07/06/2009


Telefonica presented the highest profitability in 1Q09

 

Telefonica (Telesp) was the telecommunication operator that presented the highest profitability in the first quarter of 2009 (1Q09), with Net Margin (Net Profit / Net Revenue) of 12.2%.

 

 

 

 

 

Telefonica has presented higher Net Margin if compared with other telecom operators in Brazil, Telefonica was surpassed only by GVT in 2Q08.

 

We can observe that fixed operators, the companies that provide Fixed Telephony, Broadband and Pay TV, presented the highest Net Margins.

 

The table below presents the market cap and gross revenue of these operators in 1Q09.

 

 

1Q09 R$ Billions
Market Cap
Gross Revenue
Growth 1Q09/1Q08
Mobile Vivo
11.3
5.6
9.4%
Tim
9.2
4.2
-0.2%
Claro
-
3.8
5.8%
Fixed Telefonica
22.7
5.8
4.6%
Embratel
9.2
3.5
9.0%
Net
6.5
1.4
30.7%
GVT
3.4
0.6
30.7%
Mobile and Fixed Oi
13.5
11.2
7.8%

Note: The companies considered were Vivo Participações (Vivo), Tim Participações (Tim), Telesp (Telefonica), Embratel Participações (Embratel), Net Serviços de Comunicação (Net), GVT (Holding) and Tele Norte Leste Participações - TNLP (Oi), being BrT included in Oi. For the information about Claro, Teleco has América Móvil as source.

 

We can notice that Oi (including BrT), the only one to provide mobile (cellular) and fixed (Fixed Telephony, Broadband and Pay TV) services, presented higher gross revenue (R$ 11.2 billion in 1Q09). Its market cap is, however, lower than Telefonica's (Telesp).

 

This situation presents small modifications when considered the EBITDA Margin (EBITDA/Net Revenue). The EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is obtained by subtracting taxes and operational costs from the revenue. Vivo's EBITDA margin was higher than Embratel's and Net's in 1Q09.

 

 

 

Telefonica is the leader also when we consider company's net profit/net worth. Net worth represents the values that business partners or shareholders own in the company in a determined moment.

 

 

 

 

The process of growth which Oi is going through, by the acquisition of Brasil Telecom (BrT), and the entrance in the cellular market of São Paulo is affecting Oi's profitability. One year ago, in 1Q08, Oi's profitability indexes were close to Telefonica's.

 

Oi (TNLP) holds the biggest leverage (Asset/Net Worth) in comparison with the analized companies. In fact, Oi's net debt increased from R$ 2.5 billion in 1Q08 to R$ 19.2 billion in 1Q09, it already includes BrT's purchase.

 

 

 

You could ask:

  • Why did fixed telephony companies present in 1Q09 higher profitability than mobile telephony companies?
  • Do a mobile and fixed service provider tend to present higher profitability than the companies that do not offer this degree of integration?
  • What factors might affect this climate? New technologies? New authorizations such as WiMax and IPTV?
  • Which operator is better positioned strategically?

To send us a commentary, click on: teleco@teleco.com.br

 

Please let us know if you authorize the publication of your commentary.

 

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