S&P lowers Telefonica

Standard & Poor's said it lowered to BBB from BBB+ the long-term corporate credit rating on Telefonica SA and related subsidiaries, Telefonica Czech Republic AS, Telefonica Moviles Chile SA and Telefonica Chile SA.

The A-2 short-term corporate credit rating on Telefonica SA was affirmed.

The outlook is negative.

The downgrades follow news of Telefonica's first-quarter results and downward revision of expectations for the group, S&P said.

While the agency said it still views the business risk profile as strong, thanks notably to its wide geographic diversification, it believes that macroeconomic and competitive factors are affecting its revenues and profitability.

S&P said it is particularly concerned by the extent of the decline in domestic revenues with mobile service revenues down 16% before regulatory impacts in first quarter, amid a harsh domestic backdrop, high unemployment, adverse consumer behavior and fierce competition.

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