1 st Quarter 2004 Earnings Release April 30, 2004

Transcription

1 1 st Quarter 2004 Earnings Release April 30, 2004 Conference Call Compañía Anónima Nacional Teléfonos de Venezuela (NYSE:VNT)

2 Safe Harbor Statement Statements in this presentation that are not strictly historical in nature are forward-looking statements. These statements are only predictions based on current information and expectations and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in such statements due to various factors. Factors which may cause actual results to differ materially from those discussed herein include economic considerations that could affect demand for telecommunications services and the ability of the Company to make collections, inflation, regulatory factors, exchange controls and occurrences in currency markets, competition, labor relations, and the risk factors set forth in the Company's various filings with the Securities and Exchange Commission, including its more recently filed Annual Report on Form 20-F. The Company undertakes no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof, and claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of st Quarter 04 Earnings Release / APR NYSE: VNT

3 Initial Notes Non-GAAP measures This presentation includes certain Non-GAAP financial measures as defined under SEC rules. As required by those rules, we have provided a reconciliation of those measures to the most directly comparable GAAP measures in this presentation and in our Earnings Press Release Use Use of of Bolivars figures Financial results are stated in accordance whith generally accepted accounting principles in Venezuela. Amounts in Bolivars (the local currency) have been adjusted for inflation and expressed in constant Bolivars as of March 31, Same Same quarter comparisons Same quarter year-over-year comparisons are used in management s discussion and analysis throughout this document and economic improvement should be taken into consideration: GDP Total Telecom 18% % (27.9%) (1.1%) 3 1 st Quarter 04 Earnings Release / APR NYSE: VNT

4 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Earnings and Expenses Cash flow Balance Sheet Closing highlights 4 1 st Quarter 04 Earnings Release / APR NYSE: VNT

5 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Earnings and Expenses Cash flow Balance Sheet Closing highlights 5 1 st Quarter 04 Earnings Release / APR NYSE: VNT

6 Operating Highlights On a year-over-year comparison: Subscriber growth in all segments: Fixed 2.5% Mobile 11.6% Internet 31.7% Traffic growth in mobile service of 36.6% Increase in mobile ARPUs and handset sales Resumption of capex and working capital levels in line with market opportunities Other: Third quarter of consecutive growth in fixed lines and mobile subscribers Highest quarterly net additions to: Internet service (22.5 thousand) ABA (ADSL) service (10.7 thousand) 6 1 st Quarter 04 Earnings Release / APR NYSE: VNT

7 Financial Highlights Billion constant Bs. % Inc. Revenues % Operating expenses % EBITDA % EBITDA margin (%) 38% 39% (100 bps) Net Income % Working capital increase % CAPEX % Free cash flow (35.7%) Debt payment % Dividend payments (100%) Better financial results than last year s while supporting increased working capital and CAPEX 7 1 st Quarter 04 Earnings Release / APR NYSE: VNT

8 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Fixed Mobile Internet and Others Summary of Revenue review Earnings and Expenses Cash flow Balance Sheet Closing highlights 8 1 st Quarter 04 Earnings Release / APR NYSE: VNT

9 Revenues Billion constant Bs % 841 Year-over-year growth Internet & others Mobile (23.7%) 36.2% Fixed (3.4%) Mobile services drove total revenue growth 9 1 st Quarter 04 Earnings Release / APR NYSE: VNT

10 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Fixed Mobile Internet and Others Summary of Revenue review Earnings and Expenses Cash flow Balance Sheet Closing highlights 10 1 st Quarter 04 Earnings Release / APR NYSE: VNT

11 Access lines Access lines thousands Share of net lines increase in 100% = 26,355 lines 2,692 2,672 2,679 2, % 2,760 11% 0% 48% 41% Residential ABA (ADSL) 2Q03 3Q03 4Q03 Non-Residential Public Telephones Increase in ABA and residential lines drove third consecutive quarter growth in fixed lines 11 1 st Quarter 04 Earnings Release / APR NYSE: VNT

12 Fixed line revenue breakdown Billion constant Bs. 588 (3.4%) 569 Year-over-year growth Others Data (5.2%) 11.9% Interconnection (7.4%) ILD DLD (16.6%) 0.1% Local services (4.1%) Data revenues growth helped offset revenue reductions in other fixed services business lines 12 1 st Quarter 04 Earnings Release / APR NYSE: VNT

