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Brasil Telecom Deal Boosts Customers and Debt
TNL PCS, which trades as Oi, completed the acquisition of Brasil Telecom in January 2009, thereby boosting its customer base to 31.84m at the end of Q1 09. The quarterly gain of 7.45m included approximately 5.6m Brasil Telecom customers. The prepaid base increased by 6.37m to 26.86m, while the contract base added 1.08m to finish on 4.98m, or 15.6% of the total. Prior to the acquisition, Oi had reported a marginally higher figure of 16% contract, although it only quoted this figure to the nearest 1%.
At the end of Q1 09, Oi’s annual growth rate stood at 83.7%, compared to 29.7% for the prior twelve month period. Net additions were up from 3.97m to 14.50m. These figures account for the effect not only of the Brasil Telecom acquisition, but also of the acquisition of Tele Norte in Q2 08. This added a further 1.47m to Oi’s customer base. Nevertheless, even excluding the combined 7.1m boost of these deals, Oi performed well. Annual growth would have been 42.8% and net additions would have been 7.42m.
What makes the company’s underlying customer growth even more impressive is that it managed to maintain a stable ARPU in 2007 and 2008. However, Q1 09 saw a substantial drop on a proforma basis. The Q1 08 proforma figure of BRL23.90 was BRL2.60 higher than the actual figure, reflecting the fact that Brasil Telecom had a significantly higher ARPU of around BRL30. Meanwhile, Q4 08 saw a proforma figure of BRL25.00, compared to an actual figure of BRL22.70. The effect of the Brasil Telecom acquisition was nowhere to be seen in the Q1 09 proforma figure, however, with an 11.7% year on year decline to BRL21.10. In fact, this was even lower than the actual Q1 08 figure. Other Brazilian operators saw drops in ARPU in the first quarter but this was the largest, and one wonders how much bigger it might have been without the Brasil Telecom deal.
In terms of the financial figures, Oi saw a 3.5% year-on-year gain in revenues on a proforma basis to BRL7.5bn in Q1 09. However, adjusted EBITDA was down 8.0% to BRL2.4bn, leaving the margin off 1.2pp at 32.9%. Meanwhile, net debt surged from BRL3.0bn in Q1 08 to BRL19.2bn in Q1 09 as a result of the acquisition.
Posted to the site on 31st May 2009
This article was extracted from The Mobile World Briefing, the weekly newsletter from The Mobile World.
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