PURSUANT TO RULE 13a-16 OR 15d-16
Providencia, Santiago, Chile
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
in paper as permitted by Regulation S-T Rule 101(b)(1): Yes ______ No ___X___
in paper as permitted by Regulation S-T Rule 101(b)(7): Yes ______ No ___X___
Indicate by check mark whether by furnishing the information contained in this Form,
the registrant is also thereby furnishing the information to the Commission pursuant to
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registrant in connection with Rule 12g3-2(b): ___N/A___
1Q08 Earnings Release
Quarterly Earnings ReleaseFOR IMMEDIATE RELEASE
COMPAÑIA DE TELECOMUNICACIONES DE CHILE S.A.
ANNOUNCES RESULTS FOR THE FIRST QUARTER 2008 (1Q08)
Highlights:
- In 1Q08, operating revenues increased 1.4% as compared to 1Q07, fueled by flexible plans, broadband revenues and pay television.
- EBITDA in 1Q08 reached Ch$63,735 million (US$145.6 million), compared to Ch$69,963 million (US$159.8 million) in 1Q07. EBITDA margin reached 40.5% in 1Q08 compared to 45.1% in 1Q07.
- The Company recorded net income of Ch$1,045 million (US$2.4 million) in 1Q08, compared to net income of Ch$1,138 million (US$2.6 million) in 1Q07.
- Financial debt level closing at Ch$363,862 million in 1Q08.
Santiago, Chile – April 24, 2008, Compañía de Telecomunicaciones de Chile S.A. (NYSE: CTC) (“Telefónica Chile” or the “Company”) today announced its consolidated quarterly financial results, submitted to an interim financial review of independent auditors stated in Chilean GAAP (in constant Chilean pesos as of March 31, 2008) for the first quarter of 2008. U.S. dollar equivalent information is based on the Observed Exchange Rate (as defined by the Chilean Central Bank) March 31, 2008, which was Ch$437.71 = US$1.00. This information will be made publicly available through the Chilean Superintendencia de Valores y Seguros (“SVS”) and the Securities and Exchange Commission of the United States of America (www.sec.gov), as well as at the Company’s website, www.telefonicachile.cl.
CONSOLIDATED RESULTS FOR 1Q08
(Comparisons refer to 1Q07)
REVENUES
Telefónica Chile's revenues increased by 1.4% in 1Q08 with respect to 1Q07, amounting to Ch$157,278 million (US$359.3 million). This variation mainly stems from growing Broadband revenues (+17.5%), Television (+95.8%), Corporate Communications (+5.2%) and plans of minutes (+12.2%), which offset the decrease in revenues from fixed variable charges as well as the long distance business.
OPERATING COSTS AND EXPENSES
Operating costs and expenses (excluding depreciation) increased 9.9% in 1Q08 to Ch$93,542 million (US$213.7 million), mainly explained by: (i) a 5.4% increase in salaries due to CPI adjustment in severance provisions and higher expenses associated to employee benefits due to the higher proportion of permanent employees as result of the internalization process carried out during 2007 (ii) higher direct costs of operations which increased 20.3%, mainly explained by higher TV content expenses associated with the increase in number of TV Clients, as well as higher costs of equipment sales associated with commercialization of the “Puesto de Trabajo” (“workstations”) service for the small and medium enterprises segment and ongoing projects with corporations, and higher interconnection costs due to the higher capacity given to broadband clients and (iii) increased uncollectables provision with respect to 1Q07, due to a more conservative approach for the provision.
1
EBITDA
As a result, EBITDA1 in 1Q08 decreased 8.9% to Ch$63,735 million (US$145.6 million), compared to Ch$69,963 million (US$159.8 million) recorded in 1Q07.
EBITDA margin2 in 1Q08 was 40.5%, compared to the 45.1% recorded in 1Q07. EBITDA margin is mainly affected by higher costs, primarily associated with the growth of the television business and increased commercial activity in all segments.