13 Local service revenues Total revenues Billion constant Bs. 26.2% of total revenues Local unbundled minutes Million Public telephony Non-residential Year-over-year growth (25.2%) 6.0% 229 (4.1%) 220 Nonresidential & public telephony 40% 45% Residential 1,366 1,383 Real tariffs variations ( vs. ) 1.2% Price per minute Residential 60% 55% Public telephony 4.5% Monthly recurring fee Non-residential 4.0% 12.8% Residential (17.5%) (16.4%) Local service revenue decreased as residential tariffs adjustment is still pending and public telephony continued to drop 13 1 st Quarter 04 Earnings Release / APR NYSE: VNT

14 DLD and ILD revenues DLD revenues ILD revenues Billion constant Bs. 7.7% of total revenues Billion constant Bs. (16.6%) 2.9% of total revenues 0.1% DLD Change Incr. in tariffs ILD Change in traffic Incr. in tariffs Unbundled minutes N&W subs (0.3%) (18.5%) (2.2%) 24.4% Outgoing Net Settlements 20% (11 MM minutes) (23.9%) - Bundled plans supported DLD revenues and ILD revenues declined due to increasing competitive environment 14 1 st Quarter 04 Earnings Release / APR NYSE: VNT

15 Interconnection revenues Total revenues Billion constant Bs. Incoming DLD F-M Outgoing (7.4%) % of total revenues (19.5%) (17.8%) Total minutes Million Incoming DLD F-M Outgoing Local F-M Outgoing % Year-over-year growth 68.4% 7.9% (9.8%) Real tariffs variations ( vs. ) Local F-M Outgoing % Local F-M Outgoing 11.0% DLD F-M Outgoing (24.1%) Incoming (46.6%) Interconnection revenues decreased as traffic flows changed on a different real tariff structure 15 1 st Quarter 04 Earnings Release / APR NYSE: VNT

16 Data revenues Revenues ABA (ADSL) lines Year-over-year growth Billion constant Bs. 11.9% % of total revenues Thousands Highest net additions since launch % Others 89% 83% 5.9% ABA 11% 17% 71.1% 2Q03 3Q03 Highest historic ADSL subscriber growth drove increase in Data revenues 4Q st Quarter 04 Earnings Release / APR NYSE: VNT

17 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Fixed Mobile Internet and Others Summary of Revenue review Earnings and Expenses Cash flow Balance Sheet Closing highlights 17 1 st Quarter 04 Earnings Release / APR NYSE: VNT

18 Mobile revenues Subscribers Thousands Revenues Billion constant Bs. 36.2% Year-over-year growth 11.6% 29.8% of total revenues Prepaid 2,297 2,261 2,264 2,480 2, % Postpaid % 2Q03 3Q03 4Q03 Mobile sustained subscribers growth translated into strong revenue growth 18 1 st Quarter 04 Earnings Release / APR NYSE: VNT

19 Mobile ARPU Thousand Constant Bs Prepaid ARPU Blended ARPU % % Postpaid ARPU % ARPU increased in real terms for prepaid and postpaid segments 19 1 st Quarter 04 Earnings Release / APR NYSE: VNT

20 Other mobile revenue items Special services revenues SMS Billion constant Bs. Million messages % % 943 Equipment sales revenues Handsets Billion constant Bs. Thousands 733% % Special services and equipment sales were important revenue growth drivers 20 1 st Quarter 04 Earnings Release / APR NYSE: VNT

21 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Fixed Mobile Internet and Others Summary of Revenue review Earnings and Expenses Cash flow Balance Sheet Closing highlights 21 1 st Quarter 04 Earnings Release / APR NYSE: VNT

22 Internet and other revenues Revenues Internet subscribers Billion constant Bs % of total revenues Thousands Highest net additions in the last two years 31.6% Others % Mainly attributable to publication timing differences Internet Q03 3Q03 Internet strong growth is more than offset by the results of timing differences in the publication of directories 4Q st Quarter 04 Earnings Release / APR NYSE: VNT

23 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Fixed Mobile Internet and Others Summary of Revenue review Earnings and Expenses Cash flow Balance Sheet Closing highlights 23 1 st Quarter 04 Earnings Release / APR NYSE: VNT

24 Summary of revenues analysis % of total revenues Comment: Traditional telecom revenue streams Growing business Rising Rising business Total revenues increased 5.0% to Bs billion driven by strong mobile growth 26% Local service revenues decreased 4.1% as residential tariffs adjustment is still pending and public telephony continued to drop 19% Interconnection revenues decreased 7.4% as traffic flows changed on a different real tariff structure 11% Bundled plans supported DLD revenues and ILD revenues declined 16.6% due to increasing competitive environment 30% Mobile revenues posted a strong 36.2% growth with subscribers and ARPUs increases in prepaid and postpaid 2% Internet revenues grew 14.1% with highest increase in subscriber base 2% Highest historic ABA subscriber growth drove increase in Data revenues 10% All Others 24 1 st Quarter 04 Earnings Release / APR NYSE: VNT

