Sonaecom Swings to First-Quarter Net Loss on Greater Depreciation

Sonaecom SGPS said it swung to a net loss of 6 million euros in the first-quarter from a 300,000 euro profit a year earlier due to a rise in depreciation and amortization charges.

Sonae SGPS' telecom unit said depreciation and amortization charges increased by 13% year-on-year to 36.6 million euros in 2007 from 32.4 million euros due the expansion of the asset base, including the extension of its UMTS/HSDPA network and improvements to its fixed-line network.

The company said net financial charges increased 16.4% year-on-year to 4.1 million euros due expenses related to temporarily higher gross debt in the form of shareholder loans granted by Sonae SGPS, totalling 1.2 billion euros, for the cash funding of Sonaecom's failed bid for bigger rival Portugal Telecom SGPS.

The company also had a higher average cost of debt.

Group revenues increased 4.5% year-on-year to 198.9 million driven by a 5.9% year-on-year increase in service revenues from growth in mobile broadband products as well as in convergent products and in fixed-line ADSL services. EBITDA decreased 10.8% year-on-year to 34 million euros due to higher handset subsidisation and leased line costs in the first quarter.

The EBITDA margin decreased 2.9 percentage points to 17.1%.

Average revenue per user at the Optimus mobile unit was at 17.7 euros compared to 19.3 euros in the first-quarter of 2006. Active customers increased by 58,600 in the quarter, compared to an increase of 8,000 in the first quarter of 2006.

In total, Optimus increased its customer base by 12% to 2.1 million clients in the first quarter.

Sonaecom also said that in March 2007 it sold its about 1% stake in Portugal Telecom SGPS, generating a capital gain of 2.5 million euros. It no longer holds any stake in PT.

The company said that it plans to focus on achieving customer growth by investing further in its brands and new products, expanding the capacity of its mobile and wireline networks.