DEPRECIATION
Total depreciation in 1Q08 decreased 5.4% to Ch$52,467 million (US$119.9 million), as compared to Ch$55,457 million (US$126.7 million) in 1Q07, mainly due to the completion of the useful lives of certain assets and lower investment as compared with historic levels.
| Operating Costs* | 1Q07 | 1Q08 | Var. % 08/07 | |||
| (Million of Ch$) | ||||||
| Personnel | 18,952 | 19,980 | +5.4% | |||
| Direct Cost Of Operations | 18,761 | 22,569 | +20.3% | |||
| Commercial Expenses | 16,648 | 16,307 | -2.0% | |||
| Uncollectables | 5,383 | 8,059 | +49.7% | |||
| Others | 25,335 | 26,627 | +5.1% | |||
| Depreciation | 55,457 | 52,467 | -5.4% | |||
| Total operating expenses | 140,535 | 146,009 | +3.9% | |||
• Change in the Operating Cost Breakdown presented in Results Information: As of 2008, the breakdown of operating has been modified and basically differs from the previous breakdown in that: (i) Personnel costs considers salaries of permanent employees as well as outsourced employees; previously only salaries of permanent employees was considered and labor costs of outsourced personnel was recorded as general expenses; (ii) “Commercial Costs” includes sales commissions, advertising and client service costs; (iii) “Direct costs of operations” includes sales equipment costs, interconnections and TV content and infrastructure costs; (iv) “Uncollectables” and “Depreciation” remain unchanged; and (v) “Others” refers to general expenses such as utilities, maintenance and others. As a reference, a historical series of the new breakdown is included in the results tables.
OPERATING INCOME
OPERATING INCOME decreased 22.3% to Ch$11,269 million (US$25.7 million) in 1Q08 when compared to Ch$14,507 million (US$33.1 million) in 1Q07. As a result, the operating margin for 1Q08 was 7.2% compared to 9.4% in 1Q07.
_________________________________
1 EBITDA = operating income + depreciation
2 EBITDA margin = (operating income + depreciation) / total operating revenues
2
NON-OPERATING RESULTS
NON-OPERATING RESULT registered a non-operating loss of Ch$6,010 million (US$13.7 million) in 1Q08 as compared to a non-operating loss of Ch$7,566 million (US$17.3 million) in 1Q07.
The non-operating loss in 1Q08 is mainly explained by:
(i) financial expenses of Ch$6,506 million (US$14.9 million), which increased by 49.1% as a result of the increase in the average debt interest rate. This is due to the fact that during 4Q07 and 1Q08 the Company hedged a portion of its debt from UF to Chilean peso denominated debt. This resulted in a higher interest rate for said debt. At the same time, this higher rate is compensated by lower monetary correction of debt, as the debt is no longer denominated in the inflation-adjusted UF. The financial debt remained stable totaling Ch$363,862 million (US$831.3 million) as of March 31, 2008.
(ii) other non-operating expenses reached Ch$2,871 million (US$6.6 million), mainly explained by: (i) Ch$1,046 million (US$2.4) for personnel severances paid in 1Q08 and (ii) Ch$1,694 million (US$3.9 million) in asset write-offs; mainly associated with equipments.
The above was partially offset by: (i) interest income of Ch$1,505 million (US$3.4 million) in 1Q07, in comparison with Ch$1,262 million (US$2.9 million) registered in 1Q07. This increase is mainly explained by higher level of available funds and higher short term interest rates in the quarter, and (ii) monetary correction reflected a gain of Ch$1,328 million (US$3.0 million) due to the CPI of 0.82% registered in the quarter, which meant a gain due to the unbalance of fixed assets and liabilities and a positive charge amounting Ch$243 million (US$0.6 million) related to the fair value of hedging instruments used in debt hedges. This compares to a loss in the monetary correction of Ch$4,790 million (US$10.9 million) in 1Q07, and (iii) the 73.2% decrease in other non-operating income amounting Ch$570 million in 1Q08.
INCOME TAXES
INCOME TAXES: In 1Q08 Telefónica Chile recorded a total income tax charge in the amount of Ch$4,296 million (US$9.8 million). This compares to the Ch$5,897 million (US$13.5 million) tax charge in 1Q07.
Total income tax in 1Q08 consists of: (i) a charge of Ch$3,276 million (US$7.5 million) for deferred taxes from previous periods due to the change in accounting standards (Technical Bulletin No. 60) in year 2000, which required the Company to amortize the accumulated amount of deferred taxes from previous years, and also includes the Chilean tax rate (17%) applied to taxable net income, which differs from financial net income in that it does not consider as an expense (i) monetary correction of shareholders' equity or (ii) certain contingencies and write-offs.
