Grupo Iusacell Announces 12% Nominal EBITDA Growth to Ps.460 Million in 2Q08

2008-07-24 20:26:00

Grupo Iusacell Announces 12% Nominal EBITDA Growth to Ps.460 Million in 2Q08

        - Net Revenue Increased 9% in the Quarter in Nominal Terms -

     - Growth of New Mobile Broadband Users Doubles Thanks to Superior

                                Technology -



    MEXICO CITY, July 24 /EMWNews/ -- Grupo Iusacell, S.A.B.

de C.V. (BMV: CEL; LATIBEX: XCEL), the first provider of wireless cellular

third generation services in Mexico with a national footprint, announced

today net revenue of Ps.2,661 million and EBITDA of Ps.460 million in the

second quarter of 2008.



    In nominal terms -- considering each quarter figures in current pesos

-- revenue grew 9%, and EBITDA increased 12%.



    "Revenue continued its positive trend and EBITDA has outpaced sales

growth for the eighth consecutive quarter, all in favor of strengthening

our profitability," said Gustavo Guzman, Grupo Iusacell Chief Executive

Officer. "The solid advance is even more significant taking into account

that the base period for comparison includes the results of the Grupo

Iusacell and Unefon merger."



    "A year since our merger, we now have superior market positioning,

operative efficiency growth, and the most extensive and efficient third

generation network coverage in Mexico," added Mr. Guzman. "We offer the

fastest data transmission service in the country, which in this quarter

contributed to the remarkable increase in the number of Mobile Broadband

Users (BAM) and allowed the successful commercialization of the unique

Blackberry Pearl third generation handset in Mexico, as well as

facilitating the continued expansion of our postpaid subscriber base."



    Second Quarter Results



    The merger between Grupo Iusacell and Unefon Holdings took place in the

second quarter 2007, thus the second quarter of 2007 and 2008 financial

results are consolidated figures.



    As we detailed in the previous quarter, this year changes in norms of

financial information were introduced. Under the new rules, the 2008

figures are in current pesos, while the 2007 figures are in constant pesos

as of December of 2007.




Below are the financial results under the new rules: 2Q07 2Q08 Change Ps. % Nominal* Net revenue $2,516 $2,661 $146 6% 9% EBITDA $420 $460 $40 9% 12% Net income $141 $(228) $(369) ---- ---- Earnings per Share $1.12 $(1.82) $(2.95) ---- ---- Million pesos in constant purchasing power as of December 31, 2007 for 2Q07, and 2Q08 in current pesos. EBITDA: Revenue less cost and operating expenses. * Change in nominal terms is included to help in the analysis of this report. The nominal change is equivalent to adding the accumulated inflation between June and December of 2007 to the new financial reporting rules. Net Revenue Net revenue during the quarter increased 6% to Ps.2,661 million compared to Ps.2,516 million in the same period of the previous year. Growth is due mainly to higher incoming roaming revenues, postpaid rents of cellular services, long distance communication and data service income from our 3G EV-DO (Evolution-Data Optimized) network. Of particular significance was the dynamism of the BAM service -- wireless mobile connectivity through Internet broadband, at the fastest speed available in Mexico -- which reached 71,000 users versus 26,000 a year earlier. The new client growth rate is increasingly dynamic; 17,000 new users were added in second quarter 2008, more than double the 8,000 new clients gained in the same 2007 period.
Subscriber Base 2Q 2007 2Q 2008 Change % Subscribers (thousands) 3,920 4,050 3% Postpaid 908 1,076 19% Prepaid 3,012 2,974 -1% The number of postpaid subscribers increased 19% over the year ago period, a significant figure given their high profitability and low churn rate. Grupo Iusacell's subscriber base is 27% postpaid and 73% prepaid users. The ratio of postpaid subscribers to total users during the period is four percentage points higher than 23% during the second quarter of 2007, when Grupo Iusacell and Unefon merged -- and the company is gearing its efforts toward continued strong postpaid percentage growth in the future. Prior to the Unefon merger, Grupo Iusacell's subscriber mix was 35% postpaid and 65% prepaid. Grupo Iusacell believes that number portability, recently implemented in Mexico, offers a great opportunity for users of other companies to access Iusacell's innovative services, which allow maximum speed in applications such as wireless Internet connectivity and customized GPS products, as well as access to real time television. These services also include access to Comunidad Iusacell (the Iusacell Community), allowing users to communicate with millions of Iusacell subscribers with the most competitive rates in the market. Costs and Expenses Quarterly costs were Ps.1,532 million, versus Ps.1,511 million in the same 2007 period. The increase was a result of higher handset subsidies -- consistent with the increase in postpaid subscribers -- plus higher network rents and interconnection outlays as a result of growth in voice traffic. Operating expenses were Ps.670 million, versus Ps.584 million in the second quarter a year earlier. The increase was a result of higher advertising outlays -- related to extensive marketing campaigns for the launch of new product and services -- as well as higher personnel expenses for a larger number of promotion executives, more points of sale and increased customer service, to bring the company even closer to its clients. This was partially compensated by reductions in administrative expenses. EBITDA and Net Income EBITDA for the quarter was Ps.460 million, 9% higher than the Ps.420 million posted in the year ago period. EBITDA margin was 17%, unchanged from the year ago quarter. The company registered a net loss of Ps.228 million during the quarter, versus net income of Ps.141 million a year earlier. The change is the result of extraordinary fiscal gains of Ps.659 million in 2007, due to cancellation of Unefon's deferred income tax liabilities, which Grupo Iusacell included in its consolidated results a year ago. Capex Capital expenditures for the second quarter of 2008 were Ps.188 million, mainly for system and equipment purchases for the purpose of extending Iusacell's 3-G network coverage and capacity and its EVDO services. Six Month Results Income for the first six months was 5,420 million, up 17% from Ps.4,625 million during the year ago period. EBITDA was Ps.1,020 million, up 26% from Ps.808 million a year ago. Net losses were Ps.508 million, versus Ps.1,131 million for the first six months a year ago. The greatest loss a year ago was due to the 2007 cancellation of Ps.826 million in fixed assets, for the substitution of transmission cells with the superior EVDO technology.
6M07 6M08 Change Ps. % Nominal* Net Revenue $4,625 $5,420 $795 17% 21% EBITDA $808 $1,020 $212 26% 30% Net Income $(1,131) $(508) $623 55% 54% Earnings per Share $(9.05) $(4.06) $4.99 55% 54% Million pesos in constant purchasing power as of December 31, 2007 for 6M07, and 6M08 in current pesos. EBITDA: Revenue less cost and operating expenses. * Change in nominal terms is included to help in the analysis of this report. The nominal change is equivalent to adding the accumulated inflation between June and December of 2007 to the new financial reporting rules.

