Mexican fixed line incumbent Telefonos de Mexico (Telmex) has revealed a 67.7% year-on-year increase in net profit for the three months ended 31 December 2009. For the three-month period Telmex, controlled by Mexican businessman Carlos Slim, posted a net profit of MXN4.99 billion (USD382 million), with the company noting that the rise could be partly attributed to an exchange rate gain in the quarter. Despite the improvement in net profit, revenue has continued to decline, and in 4Q 2009 Telmex generated a turnover of MXN29.7 billion, 3.9% down compared to the corresponding period a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) meanwhile fell 10.9% y-o-y to MXN12.2 billion.
At the end of December 2009 Telmex’s fixed line voice subscriber base had fallen to 15.88 million, down from the 17.58 million it reported at end-2008. The telco said that a significant portion of the losses could be attributed to a decision to not include statistics for those customers that were more than two months behind on their bill payments. Telmex said that some 1.2 million lines were removed from its reported customer base as a result of the action; by comparison the telco also noted that at end-December its previously reported figure included approximately 1.1 million subscribers behind with payments. While not entirely offsetting the decline in voice subscribers, Telmex also reported that its high speed internet customer base had risen by 221,000 in the three months to end-December 2009, and by 1.5 million over the year to date. As at 31 December 2009 Telmex had 6.52 million broadband subscribers.
In separate but related news, mobile giant America Movil (AM), which is also controlled by Slim, expects to complete the transaction that will see it absorb both Telmex and regional fixed line group Telmex Internacional by the end of the second quarter of 2010, according to BNamericas, citing comments by AM’s CEO Daniel Hajj. AM last month revealed it will initially offer 2.0474 AM shares for every share held in Carso Global Telecom (CGT), which if accepted would give it an indirect 59.4% stake in Telmex and 60.7% in Telint, which has a number of Latin American fixed line subsidiaries in countries including Brazil, Argentina and Colombia. Subsequently AM will then offer any remaining shareholders 0.373 AM shares, or MXN11.66 in cash, for each Telint share as it looks to acquire the remaining 39.3% in the fixed line group. Upon completion of both of these acquisitions it is then understood that AM will delist both CGT and Telint from the markets on which they trade, and while AM would absorb Telint, Telmex would retain a separate management structure.