Mexico's Grupo Iusacell Losses Deepen on Currency Depreciation

Mexico based mobile network operator, Grupo Iusacell has reported that its first quarter revenues rose slightly to Ps.2.9 billion (US$207 million), compared to Ps.2.8 billion (US$200 million) in the same period in 2008. The company registered a net loss of Ps.678 million (US$48.5 million), compared to net loss of Ps.279 million (US$20 million) for the same period of the previous year. The result was primarily due to foreign exchange losses as a result of the depreciation of the peso during this quarter.

During the fourth quarter of 2008, the firm updated its prepaid customer base, as part of a regular procedure to reflect only those subscribers that are currently active, meaning that they have recently acquired prepaid air time and still receive calls. As a result, the prepay subscriber base dropped by 19% to reach 2.38 million. Contract customers increased though by 12% to reach 1.15 million. The total base dropped by 11% to 3.54 million.

The company has also started specific actions to further increase the activation of new prepaid users throughout more competitive plans to acquire handsets and buy air time. The company continues to implement an aggressive expense reduction plan to confront the current economic slowdown in Mexico.

As of March 31, 2009, the debt balance of the company was Ps.12.5 billion (US$894 million), compared to the Ps.10.5 billion reported a year ago; the increase is mainly due to the rise in the peso amount of the dollar denominated debt, resulting from the exchange rate depreciation. The company recently stopped paying its US denominated debt as it seeks to renew the debt into Mexican Pesos.

Capital expenditures for 1Q09 were Ps.217 million (US$15.5 million) mainly for systems and equipment maintenance of its 3G network.

Posted to the site on 29th April 2009