Spanish giant Telefonica reported Wednesday a sharp rise in net profit in the first quarter of 2013 despite a sales slump blamed on the declining value of Venezuela's bolivar.
The vast telecommunications group, which now counts Brazil as its biggest source of revenue, said net profit in the quarter rose 20.6 percent from a year earlier to 902 million euros ($1.18 billion).
Lower operating expenses boosted profits at the group.
But the improvement was helped by the fact that net profits are being compared the first quarter of 2012 when Telefonica booked large losses on investments in Italy.
Sales slumped 8.8 percent to 14.14 billion euros in the latest quarter, mostly due to a devaluation in Venezuela, Telefonica said.
"Latin America contributed with over 50 percent of group revenues for the second quarter in a row and Brazil became Telefonica's main market in terms of revenue contribution for the first time, highlighting the advance in our business' diversification," said Telefonica chairman Cesar Alierta.
Telefonica is transforming its traditional business, scrapping subsidies for handsets in favour of providing quality and varied offers that increase customer loyalty, Alierta said in a statement.
Telefonica has sought to reduce its dependence on the troubled economies of Europe and especially Spain, which has been plunged into crisis since the bursting of a property bubble in 2008.
In the latest quarter, revenue from Latin America eased 3.8 percent to 7.232 billion euros while revenue from Europe plunged 11.8 percent to 6.675 billion euros.
Telefonica said "organic" revenue -- due to sales and production rather than mergers or acquisitions -- fell by 1.6 percent overall, with a drop of 10.5 percent in Europe eclipsing a 6.8-percent boost in Latin America.
"Growth in Telefonica Latinoamerica could not offset lower revenues of Telefonica Europe, still affected by the macroeconomic situation, the intense level of competition and the negative impact of regulation," the group said in a statement.
Telefonica said net debt rose 1.1 percent from the previous quarter to 51.8 billion euros. Debt maturities were covered beyond 2014, it said.