FOR IMMEDIATE RELEASE
Contacts:
Tele Nordeste Celular Participações S.A. Thomson Financial IR
Mario Gomes ...
The consolidated financing expenses, comprised mainly by exchange variations on
foreign currency debt of certain operating...
The change in the depreciation rates of transmission equipment and switches, as from
January 1999, resulted in increases i...
Net operating revenues for the third quarter 1999 increased 47.2% on the same quarter
last year, as a function of the grow...
Selected Physical Data
30.09.99 30.09.98
Radio-base stations ...
The operating companies carrying US-dollar-denominated debt closed hedging
operations between July and October 1999, throu...
Y2K
Tele Nordeste and its operating companies have been working in the preparation of
their systems for the year 2000 sin...
Tele Nordeste Celular Participações S.A.
Balance sheets
September 30 and June 30, 1999
(In thousands of reais)
...
Tele Nordeste Celular Participações S.A.
Income Statements
For the quarter and first half ended September 30, 1999 and 19...
CONFERENCE CALL
TELE NORDESTE CELULAR
PARTICIPAÇÕES S.A.
...
of 10

Press Release 3 T99 Tele Nordeste Celular

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


Transcripts - Press Release 3 T99 Tele Nordeste Celular

  • 1. FOR IMMEDIATE RELEASE Contacts: Tele Nordeste Celular Participações S.A. Thomson Financial IR Mario Gomes Peter Firestein 55.81.216.2591 Isabel Vieira Fabíola Almeida 212.701.1823 55.81.216.2594 Octavio Muniz 55.81.216.2593 Homepage: www.timnordeste.com.br TELE NORDESTE CELULAR PARTICIPAÇÕES S.A. ANNOUNCES THIRD QUARTER 1999 RESULTS Recife, Brazil (November 16, 1999) – Tele Nordeste Celular Participações S.A. (NYSE: TND, BOVESPA: TNCP3, TNCP4) (“Tele Nordeste,” or “The Company”), the holding company controlling the operating companies serving Band A cellular telecommunications customers in the states of Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco and Alagoas, announced today its results for the third quarter of 1999 in accordance with Brazilian GAAP. The translation to US dollars has been presented solely for the convenience of the reader. This conversion does not imply that real amounts actually represent such US dollar amounts or may be converted to US dollars at the rate indicated or at any other rate. The US dollar amounts have been translated from Reais at the commercial selling rate published by the Central Bank of Brazil at September 30, 1999, which was R$1.92 to US$1.00. Financial Highlights Tele Nordeste reported a net consolidated loss of R$4 million (US$2.1 million) for the third quarter of 1999, compared to a net income of R$19.7 million (US$10.3 million) for the same period last year. The year-to-date net income at September 30, 1999 was R$12.5 million (US$6.5 million), compared with R$68.3 million (US$35.6 million) for the same period in 1998, or R$0.748 (US$0.3896) per ADR (20,000 preferred shares each). 1
  • 2. The consolidated financing expenses, comprised mainly by exchange variations on foreign currency debt of certain operating companies, totaled R$24.6 million (US$12.8 million) in the third quarter of 1999, compared with R$8.2 million (US$4.3 million) in the same quarter last year; this was the main reason for the net loss reported for the quarter. The financing expenses for the first and second quarters of 1999 were, respectively, R$13.9 million (US$7.2 million) and R$12.2 million (US$6.4 million) The number of customers reached 952,057 at September 30, 1999, including 169,704 customers of the prepaid system, with the net addition of 159.535 customers in the quarter then ended. Cumulative growth in the year has reached 55%. Consolidated net operating revenues for the third quarter totaled R$171.6 million - US$89.4 million (R$116.6 - US$60.7 million in the third quarter of 1998), and the year to date net figure is R$462.5 million - US$240.9 million (R$346.6 million - US$180.5 million in the same period of 1998). Net sales of digital handsets and accessories in 1999 reached R$63.5 million - US$33.1 million (these sales started in December 1998), with a total subsidy of handset sales of R$16.2 million - US$8.4 million. Excluding handset sales, net operating revenues increased 15.1% in the nine-month period ended September 20, 1999, compared with the same period last year, reflecting the significant increase in the number of users. Consolidated EBITDA and EBIT for the third quarter were R$40 million (US$20.8 million) and R$9.9 million (US$5.2 million), respectively, representing 23.3% and 5.8% of net operating revenues. In the third quarter of 1998, the consolidated EBITDA and EBIT were R$55.6 million (US$28.9 million) and R$43.6 million (US$22.7 million), respectively, representing 47.3% and 37.1% of