Telemar Net Profit Rises 38.6% in 2Q 06

Brazil's largest telecoms group Telemar reported a 38.6% rise in net profit to 283mn reais (US$129mn) for the second quarter of 2006 compared to 204mn reais a year ago, the company said in its consolidated earnings statement.

Telemar's net revenues between April and June slumped 1.5% to 4.06bn reais from 4.12bn reais in the same period last year.

Gross revenues in the same period reached 5.83bn reais up 0.2% from 5.82bn reais in the same quarter of 2005.

The operator's consolidated Ebitda was 1.56bn reais versus 1.66bn reais, with its Ebitda margin dipping to 38.4% from 40.4% a year earlier.

The fixed line operator also posted Ebit of 827mn reais compared to 814mn reais in the same quarter of 2005.

The Telemar Group attracted 645,000 new customers during Q2 bringing its customer base to a total of 27.5 million, up 3.8 million from 2Q05.

Telemar's installed wireline capacity at the end of June 2006 was 17 million people, 85.1% of which was in service. Gross revenues from wireline services declined 2.1% to 5.05bn reais from 5.15bn in 2Q05.

Telemar's Oi mobile service had a total of 12 million customers at the end of 2Q06, up 48.3% compared to 2Q05. Revenues from wireless services were up 17.6% to 779mn reais compared to 662mn reais in 2Q05 driven by a growth in outgoing calls, mobile data and value-added services, partially offset by lower handset sales.

Of the 817,000 net additions during the quarter, 38% were in postpaid plans and the remainder in prepaid. The 745,000 disconnections represented 6.4% of the average subscriber base.

Broadband subscriptions totaled 970,000 at the end of the quarter, up 51.3% versus 2Q05.

Telemar's results were very mixed, according to Brendan Conroy, a telecoms analyst at the Brazilian unit of US consultancy IDC.

They are making progress in some markets such as data communications and mobile phone business, whilst they dropped in long distance revenues, Conroy told BNamericas.

However, with the appointment of the new CEO, Luiz Eduardo Falco, and the alignment of its mobile and fixed line operations under one company, rather than as separate operations, Conroy believes the company will be stronger.

The alignment will help Telemar to offer crucial triple play and quadruple play services in the future, according to Conroy.

Telemar has operations in 16 of the 27 Brazilian states.

BNAmericas.com"

Posted to the site on 28th July 2006