    About Iusacell



    Grupo Iusacell, S.A.B. de C.V. (BMV: CEL; Latibex: XCEL) is a wireless

cellular and PCS service provider in Mexico with a national footprint.

Iusacell offers more and better voice communication and data services

through state-of-the-art technology, such as its new 3G network, throughout

all of the regions in which it operates. In addition to its core mobile

telephony services, Iusacell also provides a wide range of other

telecommunications services, including long distance, wireless local

telephony and data transmission services.



    Grupo Iusacell is a Grupo Salinas company (http://www.gruposalinas.com) a

group of dynamic, fast-growing, and technologically advanced companies

focused on creating shareholder value, contributing to build the middle

class of the countries in which they operate, and improving society through

excellence. Created by Mexican entrepreneur Ricardo B. Salinas

(http://www.ricardosalinas.com), Grupo Salinas operates as a management

development and decision forum for the top leaders of member companies. The

companies include TV Azteca (http://www.irtvazteca.com), Azteca America

(http://www.aztecaamerica.com), Grupo Elektra (http://www.grupoelektra.com.mx), Banco

Azteca (http://www.bancoazteca.com.mx), Afore Azteca (http://www.aforeazteca.com.mx),

Seguros Azteca (http://www.segurosazteca.com.mx) and Grupo Iusacell

(http://www.iusacell.com.mx). Each of the Grupo Salinas companies operates

independently, with its own management, board of directors and

shareholders. Grupo Salinas has no equity holdings. However, 6 member

companies share a common vision, values and strategies for achieving rapid

growth, superior results and world-class performance.



    Grupo Iusacell, S.A.B. de C.V. quarterly reports and all other written

materials may from time to time contain statements about expected future

events and financial results that are forward-looking and subject to risks

and uncertainties. For those statements, the Company claims the protection

of the corresponding laws.