net operating revenues. Consolidated EBITDA and EBIT for the first nine months of the year reached R$151.0 million (US$78.6 million) and R$63.3 million (US$32.9 million), respectively, representing 32.6% and 13.7% of net operating revenues for the period. In the same period last year consolidated EBITDA and EBIT were R$181.9 million (US$94.7 million) and R$148.5 million (US$77.3 million), respectively, or 52.5% and 42.9% of the net operating revenues. Excluding handset sales and related subsidies, consolidated EBITDA for the third quarter of 1999 was R$49.7 million (US$25.9 million) and the year to date figure was R$167.1 million (US$87 million), representing 37% and 42% of net operating revenues in these periods, respectively. The exchange losses incurred by certain operating companies in the first quarter of 1999 have been deferred for amortization over a period of 4 years or until these losses are effectively disbursed, in accordance with the Brazilian CVM ruling. The related amortization in the third quarter of 1999 was R$4.4 million (US$2.3 million). The balance to be amortized, at September 30, 1999, was R$24.9 million (US$13 million), of which the minimum of R$12 million (US$6.3 million) will be amortized in the fourth quarter of 1999, together with the respective disbursement. 2
  • 3. The change in the depreciation rates of transmission equipment and switches, as from January 1999, resulted in increases in the depreciation charges of R$14.5 million (US$7.5 million) for the third quarter of 1999 and of R$42.7 million (US$22.2 million) for the nine-month period ended September 30, 1999, reducing net income by R$9.4 million (US$4.9 million) and R$27.8 million (US$14.5 million), respectively, after income taxes. Following the decision taken at the Annual Shareholders’ Meeting held on April 28, 1999, Tele Nordeste began payment of 1998 interest on its own capital and dividends in respect of 1998, which totaled R$26.6 million (US$13.8 million), net of taxes. At September 30, 1999, R$24.6 million (US$12.8 million) had already been paid. The operating companies, following their respective Annual Shareholders’ Meetings, also started, on June 25, 1999, payment of the interest on their own capital and dividends in respect of 1998, totaling R$34 million (US$17.7 million), net of taxes. At September 30, 1999, R$30.7 million (US$15.9 million) had already been paid to the shareholders. Selected Consolidated Financial Data (in thousands of Reais) 1999 1998 3rd Qtr Jan-Sept 3rd Qtr Jan-Sept Gross Operating Revenues - Usage charges 99,816 288,204 77,758 229,471 - Monthly subscription fees 36,679 104,046 24,127 98,312 - Activation fees 0 0 2,991 6,992 - Interconnection charges 41,331 118,379 37,827 97,598 - Sales of handsets and 44,941 80,095 0 0 accessories - Other revenues 856 2,694 2,812 3,225 Subtotal 223,623 593,418 145,515 435,598 - Taxes (ICMS, PIS e Cofins) (52,017) (130,920) (28,946) (89,018) Net operating revenues 171,606 462,498 116,569 346,580 Cost of Services and Goods Sold - Depreciation and amortization (29,493) (86,155) (11,876) (33,080) - Personnel (2,736) (4,479) (611) (1,936) - Materials and services (2,008) (5,310) (54) (100) - Circuit leasing and related costs (31,545) (86,837) (16,849) (47,490) - Rental and insurance (1,746) (4,718) (12,584) (47,255) - Handset costs (45,439) (79,792) 0 0 - Fistel tax and others (2,692) (12,501) (1,409) (7,350) Subtotal (115,659) (279,792) (43,383) (137,211) Gross Profit 55,947 182,706 73,186 209,369 3
  • 4. Net operating revenues for the third quarter 1999 increased 47.2% on the same quarter last year, as a function of the growth in the client base and of the sales of handsets, which did not exist in the same period in 1998. Year-to-date net operating revenues reached R$462.5 million (US$240.9 million), compared to R$346.6 million (US$180.5 million) in the same period last year. The average number of users in the third quarter of 1999 increased 76% on the same quarter last year, from 491,049 to 864,602. The gross profit in the third quarter of 1999 was 23.6% lower than the same quarter last year, falling from R$73.2 million (US$38.1 million) to R$55.9 million (US$29.1 million). The subsidies on handsets reached R$9.8 million (US$5.1 million) in the third quarter of 1999. Excluding handset subsidies, gross profit decreased 10.2% compared to the same quarter last year. From January to September 1999, gross profit was R$182.7 million (US$95.1 million), including handset subsidies, and R$198.9 million (US$103.6 million), excluding these subsidies, compared to R$209.4 million (US$109.1 million) in the same period last year, a 5% decrease. The increase of certain depreciation rates as from January 1999 resulted in additional depreciation