Contacts:
Stock Exchange at September 30, 1999:
In Brazil
...
The table below provides a breakdown of operating revenue for the third quarter and nine-
month period ended September...
This quarter the Company adopted a more realistic policy for provisions for doubtful
accounts, including credits from the ...
clients to the change from the analog to the digital system, as well as the previously
mentioned adjustments performed dur...
Non-operating income
The Company is replacing equipment and technology for network digitalization. Fixed assets
were ther...
Market Share
The Company maintained its leadership position, ending the third quarter of 1999 with 89%
market share and a...
General Considerations
As of October 1, 1999, Tele Celular Sul, decreased its cellular telephone subsidies as part of
its...
Financial Statements
TELE CELULAR SUL PARTICIPAÇÕES S.A.
BAL...
TELE CELULAR SUL PARTICIPAÇÕES S.A.
BALANCE SHEETS AT SEPTEMBER 30,1999 AND JUNE 30, 1999...
TELE CELULAR SUL PARTICIPAÇÕES S.A.
INCOME STATEMENTS
...
TELE CELULAR SUL PARTICIPAÇÕES S.A.
CONSOLIDATED INCOME STATEMENTS
...
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Press Release 3 Q99 Tele Celular Sul En

Published on: Mar 4, 2016
Source: www.slideshare.net


Transcripts - Press Release 3 Q99 Tele Celular Sul En

  • 1. Contacts: Stock Exchange at September 30, 1999: In Brazil TCSL3: R$ 2.40 /1,000 shares Ruggero Caterini TCSL4: R$ 3.65 / 1,000 shares Joana Dark Fonseca Serafim TSU: US$ 19.13 (ADR = 10,000 PN shares) Phone #: +55 41 312-6862 Market Value: R$ 1,065,095 million E-mail: jserafim@timsul.com.br US$ 554,073 million Web site: www. timsul.com.br TELE CELULAR SUL PARTICIPAÇÕES S.A. ANNOUNCES ITS RESULTS FOR THE THIRD QUARTER OF 1999 Curitiba, November 16, 1999 – Tele Celular Sul Participações S.A. (BOVESPA: TCLS3 and TCLS4; NYSE: TSU), the holding Company of Telepar Celular S.A., Telesc Celular S.A. and CTMR Celular S.A., leading providers of cellular telecommunications services in Southern Brazil, announced today its results for the third quarter of 1999. In accordance with Brazilian GAAP. Operating revenue For the third quarter of 1999, gross operating revenue reached R$206.3 million, representing a 30% increase compared to the R$158.6 million reported for the third quarter of 1998. During the quarter, the total number of subscribers grew by 64%, representing 347,000 additional subscribers, of which 164,000 are pre-paid service users. Total net operating revenue for the third quarter was R$165.3 million, including net revenue from the sale of cellular phones, which was R$39.5 million.
  • 2. The table below provides a breakdown of operating revenue for the third quarter and nine- month period ended September 30, 1999, compared to the same periods of the previous year: (in thousands of reais) 1Q99 2Q99 3Q99 3Q98 YTD Sep/99 YTD Sep/98 Gross Operating Revenue 182,724 205,538 206,344 158,566 594,606 483,908 Sales of cellular phones 19,306 36,217 45,819 - 101,342 - Usage charges 88,267 86,646 83,007 76,350 257,920 236,234 Monthly subscription fee 36,380 42,743 40,577 42,174 119,700 123,080 Rental 8,100 5,017 2,888 10,692 16,005 33,039 Interconnection charge 28,176 31,444 34,395 24,405 94,015 71,500 Activation 1,931 873 (1,628) 4,034 1,176 16,102 Additional Services 717 735 374 448 1,826 3,785 Others (153) 1,863 912 463 2,622 168 Taxes and Other Deductions (37,202) (46,966) (41,006) (35,284) (125,234) (104,848) Net Operating Income 145,522 158,572 165,278 123,282 469,372 379,060 Net Operating Income from Services 128,909 127,133 125,734 123,282 381,776 379,060 Net Operating Income from Sales 16,613 31,439 39,544 - 87,596 - Total Customers (in thousands) 164 1000 891 0 64 0 800 544 Total: 891 600 610 665 462 726 400 200 1998 1Q99 2Q99 3Q99 Growth of 64% Postpaid Prepaid 0 3Q98 3Q99 Operating Costs and Expenses The cost of services rendered for the third quarter of 1999, excluding the sale of telephones, amounted to R$62.5 million. Compared to the same quarter of the previous year, this increase can be attributed to growth in the customer base and to the change in depreciation rates. The change in the depreciation rates represented an increase in costs amounting to R$6.9 million for the quarter and R$19.7 million accrued for the first nine months of the year. Cellular telephone selling expenses for the quarter were R$57.3 million, while for the 9 months ended September 30, 1999, they were R$112.8 million Selling expenses reached R$32.1 million for the third quarter of 1999, an increase compared to the R$16.1 million recorded for the third quarter of 1998. This increase was due to the current cost of customer acquisition – SAC, in a competitive environment. During the quarter the SAC reached R$ 230, and R$ 191 for the first nine months of the year
