Financial Statements - Entel

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EMPRESA NACIONAL DE TELECOMUNICACIONES S.A. & SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor Transalation Purposes OnlyGROWTH IN SALES REVENUE:2012 2011 ChangeM. CLP$ M. CLP$ %Mobile Telephony 1,142,690 966,709 18Data Services (including IT services) 105,922 93,703 13Local Telephony (including NGN-IP) 41,469 41,705 -1Long Distance 32,805 30,688 7Internet 17,217 16,585 4Services to Other Operators 21,855 20,246 8Traffic Business 36,667 31,696 16Americatel Perú 20,111 19,147 5Entel Call Center 11,377 10,317 10Other Revenue (1) 10,865 10,117 7Total Operational Revenue 1,440,978 1,240,914 16(1) Non-ordinary revenue, arising from the transfer of fixed assets, commercial interestand others.As seen, growth in mobile services continues to be the Group’s main source ofrevenue growth, driven by the expansion of the customer base.For mobile services, the Group maintained its strong position based on itssustained commercial drive and service quality that have contributed to securingthe preference of its customers. The increase in sales was in line with growth in thecustomer base, both in terms of voice services and innovative value added services(VAS) and Mobile Broadband (MBB). Furthermore, mobile revenue also increasedas a result of the new accounting procedure for postpaid mobile handsets describedin Note 22 to the Financial Statements. As of December 31, 2012, the customerportfolio had 10,105,888 users, an increase of 8% with respect to the same date forthe previous year. It should be noted that postpaid customers make up 31% of thetotal base. Furthermore, the number of customers with mobile broadband (MBB)and wireless business data rose to 1,043,189.Revenue from data services for integrated voice, Internet and data networkssupplied to the enterprise segment, together with IT services, have exhibited stronggrowth driven by new customer contracts.Revenue from services to other operators has grown by 8% over the period as aresult of both fixed and mobile infrastructure leasing for various operators on boththe local and international operators.- 80 -
EMPRESA NACIONAL DE TELECOMUNICACIONES S.A. & SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor Transalation Purposes OnlyThe traffic business saw an increase of 16% in its services related to increasedvolumes of traffic processed in the wholesale business.Call Center services expanded as a result of increased activity, both in Chile andPeru.The revenue of Americatel Perú increased by 5%, though largely due to thestrengthening of the Peruvian currency (the Peruvian Sol) with respect to theChilean peso.Revenue from long distance services has increased, essentially due to internationallong-distance services, partially compensated by the national long-distance serviceaffected by the reduction in the number of primary zones from the 24 to 13 inOctober of the previous year.Costs, Expenses and ProfitabilityThe following information represents the most significant costs and expenses for2012 and 2011:COSTS, EXPENSES, AND PROFITABILITY:2012 2011 ChangeM. CLP$ M. CLP$ %Operating Costs (1,219,398) (1,002,687) 22Operational Earnings (EBIT) 221,580 238,227 -7Net Financing Costs, Adjustments and Others (22,944) (18,901) 21Net Profit 167,294 180,767 -7The growth in operating costs is a consequence of the expansion of the customerbase and the volume of operations, together with adjustments to changes in marketsupply arising in the course of the annual activities. Furthermore, costs alsoincreased as a result of the new accounting procedure for postpaid mobile handsetsdescribed in Note 22 to the Financial Statements.Specifically, there were increases in advertising, salaries, rentals sites,depreciations, baddebt provisions, commissions and sales expenses and equipmentdriven by higher commercial activityThe increased costs of handsets are a result of both growth in the customer baseand the value of the new handsets sold, which include new technology to supportexpansions to the range of services, particularly with respect to data. Thistranslates into an increase in sales costs for handsets sold to prepaid customers and- 81 -
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