NET RESULT
The Company recorded net income of Ch$1,045 million (US$2.4 million) in 1Q08 vs. net income of Ch$1,138 million (US$2.6 million) in 1Q07.
Net income per ADR in 1Q08 amounted to US$0.010, compared to the net income per ADR of US$0.011 recorded in 1Q07. Likewise, net income per share in 1Q08 equaled Ch$1.1 as compared to Ch$1.2 in 1Q07.
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CAPEX
Capital Expenditures for Telefónica Chile and its consolidated subsidiaries amounted to Ch$27,326 million (US$62.4 million) in 1Q08. Capital expenditures were mainly associated with the development of broadband (ADSL), Pay TV, fixed telephony network, data network, maintenance and development, and projects aimed at improving quality.
REVENUES BY BUSINESS UNIT
VOICE, NETWORK AND COMPLEMENTARY SERVICES
Voice, Network and Complementary services is divided into Telephony (voice), Access Charges and Interconnections, and Other Complementary services, which include other revenues associated to fixed telephony, such as: interior installations, equipment marketing, connections and other installations, directory advertising and Telemergencia (home security services subsidiary), and public telephones, among others. The total of these revenues represented 54.7% of total operating revenues in 1Q08, amounting to Ch$86,006 million (US$196.5 million) decreased 6.7% from 1Q07. This is mainly attributable to the decline in Telephony (voice) revenues (-5.7%), access charges (-2.4%) and complementary services (-12.1%) .
Flexible plans represent 76% of total lines in service
Telephony (Voice) revenues, which include the fixed monthly charge, variable charge, connections and other installations and plans of minutes (allowed under tariff flexibility), decreased 5.7% to Ch$54,698 million (US$125.0 million) in 1Q08 as compared to 1Q07. This decrease is mainly attributable to a 28.6% decrease in the fixed monthly charge and a 20.2% decrease in the variable charge. Traditional telephony (fixed monthly charge and variable charge) revenues have also been affected by: (i) a 13.8% decrease in average traffic per line for 1Q08 compared to 1Q07; and (ii) a 1.4% decrease in average lines in service compared to 1Q07, mainly resulting from competition and mobile cannibalization. These were partially offset by an increase of 12.2% in revenues from plans of minutes associated with tariff flexibility. As of March 31, 2008, these plans represented 75.7% of the total lines in service, including plans of minutes of corporations.
4
Nevertheless, revenue diversification through the increased mix of plans associated with tariff flexibility has helped mitigate the decline in revenues due to lower traffic and lines in service, in line with the Company’s strategy. The revenues associated with flexible plans represent 21.2% of the consolidated revenues.
Access charges and interconnection (Fixed Network) revenues include revenues from access charges generated by LD carriers, as well as those paid by other telecommunications operators that use Telefónica Chile's network. They also include other interconnection services apart from access charges, such as network unbundling, interconnection of networks, information services for carriers and network services for wholesalers, among others. These revenues decreased by 2.4% in 1Q08 to Ch$12,861 million (US$29.4 million). This difference was mainly due to decreases of 23.5% and 26.7% in access charge revenues from DLD and ILD, repectivley. Long distance access charge traffic decreased 17.5% in 1Q08 as compared with 1Q07. These were partially offset by an increase of 2.9% in revenues of other interconnection services.
Revenues from Complementary Services include revenues generated from telephone directory advertising as a result of the Company's contract with Publiguías, dedicated and dial-up Internet service, Telemergencia (home security services subsidiary), public telephones, interior installations, equipment marketing and connections and other installations, value-added services and other basic telephony revenues (such as operator assisted services and rural telephony, among others). These revenues decreased 12.1% in 1Q08 to Ch$18,447 million (US$42.1 million) as compared to 1Q07. This is mainly due to lower revenues from: (i) Telemergencia home security services (-23.9%) due to greater market competition; (ii) interior installations (-14.4%) due to lower number of lines subject to maintenance charges; and, (iii) other basic telephony services (-30.8%) . The above were partly offset by higher equipment marketing revenues, which amounted to Ch$1,119 million (US$2.6 million) in 1Q08 as compared to Ch$439 million (US$1.0 million) in 1Q07. This increase is mainly explained by the sale of computers and telecommunications equipment related to the “Puesto de Trabajo Informático” (“workstation”) plan for small and medium enterprises, which was launched in July 2007. The plan offers Voice and Broadband services to small and medium enterprises, including the necessary equipment to provide the service.
