Second Quarter 2012 Results - Entel

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Second Quarter 2012 ResultsAugust 6, 2012Consumers Segment (includes Residential)Consumers Segment revenue expanded 18% Revenue Distributioncompared to 2Q11. The increase was a result ofconsistent growth in mobile services, especially2%driven by service revenues (+19%), stimulated bysolid customer base (+19%) expansion. Inaddition, equipment sales grew (+24%) driven byprepaid sales. The customer base reached98%8,670,792, up 19% when compared to 2Q11,The total MBB continued to grow (+30%) drivenby prepaid, aligned with the Company´s strategyMobile Services Fixed Servicesto strongly grow data services. The Company continued to capture clients’ preference, withmarket share over 40%, well above the 38% figure reported in 2Q11.After approximately six months, the status of mobile number portability has had a minor impacton the industry, with migrated users representing less than 2% of the total industry base. TheCompany’s figure was a net loss of 23 thousand subscribers, while displaying positive trendswith regards to capturing high-end customers.Entel remains fully focused on delivering value to customers through better user experiencesand higher quality infrastructure. Thus, during the quarter, the Company continued to stronglyadvocate "smartphone" device penetration especially in the postpaid segment, with promotionsthrough the purchase of multimedia plans. Additionally, through exclusive customer presales,the Company launched new smartphone devices such as the HTC-One (quadcore) and theSamsung SIII.This allowed faster advances in the introduction of data plans as of June 2012, with 35%penetration over the postpaid base, well above the 22% achieved in 2Q11.In the prepaid segment, the Company also delivered strong sales in data plans through mobilebroadband and mobile Internet. Through market offers in the prepaid segment, Entel´s clientscan also access high-value handsets such as the iPhone 3G with special offers at big retailers.Lastly, Consumers segment local telephony and Internet services revenues declined, principallyrelated to a reduction in the customer base, partially offset by higher LD services revenue, inlinewith traffic and tariff improvements in ILD services.EBITDA in the quarter increased 1%, totaling Ch$ 67.2 billion compared to the Ch$ 66.3 billion in2Q11. This improvement was the result of direct service margin expansion in mobile (+17%), mainlybased on solid customer expansion and data services adoption. On the other hand, and almostcompletely offsetting these affects, were lower equipment sales margins in the prepaid segment andhigher SG&A expenses. Service margins grew in-line with the strong evolution of the client base,while acquisition costs, one time charges and expenses to meet high market activity impactedequipment sales margins and SG&A. EBITDA margin for the quarter was 32%, lower than the 37%reported in 2Q11For the first six-month 2012 period, EBITDA reached Ch$ 142.3 billion, 4% growth compared to thesame period in 2011. EBITDA margin was 34%, down from the 39% in first half 2011.___________________________8
Second Quarter 2012 ResultsAugust 6, 2012Corporate and SME SegmentCorporate and SME segmentrevenues in the quarter grew 11%,mainly determined by mobile servicesdriven by the customer baseexpansion, which for the quarterreached 1,143,806 (+16%), coupledwith data services penetration. Fixedservices also increased, resultingfrom higher IT and integratedsolutions over MPLS-IP network andLD due to higher tariffs in ILD. Localtelephony declined due to lowertraffic.Revenue DistributionEBITDA in the quarter reached Ch$ 44.8 billion, decreasing 1% when compared to 2Q11figures. This was the result of lower margins in fixed line services related to local telephony anddata (including IT). On the other hand, EBITDA from the mobile services improved as aconsequence of higher direct margins in both service and equipment sales, while mobile SG&Aexpenses rose. EBITDA margin in 2Q12 was 38%, a decline when compared to the 43%reported in 2Q11.For the first half 2012, EBITDA was Ch$ 87.2 billion, an increase of 1% compared to 2011.EBITDA margin reached 38%, below the 42% reported in 2011.Entel is a leader in the supply of fixed-mobile offering for businesses, providing connectivityservices for voice, data and IT to leverage companies’ productivity. Along these lines, theCompany reached an agreement with SAP, the first operator of SAP mobility applications inLatin America. Customers can access from anywhere business applications on mobile devicesto facilitate working models and optimize labor management.In addition, Entel introduced new business management tools to facilitate the collection of fielddata (filling out forms in real time, sales, inspections, audits, surveys and reports), through any"smartphone" connected to mobile Internet, rapidly deployable and operating via ‘cloud’technology.During July, the fifth Entel Summit was held, one of the most important meetings for Innovation,Technology and Business in Chile. This event’s aim is to create a vision and tools that enablecompanies to enhance business, create value and leverage companies’ competitiveadvantages. This year presented trends in connectivity, mobility, virtualization and cloudcomputing technologies that impact people’s lives and redefine the way business is done. Mr.Steve Wozniak, co-founder of Apple, was the keynote speaker.During the quarter, the following contracts were signed, among others:DEFENSORIA PENAL PUBLICA (Public Defender, public institution supervised by theJustice Ministry): The contract will provide connectivity to 80 branches throughout Chile,including the provisioning of integrated solutions for voice, data and Internet, in additionto the operation and support of a telecommunication data center, including local areanetworks, security SOC and wireless (Wi-Fi) services. In terms of connectivity, fixedmobileconvergence services and full HD videoconference are also included in thecontract.9
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