Telemar’s net income dips on higher interconnection costs

27 Oct 2006

Brazilian fixed line operator Tele Norte Leste Participacoes (Telemar) has reported a 10% decline in net income for the three months to 30 September as the rising cost of connecting mobile users to its fixed line and data networks impacted on its bottom line. According to Bloomberg, Telemar’s consolidated net profit dropped 10.4% to BRL269.6 million (USD125.8 million), down from BRL301 million a year earlier. Telemar provides fixed line telephony services in an area covering more than half of Brazil. It is increasing its spending on interconnecting mobile and internet users and reported 12.6 million cellular users at the end of September (up 41% year-on-year), while its broadband subscriber base grew by 43% to one million users. On the downside, costs rose by 11% in the third quarter, to BRL2.76 billion, driven by a 32% rise in interconnection outlays to BRL793.8 million, outstripping a marginal 1.8% increase in net revenue growth to BRL4.31 billion.

Brazil, Oi