BellSouth's LatAm revenues plunge 29%

01/27/2003 - Source: BNamericas Fourth-quarter revenues at the Latin American operations of US telco BellSouth (NYSE: BLS) declined 29.4% to US$486mn, compared to US$568mn for the same period in 2001, according to the company's 4Q02 and year-end earnings statement. Quarterly revenues were also down 1.8% compared to 3Q02. Revenues for the full year fell 24.2% to US$1.84bn, compared to US$2.43bn in 2001. BellSouth gave the same explanation for its falling sales that it has given for each of the last four quarters: weak economic conditions and currency devaluations, principally in Argentina and Venezuela. Argentina's peso lost 70% and Venezuela's Bolivar 54.6% against the US dollar last year. Pyramid Research analyst Carlos Rodriguez agreed with BellSouth's assessment. "Argentina and Venezuela had a very difficult year. Their biggest eggs were in the wrong baskets," he told BNamericas, adding that the worst may yet come in Venezuela. "Even if the general strike ends today, they are going to lose many of their most valuable business customers. There are going to be lots of bankruptcies in the coming months," he said. BellSouth also said its Latin American Ebitda margin was 38.1%, up from 34.1% in the third quarter of 2002. For the full year, the Ebitda margin improved to 32.8% in 2002 from 30.2% a year earlier. The company's main Latin American operations at end-2001 were Argentina and Venezuela. Movicom BellSouth in Argentina lost about 17% of its subscribers last year, while Venezuela and Brazil, the first- and third-largest subsidiaries respectively, recorded zero subscriber growth.

Growth in Chile, Colombia, Nicaragua, Panama and Peru was around or below the 20-30% range. Only Ecuador and Guatemala posted substantial growth, expanding 84% and 158% respectively. Rodriguez said the Guatemalan operation is unique for BellSouth in that Guatemala is one country where the US telco was a late entrant rather than the first-mover that never learned how to respond to aggressive competitors. BellSouth operates in a joint venture with Cayman-based Multi Holding Corp in Guatemala and Panama. Regionally BellSouth needs to focus its strategy, and try to sell certain subsidiaries, Rodriguez said. The company seems to be doing just that in Brazil, he said, noting the recent news that northeastern mobile operator BSE is negotiating its sale. Also known as BCP Nordeste, BSE is linked to BellSouth's Sao Paulo-based operator BCP. BellSouth and its partners serve a total of 11.5 million customers in 11 Central and South American countries, including 298,000 fixed wireless customers.