By Clara-Laeila Laudette
MADRID (Reuters) -Spanish telecoms group Telefonica (MC:TEF) posted first-quarter core earnings in line with forecasts thanks to reduced operating expenses and a partial economic recovery from the COVID-19 pandemic, lifting its shares in early trade on Thursday.
Telefonica on Thursday reported core earnings of 3.42 billion euros ($4.13 billion), compared with the 3.36 billion euro average forecast from analysts polled by the company.
Shares in the company rose as much as 4.3% and were up 2.3% at 4.03 euros by 1015 GMT.
"Telefonica offers an attractive asset portfolio," JP Morgan's Cazenove equity analysts said on Thursday, though they voiced concern over the company's debt levels given the intense competition in the Spanish market.
A large part of the cash generated during the quarter was allocated to spectrum auctions in the UK, Spain and Chile, but chief operating officer Angel Vila said that British spectrum costs proved lower than expected.
Investments in radio frequencies vital to building out connectivity in the race to deploy next-generation 5G mobile data cost Telefonica 694 million euros.
"Spain and Brazil auctions are yet to come, but the UK spectrum acquisitions brought certainty," Vila told analysts, adding that strong cost control had aided UK business performance, partly thanks to cost savings from stores being closed during lockdowns.
"We expect (this performance) to continue thanks to synergies generated by our joint venture transaction," Vila said, referring to the 31.4 billion pound deal to merge Telefonica's British mobile brand O2 with Virgin Media.
Net profit stood at 886 million euros, more than twice as much as the same quarter a year ago as the company recovered from the economic paralysis caused by COVID-19 lockdowns imposed last spring.
Telefonica's debt shrank by 6.4% to 35.8 billion euros while earnings per share more than doubled year on year to 15 euro cents.
($1 = 0.8282 euros)