Rising inflation hits Telefonica Chile's bottom line

24 Jul 2008

Chilean fixed line incumbent Telefonica Chile has reported a 43% drop in first half net profits to CLP3 billion (USD6.08 million), compared to CLP5.27 billion a year earlier. Sales, meanwhile, grew by less than 1% to CLP323.8 billion. The firm’s CEO, Jose Moles, said he would look to moderate investments and sell assets, including real estate, to improve cashflow and counter rising costs and slow revenue growth. The executive said that the company’s margins had been hit by rising inflation, estimated in June to be around 9.5%, compared to the 4%-5% the company had factored into its investment plans when they were drawn up last year. ‘We worked a lot on efficiency [in the first half of the year] for reasons related to the economy, the high levels of inflation and the problems of bad debtors that are also being seen in the retail and banking industries. That tightened margins a bit more than we expected,’ he said.

New subscriptions of telephony, broadband and TV rose 4.7% in the first half to 3.06 million, with growth of 15.1% in broadband, 7.1% in fixed telephony and 76.1% in pay TV. According to the company’s own figures, it ended June with a 49.2% share of the broadband market.

Chile, Telefonica Moviles Chile (Movistar)