Attached is the Consolidated Income Statement of each of Grupo Iusacell, S.A.B. de C.V. for the three-month and six-month period ended March 31, 2008, and the Consolidated Balance Sheet of Grupo Iusacell, S.A.B. de C.V. at June 30, 2008. GRUPO IUSACELL, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS FIGURES IN MILLIONS OF MEXICAN PESOS 2Q07 2Q08 Change Gross Revenues 2,633 105% 2,772 104% 138 5% Commissions (118) (5%) (110) (4%) 8 6% Net Revenues 2,516 100% 2,661 100% 146 6% Cost of services 991 39% 975 37% (16) (2%) Handsets Subsidy 520 21% 556 21% 37 7% Total Cost 1,511 60% 1,532 58% 21 1% Gross Profit 1,005 40% 1,130 42% 125 12% Selling, General & Administrative Expenses 584 23% 670 25% 85 15% EBITDA 420 17% 460 17% 40 9% Depreciation and Amortization (547) (22%) (452) (17%) 95 17% Fixed assets' write-off 0 0% - 0% 0 100% Other income (expenses) (2) (0%) 9 0% 11 n.m. Comprehensive Financing Cost Interest Expense - Net (315) (13%) (365) (14%) (51) (16%) Foreign exchange gain (loss) 195 8% 206 8% 11 6% Gain from net monetary position (49) (2%) (0) (0%) 49 100% Derivative instruments (loss) gain (1) (0%) 2 0% 3 n.m. (170) (7%) (157) (6%) 12 7% Income (Loss) Before Taxes (298) (12%) (141) (5%) 157 53% Tax Provisions: Asset Tax (223) (9%) 2 0% 225 101% Corporate Flat Rate Tax - 0% (29) (1%) (29) n.a. Deferred Income Tax 659 26% (88) (3%) (747) (113%) 436 17% (114) (4%) (550) (126%) Minority Interest 3 0% 27 1% 24 n.m. Net Income (Loss) 141 6% (228) (9%) (369) n.m. PER SHARE INFORMATION Outstanding Shares (000) at the end of the quarter 125,279 125,279 0.96 0% Quarter Earnings (Losses) per Share (Pesos) 1.12 (1.82) (2.95) n.m. GRUPO IUSACELL, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS FIGURES IN MILLIONS OF MEXICAN PESOS 6M07 6M08 Change Gross Revenues 4,814 104% 5,655 104% 841 17% Commissions (190) (4%) (235) (4%) (45) (24%) Net Revenues 4,625 100% 5,420 100% 795 17% Cost of services 1,909 41% 1,935 36% 26 1% Handsets Subsidy 912 20% 1,068 20% 157 17% Total Cost 2,821 61% 3,004 55% 183 6% Gross Profit 1,804 39% 2,416 45% 613 34% Selling, General & Administrative Expenses 996 22% 1,396 26% 400 40% EBITDA 808 17% 1,020 19% 212 26% Depreciation and Amortization (956) (21%) (992) (18%) (36) (4%) Fixed assets' write- off (826) (17%) - 0% 826 100% Other income (expenses) 0 0% 19 0% 19 n.m Comprehensive Financing Cost Interest Expense - Net (566) (12%) (734) (14%) (168) (30%) Foreign exchange (loss) 3 0% 362 7% 358 n.m Gain from net monetary position 18 0% 0 0% (18) (100%) Derivative instruments (loss) gain (19) (0%) 1 0% 20 106% (564) (12%) (371) (7%) 193 34% Income (Loss) Before Taxes (1,538) (33%) (324) (6%) 1,214 79% Tax Provisions: Asset Tax (257) (6%) 0 0% 258 100% Corporate Flat Rate Tax - 0% (52) (1%) (52) n.a. Deferred Income Tax 659 14% (175) (3%) (834) (127%) 402 9% (227) (4%) (629) (156%) Minority Interest 5 0% 43 1% 38 n.m Net Income (Loss) (1,131) (24%) (508) (9%) 623 55% Last Twelve Months EBITDA 1,631 2,316 685 42% Last Twelve Months Net Income (Loss) 4,355 (662) (5,016) (115%) PER SHARE INFORMATION Outstanding Shares (000) at the end of the quarter 125,279 125,279 1 0% LTM Earnings (Losses) per Share (Pesos) 34.76 (5.28) (40.04) (115%) GRUPO IUSACELL, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS FIGURES IN MILLIONS OF MEXICAN PESOS As of June 30, 2007 2008 Change Cash and cash equivalents 967 5% 479 3% (488) (50%) Customers 804 4% 928 5% 123 15% Other accounts receivable 226 1% 2 0% (224) (99%) Advanced payments and other receivables 371 2% 599 3% 228 61% Unamortized handset subsidy 592 3% 746 4% 154 26% Inventories 269 1% 104 1% (166) (62%) Current assets 3,230 17% 2,857 16% (373) (12%) Fixed assets 7,477 40% 6,718 39% (759) (10%) Goodwill 3,581 19% 3,774 22% 193 5% Other assets 4,526 24% 4,012 23% (514) (11%) TOTAL ASSETS 18,814 100% 17,361 100% (1,453) (8%) Short-term debt 1,339 7% 1,931 11% 592 44% Accrued interests 541 3% 110 1% (432) (80%) Short-term liabilities with financial cost 1,881 10% 2,041 12% 160 9% Suppliers 1,239 7% 1,196 7% (43) (3%) Unaccrued air time 147 1% 128 1% (19) (13%) Accumulated expenses and other payables 1,775 9% 1,430 8% (345) (19%) Short-term liabilities without financial cost 3,161 17% 2,754 16% (407) (13%) Short-term liabilities 5,042 27% 4,795 28% (247) (5%) Long-term debt 8,944 48% 8,363 48% (581) (6%) Other long-term liabilities 23 0% 13 0% (11) (47%) Long-term liabilities with financial cost 8,968 48% 8,376 48% (592) (7%) Deferred taxes - 0% 466 3% 466 n.a. Labor obligations - 0% 25 0% 25 n.a. Long-term liabilities with financial cost - 0% 491 3% 491 n.a. Advances from customers 1,350 7% 1,013 6% (336) (25%) Deferred credits 1,350 7% 1,013 6% (336) (25%) TOTAL LIABILITIES 15,359 82% 14,675 85% (685) (4%) STOCKHOLDERS' EQUITY 3,454 18% 2,686 15% (769) (22%) LIABILITIES + EQUITY 18,814 100% 17,361 100% (1,453) (8%)

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