charges of R$14.5 million (US$7.5 million) in the third quarter of 1999 and R$42.7 million (US$22.2 million) in the nine-month period ended September 30, 1999, contributing to the reduction in gross profit when compared to 1998. Selected Consolidated Financial Data (in thousands of Reais) 1999 1998 3rd Qtr Jan-Sept 3rd Qtr Jan-Sept Operating Expenses - Selling (31,776) (73,598) (38,178) (52,770) - General and administrative (16,145) (47,326) 16,180 (21,773) - Other operating revenues 3,628 6,409 (7,455) 13,867 (expenses) Subtotal 44,293 114,515 29,453 60.676 - Net financing expenses (23,405) (39,499) (3,438) (17,711) Total (67,698) (154,014) (32,891) (78,387) Consolidated operating expenses in the third quarter of 1999 increased 50.5% on the same quarter last year (from R$29.4 million - US$15.3 million to R$44.3 million – US$23.1 million), mainly because of the intensification of marketing and distribution activities and of the restructuring of the operating companies following privatization (which occurred at the end of July 1998). It should be noted that in the third quarter of 1998 bad and doubtful debt expenses were reclassified from general and administrative to selling expenses, distorting the comparison between quarters. Net financing expenses increased substantially quarter on quarter due to the exchange losses on foreign currency debt which were transferred to certain operating companies in the breakup of Telebrás. The exchange rate to the US dollar increased 60% between September 1998 and 1999, from R$1.18 to R$1.92. Consolidated bad debt expenses represented 5.4% of gross operating revenues in the third quarter of 1999 and 5% in the year, totaling, respectively, R$12.2 million (US$6.4 million) and R$29.9 million (US$15.6 million). 4
  • 5. Selected Physical Data 30.09.99 30.09.98 Radio-base stations 652 591 Switches 12 12 Subscribers (in thousands 782 511 Prepaid customers (in thousands) 170 - Total of customers (in thousands) 952 511 Year-to-date growth in number of customers 55% 10% Population (in millions) 26,0 25,8 Tele Nordeste penetration rate 3,66 1,98 Churn in third quarter (%) 4,0 2,5 ARPU (net of taxes) for the third quarter of 1999 was R$52.52 (US$27.35) per month (R$73.46 - US$38.26 per month in the third quarter last year). ARPU for the year is now R$59.05 (US$30.75), compared with R$74.61 (US$38.86) for the same period last year. The 1999 data includes the post-paid and prepaid systems. The new billing system implemented in three operating companies in September 1999 has not yet generated reports on outgoing minutes and, therefore, this information has not been included herein. Market Tele Nordeste’s market share at the end of the third quarter has been estimated at 76.5%. The total penetration rate in the region at 30 September 1999 was 4.78%. In the third quarter of 1999 the operating companies continued the digitalization of the network (TDMA) and now more than 61% of the customers are using digital handsets. Together, the operating companies expanded the client base to 952,057 customers (782,353 in the post-paid system and 169,704 in the prepaid system), with gross additions of 194,491 customers and the disconnection of 34,956 lines. Most of the disconnections were due to non-payment. Tele Nordeste total coverage reached 74% of the population and 28% of the concession area. Aiming at increasing its client base, Tele Nordeste has intensified its marketing activities, including special promotion on commemorative dates. In addition to advertising and publicity, Tele Nordeste has offered financing of handset purchases, through specialized financing companies. Balance Sheet The total debt at September 30, 1999 was R$216.7 million (US$112.8 million), of which R$129.6 million (US$67.5 million) was denominated in US dollars and R$149.7 million (US$77.9 million) matures within the following 12 months. The exchange rate used to close the accounts was R$1.92 to US$1.00. 5
  • 6. The operating companies carrying US-dollar-denominated debt closed hedging operations between July and October 1999, through which most of the US dollar exposure has now been converted into Real obligations. The amounts due in the fourth quarter of 1999 have been covered by forward and call option contracts, with an average exchange rate of R$1.986 to US$1.00. The amounts due beyond 31 December 1999 have been converted into Real-denominated debt, bearing interest at the CDI (inter-bank) rate. As a result of the above transactions, the exposure of the operating companies to exchange variations has been substantially reduced. The consolidated provision of doubtful accounts at September 30, 1999 was R$21.6 million (US$11.3 million), representing 16.4% of amounts due from customers. At