BROADBAND
The Company consolidated its leadership position in Broadband through flexible plans and increasing revenue
Broadband (ADSL) revenues, which represent 17.5% of the total revenues, amounted to Ch$27,567 million (US$63.0 million) in 1Q08, an increase of 17.5% with respect to 1Q07. This increase was primarily due to: (i) the 22.4% growth in ADSL connections in the quarter, driven by a commercial focus on bundled plans of broadband plus minutes of voice and digital TV (for residential customers), as well as a plan for small and medium enterprises, called “Puesto de Trabajo Informatico”, launched in July 2007 as explained previously, these all led to market share to 48.6% as of March 31, 2008.
PAY TV
Revenues from the Pay TV business, launched in June 2006, amounted to Ch$8,991 million (US$20.5 million) in 1Q08, accounting for 5.7% of total revenues. As of March 31, the Company had 231,625 Pay TV clients, attaining 17.5% market share. The Company offers a wide number of channels and complements its offering with interactive services through IPTV (television over broadband). The interactive services include Video on Demand (VoD), which features a virtual library with over 200 hours of content. Additionally, as of September 2007 the Company is offering the personal video recorder service (PVR), which allows the client to record, pause, rewind or fast-forward any TV program.
5
The bundling of services through a flexible offer allows for higher revenues
This growth is mainly due to the bundling strategy of these services, by the means of a flexible offer where the clients create the combination of services that better accommodate their needs, and as a result, improve the average revenue of the client while strengthening loyalty.
LONG DISTANCE
Telefónica Larga Distancia strengthens its position of market leadership, achieving market shares of 43.9% and 41.7% in DLD and ILD, respectively
Long distance revenues include revenues from domestic and international long distance traffic, as well as revenues from the rental of the long distance network to other telecom operators. Total long distance revenues, which accounted for 9.1% of consolidated operating revenues in 1Q08, decreased 7.7% as compared to 1Q07, amounting to Ch$13,888 million (US$31.7 million). The decrease in revenues is mainly explained by: (i) a decrease of 10.8% in the revenues of network rental and (ii) a decrease of 16.1% in national long distance (DLD) mainly due to lower prices, which fell 18.7% with respect to 1Q07. The lower revenues from DLD were partly offset by a slight increase in ILD revenues, which increased 0.8% due to higher incoming ILD traffic. As a result of the Company’s commercial efforts DLD and ILD traffics increased 3.2% and 8.6%, respectively, despite the negative market trend. As a result, DLD market share for the quarter increased 4.9 p.p. with respect to 1Q07, reaching 43.9%, and ILD market share increased 2.6 p.p. to 41.7% in 1Q08.
CORPORATE CUSTOMER COMMUNICATIONS
Corporate customer communications include revenues from: (i) terminal equipments, which mainly refers to the sale of voice equipment and data transmission equipment; (ii) complementary telephone services, such as digital communications for corporations (high-consumption plans); (iii) data services, including ATM, Frame Relay, housing and hosting services and services related to the IP network; and, (iv) dedicated links and others, including videoconference, Datared, E1 Links and VSAT, e-solutions, and consulting services for corporate customers.
Stable revenues from corporate customer communications and market share of 42% in a highly competitive market
Revenues from corporate customer communications, which accounted for 12.9% of consolidated revenues, increased 5.2% from 1Q07 and amounted to Ch$20,288 million (US$46.4 million) in 1Q08.
This variation was mainly due to a an increase of 10.8% in circuits and others, due to increased revenues from advanced solutions for clients, and an increase of 3.6% in equipment sales. Both increments are mainly explained by the launch of a telecommunications project with corporations and enterprises. In the other hand, data revenues associated to the IP network (dedicated IP and digital data network Citynet) and complementary services increased 2.9% and 1.5%, respectively as compared with 1Q07.
In 1Q08, datared links decreased by 10.0%, whereas data links through the IP network (dedicated IP) grew by 26.7%, and the ATM links remained stable in comparison with 1Q07.
OTHER BUSINESSES
Other businesses include revenues from the administrative service subsidiary t-gestiona and others. These revenues, which accounted for 0.3% of total 1Q08 operating revenues, increased 12.3% with respect to 1Q07, amounting to Ch$538 million (US$1.2 million) in 1Q08.
