Contacts:
Stock Exchange at September 30, 1999:
In Bra...
Market Share
The Company maintains a leadership position in its market, closing the year with an
...
General and administrative expenses totaled R$62.1 million for the year compared to R$
39.5 million recor...
As of October 1999, the Company raised the selling price of its cell phones, in order to
reduce the impa...
swap operation, thus becoming a fixed rate loan of 23.85% per annum. An exchange rate
swap operation was arranged for the ...
Selected Data
Operating Income
3Q99 4Q99 4Q98 19...
Operating
Results
3Q99 4Q99 4Q98 1999 1998
Total Subscrib...
TELE CELULAR SUL PARTICIPAÇÕES S.A.
BALANCE SHEET AS OF DECEMBER 31, 1999 AND DECEMBER 31,1998
(Ex...
TELE CELULAR SUL PARTICIPAÇÕES S.A.
BALANCE SHEET AS OF DECEMBER 31, 1999 AND DECEMBER 31,1998
...
TELE CELULAR SUL PARTICIPAÇÕES S.A.
STATEMENTS OF INCOME FOR THE YEARS
...
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Press Release 4 Q99 Tele Celular Sul En

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


Transcripts - Press Release 4 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 FOR THE FOURTH QUARTER AND YEAR-END RESULTS 1999 Curitiba, March 24, 2000 – Tele Celular Sul Participações S.A. (NYSE: TSU; BOVESPA: TCLS3;TCLS4), 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, announces its results for the fourth quarter and year-end of 1999. CEO Statement “For Tele Celular Sul, 1999 was a particularly challenging year because it demanded great effort on the part of management both to organize the company and to carry out the activities that allowed it to maintain its leading position in the market. As a result, the Company achieved a solid increase in its customer base, surpassing 1 million clients, or approximately 70% more than the figure recorded in December 1998, maintaining its Market Share of 86%, which is the best within the Brazilian cellular telephone industry.” 3Q99 4Q99 1999 1998 Total Gross Revenue 206,344 262,992 857,599 644,007 Net Operating Revenue 125,734 149,480 531,256 504,201 Net Cell Phone Sales Revenue 39,544 61,595 149,191 0 Total Net Revenue 165,278 211,075 680,447 504,201 EBITDA 23,188 32,196 170,387 267,980 EBITDA Margin 14% 15% 25% 53% EBITDA Margin, excluding cell phone sales 18% 22% 32% 53% Depreciation 33,672 32,727 100,781 87,102 Net Profit (6,926) 10,062 34,332 123,995 Profit per Share (0.20) 0.30 0.10 0.38
  • 2. Market Share The Company maintains a leadership position in its market, closing the year with an approximate 86% Market Share. The total market penetration rate was estimated at 8.4 cell phones per 100 inhabitants, demonstrating that there is room for the growth in cell telephone services. Additionally, Tele Celular Sul’s churn rate was 10%. Operating Revenue The Company’s gross operating revenue was R$857.6 million in 1999, 33% higher than 70% growth in 1998. For the fourth quarter of 1999, gross operating revenue totaled R$ 263.0 million, a the total subscriber 27% increase in relation to the third quarter. base The total net revenue for the year was R$ 680.4 million, with R$211.1 million recorded for the fourth quarter of 1999. Net operating revenue with handsets sales reached R$ 149.2 million and R$61.6 million, in those same periods. Gross Operating Revenue Breakdown Gross Operating Revenue Breakdown Dec. 31 1999 - R$ 857.6 million Dec. 311998 - R$ 644.1 million Other Hanset Sales Use of Network Other Connection Fee Use of the Network 12,8 166,6 99,1 5,4 20,9 136,6 42,7 Rental 17,1 Rental 158,7 317,3 167,4 357,1 Use Use Subscription Subscription In 1999, the Company expanded its total subscriber base by 70%, reaching 1,034,266 subscribers, representing 423,885 new subscribers, of which 279,092 were prepaid users. Operating Costs and Expenses The costs of the services for 1999 amounted to R$234.9 million, a 39% increase in relation to 1998. For 4Q99, this item amounted to R$ 65.0 million, compared to R$ 62.6 million for the third quarter of 1999. The increase in these expenses during the year is primarily due to network growth and the change in the depreciation rates (R$29.4 million). Composition of the Cost of Services Rendered Composition of the Cost of Services Rendered Dec/31/99 - R$ 234.9 million Dec/31/98 - R$ 169.1 million Third party Third Party Fistel Payroll Services Payroll services 11,7 3,5 8,4 Fistel 6,2 12,3 22,7 47,8 54,0 Depreciation Use of 53,2 98,7 41,0 Network 44,5 Use of Network Depreciation Interconnection Interconnection Cost of handsets sales for the year amounted to R$ 204.8 million, of which R$ 92.0 million was for the fourth quarter of 1999.
