UPDATE: Portugal Telecom 1Q Net Profit -40% As Costs Rise
May 06 2010 - 3:12AM
Dow Jones News
Portugal Telecom SGPS SA (PT) said Thursday its first-quarter
net profit fell 40% as revenue stagnated in its key home market and
the company earmarked more money to expand networks and pay
television.
PT, Portugal's biggest telecommunications company by market
capitalization and subscribers, said net profit fell to EUR100.3
million from EUR166.4 million a year earlier. Still, the figure
beat analysts' expectations for EUR94.6 million.
Revenue rose 11% to EUR1.77 billion, while earnings before
interest, taxes, depreciation and amortization increased 5.1% to
EUR633.4 million.
At 0732 GMT, Portugal Telecom shares were down 1.9% to EUR7.20,
falling further than the overall Portuguese market.
Portugal Telecom invested heavily in the quarter in beefing up
its pay-TV business in Portugal and third-generation mobile network
in Portugal and Brazil, two of the company's main strategic bets.
The company said capital expenditure in the quarter rose 2% to
EUR229 million compared with a year ago, mostly due to costs from
expanding its fibre optic networks.
European telecommunication companies, including PT, are facing
stagnant revenues as customers scale back on spending during the
financial crisis and migrate to low-cost operators to limit
spending. Portugal, along with many of its peers in Southern
Europe, has been hit especially hard by lower consumer spending
that has forced companies to cut tariffs.
PT also said it had to spend more in the quarter to compete and
attract customers.
The company's biggest source of revenue is Brazilian mobile
company Vivo Participacoes SA (VIV), which it controls jointly with
Spain's Telefonica SA (TEF). Due to a stronger real and growth in
the Brazilian market, PT's revenue in the quarter from Brazil rose
27% to EUR916.5 million.
Besides Portugal and Brazil, Portugal Telecom has smaller
operations in Angola, Cape Verde, Mozambique, Namibia and East
Timor.
Company Web site: http://www.telecom.pt
-By Jason Sinclair, Dow Jones Newswires; +34-91-395 8127;
jason.sinclair@dowjones.com
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