Telemar Q1 profit down 25%; plans to invest USD1.2 billion in 2006

28 Apr 2006

Brazil’s largest telecoms operator Telemar said net profits fell 25% to BRL144 million (USD68.6 million) in the first quarter of 2006, compared with the same period a year ago, while net operating revenues dipped 3% to BRL4.06 billion. Net EBITDA was BRL1.49 billion, compared with BRL1.67 billion a year ago, and the EBITDA margin fell to 36.6%, from 47.7% in 1Q 2005.

Telemar ended the quarter with 14.7 million fixed lines in service and 896,000 ADSL subscribers, having added 91,000 new broadband users in the three-month period. The group’s mobile arm Oi ended March with 11.2 million customers, an impressive 54.7% rise year-on-year, despite widening losses which reached BRL28.1 million – 138% higher than a year ago. At the start of April 2006 Oi had 81% of its subscribers on pre-paid contracts and 19% on pre-pay.

Rio de Janeiro-based Telemar plans to invest BRL2.5 billion (USD1.19 billion) in 2006 – on top of a similar amount last year – to expand and upgrade its network and services. Approximately three-quarters of the money will go on technology upgrades and the expansion of Telemar’s fixed line networks, while the remainder is earmarked for Oi. The company’s chief financial officer Jose Luiz Salazar said strong demand for broadband services has prompted the firm to invest more heavily on improving its PSTN. Its broadband division Velox boosted first quarter revenues by 50.1% to BRL208 million, thanks to a 62% rise in customers.

Brazil, Oi