  • 3. This quarter the Company adopted a more realistic policy for provisions for doubtful accounts, including credits from the sales of cellular phones. As a result, the expenses related to doubtful accounts increased by R$5.1 million, totaling R$16.9 million for the three months ended September 30, 1999. The Company has been persuading its customers to change from the analog to the digital system, thereby amassing an inventory of used analog devices. During the quarter, this inventory was marked to reflect market prices; such adjustment was provisioned for under other operating expenses and totaled R$5.1 million. The table below shows the operating costs and expenses for the third quarter and for the nine months ended September 1999, compared to the same period in the previous year: (In thousands of reais) 1Q99 2Q99 3Q99 3Q98 YTD Sep/99 YTD Sep/98 Cost of Goods and Services 75,614 87,249 119,833 42,016 282,696 131,374 Costs of Services 53,715 53,621 62,561 42,016 169,897 131,374 Costs of Goods 21,899 33,628 57,272 ------- 112,799 ---------- Operating Expenses 64,646 51,730 67,744 30,451 184,120 82,716 Selling Expenses 19,302 30,871 32,086 16,054 82,259 14,763 General Administrative Expenses 14,874 12,544 16,201 14,829 43,619 59,572 Financing Expenses 28,617 8,765 11,860 (937) 49,242 6,098 Other Operating Expenses 1,853 (453) 7,600 505 9,000 1,598 Costs and Operating Expenses 140,260 138,979 187,577 72,467 466,816 141,623 Expenses related to Doubtful 10,025 9,385 16,892 11,065 36,302 17,704 Accounts Costs and Operating Expenses Breakdown Costs and Operating Expenses Breakdown (YTD September/99) (3rd Quarter/99) R$467 million R$188 million Others Third party services Materials Others Third party Materials 16 3 1 8 services Payroll 16 120 39 Payroll 7 Rent 30 8 Rent 36 Expenses 17 Expenses related to related to doubtful doubtful 57 accounts 113 73 accounts 30 Costs of Costs of handsets Depreciation handsets Depreciation EBITDA EBITDA for the third quarter was R$23 million, with EBITDA for the nine months ended September 30, 1999, reaching R$138 million, representing EBITDA margins, excluding the sale of cellular phones but including subsidies, of 18% and 36%, respectively. This decrease is basically due to subsidies related to the sale of cellular phones and incentives for
  • 4. clients to the change from the analog to the digital system, as well as the previously mentioned adjustments performed during the quarter. Tele Celular Sul has been trying to maximize revenue generation by attracting and retaining new customers, since the use of TDMA standard technology renders it difficult as well as more expensive to switch to its competitor who uses the CDMA standard. In this regard, the Company will be better able to manage the churn. In light of the increase already achieved in the customer base, in October, the Company raised selling prices to reduce the impact of subsidies on revenues. (in thousands of reais) 1Q99 2Q99 3Q99 3Q98 YTD Set/99 YTD Set/98 EBITDA 57,272 57,571 23,185 66,782 138,190 216,652 EBITDA margin 39% 36% 14% 54% 29% 57% EBITDA margin 44% 49% 18% - 36% - (excluding handset sales but including subsidies) Changes from analog to 29,605 38,216 62,207 - 130,028 - digital system Financial Expenses Financial Expenses were R$11.9 million for the third quarter, totaling R$49 million in the period. The impact of the real devaluation on financial expenses was R$38.5 million accumulated to September 30, 1999; the Company did not defer these expenses. Tele Celular Sul’s interest-bearing indebtedness as of September 30, 1999, was R$139 million, representing dollar-denominated debt with suppliers. Loans / Financing (consolidated) September 30th, 1999 (in thousands of Reais) Short Term Local Currency 43,678 Foreign Currency 80,176 Long Term Local Currency 0 Foreign Currency (2000-2005) 14,781 TOTAL 138,635 On September 3, 1999, the Company hedged R$ 82.5 million, covering its debts due in December 1999.
