Algar Telecom posts 10.2% rise in 2011 profits

20 Mar 2012

Brazilian telecoms operator Algar Telecom has reported a 10.2% year-on-year rise in net profit to BRL144.4 million (USD80.14 million) in 2011, on net revenue of BRL1.68 billion (+11.3%). The telco booked gross revenue of BRL2.15 billion, of which almost half was derived from traditional voice services, 30% from broadband and a further 18% from business process outsourcing (BPO) and technology sales. In FY2011 Algar invested a total of BRL371.9 million in its networks and services – up 57% year-on-year – of which 39% was funnelled into voice and data, and 12% was set aside to help expand its retail footprint in 19 new regions following its successful acquisition of 3G mobile (Band H) spectrum for these areas. Mobile data is already a growing business for Algar’s CTBC Celular unit. The mobile arm reported 56,000 3G subscribers at the end of 2011, compared to 38,000 a year earlier.

As at 31 December Algar Telecom reported a total of 612,000 mobile subscribers, up 5.6% y-o-y, of whom 183,000 were on monthly contracts (up 12% from end-2010). In the fixed line arena, the telco reported 15.8% growth in the number of active lines in service (TeleGeography estimates this to be 925,000 lines at end-11, based on the reported 799,000 twelve months earlier), while the number of broadband connections reached 332,000 from 277,000 a year earlier. Algar also reported strong growth from corporate voice and data sales, which climbed 32.9% in FY11 to BRL380 million. The company also offers pay-TV services and closed out last year with 61,000 DTH customers, as well as having 32,000 cable TV users by dint of its operations in the cities of Araguari and Uberlandia. Overall, Algar Telecom ended 2011 with 94,000 TV customers, up 18.4% y-o-y.

In a separate development, Algar Telecom has reportedly signed a network sharing agreement with Brazil’s state-controlled telecoms group Telecomunicacoes Brasileiras (Telebras). The deal covers the sharing of fibre-optic infrastructure in the city and sate of Sao Paulo (and its environs) and is the first such deal signed by the two firms. It is understood that under the plan Algar will also have long-distance optical fibre connectivity between Paulinia, in Sao Paulo and Curitiba, Parana. According to the president of Telebras, Caio Bonilha, the joint initiative will help meet the demands of the football World Cup in Sao Paulo in 2014, as well as connecting to a number of Internet Exchange Points (IXPs) that link to other networks. Further, the network sharing agreement will also expand the reach of the government’s National Broadband Plan (PNBL) at these locations. In return, Algar Telecom will benefit from the deal by being able to access the interior regions of southern Brazil, which currently is not possible because its network only extends along the coast. It will also enable greater redundancy to the operator’s enterprise network.