September 30, 1999 the provision was 28.3% of amounts due from customers. Capital Expenditures In the third quarter of 1999 the companies invested R$61.4 million (US$31.9 million), mainly in the digitalization of the network and in the acquisition and implementation of new billing (CABS 2000), customer care and management (SAP R/3) systems. Investments on a year-to-date basis have reached R$125 million (US$65.1 million). Over 90% of the investment program for 1999, of R$318 million (US$165.6 million), has already been contracted and the projects are proceeding within their respective schedules. On November 12, 1999 Telpe Celular and Teleceará Celular, both controlled by Tele Nordeste, successfully completed one-year commercial paper offers in the Brazilian capital market, totaling R$100 million (US$52.1 million). The net disbursement was R$85 million (US$44.3 million). The commercial papers mature on November 6, 2000, bear interest at 103% of the CDI (inter-bank) rate and are guaranteed by Tele Nordeste. The CDI floating rate was immediately swaped into a fixed rate of 22.79% p.a. These transactions are a substantial part of the funding program for the 1999 capital budget. At September 30, 1999 the new billing system had already been implemented at Telern Celular, Telpa Celular and Telepisa Celular; the implementation in the remaining operating companies will be completed in November. The SAP R/3 management system became operational on October 1, 1999. Following this successful implementation of new systems, the Tele Nordeste companies will no longer use the fixed line companies’ information systems. Human Resources The total headcount at the end of the third quarter was 1,275, including full-time employees, interns and temporary labor. 6
  • 7. Y2K Tele Nordeste and its operating companies have been working in the preparation of their systems for the year 2000 since June 1998. We have formed an internal team, which has been joined by a specialized company, Potenza. The management of Tele Nordeste and operating companies have acquired new management and operating systems, such as SAP R/3 and CABS 2000, providing the companies with the most modern and efficient technological solutions, all year 2000 compliant. These new systems replaced the previously used systems in October 1999. The Contingency Plan prepared by the company to find solutions for any problem that might occur on, before and after December 31, 1999 has now evolved into an Operational Continuity Plan – OCP, that includes all the information systems and the networks of all operating companies and provides solutions for all critical processes not only for the year 2000 issue but also for any problem that might put at risk the continuity of the business. An OCP Committee has been formed and a functional and organizational structure has been defined. During the turn of the year 1999 the professional team that makes up the organizational and functional structure for all matters related to the year 2000 issue will be on stand by. In August 1999, Tele Nordeste and its operating companies participated in a national test of interoperability, comprised of 13 operators from all regions in Brazil, when the turn of the century was successfully simulated. The full report can be found in the Anatel site www.anatel.gov.br, showing the following conclusion: “Completely Satisfactory Results”. Tele Nordeste and its operating companies participate in the GTPC (the national Telecommunications Sector Contingency Plan Working Group), whose objectives include the harmonization of the macro contingency actions through minimum recommendations to the sector. The total year-to-date investment to make the systems year 2000 compliant and to acquire new systems amounted to R$19.6 million (US$10.2 million). The total planned investment in new systems, all year 2000 compliant, amounts to R$64.8 million (US$33.7 million). On October 29, 1999, the Y2K Contingency Plan Report was filed with the Brazilian CVM and with the SEC, in New York. The completion of systems preparation and the finalization of the OCP are planned for the end of November 1999. The conclusive report required by CVM Instruction 276 (revised by Instruction 293) was filed with CVM and SEC on July 30, 1999. This report can be obtained from our web site www.timnordeste.com.br or from Tele Nordeste’s offices. *****Tables to Follow***** 7