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COMPANY NEWS
FINAL DIVIDEND
At the General Shareholders’ Meeting held on April 14, 2008, shareholders approved the payment of final dividend, with a charge of Ch$5,050,016,393 to 2007 net income, equivalent to a gross amount of Ch$5.27606 per share. The total amount paid, from this final dividend the and interim paid in November 2007, represents 100% of 2007 net income. The final dividend will be paid on May 14, 2008 to shareholders registered in Chile as of May 8, 2008.
CAPITAL REDUCTION
The Company’s dividend policy provides for the distribution of 100% of net income. However, after taking into account capital expenditures, taxes and dividends, the free cash flow allows for the distribution of an additional amount, while still maintaining financial ratios at reasonable levels in order to face business development needs and to comply with the Company’s Investment and Financing Policy. Consequently, at the Extraordinary Shareholders’ Meeting held on April 14, 2008, shareholders approved a capital reduction of Ch$39,243,440,485, equivalent to a gross amount of Ch$41 per share, to be distributed to shareholders in 2008. The Board of Directors will determine and announce the payment date in a timely manner, and it is estimated to be paid in June 2008.
WE INVITE YOU TO VISIT TELEFONICA CHILE'S INVESTOR RELATIONS WEBSITE AT:
www.telefonicachile.cl (Investor Relations)
For more information contact:
| Sofía Chellew - Verónica Gaete | ||
| María José Rodríguez | Lucia Domville | |
| TELEFONICA CHILE | THE GLOBAL CONSULTING GROUP | |
| Tel.: 562-691-3867 | Tel: 646-284-9416 | |
| Fax: 562-691-2392 | ||
| E-mail: | E-mail: | |
| sofia.chellew@telefonicachile.cl, | ldomville@hfgcg.com | |
| veronica.gaete@telefonicachile.cl | ||
| mariajose.rodriguez@telefonicachile.cl |
7
INCOME QUARTERLY CONSOLIDATED STATEMENTS (CHGAAP)
(Millions of Ch$ as of March 31, 2008)
| JAN-MAR | IQ | IIQ | IIIQ | IVQ | JAN-MAR | IQ | Var. | |||||||||||
| 2007 | 2007 | 2007 | 2007 | 2007 | 2008 | 2008 | IQ08/IQ07 | 2008/2007 | ||||||||||
| OPERATING REVENUES | ||||||||||||||||||
| VOICE, FIXED NETWORK AND COMP. SERVICES | 92,195 | 92,195 | 92,311 | 91,520 | 90,261 | 86,006 | 86,006 | -6.7% | -6.7% | |||||||||
| Telephony (voice) | 58,028 | 58,028 | 60,056 | 57,966 | 57,635 | 54,698 | 54,698 | -5.7% | -5.7% | |||||||||
| Fixed Charge | 14,821 | 14,821 | 13,671 | 12,746 | 11,584 | 10,583 | 10,583 | -28.6% | -28.6% | |||||||||
| Variable Charge | 13,507 | 13,507 | 12,984 | 11,695 | 12,112 | 10,784 | 10,784 | -20.2% | -20.2% | |||||||||
| Plans of minutes (tariff flexibility) | 29,700 | 29,700 | 33,401 | 33,525 | 33,939 | 33,331 | 33,331 | 12.2% | 12.2% | |||||||||
| Access Charges and Interconnections (Network) | 13,173 | 13,173 | 13,260 | 13,355 | 13,473 | 12,861 | 12,861 | -2.4% | -2.4% | |||||||||
| Domestic long distance | 2,070 | 2,070 | 1,905 | 1,788 | 1,770 | 1,583 | 1,583 | -23.5% | -23.5% | |||||||||
| International long distance | 480 | 480 | 446 | 405 | 423 | 352 | 352 | -26.7% | -26.7% | |||||||||
