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Vodafone kicked off the round of European operator results last week, with the squeeze on its heartland markets putting its shareholders in angry mood. Now three other bellwethers in the saturated telecoms region have reported, all looking outside their core business for growth.

Spanish giant Telefonica is better cushioned than most against the difficulties of the western European markets because of its huge Latin American operations, which contributed just short of 40% of first half revenues. These totalled €27.58bn ($38.9bn) for the group, which includes European cellcos Movistar and O2, inching ahead of the same period last year by just 1.4% in organic terms. But group net profit slipped by 3.5% year-on-year to €1.339m ($1.89m).

In terms of subscriber numbers, the total rose 7.6% to 264m, with 160.8m of these coming from Latin America. At 61% of the whole, for 40% of the revenues, this shows the risk of Telefonica's increasing reliance this region - lower margins and ARPU. However, it also saw subscriber growth in most regions in its strongest businesses, wireless (up 9.9% overall) and pay TV (up 19.4%).

Despite the ultra competitiveness of the UK market, there were some hopeful signs for O2 UK, which boasted of its lowest ever churn. However, the unit saw slower growth than in Q1, but at least scored an increase in revenues, in a flat to declining market - its revenues were up 4.1% year-on-year, on net subscriber adds of 252,268 in the quarter.

The German arm was the main contributor to O2 growth though, and Matthew Key, CEO of Telefonica Europe, said: "Telefónica Europe has maintained its market momentum and delivered a strong financial performance in the first six months of the year against a challenging economic backdrop. There is clear evidence that the rebalancing of our European business portfolio is continuing to bear fruit, especially with the performance of Telefónica O2 Germany, which has been the main contributor to our OIBDA growth [up 29%] in the year to date."

The German unit saw revenue rise by 0.2% €896m, though mobile services were down 1.2% to €707m. The European wireless business now has 47.6m customers, up 1.5m. The Irish and Czech O2 arms were under severe revenue pressure, Key admitted.

Meanwhile, France Telecom recorded a 4.3% year-on-year drop in net income to €2.56bn during the first half of the fiscal year, while revenues fell 0.5% to €25.5bn. The struggling areas were mainly in wireline, while the Orange mobile arm saw a 9.7% increase in mobile subscribers to reach 125.5m, contributing to an overall group boost of 6.6%, to achieve 186m customers. 3G subscribers were 21.7m as of June 30, compared to 13.4m on the same date in 2008. One of the key growth opportunities for France Telecom will be emerging economies, and while Telefonica expands in Latin America, it has its eyes on a pan-African business, and said this week it might be interested in some of Zain's African assets, after the Middle Eastern group's talks with another French major, Vivendi, fell apart.

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