Europe’s second largest phone company, Telefonica SA, announced a drop of 0.6 percent in its profit in the third quarter due to Spanish recession in last six decades.

In a regulatory filing, Madrid based Telefonica said that net income has decreased to 1.99 billion euros ($2.98 billion) from 2 billion euros one year before, and the sales have fallen by 5.7 percent to 14.13 billion euros.

Mr. Cesar Alierta, Chief Executive Officer of Telefonica, agreed to spend 3.6 billion euros for buying companies in Brazil and Germany, in order to increase growth outside the Spain.

Mr. Alierta was able to boost the company’s dividend for the year 2010 by 22% in the last month and pledged a higher payment for 2012.

In Spain, the company’s sales declined 8.9% to 4.9 billion euros and in Latin America, revenue decreased by 2.3% to 5.65 billion euros.

Income from its European functionings outside Spain dropped 5.5% to 3.48 billion euros.