Iusacell 1Q losses widen, but debt deal offers hope for the future

2 May 2006

Mexican mobile operator and long-distance telco Iusacell has posted a 30% widening in losses for the first quarter, due to an increase in integral financing costs derived from the increase in exchange rates of the peso against the dollar. Iusacell registered a net loss of MXP491 million (USD44.3 million) for the three months ended 31 March 2006, compared with a net loss of MXP377 million in the same period of 2005, despite a 32% increase in revenues, up to MXP1.811 billion. OIBDA was steady at MXP275 million. During the quarter the company made investments of approximately USD11 million, applied mainly to the expansion of coverage and capacity of its CDMA2000 1xEV-DO network.

Iusacell used the financial announcement to update the progress of its recently launched debt offer, which it hopes will put an end to years of dispute with its investors. In May 2005 the operator, majority owned by Mexican businessman Ricardo Salinas Pliego, revealed that creditors were insisting on immediate repayment of a USD350 million debt on which the company has failed to pay interest since June 2003. In January 2006 it struck a deal to restructure all of its debt. Iusacell says it reached a provisional agreement with creditors who represent more than half of the USD350 million debt, to exchange bonds for new debt. Its subsidiary Grupo Iusacell Cellular, struck a similar agreement to restructure an additional USD416 million worth of debt. The company launched the debt offer in April, and hopes to free up close to USD200 million in cash in the process. The exchange offer will expire on 18 May.

Mexico, Iusacell (inc. Unefon)