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NET Servicos Reports Mixed 4Q - Analyst Blog

Posted: 3/2/2012 8:15:00 AM
Referenced Stocks: BTM;NETC;TNE

NET Servicos de Comunicacao S.A. ( NETC ) declared mixed financial results for the fourth quarter of 2011. Quarterly net income was $65.7 million or 19 cents per share compared with a net income of $78.3 million or 23 cents per share in the year-ago comparable quarter. The decline in net income is primarily due to higher tax burden.

Net revenue (excluding connection cancellations and sales taxes), in the reported quarter, was approximately $993.4 million, up 23% year over year. The increase was mainly attributable to higher subscription revenue supported by subscriber base growth and subscribers' preference toward high-end products.

Quarterly operating expenses were $463.1 million, up 21% over the prior-year quarter. As a percentage of revenue, operating costs decreased from 47.4% in the fourth quarter of 2010 to 46.6% in the fourth quarter of 2011. Quarterly operating margin was 53.4% compared with 52.6% in the prior-year quarter. Quarterly EBITDA was around $299.3 million, an improvement of 20.7% year over year. EBITDA margin in the reported quarter was 30.1% compared with 30.7% in the prior-year quarter.

Despite facing stiff competition from Brasil Telecom S.A. ( BTM ), Tele Norte Leste Participacoes S.A. ( TNE ), and Telefonos de Mexico ( TMX ), NET Servicos generated huge subscriber growth in 2011. At the end of 2011, Pay TV subscriber base was 4,730,000, up 12.3% year over year. Broadband subscriber base totaled 4,264,000, up 21% year over year. Fixed Telephone Line in Service was 3,844,000, up 21.9% year over year.

Total capital expenditure in 2011 was $922.6 million. Net debt, at the end of 2011, was $804.8 million, up 6.8% year over year. Net Debt-to- EBITDA ratio at the end of 2011 was 0.75 compared with 0.87 at the end of 2010.

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