By Inti Landauro
MADRID (Reuters) - Spanish telecoms firm Telefonica on Friday reported a third-quarter net profit of 460 million euros ($450 million), beating analysts' estimates thanks to faster revenue growth.
The quarterly net profit fell 35% in the three months ended Sept. 30 from the same period a year ago, when the company booked accounting gains on merger and acquisition deals.
Profit, however, was above the 391 million euros expected by analysts in a company-provided consensus forecast, Telefonica said in a statement.
Shares were up 1% in morning trading.
The company is "on track to deliver full-year guidance", the statement added.
Soaring consumer prices and slowing economies are creating new challenges for Telefonica which, like rivals, has seen profitability eroded in recent years by cut-throat competition and the need to invest in fibre and 5G networks.
Telefonica's core earnings came in at 3.25 billion euros, also above the consensus forecast, as overall revenues rose 11% to 10.34 billion euros.
The company said it was managing the high inflation environment through price increases and cost control. The hikes were automatic in the many countries where Telefonica's fees are indexed to inflation, and targeted in the other countries.
"Personnel costs are down year on year thanks to the redundancy program that we landed earlier in the year and the moderated salary increases we applied this year," Chief Operating Officer Angel Vila told analysts on a conference call on Friday.
He added the company had also moved to reduce energy costs by securing prices for all its energy consumption in Spain in 2023 at 60.5 euros per megawatt-hour.
The company also cut costs and reiterated it expects full-year core earnings growth to be at the "mid-to-high-end" of a low single digit range, while it now expects revenue growth to be at the high end of a low single digit range.
In the first nine months of the year, core earnings were up 2.9% year-on-year, while revenues increased by 4.1%.
Vila also said the company would book a 1.3 billion euro tax reimbursement the government has been ordered to pay in its accounts during the fourth quarter.
($1 = 1.0227 euros)
(Reporting by Inti Landauro; editing by Mark Potter and Json Neely)