Telmex reports net profit drop in 1Q11 as fixed voice accesses continue to decline

25 Apr 2012

Mexican fixed line incumbent Telefonos de Mexico (Telmex) has reported a 7.3% year-on-year decline in net profit for the first three months of 2012 on the back of revenues that fell by 3.5% as fixed line erosion continued. For the three months ended 31 March 2012 Telmex recorded a total turnover of MXN26.582 billion (USD2.02 billion), down from MXN27.547 million in the corresponding period of 2011. Revenues from data services actually increased by 3.6% y-o-y to MXN8.889 billion, growth which Telmex attributed to the higher uptake of value-added services in the corporate sector and a larger residential broadband customer base. Despite this though, such an increase was not enough to offset revenue declines from interconnection, long-distance and local services, which respectively dropped 41.5%, 8.2% and 3.1% against the year-ago quarter. Telmex in particular noted the impact of calling party pays (CPP) rate reductions, which it cited as one of the key factors for the drop in turnover from interconnection services. Net profit for the quarter, meanwhile, stood at MXN3.482 billion compared to MXN3.758 billion in 1Q11, and the telco’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the three-month period were MXN9.590 billion, representing a 12% decline from MXN10.896 billion in the first quarter of 2011.

In operational terms, at the end of March 2012 Telmex counted a total of 14.589 million fixed voice connections, down from 15.562 million a year earlier, although the operator claimed that 184,000 of the lost lines had not been revenue-generating. Of the total figure, Telmex noted that 1.489 million were attributed to Telmex Social, its unit which focuses on serving those rural regions and those areas of the country ‘in which there is no economic interest of any competitor’. Further, 686,000 of the total accesses were public telephony lines, a figure which Telmex said had dropped by 41,000 over the previous twelve months. Broadband accesses continued to increase, however, rising by 6.8% year-on-year to cross the eight million mark at the end of 1Q12, while dial-up internet connections dropped by 28.6% to just 60,000 as more customers upgraded to high speed options.

Mexico, Telefonos de Mexico (Telmex)