Telmex 2Q net profit plunges 40% as mobile substitution bites

21 Jul 2010

Mexican fixed line incumbent Telefonos de Mexico (Telmex) has unveiled its financial results for the three months ended 30 June 2010, revealing an almost 40% slump in net profit, which the company attributed to fixed to mobile substitution and migration of customers to alternative fixed line cable providers. In its second quarter of the 2010 fiscal year Telmex posted a net profit of MXN3.57 billion (USD280 million), down 39.7% year-on-year compared to the MXN5.92 billion reported in the same period a year earlier. Revenues also fell against 2Q 2009, with the company generating turnover of MXN28.4 billion in the three months to end-June 2010, down 4.6% y-o-y, while earnings before interest, tax, depreciation and amortisation (EBITDA) tumbled 13.4% to MXN11.2 billion against MXN13 billion a year earlier. The operator claimed that the decline in revenue was in part the result of continued reduction in the prices it charges its customers.

At 30 June 2010 Telmex’s fixed line voice subscriber base had fallen to 15.7 million, down 1.7 million against end-June 2009 and down from a peak of 18.4 million five years ago. The company claimed that its market share had now fallen to 79.5%, which it said was below the average of 86.5% ‘for 35 of the most representative countries worldwide.’ Uptake of Telmex’s broadband internet services has, however, continued to climb, and at the end of the second quarter the telco reported a customer base of 7.06 million, up around one million against the same date a year earlier.

Mexico, Telefonos de Mexico (Telmex)