Embratel posts 20% drop in third-quarter profits

24 Oct 2008

Brazilian fixed line service provider Embratel says its net profit in the three months to 30 September fell 20% year-on-year to BRL94.5 million (USD44.6 million), despite a 14.7% expansion in net revenues from BRL2.18 billion to BRL2.50 billion. Group EBITDA climbed by 13.1% to BRL651 million in the period under review, though the EBITDA margin contracted by 0.4 percentage points to 26% compared to the third quarter of 2007. Embratel said its sales were bolstered by a 34.3% rise in local call services, a 14.6% increase in data communications services and 10.6% growth in long-distance voice call services. BNamericas reports however, that service costs also rose by 16.8% to BRL1.34 billion, sales costs climbed 11.1% and administrative costs rose 16.6% to BRL181 million. The bottom line was also adversely impacted by a 52.5%, or BRL170 million, increase in financial costs and monetary variations. 3Q08 CAPEX was BRL616 million, it said.

Embratel ended the third quarter of this year with five million voice lines registered, up 61.2% year-on-year, and broadband users reached 3.8 million lines, an annual increase of 39.6%. Sales from domestic long-distance (DLD) calls expanded 13.2% to BRL1.17 billion it said, partially offset by a 10.1% fall in international long-distance (ILD) calls to BRL115 million.