  • 5. Non-operating income The Company is replacing equipment and technology for network digitalization. Fixed assets were therefore written-off in the quarter, resulting in a non-operating expense of R$33 million. Taking into account provisions made in 1999, the impact on the results for quarter was R$4.7 million, and the impact for the first nine months of the year was R$12.7 million. Net Profit The Company reported a R$6.9 million loss for the third quarter of 1999, with an accumulated year-to-date profit of R$24.2 million, or R$ 0.07 per lot of 1,000 shares. Investments The Company invested R$63 million during the quarter, totaling R$169 million invested at September 30, 1999, financed exclusively by the Company’s own cash. As a result, the Company achieved 80% digitalization of its radio base stations and 54% digitalization in relation to its customers, expanded the customer base to 890,000, increased coverage and enhanced the quality of its services; furthermore, it is implementing new collection and management systems. Network Digitalization RBS's Channels Digital Analogic Digital Analogic Units 502 128 11,418 19,229 % 79% 21% 37% 63% Funding On November 12, 1999, Telepar Celular and Telesc Celular, TSU’s subsidiaries, collectively issued R$144 million in commercial paper, which represents a net disbursement of R$ 120 million. This amount will be used to finance the investments for the expansion and modernization of its network as well as for IT investments. Telepar Celular is issuing 157 commercial papers, with a total value of R$78.5 million. Telesc Celular is issuing 131 commercial papers, with a total value of R$65.5 million. The face amount of each paper is R$500,000, which will be discounted. The notes will have 360 days to mature. The costs will be approximately 3% over the CDI rate, which was immediately swapped into a fixed rate of 23.8% p.a., and according to Brazilian standards, this is considered one of the best rates of the market. The Company is in the final stages of negociating the approximately R$70 million in funding from the Export-Import Bank of the United States (“Eximbank”), which will also be used for the TSU’s investments.
  • 6. Market Share The Company maintained its leadership position, ending the third quarter of 1999 with 89% market share and an average monthly growth share of 76%. For the quarter, total market penetration was estimated at 7%, thus indicating that there is room for growth in the cellular telephony market. Selected Data 1Q99 2Q99 3Q99 3Q98 YTD Set/99 YTD Set/98 Total Subscribers 665,708 770,873 891,144 544,030 891,144 544,030 Postpaid 665,708 706,965 726,175 544,030 726,175 544,030 Prepaid - 63,908 163,969 - 163,969 - Estimated population in the region 14.3 14.4 14.6 14.3 14.6 14,3 (millions) Penetration (TSU) 5.0% 5.4% 6.1% 3.85% 6.1% 100% Municipalities Served 191 193 202 166 202 166 Market Share 98% 94% 89% 100% 89% 100% Marginal Market Share 77% 77% 72% - 76% - TOTAL ARPU1 R$67.35 R$60.00 R$50.50 R$77.09 R$56.50 R$83.72 ARPU postpaid1 R$67.35 R$62.07 R$53.32 R$77.09 R$61.23 R$83,72 ARPU prepaid1 - R$26.88 R$26.27 - R$26.41 - MOU (incoming) 103 94 87 - 91 - MOU (outgoing) 78 70 59 - 66 - MOU (outgoing) prepaid - 21 21 - 21 - Investments ( millions ) R$ 8.1 R$ 97.8 R$62.2 R$21.4 R$169.1 R$84.2 Gross Additions 65,689 128,192 146,027 29,813 339,908 115,765 Disconnections 10,362 23,026 26,756 8,343 60,144 26,460 Churn 2 2% 3% 3% 2% 8% 5% Points of sales (including own stores) 503 532 549 - 549 - Company stores 10 17 16 - 16 - Total Employees 862 927 1,112 350 1,112 350 Full-time 385 537 943 350 943 350 Contractors and Interns 477 390 169 169 Note: (1) Average net revenue per subscriber, excluding equipment sales. (2) Calculated on the average subscriber base. The Year 2000 Issue The Company has acquired new systems that are already Year 2000 compliant, which are in the final stage of installation. To further guarantee no disruptions, TSU created a Contingency Plan aimed at finding solutions to problems associated with the year 2000. TSU and its operating companies are also members of the GTPC (The National Telecommunications Sector Contingency Plan Working Group), whose objectives include managing and developing contingency actions to deal with any unforeseen Year 2000 disruptions.
