Revenue dropped 9% at Spanish telecoms company Telefonica in the first quarter, hit by unfavourable exchange rates in Latin America and weakness in Europe.

Revenues at the company, which owns O2 Ireland, were €14.1 billion, in line with analyst expectations.

The decline was less marked in Latin America, which accounts for over half the group's revenue, dipping 4%, compared with a 12% drop in Europe to €6.7 billion.

European peers like France Telecom, Swisscom and KPN also reported drops in revenue in the first quarter, with France Telecom hit by a price war in its home market.

Telefonica, which plans to cut debt to under €47 billion by the end of 2013, reported net borrowings of €51.8 billion at the end of March compared with €51.3 billion at the end of 2012.

The company said debt was hit by the devaluation of the Venezuelan bolivar and a €701m investment in spectrum, but added that it was on track to meeting its 2013 target after shaving an additional €653m from debt since the end of the first quarter to €51.2 billion.

Telefonica took steps to trim debt in the first quarter, including selling its treasury stock and disposing of 40% of its Central American assets.

The company said that first quarter profit rose 21% to €902m, owing to better financing costs and a favourable comparison with last year when the company wrote down its stake in Telecom Italia.