  • 3. General and administrative expenses totaled R$62.1 million for the year compared to R$ 39.5 million recorded in 1998. The increase in these expenses are mostly due to the following: 1) billing expenses (the cost of issuing bills), increased with subscriber growth; 2) expenses related to billing systems which was was replaced in October/99 by in-house systems; 3) increase in staff to 1,024 (358 employees in 1998). Marketing expenses were R$117.3 million for the year, compared to R$ 68.2 million in 1998. During the fourth quarter of 1999, marketing expenses amounted to R$35.1 million, a 9% growth as compared to the previous quarter. For 1999, expenses related to doubtful accounts, listed under selling and administrative, represented R$ 50.3 million (R$46.9 million in 1998), or 6% of the Company’s total revenue. In the third quarter the Company adopted more realistic criteria for the provision for doubtful accounts, which increase expenses by R$ 2.8 million for the period. The new Billing System, implemented during the fourth quarter of 1999, will allow the Company to establish better credit and collection control measures through the centralization of its Central de Tele Cobrança (Automated Billing Unit). Marketing and advertising expenses for 1999 reached R$ 35.1 million (R$ 5.1 million in 1998) reflecting the transition into a more competitive environment. Tele Celular Sul has been encouraging its customers to migrate from the analogue to the digital system, thereby amassing an inventory of used analog devices. This inventory was marked to market so as to reflect the effective selling expenses; such adjustment was provisioned for under other operating expenses and represented a cost of R$ 6.3 million. Financing Expenses 97% are short- term debts Financing expenses for the year were R$ 72 million, a 52% increase in relation to 1998. 97% of the This increase is primarily due to: R$ 16.9 million expenses relating to interest on own Total debt is capital (accrued during the fourth quarter) and the R$ 31.9 million due to the impact of the Hedged Real devaluation that occurred in early 1999. Tele Celular Sul’s interest-bearing indebtedness at December 31,1999 was 222.2 million, representing 40% of stockholders’ equity. Foreign Currency 26,1 The EBITDA for the 4Q/99 was R$32.2 million 196,1 Local Currency EBITDA EBITDA and EBITDA margin for the year represented R$ 170.4 million and 25% respectively, over net revenue - or 32%, excluding subsidies, but including the sale of cell phones. The decrease in relation to 1998 (R$ 268.1 million and a 53% margin) is basically due to the increase in marketing costs, the practice of subsidizing the sale of handsets and the migration of customers from the analogue to the digital system, as well as to adjustments previously mentioned.
  • 4. As of October 1999, the Company raised the selling price of its cell phones, in order to reduce the impact of subsidies on the results. The full effect of this new policy did not impact 4Q99 results due to the special marketing strategy adopted during the Christmas’s season, which is characterized by a high volume of sales, as well as a high level of migration from analogue to the digital system. As a strategy to obtain customer loyalty, the Company persuaded 194,921 subscribers to migrate to the digital system, with 64,893 migrations occurring during the fourth quarter. Non-Operating Income The Company replaced some of its equipment and technology in order to digitalize its network. Fixed assets were therefore written-off in the quarter, resulting in an expense of R$ 5.4 million – the net value of the provisions made for future sales. Net Profit Consolidated net profit for the year was R$ 34 million, a decrease of 72% when compared with R$ 124 million for 1998. The main factors contributing to the decrease in margins and, consequently, to the decrease in net profit were: 1) strong expansion under increased competition, handsets sale subsidies and of the migration to the digital system; 2) expenses incurred due to aggressive marketing and a greater volume of commissions paid to dealers; 3) the effects of the currency devaluation; 4) change in the depreciation rates; 5) change in the doubtful accounts provisioning criteria. Investment The Company invested R$ 298.4 million during 1999, 46% more than in 1998 (R$ 192 million), prioritizing network expansion and digitalization, in addition to the development of new systems to meet customers’ demands and maintain a leading position as a mobile telephone provider in the region. Network Digitalization ERB´S Voice Channel Digital Analogue Digital Analogue 556 106 16.917 18.326 84% 16% 48% 52% Funding