Spain’s largest phone company, Telefonica,  announced on Friday that its full year operating profit had decreased to €20.2bn from €25.8bn year-on-year. Net profits were down to €5.4bn from €10.1bn in 2010.

The fall was caused by lower domestic revenue and costs of cutting jobs amid rising unemployment, which saw customers switch to cheaper rivals, Telefonica said.

The group’s CEO Cesar Alierta said Telefonica is also looking to slash its domestic workforce and stop major M&A to counter the consequences of Spain’s deteriorating economy.