Brazilian competition hits PT

3 Nov 2004

Portugal Telecom has announced its third-quarter financial results, with competition in Latin America stunting sales growth and reducing profits. The company reported revenues of EUR1.539 billion for the three months to the end of September, up from EUR1.506 billion in the same period last year. Net income fell 1.4% to EUR133.9 million.

Portugal Telecom is a joint owner of Brazil’s largest cellular operator Brasilcel (Vivo), which had more than 24.6 million subscribers at the end of September, up from less than 18.5 million a year earlier. The growth in customer numbers has come at the expense of profits, however, as new users are enticed by hefty discounts, with EBITDA down 22% to EUR119.5 million. ARPU levels have also fallen – down 19.7% year-on-year – as increasing numbers of low-usage customers are signed up.

Portugal Telecom’s domestic unit saw a slight rise in the number of main lines in service as the growth in ADSL connections cancelled out a drop in the number of PSTN and ISDN lines, although retail traffic fell 10.8% year-on-year. Meanwhile, customer acquisitions at its TMN mobile unit slowed, with the operator adding 69,000 net new users over the quarter compared to 186,000 in 3Q2003. TMN had 4.94 million subscribers at the end of September.

The telco says it plans to slash between 500 and 1,000 jobs in 2005 in an attempt to boost profits. It currently employs around 26,000 people worldwide, and says the measures will cost around EUR250 million in severance payments.

Brazil, Portugal