Costs, currency losses drive Net Servicos’ 2Q10 profits down 69%

21 Jul 2010

Brazil’s largest cable-based TV and internet access provider Net Servicos de Comunicacao (Net) said net profits for the three months to 30 June 2010 dropped 69% year-on-year on higher costs and currency losses. The cableco booked a net income of BRL56 million (USD31 million), down from BRL180 million in the corresponding period a year ago, missing analyst forecasts of profit of BRL73.3 million in a poll conducted by Bloomberg. Revenues were up 19% y-o-y at BRL1.31 billion it said in a regulatory filing and operating costs rose 11% to BRL620.1 million in the second quarter as it was forced to pay more for programming, call-centre services and internet bandwidth. The Sao Paulo-based company added that a fall in the value of the local currency, the real, against the US dollar resulted in a loss of BRL15.9 million on its dollar-denominated loans, reversing a BRL133.1 million-real gain in the year-earlier period.

At the end of June 2010 Net counted more than 3.88 million pay-TV subscribers, up 12% year-on-year, while its broadband internet subscriber base grew 19% to 3.1 million customers. The company added that average revenue per user (ARPU) per household rose 2% y-o-y to BRL135.44 per month.