PT 2007 net profit drops 14.4%

28 Feb 2008

Portugal Telecom (PT) posted a 14.4% drop in net profit in full-year 2007, with growth at domestic mobile network operating unit TMN offset by redundancy costs and weak wireline performance. PT said its annual net income fell to EUR742 million (USD1.1 billion), down from EUR867 million in 2006, on revenues that rose 6.6% to EUR6.1 billion. The telco spent EUR276 million in curtailment costs last year to lay off 1,004 employees, to result in an improved efficiency ratio of 657 fixed lines per employee. Group profit margins were pushed down further by Brazilian mobile subsidiary, Vivo, which swung to an annual net loss despite a 17% year-on-year increase in operating revenues.

Domestic mobile customer numbers increased by 9.8% compared to 2006 to 6.26 million, and this partnered with strong growth in data revenues (40%) and equipment sales (28.9%) led to an increase in operating revenues to EUR413 million in this area. PT launched an IPTV service at the end of June 2007 and by the end of the year had signed up a total of 21,000 customers. PT recently spun off cable TV, internet and telephony division PT Multimedia, which has now been renamed Zon Multimedia.

In the fourth quarter of 2007 PT’s net profit fell 78.9% to EUR72 million, compared with EUR340 million a year earlier. The company said net income in both years was impacted by one-off events that, if excluded, would result in a fall in quarterly net profit of 11.2% to EUR105 million.