Telefonica Says 06 Sales Expected To Rise Over 37%

MADRID -(Dow Jones)- Telefonica said Tuesday it now expects sales to rise over 37% in 2006, compared with its previous guidance of an increase of between 34% and 37%.

Telefonica, the world's fourth-largest telecom company by market value, said that capital expenditure reached EUR8 billion in 2006, higher than previously expected, as the Spanish company accelerated investment to meet an increased demand for fixed-line broadband and mobile telephone services.

Capital expenditure in 2006 was 50% higher than that of 2005, and is also higher than the company's current target for capital expenses this year, it added in a press release.

"The raised sales guidance is a good sign for Telefonica, and shows a strong demand for its broadband", said a London-based analyst, who requested anonymity.

At 1349 GMT, Telefonica shares were down 0.1% at EUR16.91.

Telefonica said that most of the investment was earmarked for fixed-line broadband networks in Spain and Latin America, the company's third-generation mobile network in Germany and a second-generation - or GSM - mobile network in Brazil.

As of Sept. 30, 2006, Telefonica had 7.2 million residential broadband subscribers in Europe and Latin America, 45% more than a year earlier.

Company Web site: http://www.telefonica.es

-By Jason Sinclair, Dow Jones Newswires; 34 913958127, jason.sinclair@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 16th January 2007