Telefonica suspends dividend payments, Mango cuts prices and Santander boosts its debt provisions: Spanish companies are stepping up measures against an economic crisis that has no end in sight. In a surprise announcement Wednesday, Telefonica said it had scrapped its dividend and share buy-back programme for 2012, and slashed pay for top managers by 30 percent, in response to the deepening downturn at home. \"This exceptional decision will immunise the company from debt market liquidity conditions by having debt maturities covered till the end of 2013,\" said Telefonica chief executive Cesar Alierta. Telefonica and other large Spanish companies are racing to slash debt piles built up during a decade-long boom that ended in 2008 when the property market collapsed, and have been struggling to access funding on global markets. \"The majority of Spanish companies are heavily indebted, the debt of those that make up the Ibex-35 share index is higher than their market capitalisation, which means that what they owe is higher than what they are worth,\" said analyst Daniel Pingarron of brokerage IG Markets. Telefonica alone has a debt mountain of 57 billion euros ($67 billion). \"It is true that these measures will hurt the credibility of the company with its shareholders, but these measures will allow it to save up to 10.2 billion euros over the next two years,\" Spanish bank Bankinter said in a note. Business daily Expansion said \"Telefonica had grabbed the bull by the horns\", adding the company \"shows the path that other Spanish firms, which are also affected by a very adverse financial and economic environment, must take.\" Spain, the eurozone\'s fourth-largest economy, is struggling with its second recession in four years and the debt crisis that has pushed its banking system to the brink. Last week the government predicted the Spanish economy would remain in recession until 2014. It forecasts that output will shrink by 1.5 percent this year and a further 0.5 percent next year before posting modest growth in 2014. The economic downturn, combined with government austerity measures such as higher taxes and pay cuts for public sector workers, has led to a sharp drop in consumer spending. Telefonica\'s revenues in Spain, where one in four people are out of work, dropped 13 percent in the second quarter, compared to a 6.0 percent drop in Europe overall. Revenues in Latin America increased 6.0 percent. In response companies are slashing prices. Spanish retailer Mango, which employs British supermodel Kate Moss in its latest ad campaign, announced in March that it would cut average prices of its spring-summer collection by 20 percent to attract more customers. El Corte Ingles, one of Europe\'s largest department store chains, followed Mango\'s example last month and cut prices on 5,000 food and drugstore items by 20 percent. Banks meanwhile are boosting their provisions under government orders to cover possible losses resulting from bad real estate loans. Santander, the biggest eurozone bank by capitalisation, said Thursday it had set aside almost all of its second quarter earnings as provisions. It posted a net profit for the period of 100 million euros, down from 1.39 billion euros in the second quarter of last year. \"The provisions we are making will allow us to put real estate write-offs in Spain behind us by the end of this year,\" said Santander Chairman Emilio Botin. Given Spain\'s bleak economic prospects, Spanish companies are stepping up their operations abroad, especially in fast-growing Latin America where a common language and culture give them an advantage. \"They are absolutely right to do so. Especially for the construction firms because it is obvious that here, following the collapse of the property bubble, they are not going find big opportunities,\" said Pingarron. \"All companies are looking to internationalise and enter emerging markets, mainly South America,\" he added.