By Christopher Bjork 

MADRID-- Telefónica SA on Wednesday said it is embarking on a period of growth, after the telecommunications company's profit fell sharply in the fourth quarter due to charges at its businesses in Venezuela and Europe.

"We're raising our ambitions for the coming two years," Chairman César Alierta said in a news release, citing the company's strategy of becoming a bigger player in fewer markets and an "evident change" in operating trends in markets such as Spain.

Spain's largest telecommunications company said net profit for the three months ended Dec. 31 was EUR152 million ($172.5 million), down almost 90% from EUR1.45 billion a year earlier.

The Madrid-based company had already said it was slashing the value of its assets in Venezuela to reflect the sharp devaluation of the country's currency. It also assumed restructuring costs at its German unit linked to its takeover of rival phone operator E-Plus, and wrote down the value of its Italian holdings. Combined, these charges lowered Telefónica's quarterly profit by EUR1.06 billion.

Revenue in the fourth quarter fell 14% to EUR12.4 billion. For the full year, Telefónica said profit fell 30% to EUR3 billion and revenue declined 12% to EUR50.4 billion.

Telefónica, whose cellphone towers and underground phone networks span most of Latin America and several of Europe's biggest countries, has rewired its empire in recent years, exiting markets where it lacked scale or product offering, and bulking up where it was already a big player.

This strategy led the firm to exit Ireland and the Czech Republic, and more recently, the U.K., where it is negotiating the sale of its O2 unit. It has plowed proceeds from some of these sales into acquisitions it made in Brazil, Germany and Spain.

Telefónica is betting that having a leading position in these three markets will drive growth in coming years. On Wednesday, the company forecast sales growth of more than 7% in 2015--excluding from that calculation its sales in the U.K. and Venezuela--and more than 5% in 2016.

At the end of 2014, Telefónica said it had 341 million customers, up 6% on the year.

The company said Wednesday it is "highly confident" that the planned sale of O2 to Hutchison Whampoa Ltd. will be successful.

"We are progressing nicely," Chief Financial Officer Angel Vila said during a conference call Wednesday, adding that Hutchinson is conducting due diligence without any surprises.

Hutchison and Telefónica began exclusive, non-binding talks in January for a deal in which the Hong Kong firm would pay Telefónica GBP10.25 billion ($15.89 billion) for O2, a leading U.K. cell phone operator.

Write to Christopher Bjork at christopher.bjork@wsj.com

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