Most of the investment program carried out in 1999 was funded by the Company’s own cash generation. However, to complement the amount needed Tele Celular Sul carried out two major funding efforts in 1999, through its controlled companies: Telepar Celular and Telesc Celular. The first, amounting to R$ 144 million (net amount of R$ 122 million) consisted of an issue of Promissory Notes due in 360 days at an approximate cost of 103% of the Interbank Deposit Certificate (CDI). The second, amounting to R$ 73 million 64.8 thousand migrated to the (approximately US$ 40 million) was entered into with the Export-Import Bank of the digital system United States - “Eximbank”. As the funds were received in January 2000, they are not included in the Company’s indebtedness account for December 1999. As part of the hedging policy, the first operation had a floating interest rate covered by a
  • 5. swap operation, thus becoming a fixed rate loan of 23.85% per annum. An exchange rate swap operation was arranged for the second funding effort, converting the debt to Reais. Expectations For 2000, Tele Celular Sul believes that technological progress and increased competition by companies operating in the PCS (Personal Computer Service) frequencies will continue stimulating the growth of the industry and, at the same time, will pose new challenges, leading to continuous improvement in the quality of services. The consolidation of the Company, its technological infrastructure and new information systems, in conjunction with its experienced work force, favor a continuously innovative strategy with the launching of added-value products, in order to increase the competitive advantages. The Company will continue striving to maintain its leadership position in the market, focusing efforts on the recovery of the profitability margin and on the improvement of services, as an aspect that will contribute to the success of the customer loyalty efforts. The expectation is for the customer acquisition cost to decrease during 2000. Tele Celular Sul will pursue the goal of generating value to its shareholders, customers and employees, and overcoming new challenges brought by the market. xxxxxxxxxxxxxxxxxxxx
  • 6. Selected Data Operating Income 3Q99 4Q99 4Q98 1999 1998 Sale of cellular phones 45.819 65.250 - 166.592 0 Usage charges 83.007 99.179 81.106 357.099 317.340 Monthly subscription fee 40.577 47.677 35.580 167.377 158.660 Rental 2.888 1.070 9.704 17.075 42.743 Interconnection charge 34.395 42.648 27.591 136.663 99.091 Activation Fee 0 0 4.687 0 20.789 Others (342) 7.169 1.431 12.793 5.384 GROSS OPERATING INCOME 206.344 262.993 160.099 857.599 644.007 Taxes on Gross Revenue (41.066) (51.918) (34.958) (177.152) (139.806) NET OPERATING INCOME 165.278 211.075 125.141 680.447 504.201 Net Operating Income from Services 125.734 149.480 125.141 531.256 504.201 Net Operating Income from Sales 39.544 61.595 - 149.191 0 Operating Costs and Expenses 3Q99 4Q99 4Q98 1999 1998 Costs of Goods and Services 119.833 156.985 52.244 439.681 183.618 Costs of Services 62.561 64.991 52.244 234.888 169.113 Costs of Goods 57.272 91.994 0 204.793 14.505 Operating Expenses 67.744 84.378 76.020 268.498 158.736 Selling Expenses 32.086 35.055 24.644 117.314 68.176 General Administrative Expenses 16.198 18.489 8.790 62.108 39.549 Financing Expenses 11.860 23.205 41.618 72.447 47.716 Other Operating Expenses 7.600 7.629 968 16.629 3.295 Costs and Operating Expenses 187.577 241.363 128.264 708.179 342.354 Expenses Related to Doubtful Accounts 16.892 13.961 28.763 50.263 46.900
  • 7. Operating Results 3Q99 4Q99 4Q98 1999 1998 Total Subscribers 891.144 1.034.266 610.381 1.034.266 610.381 Postpaid 726.175 755.174 610.381 755.174 610.381 Prepaid 163.969 279.092 0 279.092 0 Estimated population in the 14,6 14,7 14,3 14,7 14,3 region (millions) Penetration (TSU) 202 216 188 216 188 Municipalities Served 6,10% 7% 4% 7% 4% Market Share 89% 86% 99% 84% 99% TOTAL ARPU 1 R$51 R$53 R$69 R$56 R$75 ARPU postpaid 1 R$53,32 60 R$41 R$63 R$75 ARPU prepaid 1 R$26,27 26 - R$26 - MOU (incoming) 87 82 - 87 102 MOU (outgoing) 59 73 - 70 78 MOU (outgoing) prepaid 21 23 - 22 - MOU (incoming) prepaid - 85 - - - Investments ( millions ) R$ 62 R$ 129 R$ 108 R$ 298 R$ 192 Gross Additions 146.027 173.032 80.133 512.940 195.898 Disconnections 26.756 28.911 19.041 89.055 45.501 Churn 2 3% 3% 3% 11% 8% Points of sales (including own 549 555 503 555 503 stores) Company stores 16 17 10 17 10 Total Employees 1.112 1.156 825 1.156 825 Full-time 943 1.024 358 1.024 358 Contractors and Interns 169 132 467 132 467 (1)Average net revenue per subscriber, excluding equipamente sales. For 1998 activation fee was excluded.
