Net Q1 revenue up 22% on strong subscriber growth; Embratel’s profit down

22 Apr 2013

Brazil’s largest cable operator by subscribers Net Servicos de Comunicacao (Net), a unit of Mexico’s America Movil (AM), has reported a sharp rise in revenue for the three months ended 31 March 2013, driven by the expansion of its customer base. The company, which offers pay-TV (branded ‘NET’), digital video (NET Digital), high definition digital video (NET Digital HD), broadband internet access (NET Virtua) and voice telephony in partnership with sister firm Embratel (NET Fone via Embratel), booked net revenue of BRL2.24 billion (USD1.12 billion) in the first quarter of this year, up 21.9% compared to BRL1.84 billion in the corresponding year-earlier period. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 22.6% over the same period to BRL629.45 million from BRL513.39 million in Q1 2012; EBITDA margin was 28.1%, up from 27.9% previously. The company reported that net income was largely unchanged however, standing at BRL114.89 million compared to BRL114.60 million in the first quarter of 2012.

Meanwhile, Net Servicos affiliate Embratel Participacoes reported a drop in first-quarter net income to BRL253.30 million, from BRL383.40 million in Q1 2012, as a sharp rise in costs (especially related to depreciation and amortisation) impacted its bottom line. The carrier said that expenses reached BRL3.68 billion in January-March, up from BRL3.16 billion in 1Q12, as costs relating to depreciation and amortisation surged 33% to BRL799.6 million. The carrier reported net revenue of BRL5.08 billion in the first three months of this year, up 19.0% on an annualised basis.

As previously reported by TeleGeography’s CommsUpdate, America Movil (AM), the telecoms group controlled by Mexican billionaire Carlos Slim, plans to merge its fixed and mobile telecoms and cable TV operations in Brazil – including Net Servicos. Under the plan, AM will amalgamate its fixed line business Embratel Participacoes (Brazil’s third largest telco behind Oi SA and Telefonica Brazil [Vivo]), Claro-branded mobile unit Telecom Americas (the number three player in the wireless market) and Net Servicos, in a bid to reduce overall operational costs. In a joint statement issued on 11 April, the three AM units confirmed that they are evaluating options for a structural merger.

Brazil, America Movil (AM)