  • 7. General Considerations As of October 1, 1999, Tele Celular Sul, decreased its cellular telephone subsidies as part of its marketing strategy. The prepaid handsets bear a lower level of subsidies than postpaid handsets. Nevertheless, it is difficult to ensure that the benefits of this new policy will be seen in fourth quarter results, since special end-of-year offers are usually employed. Tele Celular Sul applied for a tariff adjustment and on October 7, 1999 Anatel authorized maximum increases of 15.47% and 9.97% on interconnection charges and on basic services plan items, respectively. These values are net of taxes and social contribution charges. As of October 10, 1999, the Company began charging new interconnection rates, but has not yet determined when new prices for basic service items will become effective. A total or partial increase will depend on market strategy, which will be dependent on the market and competitive environment. Tele Celular Sul is implementing a new billing system while simultaneously modernizing its call center system, by means of new technologies, new processes and corporate restructuring. As a direct result of these efforts, the Company will improve its customer service, credit management and customer retention standards to even higher levels with a better, more efficient control. Brazil is still waiting for changes to economic policy, with lower interest rates, decreased government spending and expansion of the global marketplace. Despite this scenario, the Company is working to keep its leadership position in the industry and is optimistic the Company will continue to grow.
  • 8. Financial Statements TELE CELULAR SUL PARTICIPAÇÕES S.A. BALANCE SHEETS AT SEPTEMBER 30, 1999 AND JUNE 30, 1999 (Expressed in thousands of Brazilian reais) (Translation of the original in Portuguese) A S S E T S Parent Company . Consolidated . Sept. 30, 1999 June 30, 1999 Sept. 30, 1999. June 30, 1999. CURRENT ASSETS Cash and marketable securities 36 1,702 984 26,167 Accounts receivable from services - - 114,237 91,060 Accounts receivable from sales of products - - 14,317 18,463 Allowance for doubtful accounts - - (17,837) (13,116) Receivable from subsidiaries 122,744 106,969 - - Inventories - - 46,103 10,600 Recoverable taxes 2,206 4,259 15,604 16,211 Deferred taxes - - 8,738 13,389 Other current assets 2,216 2,523 23,939 21,418 ---------- ---------- ---------- ---------- 127,202 115,453 206,085 184,192 ---------- ---------- ---------- ---------- LONG-TERM ASSETS Receivable from subsidiaries 2,341 3,984 - - Deferred taxes - - 35,566 16,998 Judicial deposits and other assets - - 9,509 7,268 ---------- ---------- ---------- ---------- 2,341 3,984 45,075 24,266 ---------- ---------- ---------- ---------- PERMANENT ASSETS Investments 444,781 455,225 20 20 Property and equipment 28 22 706,290 677,173 Deferred assets - - 335 359 ---------- ---------- ---------- ---------- 444,809 455,247 706,645 677,552 ---------- ---------- ---------- ---------- Total assets 574,352 574,684 957,805 886,010 ====== ====== ====== ======
  • 9. TELE CELULAR SUL PARTICIPAÇÕES S.A. BALANCE SHEETS AT SEPTEMBER 30,1999 AND JUNE 30, 1999 (Expressed in thousands of Brazilian reais) (Translation of the original in Portuguese) LIABILITIES AND SHAREHOLDERS’ EQUITY Parent Company . Consolidated . Sept. 30, 1999 June 30, 1999 Sept. 30, 1999. June 30, 1999. CURRENT LIABILITIES Loans and financing 7,344 - 123,854 73,040 Suppliers 2 - 73,523 47,489 Taxes and contributions 278 103 17,535 17,097 Dividends payable 1,497 2,116 4,677 5,604 Provision for contingencies - - 647 2,859 Other current liabilities 25 333 16,917 9,761 ---------- ---------- ---------- ---------- 9,146 2,552 237,153 155,850 ---------- ---------- ---------- ---------- LONG-TERM LIABILITIES Loans and financing - - 14,781 13,391 Provision for pension plan - - 2,012 1,909 Other long-term liabilities 75 75 7,420 4,489 ---------- ---------- ---------- ---------- 75 75 24,213 19,789 ---------- ---------- ---------- ---------- ---------- ---------- ---------- MINORITY INTEREST - - 131,308 138,314 ---------- ---------- ---------- SHAREHOLDERS’ EQUITY Capital Stock 175,872 175,872 175,872 175,872 Legal reserve 15,027 15,027 15,027 15,027 Profit Reserves 142,408 142,408 142,408 142,408 Retained earnings 231,824 238,750 231,824 238,750 ---------- ---------- ---------- ---------- 565,131 572,057 565,131 572,057 ---------- ---------- ---------- ---------- Total liabilities and shareholders’ equity 574,352 574,684 957,805 886,010 ====== ====== ====== ======