  • 8. TELE CELULAR SUL PARTICIPAÇÕES S.A. BALANCE SHEET AS OF DECEMBER 31, 1999 AND DECEMBER 31,1998 (Expressed in thousands of Brazilian Reais) (Translation of the original in Portuguese) ASSETS Parent Company Consolidated 1999 1998 1999 1998 ASSETS CURRENT ASSETS 37.683 126.436 292.711 268.441 Cash and cash equivalents 673 3.894 2.084 151.495 Accounts receivable from subscribers - - 191.566 78.970 Loans to subsidiaries - 94.436 - - Deferred and recoverable taxes 2.993 291 33.829 24.598 Inventories - - 44.993 3.718 Other assets 34.017 27.815 20.239 9.660 LONG-TERM ASSETS 114.803 6.503 50.452 13.218 Loans to subsidiaries 114.008 6.503 - - Deferred and recoverable taxes 795 - 40.521 13.168 Judicial Deposits - - 9.781 50 Other assets - - 150 - PERMANENT ASSETS 439.952 440.179 809.361 623.519 Investments 439.922 440.163 20 20 Property, plant and equipment, net 30 16 791.022 623.093 Deferred charges - - 18.319 406 TOTAL ASSETS 592.438 573.118 1.152.524 905.178
  • 9. TELE CELULAR SUL PARTICIPAÇÕES S.A. BALANCE SHEET AS OF DECEMBER 31, 1999 AND DECEMBER 31,1998 (Expressed in thousands of Brazilian Reais) (Translation of the original in Portuguese) LIABILITIES AND SHAROLDERS EQUITY Parent Company Consolidated 1999 1998 1999 1998 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES 29.056 32.182 440.098 213.485 Salaries and social charges 3.934 9 5.980 4.095 Accounts payable and accrued expenses 4.397 115 169.316 97.037 Direct and Indirect taxes 1.606 533 27.127 18.623 Dividends and Profit sharing 15.575 31.525 21.164 41.034 Loans to subsidiaries 2.908 - - - Loans and financing 5 - 214.991 50.124 Provision for contingencies 631 - 1.520 2.572 LONG-TERM LIABILITIES 2.341 - 22.757 11.773 Loans and financing - - 7.207 10.070 Provision for private pension plan 1.839 - 1.880 1.702 Indirect taxes - - 10.150 - Provision for contingencies 502 - 3.520 1 MINORITY INTERESTS - - 128.628 138.984 SHAREHOLDERS' EQUITY 560.966 540.861 560.966 540.861 Capital stock 175.872 175.872 175.872 175.872 Profit reserves 143.399 157.435 143.399 157.435 Retained earnings 241.695 207.554 241.695 207.554 CAPITALIZABLE FUNDS 75 75 75 75 TOTAL LIABILITIES 592.438 573.118 1.152.524 905.178
  • 10. TELE CELULAR SUL PARTICIPAÇÕES S.A. STATEMENTS OF INCOME FOR THE YEARS ENDED ON DECEMBER 31,1999 AND 1998 (In thousands of Brazilian Reais) (Translation from the original in Portuguese) Parent Company Consolidated 1999 1998 1999 1998 (*) GROSS REVENUE - - 857.599 644.007 Deductions - - (177.152) (139.806) NET REVENUES - - 680.447 504.201 Cost of services rendered - - (439.681) (183.618) GROSS PROFIT - - 240.766 320.583 OPERATING INCOME (EXPENSES) 6.811 110.921 (173.148) (101.470) Selling expenses - - (117.314) (68.176) General and administrative expenses (6.004) (873) (62.108) (39.549) Equity on subsidiarie`s results 13.658 111.752 - - Other net operating income (expenses) (843) 42 6.274 6.255 OPERATING INCOME BEFORE FINANCIAL EFFECTS 6.811 110.921 67.618 219.113 Net financial income (expenses) 37.191 (7.778) (49.056) (15.692) OPERATING INCOME 44.002 103.143 18.562 203.421 Non-operating income (expenses) - 9 (5.823) (38.241) INCOME BEFORE TAXES, PROFIT SHARING, MINORITY INTEREST AND REVERSAL OF INTEREST ON STOCKHOLDERS´ EQUITY 44.002 103.152 12.739 165.180 Income and social contribution taxes (9.939) (7.284) (529) (48.507) Provision for employee profit sharing (1.233) - (2.103) (965) Minority interest 7.357 (32.059) INCOME BEFORE REVERSAL OF INTEREST ON STOCKHOLDERS´ EQUITY 32.830 95.868 17.464 83.649 Reversal of interest on stockholders´ equity 1.502 30.741 16.868 40.346 NET INCOME FOR THE PERIOD 34.332 126.609 34.332 123.995 Oustanding shares at the balance sheet date (in millions) 334.399 334.399

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