First Brazil profit boosts Telmex first quarter results

27 Apr 2005

Teléfonos de México (Telmex) – the former wireline monopoly operator in Mexico controlled by billionaire Carlos Slim Helú – has reported a 10% rise in net income to MXN6.3 billion (USD568 million) for the first quarter of 2005, while sales grew 28% to MXN39 billion. Stagnating revenues from domestic operations over the last three years prompted Telmex to seek expansion overseas and in August 2004 the company completed the purchase of Brazilian operator Embratel, a provider of long-distance and international services. The decision appears to have been vindicated with the new acquisition turning in its first profit: net income increased ninefold in the most recent quarter. Although analysts have expressed fears that Telmex is using earnings from Mexican operations coupled with the creation of debt in order to invest in Brazil, it is unlikely to run into serious problems since enough cash is generated in Mexico to pay off the debt over time.

Brazil, Mexico, Telefonos de Mexico (Telmex)