CANTV profits down; could fall further on back of pension ruling

28 Jul 2005

Shares of Venezuela’s largest telco, Compañia Anónima Nacional de Teléfonos de Venezuela (CANTV), fell 5.9% yesterday after a set of poor quarterly financials and a ruling by the country’s Supreme Court forcing it to index workers’ pensions. CANTV’s net profit for the three months to the end of June 2005 dropped 96% year-on-year to USD2 million due to an operating loss and higher taxes. Operating income fell from USD53 million in the second quarter last year to a loss of USD10 million this year. Quarterly EBITDA fell from USD171 million to USD123 million, despite total operating revenues rising to USD557 million, from USD501 million in 2Q2004. The one plus was a rise in revenues at its wholly owned Movilnet mobile subsidiary to USD202 million from USD148 million a year earlier. Movilnet ended June with nearly 3.6 million subscribers, up 27.6% y-o-y.

Meanwhile, CANTV was ordered to adjust the pensions of 3,408 union members to reflect the country’s new minimum wage level. The telco says it may attempt to appeal the Supreme Court decision, fearing that the order will harm its bottom line further still.

Venezuela, CANTV, Movilnet