Telefónica Eating into Giant Debt

MADRID—Telefónica SA, one of the world's most indebted companies, gave indications that it is cutting its debt at an accelerated pace and that a better mood in financial markets is helping lower financing costs.

Madrid-based Telefónica, Europe's second-largest telecommunications firm after the U.K.'s Vodafone PLC, posted an 82% drop in net profit for the three months to Dec. 31 to €473 million ($621.3 million) from €2.67 billion a year earlier. Much of the drop, however, was a reflection of extraordinary charges due to accounting adjustments for a lower value of the company's stake in Telecom Italia SpA and its Irish ...

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