25 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Earnings and Expenses Cash flow Balance Sheet Closing highlights 25 1 st Quarter 04 Earnings Release / APR NYSE: VNT

26 Total operating expenses and others Total operating expenses Billion constant Bs. Uncollectibles Taxes Interconnection Depreciation and amortization Operations, maintenance, repairs and administrative % (29.2%) (8.1%) (8.5%) (7.4%) 16.7% Highlights Increase of 16.7% of operations, maintenance, repairs and administrative attributable to higher equipment sales Depreciation and amortization reduction as a result of wireline network assets reaching the end of their useful lives as well to 2003 CAPEX reduction Decrease in concession taxes Year-over-year growth 26 1 st Quarter 04 Earnings Release / APR NYSE: VNT

27 EBITDA and Net Income Billion constant Bs. EBITDA Net Income Percentage of revenues 40 (34) 7 (4.7) 2.1% % EBITDA Operating revenues Operating expenses EBITDA Net Income Operating income Other expenses 27 1 st Quarter 04 Earnings Release / APR NYSE: VNT Income tax Net Income 39% 38% 1.6% 5.0% EBITDA growth reflects costs control efforts while improvement in net income was the result of higher operating income and lower financial cost

28 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Earnings and Expenses Cash flow Balance Sheet Closing highlights 28 1 st Quarter 04 Earnings Release / APR NYSE: VNT

29 Cash flow Billion Bs. as of March 31 st Q 2003 (18) (18) (82) 611 Free cash flow Bs. 253 billion (315) (37) 504 1Q (104) (65) 10 (187) (11) Free cash flow Bs. 163 billion Beginning cash EBITDA Increase in working capital CAPEX Other FCF Debt payments Dividend payments FX gains in cash Ending cash A 2% higher EBITDA with higher working capital and CAPEX uses reduced free cash flow generation for the 1 st quarter of st Quarter 04 Earnings Release / APR NYSE: VNT

30 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Earnings and Expenses Cash flow Balance Sheet Closing highlights 30 1 st Quarter 04 Earnings Release / APR NYSE: VNT

31 Balance sheet Net cash Billion constant Bs. Debt to equity March 31 st, (722) 10.4% 7.0% March 03 March 04 EBITDA / Interest expense % Cash ST Debt LT Debt Net Cash 1.7% 31 1 st Quarter 04 Earnings Release / APR NYSE: VNT

32 Agenda Operating and financial highlights Review of income, cash flow and balance sheet: Revenues Earnings and Expenses Cash flow Balance Sheet Closing highlights 32 1 st Quarter 04 Earnings Release / APR NYSE: VNT

33 Closing highlights Total revenues increased 5.0% driven by strong mobile revenue growth of 36.2% Subscriber growth in all fixed, mobile and Internet segments Third consecutive quarter of fixed line growth Highest additions in Internet and ABA (ADSL) subscribers EBITDA growth of Bs. 6.5 billion translating into a 38% margin Net income from 1.6% to 5.0% of revenues Reduced free cash flow, from Bs. 253 billion to Bs. 163 billion, reflecting higher CAPEX and working capital levels in line with current market opportunities Debt payments of Bs billion A good start for 2004 with overall growth in our customer base and higher revenues, EBITDA and net income compared to the year-ago period 33 1 st Quarter 04 Earnings Release / APR NYSE: VNT

34 Reconciliation of Non-GAAP financial measures Billion constant Bs. For the quarters ended March 31, 2004 and 2003 Bs. Bs. US$ US$ EBITDA Net Income 42,108 13, Plus: Income tax 12,982 8, Plus: Minority interest expense (income) 146 (160) - - Minus: Other expense, net (6,424) (12,941) (3) (7) Plus: Depreciation and amortization 260, , EBITDA 321, , EBITDA Margin EBITDA = 321, , Total operating revenues 840, , EBITDA Margin 38% 39% 38% 39% Free Cash Flow Net cash provided by operating activities 228, , Minus: Net cash used in investing activities (65,310) (18,282) (34) (10) Free cash flow 162, , As of March 31, 2004 and December 31, 2003 Mar 31, 2004 Dec 31, 2003 Mar 31, 2004 Dec 31, 2003 Bs. Bs. US$ US$ Net Cash Position Cash and temporary investments 722, , Minus: Short-term debt 48, , Long-term debt 192, , Net cash position 481, , st Quarter 04 Earnings Release / APR NYSE: VNT

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