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Chile's Entel net profit rises 24% in Q3

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Revenues rose 6% to 216bn pesos from 203bn pesos a year ago. Ebitda increased 10% to 91.1bn pesos versus 82.7bn pesos in 3Q06, while the Ebitda margin was 42% compared to 41%.

Mobile Telephony

Mobile telephony accounted for 76% of total revenues and increased 12% to 164bn pesos in Q3 compared to 147bn pesos a year ago. In 3Q06 mobile telephony represented 72% of total revenues. Entel PCS ended the quarter with 5.4mn users, or 41% of the Chilean market, up 14% year-on-year. The postpaid customer base rose 45% to 1.39mn subscribers compared to 958,000 a year ago.

ARPU remained flat as an increase in valued added service (VAS) revenues was offset by a decrease in outgoing tariffs. VAS revenues hiked 32% mainly derived from GPRS and broadband usage in the postpaid segment. VAS totaled 14% of outgoing call revenues in the quarter compared to 13% in 3Q06.

Entel PCS continued to build out its 3G HSDPA network and ended the quarter with full coverage of capital Santiago, as well as some districts in neighboring region V.

Wireline

The wireline business, comprised of data services, local telephony, internet and long distance, generated revenues of 57.7bn pesos, down 2% year-on-year. The decrease was driven by a 22% year-on-year decline in residential wireline revenues, due mainly to falling dial-up traffic and broadband subscriptions. Residential services accounted for 14.7% of wireline revenues in the quarter, down from 18.5% in 3Q06.

Speaking during a conference call with investors, Entel's CFO Felipe Ureta said he expected 2008 to be the turning point for the wireline business with greater adoption of value added services on the company's next generation network infrastructure.

The firm ended the quarter with 54,654 next generation IP lines in service, or 32% of the 173,425 local telephony lines operated by Entel at end-September. Growth of NGN-IP lines is being driven chiefly by demand from SMEs.

Data and IT services revenues rose 1% to 15.0bn pesos in the quarter due to expansions in high-speed connectivity over the MPLS-IP network, and partially offset by lower data center sales.

During the quarter Entel increased capacity of its WiMax network by 30%.

Ureta said the company's capex estimates for 2007 remained firm at US$120mn-130mn.

What is Entel doing right?

In answer to a question about how Entel was managing to gain market share against its mobile competitors Movistar of Telefonica and Claro of America Movil, while at the same time lowering call rates, Ureta said the company was benefiting from investments in network upgrades.

"The improved quality of networks enable us to reduce costs and provide new services knowing that the network is reliable and not going to fail, Ureta said.

The executive added that when Telefonica merged its mobile operations with those of Bellsouth in 2004 and Claro entered the market in 2005, Entel prepared itself for stiff competition especially in the postpaid market.

In response to that the company invested heavily in network upgrades and providing new services to improve customer loyalty. The company has made a strong drive to upgrade prepaid customers to postpaid in that period.

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Tags: capex  telefonica  vas  entel  next generation network  movistar  gprs  cfo  claro  value added services  data center  Chile