  • 10. TELE CELULAR SUL PARTICIPAÇÕES S.A. INCOME STATEMENTS FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Expressed in thousands of Brazilian reais) (Translation of the originally issued in Portuguese) Parent Company Three months Nine months Three months Nine months Ended Sept 30, ended Sept 30, ended Sept 30, ended Sept 30, 1999 1999 1998 1998 Operating income (expenses), net General and administrative (2,578) (3,665) (251) (251) Financial income 8,170 33,560 9,014 16,442 Other operating income (expenses), net (18) 86 - - Income from the investments in subsidiaries (10,444) 4,618 27,923 94,692 ---------------- ---------------- ---------------- ---------------- Operating profit (4,870) 34,599 36,686 110,883 Non-operating income, net - - 1 9 ---------------- ---------------- ---------------- ---------------- Income before taxes (4,870) 34,599 36,687 110,892 Provision for income tax and social contribution (2,056) (10,329) (2,886) (5,336) ---------------- ---------------- ---------------- ---------------- Net profit (loss) (6,926) 24,270 33,801 105,556 ========= ========= ========= ========= Number of shares outstanding (in thousands) 334,399,027 334,399,027 334,399,027 334,399,027 ========= ========= ========= ========= Net profit (loss) per thousand shares (0.02) 0.07 0.10 0.32 ========= ========= ========= =========
  • 11. TELE CELULAR SUL PARTICIPAÇÕES S.A. CONSOLIDATED INCOME STATEMENTS FOR THE QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Expressed in thousands of Brazilian reais) (Translation of the originally issued in Portuguese) Consolidated Three months Nine months Three months Nine months Ended Sept 30, Ended Sept 30, ended Sept 30, ended Sept 30, 1999 1999 1998 1998 Gross revenue 206,344 594,606 158,566 483,908 Deductions (41,066) (125,234) (35,284) (104,848) ---------------- ---------------- ---------------- ---------------- Net revenue 165,278 469,372 123,282 379,060 Cost of sales (119,833) (282,696) (42,016) (131,374) ---------------- ---------------- ---------------- ---------------- Gross profit 45,445 186,676 81,266 247,686 Operating income (expenses), net Selling expenses (40,615) (82,259) (4,989) (14,763) General and administrative (7,669) (43,619) (23,916) (*) (59,752) Financial income (expenses) (10,279) (28,818) 7,498 12,677 Other operating income (expenses), net (3,343) 4,142 2,006 7,837 ---------------- ---------------- ---------------- ---------------- Operating profit (loss) (16,461) 36,122 61,865 193,685 Non-operating expenses, net (4,304) (12,244) (20) (4) ---------------- ---------------- ---------------- ---------------- Income before taxes and profit sharing (20,765) 23,878 61,845 193,681 Provision for income tax and social contribution (6,483) (30,999) (19,363) (62,207) Deferred income tax and social contribution 13,822 24,751 1,264 3,509 Profit sharing (506) (1,036) (161) (495) Minority interest 7,006 7,676 (9,385) (31,020) ---------------- ---------------- ---------------- ---------------- Net profit (loss) (6,926) 24,270 34,200 103,468 ========= ========= ========= ========= Number of shares outstanding (in thousands) 334,399,027 334,399,027 334,399,027 334,399,027 ========= ========= ========= ========= Net profit (loss) per thousand shares (0.02) 0.07 0.10 0.31 ========= ========= ========= ========= (*) This amount comprises R$ 28,769 of allowance for doubtful accounts, which has been classified as selling expenses since January, 1999.

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