Telefonos de Venezuela Says May Lose Up to $195 Mln (Update1)

By Peter Wilson

Caracas, April 28 (<a href=quote.bloomberg.com>Bloomberg) -- CA Nacional Telefonos de Venezuela, the country's largest telephone company, said it may lose as much as $195 million this year, reversing year-ago net of $44 million, as the economy shrinks and the government limits the sale of dollars.

Nacional Telefonos said it will post losses between $73 million and $195 million, or between 64 cents and $1.74 an American depositary receipt. The company, which is 28.5 percent owned by Verizon Communications Inc., had 2002 earnings of 39 cents an ADR.

``The second and third quarters will be the weakest with improvements in the last quarter of the year,'' the company said in a press statement.

Venezuela's economy may contract by up to 17 percent this year, according to the International Monetary Fund. The consequences of a two-month general strike hurt consumer confidence and sales. Limits on the amount of dollars businesses can buy has made it difficult for the company to service dollar- denominated debt or pay overseas suppliers.

Nacional Telefonos, which reports first-quarter results May 7, said its free cash flow will be between $370 million and $475 million this year.

``We expect the total wireless market to remain flat in 2003, while the total wireline market could decrease by up to 2 percent,'' the company said.

The company's ADRs rose 0.6 percent to $9.81 as of 10:30 a.m. New York time. The country's Class D shares fell 35 bolivars, or 1.5 percent, to 2,265 bolivars ($1.42).

Each ADR is equal to seven Class D shares.

Slumping Investments

The company forecasts investments of between $60 million and $120 million. The company had $368 million of capital expenditures last year.

It gave no timetable for the government to decide on a residential rate increase the company applied for in December. It earlier won a 19 percent increase on non-residential tariffs.

Nacional Telefonos had 2.7 million fixed lines in service as of Dec. 31, with 2.5 million cellular subscribers.

Besides Verizon, Spain's Telefonica SA owns 6.9 percent. The government owns 6.6 percent, and employees own 12 percent. The rest, or about 46 percent, is traded. Last Updated: April 28, 2003 11:25 EDT