge its UK unit O2 mobile business with Liberty Global's <LBTYA.O> cable company Virgin Media to create a major new force in the British telecoms market.

Telefonica is trying to reinvent itself to fight fierce competition and boost revenue in the next two years by focusing on its most profitable markets - Spain, Britain, Germany and Brazil - and considering mergers and acquisitions.

In February, before the spread of the coronavirus froze economies worldwide, Telefonica had said it expected sales and core profit to be stable this year.

Its shares have fallen 31% so far this year, before the latest earnings were published, in line with the fall in Spain's IBEX 35 blue-chip index.

Group results were released the day after figures from its German and Brazilian units underlined the disparities between its businesses: Telefonica Deutschland posted revenue and profit growth for the first quarter while Telefonica Brasil reported declines in both.

($1 = 0.9269 euros)

(Reporting by Inti Landauro and Isla Binnie; editing by John Stonestreet)