SAO PAULO, April 28 /PRNewswire-FirstCall/ Net Servicos de Comunicacao S.A. (BM&FBOVESPA: NETC3 and NETC4; Nasdaq: NETC; and Latibex: XNET), the largest cable company in Brazil and one of the largest in Latin America with integrated services that include Pay TV ("NET"), Digital Video ("NET Digital"), High Definition Digital Video ("NET Digital HD"), bidirectional broadband internet access ("NET Virtua") and Voice ("NET Fone via Embratel"), announces today its results for the first quarter of 2010 ("1Q10").
NET is a pioneer in the launch of HD, and this year one of its main objectives is to expand the number of subscribers with access to high definition (HD), taking advantage of the opportunity presented by the World Cup. As a result of its efforts, NET has become the leading Pay TV operator in the HD segment in Brazil and enjoys the highest recall among operators offering this service, based on the survey conducted in February this year by TNS Research International. With various packages featuring channels that truly spark the interest of consumers, NET continues to expand its leadership.
In partnership with the Sao Paulo state government, in December 2009, NET launched the low-income internet service "Internet Popular" in 47 of the state's municipalities, including the state capital. Sales of this service have had a positive impact on results, since it not only helps fuel Broadband sales in Sao Paulo state, but also expands internet access to a larger share of the state's population.
The Pay TV subscriber base ended 1Q10 with 3,776,000 clients, up 13% from 3,347,000 at the end of 1Q09. The Broadband Base totaled 2,988,000 clients at end 1Q10, up 22% from 2,452,000 in 1Q09. Lines in service at end 1Q10 stood at 2,662,000, up 29% from 2,058,000 lines at end 1Q09.
Net Revenue climbed from R$ 1,082.2 million in 1Q09 to R$ 1,260.6 million in 1Q10, representing a 16% increase, basically due to the expansion in the subscriber base for all services offered.
Operating Costs rose from R$ 515.8 million in 1Q09 to R$ 601.4 million in 1Q10, representing a 17% increase. As a percentage of net revenue, operating costs were stable at 47.7%. The increase reflects the higher costs with programming, broadband usage and call center operations fueled by the expansion in the customer and product base. On the other hand, the Indefeasible Right of Use (IRU) agreement to use Embratel's transmission capacity reduced operational costs by R$ 41.4 million.
Selling, General and Administrative Expenses were R$ 275.1 million in 1Q10, up 4% from R$ 265.3 million in 1Q09. As a percentage of net revenue, these expenses fell from 24.5% to 21.8%. Selling Expenses in 1Q10 increased 17% from 1Q09, mainly reflecting the launch of the marketing campaign "Eu quero e mais", and remained stable at 9.8% as a percentage of net revenue. G&A Expenses increased 7% from 1Q09, due to higher expenses with systems monitoring services in the field and with base and billing management. As a percentage of net revenue, these expenses declined from 12.4% in 1Q09 to 11.4% in 1Q10.
EBITDA (earnings before interest, tax, depreciation and amortization) was R$ 369.2 million in 1Q10, expanding by 30% from R$ 284.2 million in 1Q09. Meanwhile, EBITDA margin stood at 29% in the quarter, in line with the Company's expansion strategy.
In 1Q10, Capex was R$ 161.0 million, 24% lower than in 1Q09. The lower investment reflects the lower expenses with home installations. Of the total invested, the variable portion represented 72% and was mainly allocated to home installations, purchases of digital and high-definition decoders and infrastructure adjustments.
Upcoming Events 1. Conference Call - 1st Quarter 2010 Earnings Release Date: April 28, 2010 IFRS (in Portuguese): 10:00 a.m. (Brasilia time) Phone: +55 (11) 4688-6361 Code: NET Replay till May 4, 2010: (11) 4688-6312 Code: 46611 IFRS (in English): 11:30 a.m. (Brasilia time) Phone: + 1 (412)858-4600 Code: NET Replay till May 6, 2010: +1 (412) 317-0088 Replay code: 439671# Live webcast at: http://ir.netservicos.com.br/ 2. Public Meetings Sao Paulo- APIMEC Rio de Janeiro- APIMEC Venue: Caesar Park Business Faria Lima Venue: JW Marriott Hotel Rua Olimpiadas, 205 -Vila Olimpia - Room 2 Av. Atlantica, 2600 - Room Wayana Date: May 6, 2010 Date: May 7, 2010 Time: 08:30 am (Brasilia time) Time: 09:00 am (Brasilia time) 3. Scheduled Dates for Upcoming Results 2Q10 - July 20, 2010 3Q10 - October 27, 2010 IR Contact: Marcio Minoru Capital Markets and IR Officer Adriana Godinho IR Manager Maria Siqueira IR Analyst Sandra Firmino Santos IR Analyst Phone: +55 (11) 2111-2785 ri@netservicos.com.br http://ri.netservicos.com.br/
Net Servicos de Comunicacao S.A.
CONTACT: Marcio Minoru, Capital Markets and IR Officer, or Adriana
Godinho, IR Manager, or Maria Siqueira, IR Analyst, or Sandra Firmino Santos,
IR Analyst, all of Net Servicos de Comunicacao S.A., +011-55-11-2111-2785,
ri@netservicos.com.br
Web Site: http://ri.netservicos.com.br/
