Customer losses to blame again as Telmex sees revenue, profit drop in 3Q11

27 Oct 2011

Mexican fixed line incumbent Telefonos de Mexico (Telmex) saw net profit in the three months to end-September 2011 fall by 3.8% year-on-year as customers continued to switch their voice service to either cable or mobile alternatives. The telco posted a net income of MXN3.591 billion (USD266 million) for the three-month period, down from MXN3.712 billion in 3Q10. Total revenue for the quarter meanwhile stood at MXN27.763 billion, down 2.9% y-o-y, with turnover from domestic services falling by 5.5% on the back of a 6.1% decline in revenue per local billed call and 8.0% in local traffic volume and the drop in the number of billed lines. Revenue from national long-distance (NLD) services was 2.7% lower than in 3Q10, attributed in part to less traffic with mobile and other long-distance operators, although partially offset by a 3.8% increase in average revenue per minute. International long-distance (ILD) service revenues meanwhile bucked the trend, rising by 8.3% y-o-y, with incoming ILD traffic revenues up 27.6%. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter were MXN11.254 billion, down 2.8% against 3Q10.

At the end of September 2011 Telmex’s wireline subscriber base stood 12.274 million lines, down 1.8% compared with the same period of the previous year; the operator noted that this total did not include 1.409 million lines which are concentrated in rural communities and could be served by Telmex Social, while it also excluded some 692,000 public telephony lines and 752,000 prepaid lines. Taking those lines into account, the telco’s total fixed line accesses at 30 September 2011 was 15.127 million, down 3.2% compared with a year earlier.

As previously reported by CommsUpdate, earlier this month Latin American telecoms giant America Movil (AM) launched an offer to acquire the stock it does not currently own in Mexican Telmex, with the former confirming that it will offer MXN10.5 (USD0.79) per share for the telco, a price it said was in line with the initial announcement of the bid back in August 2011. The development came hot on the heels of reports that AM’s proposal to purchase the holding had been approved by Mexico’s banking and securities commission (CNBV). The bid for Telmex is now expected to close on 11 November, following which the operator will be delisted.

Mexico, America Movil (AM), Telefonos de Mexico (Telmex)