Oi reports tripling in Q1 profits as business plan gains traction

16 May 2012

Brazilian telecoms group Oi SA, the company formed through the restructuring of Telemar Participacoes’ former operating divisions Brasil Telecom, Tele Norte Leste Participacoes, Coari Participacoes and Telemar Norte Leste, says net income tripled to BRL346 million (USD174 million) for the first three months of this year, up from BRL93 million in Q1 2011. However the group, which completed a corporate restructuring programme during the January-March quarter, booked a 2.2% decline in pro forma net revenue to BRL6.8 billion, while earnings before interest, taxes, depreciation and amortisation (EBITDA) edged up 1.4% to BRL2 billion. Investments for the three-month period totalled BRL1.091 billion, 31.6% higher than the amount spent in 1Q11.

Operationally speaking, Oi ended the first quarter of this year with a total of 70.826 million revenue generating units (RGUs), up 7.2% from 66.074 million in 1Q11. Of the total, cellular (Personal Mobility) customers accounted for 44.106 million (+12.2% y-o-y), with growth being driven by post-paid take-up and a focus on greater profitability in the pay-as-you-go user base. Additionally, the group reported 2.385 million corporate users for its mobile services, taking the overall total to 46.491 million at end-March 2012.

The carrier’s residential fixed line telephony, broadband internet and pay-TV base ended Q1 with a total of 17.850 million connections, down 2.2% from Q1 2011, with Oi noting that while broadband and TV expanded, its fixed line customer base continues to contract – albeit at a slower pace. The number of residential fixed lines in service stood at 12.841 million at 31 March this year, down 7.8% from 13.925 million a year earlier. However, Corporate fixed lines in service at end-March 2012 stood at 5.192 million, up 3.9% year-on-year, while residential fixed broadband connections expanded 15.4% over the same period to 4.614 million and pay-TV subscriptions climbed 16.1% to 396,000. Oi says that through a focus on offering bundled solutions, it aims to increase the proportion of residential users with more than one product. Quarter-over-quarter, the total residences with more than one Oi product/service grew 1.3 percentage point, it said, to 6.238 million. Further, Oi reached a total 5.2 million Oi Velox clients (residential + business broadband users) at the end of March 2012. It now offers fixed broadband service in every Brazilian state except for Sao Paulo, and expanded its base with a strategy aimed at bundled services and offers a wide portfolio of internet access services, including fixed (Oi Velox) and mobile broadband (Oi Velox 3G) and Oi WiFi.

Brazil, Oi