  • 8. Tele Nordeste Celular Participações S.A. Balance sheets September 30 and June 30, 1999 (In thousands of reais) Parent Company Consolidated Parent Company Consolidated Assets 09.30.99 06.30.99 09.30.99 06.30.99 Liabilities 09.30.99 06.30.99 09.30.99 06.30.99 Current assets Current liabilities Cash and cash equivalents 238 4,955 8,207 19,223 Accounts payable to suppliers 435 150 41,811 53,204 Trade accounts receivable - - 110,098 78,922 Loans and financing - - 149,692 76,957 Telecommunications companies - - 31,456 32,422 Taxes payable 4 9 43,384 44,222 Recoverable taxes 1,500 1,450 34,775 23,826 Salaries and vacation pay - 390 3,888 3,447 Inventories - - 32,219 24,747 Consignments to third parties - - 7,753 5,085 Dividends and interest on shareholders' equity Telecommunications companies - - 10,308 7,854 - Receivable according to Law 9,249/95 - - - - Dividends and interest on shareholders' equity Prepaid Expenses - - 3,984 5,905 - Law 9,249/95 1,970 2,752 5,357 5,340 Other assets 1,001 1,929 13,350 25,127 Other liabilities 912 - 4,972 5,326 2,739 8,334 234,089 210,172 3,321 3,301 267,165 201,435 Noncurrent assets Noncurrent liabilities Loan to subsidiary 19,752 8,556 - - Loans and financing - - 62,797 67,499 Tax incentives - - 1,870 1,657 Other liabilities - - - 79 19,752 8,556 1,870 1,657 - - 62,797 67,578 Permanent assets Investments 343,511 355,135 1 1 Minority interest - - 102,101 105,855 Property, plant and equipment 4,371 2,309 538,169 504,702 Deferred charges - - 24,986 29,369 Shareholders' equity 347,882 357,444 563,156 534,072 Capital 108,943 108,943 108,943 108,943 Profit reserves 202,847 202,847 202,847 202,847 Retained earnings 55,262 59,243 55,262 59,243 367,052 371,033 367,052 371,033 370,373 374,334 799,115 745,901 370,373 374,334 799,115 745,901 7
  • 9. Tele Nordeste Celular Participações S.A. Income Statements For the quarter and first half ended September 30, 1999 and 1998 (In thousands of reais) Parent Company Consolidated Quarter ended 09 months ended Quarter ended 09 months ended Quarter ended 09 months ended Quarter ended 09 months ended 09.30.99 09.30.99 09.30.98 09.30.98 09.30.99 09.30.99 09.30.98 09.30.98 Revenue Telecommunications services and sale of goods - - - - 223,623 593,418 145,515 435,598 Deductions - - - - - - - - Sales taxes (ICMS, PIS and COFINS) - - - - (52,017) (130,920) (28,946) (89,018) Net revenue - - - - 171,606 462,498 116,569 346,580 Cost of goods sold and services rendered - - - - (115,659) (279,792) (43,383) (137,211) Gross profit - - - - 55,947 182,706 73,186 209,369 Operating income (expense) Selling expenses - - - - (31,776) (73,598) (38,178) (52,770) Administrative and general expenses 7,825 (2,772) (1,105) (1,105) (16,146) (47,326) 16,180 (21,773) Financial expenses (163) (1,352) (20) (20) (24,594) (50,773) (8,195) (26,577) Financial income (19) 4,100 1,294 2,856 1,189 11,274 4,757 8,866 Equity from subsidiaries' income (11,624) 12,531 19,923 67,933 - - - - Other operating income - - - - 1,930 7,565 (6,899) 16,149 Other operating expenses - (7) - - 1,698 (1,156) (556) (2,282) Operating income (3,981) 12,500 20,092 69,664 (11,752) 28,692 40,295 130,982 Nonoperating income - - - - 70 1,821 13 2,779 Nonoperating expenses - - - (2) (1,854) (6,711) (157) (2,936) Income before income and social contribution taxes (3,981) 12,500 20,092 69,662 (13,536) 23,802 40,151 130,825 Income and social contribution taxes - - (114) (571) 5,973 (7,382) (14,793) (42,408) Employee profit sharing - - - - (170) (499) (134) (351) Net income before minority interest (3,981) 12,500 19,978 69,091 (7,733) 15,921 25,224 88,066 Minority interest - - - - 3,751 (3,421) (5,489) (19,792) Net income for the quarter and first half (3,981) 12,500 19,978 69,091 (3,982) 12,500 19,735 68,274 Net income per lot of one thousand shares - R$ (0.0119) 0.0374 0.0597 0.2066 (0.0119) 0.0374 0.0590 0.2042 Number of shares at year end (thousands) 334,399,028 334,399,028 334,399,028 334,399,028 334,399,028 334,399,028 334,399,028 334,399,028 6
  • 10. CONFERENCE CALL TELE NORDESTE CELULAR PARTICIPAÇÕES S.A. (NYSE: TND) Friday, November 19, 1999 1:00 p.m. Eastern Standard Time Please call: Domestic Participants: (800) 230-1093 International Participants: (612) 332-0819 at least ten minutes in advance of the presentation. During the presentation, senior management will discuss third quarter 1999 results. A question-and-answer session will follow. Management representatives will include: Manoel de Deus Alves – Chief Executive Officer Mario Gomes -- Director of Finance & Investor Relations Please confirm your participation by faxing this page with the following data to (212) 509-5824 as soon as possible. Without your response, we cannot assure you access to the conference call. If you have questions, please call Isabel Vieira of Thomson Financial Investor Relations at: (212) 701-1823. CIRCLE: Yes Conflict, but interested No interest Remove From List NAME: POSITION: IF ANALYST: Buy-Side ________ Sell-Side ________ COMPANY: ADDRESS: CITY, STATE,ZIP: TELEPHONE: FAX: E-MAIL:

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