| Other interconnection services | 10,623 | 10,623 | 10,909 | 11,162 | 11,280 | 10,926 | 10,926 | 2.9% | 2.9% | |||||||||
| Complementary Services | 20,994 | 20,994 | 18,995 | 20,199 | 19,153 | 18,447 | 18,447 | -12.1% | -12.1% | |||||||||
| Directory Advertising | 670 | 670 | 246 | 1,906 | 449 | 529 | 529 | -21.0% | -21.0% | |||||||||
| ISP - switched and dedicated | 538 | 538 | 507 | 147 | 352 | 275 | 275 | -48.9% | -48.9% | |||||||||
| Security services (Telemergencia) | 2,360 | 2,360 | 2,112 | 1,909 | 1,809 | 1,797 | 1,797 | -23.9% | -23.9% | |||||||||
| Public telephones | 2,558 | 2,558 | 2,013 | 1,825 | 2,111 | 1,785 | 1,785 | -30.2% | -30.2% | |||||||||
| Interior installations | 7,637 | 7,637 | 7,591 | 7,219 | 6,862 | 6,535 | 6,535 | -14.4% | -14.4% | |||||||||
| Equipment marketing | 439 | 439 | 849 | 1,337 | 1,752 | 1,119 | 1,119 | - | - | |||||||||
| Connections and other installations | 524 | 524 | 595 | 677 | 835 | 1,030 | 1,030 | 96.6% | 96.6% | |||||||||
| Value added services | 3,750 | 3,750 | 3,674 | 3,869 | 3,691 | 3,634 | 3,634 | -3.1% | -3.1% | |||||||||
| Other basic telephony revenues | 2,518 | 2,518 | 1,408 | 1,310 | 1,292 | 1,743 | 1,743 | -30.8% | -30.8% | |||||||||
| BROADBAND | 23,463 | 23,463 | 24,855 | 27,166 | 26,962 | 27,567 | 27,567 | 17.5% | 17.5% | |||||||||
| TELEVISION | 4,568 | 4,568 | 6,158 | 7,215 | 8,827 | 8,991 | 8,991 | 0.97 | 0.97 | |||||||||
| LONG DISTANCE | 15,053 | 15,053 | 14,480 | 14,441 | 14,929 | 13,888 | 13,888 | -7.7% | -7.7% | |||||||||
| Domestic Long Distance | 5,771 | 5,771 | 5,291 | 5,355 | 5,006 | 4,839 | 4,839 | -16.1% | -16.1% | |||||||||
| International Long Distance | 6,599 | 6,599 | 6,553 | 6,573 | 6,732 | 6,655 | 6,655 | 0.8% | 0.8% | |||||||||
| Rental of LD Network | 2,683 | 2,683 | 2,636 | 2,513 | 3,191 | 2,394 | 2,394 | -10.8% | -10.8% | |||||||||
| CORPORATE CUSTOMER COMMUNICATIONS | 19,284 | 19,284 | 20,611 | 20,259 | 22,761 | 20,288 | 20,288 | 5.2% | 5.2% | |||||||||
| Terminal Equipments | 2,608 | 2,608 | 3,165 | 3,224 | 3,291 | 2,703 | 2,703 | 3.6% | 3.6% | |||||||||
| Complementary Services | 3,436 | 3,436 | 3,486 | 3,559 | 3,651 | 3,486 | 3,486 | 1.5% | 1.5% | |||||||||
| Data services | 7,263 | 7,263 | 7,468 | 7,284 | 7,511 | 7,475 | 7,475 | 2.9% | 2.9% | |||||||||
| Dedicated links and others | 5,977 | 5,977 | 6,492 | 6,192 | 8,308 | 6,624 | 6,624 | 10.8% | 10.8% | |||||||||
| OTHER BUSINESSES | 479 | 479 | 562 | 637 | 750 | 538 | 538 | 12.3% | 12.3% | |||||||||
| TOTAL OPERATING REVENUES | 155,042 | 155,042 | 158,977 | 161,238 | 164,490 | 157,278 | 157,278 | 1.4% | 1.4% | |||||||||
| JAN-MAR | IQ | IIQ | IIIQ | IVQ | JAN-MAR | IQ | Var. | |||||||||||
| 2007 | 2007 | 2007 | 2007 | 2007 | 2008 | 2008 | IQ08/IQ07 | 2008/2007 | ||||||||||
| TOTAL OPERATING COSTS AND EXPENSES | 140,535 | 140,535 | 145,461 | 142,453 | 140,303 | 146,009 | 146,009 | 3.9% | 3.9% | |||||||||
| OPERATING INCOME | 14,507 | 14,507 | 13,516 | 18,785 | 24,187 | 11,269 | 11,269 | -22.3% | -22.3% | |||||||||
