Amazônia Celular reports Q2 loss, Telemig’s revenues drop 38%

16 Aug 2006

Brazilian mobile operator Tele Norte Celular Participações (Amazônia Celular) reported losses of BRL11.3 million (USD5.2 million) in the three months to 30 June 2006, compared to net profit of BRL72 million in the same period of 2005, the company said in a statement. Despite the poor performance the operator is confident it will make a profit over the full year. Amazônia Celular’s CEO Ricardo Sacramento, , told BNamericas that he is confident he can turn the business around by year-end through several key steps. Firstly, he is concentrating on quality of service for Amazônia’s high-end users to minimise the churn rate, which has remained steady at 25% for the last four months. And secondly, the cellco is consolidating its position in the retail arena and will not open any more shops in the short term.

Amazônia Celular reported a strong EBITDA margin at 24% in the second quarter, unchanged on a year ago. However, its gross revenues dipped to BRL154 million, down from BRL156 million in the same period of 2005, while net revenues slipped to BRL98.7 million from BRL112 million previously. The cellco, which operates in the Amazon region, reported blended monthly ARPU of BRL21.94 in the second quarter 2006, down from BRL24.44 a year ago. At the end of June Amazônia Celular had 1.25 million subscribers, up marginally from 1.24 million a year earlier, and a market share of 24.4% (down from 29.4% in Q205), due to strong competition.

Meanwhile, Amazônia Celular’s sister company Telemig Celular, the largest mobile operator in the state of Minas Gerais, posted a second quarter net profit of BRL44.9 million (USD20.9 million), down 38% from BRL72.3 million in the same period last year. Net revenues were down 7% year-on-year to BRL268 million, and EBITDA fell by 14% to BRL93.3 million. Telemig’s EBITDA margin slipped to 38.4% from 40.9% a year ago, but CEO Ricardo Sacramento said the unit nonetheless posted the strongest margin in Brazil’s mobile phone segment, which has some of the lowest margins worldwide, he added. According to Sacramento, Telemig has been unaffected by the arrival of a fourth player in the market, Claro, which is backed by the financial clout of Mexico’s América Móvil. The CEO reported that Claro had a 3% market share at the end of the quarter, while Telemig was at the same level as when Claro entered the Minas Gerais market in March. At the end of June Telemig had 3.4 million customers, of whom 817,116 were post-paid and 2.59 million pre-paid, up from 2.97 million a year ago.