Oi reports 61.4% drop in Q3 net profit

4 Nov 2008

Brazilian telecoms operator Oi (Telemar) said third quarter net profits fell 61.4% year-on-year to BRL246 million (USD115 million), down from BRL637 million in the same period in 2007, BNamericas reports. Oi’s chief financial officer and investor relations director, Jose Luis Salazar, attributed the decline to higher financial expenses arising from the devaluation of the local currency, the reais, at the end of the quarter. He went on to say that Oi has USD750 million in debts that are susceptible to exchange rate variations. The telco said third-quarter net revenues increased 7.1% y-o-y from BRL4.44 billion to BRL4.75 billion, although EBITDA dropped 15.1% from BRL1.91 billion to BRL1.62 billion over the same period. The EBITDA margin was down 8.9 percentage points at 34.1%.

Oi claimed 13.9 million fixed lines in service at 30 September 2008, down 2.9% on the same time a year earlier, while broadband subscribers rose by 37.7% to 1.9 million and active mobile connections expanded 46.8% to 21.8 million; pre-paid users accounted for 84% of the total. Salazar said that it also had roughly 10,000 3G users at the end of the quarter – a service it launched at the start of September. The company’s CAPEX grew 109% year-on-year to BRL1.19 billion in Q3, with 42.4% invested in the wireline business and 57.6% in wireless operations.

Salazar went on to say that the company is working towards securing regulatory approval for the acquisition of fellow operator Brasil Telecom (BrT) via a BRL13 billion deal, for which it has already raised about BRL9 billion in loans. The remaining sum will be obtained from the company’s cash generation by year-end and in short-term loans which are currently being negotiated with banks, he said.

Brazil, Oi