Gains on the foreign exchange contribute to Telemig profits leap

30 Apr 2003

Telemig Celular Participaçoes [NYSE: TMB], the holding company for Brazilian regional mobile operator Telemig Celular, has announced a 63% year-on-year rise in first quarter profits thanks to strong subscriber growth and the recovery of the real. The Minas Gerais state incumbent cellco signed up 43,100 new pre-paid subscribers in the three months to the end of March, though there was a loss of 7,700 post-paid customers resulting in a pre-pay/post-pay mix of 67-33. The operator’s overall customer base grew 16.9% year-on-year to 1.96 million, some way ahead of its regional rival, the Telecom Italia Mobile (TIM) [Milan: TIM] subsidiary TIM Maxitel, which has around 700,000 customers in Minas Gerais.

Telemig’s net profit for the quarter amounted to BRL44.3 million and was given a significant boost by a BRL32.6 million gain made on the company’s unhedged dollar-denominated debt, following the recovery of the real against the dollar; EBITDA grew 10.4% to BRL109 million. Mobile penetration in Minas Gerais currently stands at just 19%, a figure Telemig predicts will rise to around 22% by the end of the year. It expects to capture at least half of all new customers, primarily with pre-pay tariffs. The cellco was also expected to have used the earnings report to announce details of an operational agreement with Amazonia Celular and Brasil Telecom [NYSE: BRP]. The agreement, which the three hope will give increased bargaining power with equipment suppliers, was provisionally agreed last December but has yet to be finalised.

CIT's Datafile of Latin American Telecommunications