Cantv stays in the black, despite economy
05/12/2003 - <a href=www.latintrade.com>Source: LatinTrade-BNamericas
Venezuela's incumbent telco Cantv (NYSE: VNT) managed to register net income of 10.5bn bolivares (US$6.5mn today) for the first quarter, down from 39.8bn bolivares a year ago, despite ongoing economic instability, according to the company's quarterly earnings statement. First quarter revenues fell 10.4% year-over-year, to 648bn bolivares, from 723bn bolivares for the first quarter of 2002. Cantv blamed the weak revenue performance on four factors: real rate decreases, continuing economic lethargy, an ongoing shift of customers to flat rate plans and fewer non-residential fixed lines. Revenues fell for local services, domestic long distance, international long distance, fixed-mobile interconnection and mobile services, by 12.5%, 21.5%, 33.4%, 25.1% and 11.8%, respectively.
Cantv said nominal rate increases of 28% and 29%, respectively, for local and DLD services, were partly to blame. However, the company noted that real rates for the two services actually declined year-over-year by 1.7% and 6.3%, respectively. Positive growth was reported for incoming ILD revenues, which increased 115% as Venezuelan expatriates took over a part of the burden of calls normally held by nationals. Data and Internet services also grew, by 45.3% and 20.2%, respectively. Ebitda was 255bn bolivares, down 17.5 percent from the 309bn bolivares registered in 1Q02. Ebitda margin remained stable from year to year, at 43%. Total lines in service remained flat at 2.7 million. Wireless subscribers decreased marginally, by 21,000, to close the quarter at about 2.5 million, while minutes of use fell more sharply, by 13.2%, as subscribers reacted negatively to an 18% tariff increase imposed by the company in early March. Among prepaid consumers, consumption fell further, by 23.5%, though Cantv said the drops were expected. The decline in voice traffic was partly boosted by a 76% year-over-year expansion in SMS traffic, to 822 million messages. SMS growth was propelled not only by substitution over voice, but by interconnection last year of SMS platforms between the country's three main mobile operators. Cantv ended the quarter with 204bn bolivares in free cash flow, compared to 285bn bolivares at end-1Q02. The fall in cash was partially offset by reduced capex, which was 17bn bolivares for the quarter.