Portugal Telecom got a new result of 174,4 million euros (ME), a reduction of 5.5% on the first trimester of this year, when compared to the same period of the previous year. These results exceeded analyst expectations which estimated on average, a decrease of 26%. The figures that were presented were justified with the cost of personnel reduction, which increase approximately two million of euros to 15 million euros in the first three months of the year.
Portugal Telecom Operational profits grew 1.1% to 1.475,9 ME. Excluding the average impact of the change in the consolidating business method, which now uses the patrimonial equivalent consolidating method in detriment of integrated consolidation, operational profits would have increased 3.4% in the first trimester of 2005 when compared to the same time frame of 2004.
Retail profits in Portugal (fixed network, Subscription TV and broad band) increased 2.7% in comparison to the first trimester of 2004, to 464 ME in the first trimester of 2005, reflecting a growth in profits of Subscription TV and Broad band which more than compensated the reduction in profits from the fixed network traffic, which were in turn negatively influenced by the decrease in the volume of traffic and interconnection prices.
In terms of profits per home, a concept which groups profits from cable and the fixed network divided by client, the increase was of 2.7%.
The EBITDA (results before taxes, interest, amortizations and depreciations) rose 4.4% to 613,3 ME which the EBITDA margin (indicator which estimates the profitability of the business) rose 1.3% to 41.5%.
The consolidates Capex (capital investment) registered an increase of 91.9% to 167,9 million euros as a result of the investments made in Portugal in broad band and the expansion of the network and coverage of CDMA in VIVO, Brazil which permitted the operator to get closer to UMTS technology.
At the end of the trimester, the net debt was f 3,6 million euros, an extra 258 ME than the previous time span which is a result of the extraordinary contribution of 300 million euros for a new fund of health care (managed by the newly created PT Prestaçoes) and the regular contribution of 100 million euros to the pension funds. Adjusted by the impact of the equity swaps of an equivalent of 3% of capital of PT shares, contracted in the scope of the buyback program of 10% of the social capital announced in 2003, the net debt would have increase to 3,94 billion euros.
In the fixed network, the ADSL Internet business allowed for a better performance of the fixed network, where profits increased to 33 ME, as compared to the 18 ME of the same time period in the previous year.
Meanwhile, in the mobile business, profits increase 0.5% to 374,3 ME, and were penalised by the fall in mobile-mobile interconnection tariffs in March. Without this impact, the operational profits would have risen 2.8%. The number of clients increased 50 5.087 thousand, an increase of 3.3% when compared to the same time period of the previous year.
On the other side of the Atlantic, VIVO registered an increase of 3% to 2,77 billion euros in operation profits. Overall, the EBITDA in business fell 3.2% reflecting an increase in acquisitional and client retention costs, which was due to the increase in competition.
It is important to mention that the results presented by Portugal Telecom and PT Multimedia were prepared in accordance to the International Financial Reporting Standards (IFRS or International Accounting Standards - IAS), new accounting policies which will be adapted as of this year to all European quoted companies.
PTM profits 22,4 Million Euros
PT Multimedia gained a net result of 22,4 ME during the first trimester of 2005, a value which corresponds to an increase of 22.8% on the same period of 2004. Profits, already without the contribution of the Media business, grew 8.7%.