www.WirelessFederation.com/news: Due to Venezuela’s rising inflation and the devaluation of the Bolivar, the net profit of Telefonica will be reduced by nearly EUR 548 million. Telefonica’s second largest revenue generator in Latin America is Venezuela which accounted for almost 7 percent of revenues in the first nine months of 2009.

However, the company feels that the fiscal gains of EUR 591 million from a Spanish law would offset the loss. Spanish law allows firms to deduct from taxes goodwill charges from foreign acquisitions and spread that deduction over a 20-year-period.

Venezuela’s President Hugo Chavez devalued the Venezuelan currency in relation to the US dollar by 50 percent on January 8, 2010, to an exchange rate of VEF 4.3 per dollar from VEF 2.15, and set a rate of VEF 2.6 per dollar for imports of essential items such as food and medicine. After this devaluation, the value of the assets of Telefonica became EUR 1.81 billion less.

This led to the reiteration of earnings targets by Telefonica.