| EBITDA | 69,963 | 69,963 | 68,245 | 72,585 | 76,837 | 63,735 | 63,735 | -8.9% | -8.9% | |||||||||
| Operating Margin | 9.4% | 9.4% | 8.5% | 11.7% | 14.7% | 7.2% | 7.2% | -14.7pp | -2.2pp | |||||||||
| EBITDA Margin | 45.1% | 45.1% | 42.9% | 45.0% | 46.7% | 40.5% | 40.5% | -46.7pp | -4.6pp | |||||||||
| NON-OPERATING INCOME | ||||||||||||||||||
| Interest Income | 1,262 | 1,262 | 1,352 | 1,080 | 1,423 | 1,505 | 1,505 | 19.3% | 19.3% | |||||||||
| Other Non-Operating Income | 2,126 | 2,126 | 920 | 755 | 1,227 | 570 | 570 | -73.2% | -73.2% | |||||||||
| Revenues from Related Companies | 285 | 285 | 636 | 467 | 514 | 354 | 354 | 24.2% | 24.2% | |||||||||
| Interest Expense | (4,364) | (4,364) | (4,411) | (4,543) | (5,743) | (6,506) | (6,506) | 49.1% | 49.1% | |||||||||
| Amortization of Goodwill | (390) | (390) | (394) | (399) | (398) | (390) | (390) | 0.0% | 0.0% | |||||||||
| Other Non-Operating Expenses | (1,695) | (1,695) | (3,081) | (4,640) | (10,076) | (2,871) | (2,871) | 69.4% | 69.4% | |||||||||
| Monetary Correction | (4,790) | (4,790) | 5,128 | 2,533 | (1,467) | 1,328 | 1,328 | -127.7% | -127.7% | |||||||||
| TOTAL NON-OPERATING INCOME | (7,566) | (7,566) | 150 | (4,747) | (14,520) | (6,010) | (6,010) | -20.6% | -20.6% | |||||||||
| INCOME BEFORE INCOME TAX | 6,941 | 6,941 | 13,666 | 14,038 | 9,667 | 5,259 | 5,259 | -24.2% | -24.2% | |||||||||
| Income Tax | (5,897) | (5,897) | (9,815) | (8,984) | (8,784) | (4,296) | (4,296) | -27.1% | -27.1% | |||||||||
| Minority Interest | 94 | 94 | 158 | 51 | (192) | 82 | 82 | -12.8% | -12.8% | |||||||||
| NET INCOME | 1,138 | 1,138 | 4,009 | 5,105 | 691 | 1,045 | 1,045 | -8.2% | -8.2% | |||||||||
| Observed exchange rate (end of the period) | 539.21 | 526.86 | 511.23 | 496.89 | 437.71 | |||||||||||||
| IQ | IIQ | IIIQ | IVQ | IQ | ||||||||||||||
| 2007 | 2007 | 2007 | 2007 | 2008 | ||||||||||||||
| Earnings per Common Share (Ch$) | 1.2 | 4.2 | 5.3 | 0.7 | 1.1 | |||||||||||||
| Earnings per ADR (US$) | 0.011 | 0.038 | 0.049 | 0.006 | 0.010 | |||||||||||||
| Weighted Average Number of Shares Fully Paid (millions) | 957.2 | 957.2 | 957.2 | 957.2 | 957.2 | |||||||||||||
8
COMPAÑIA DE TELECOMUNICACIONES DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Figures in Thousand of Ch$ as of March 31, 2008)
| ASSETS | 2008 | 2007 | LIABILITIES | 2008 | 2007 | |||||
| Th$ | Th$ | Th$ | Th$ | |||||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||||||||
| Cash and banks | 5,123,507 | 9,787,944 | ||||||||
| Time deposits | 84,079,423 | 71,254,151 | Banks and financial institutions - current maturities | 67,406,193 | 2,645,722 | |||||
| Marketable securities | 6,027,836 | 15,479,411 | Debentures | 2,701,464 | 2,743,958 | |||||
| Trade receivables | 176,374,620 | 182,788,392 | Current maturities of other long-term liabilities | 16,583 | 13,559 | |||||
| Notes receivable | 5,053,081 | 4,876,043 | Dividends payable | 1,674,108 | 1,729,638 | |||||
| Sundry debtors | 4,859,228 | 9,361,418 | Accounts payable | 146,267,196 | 133,583,652 | |||||
| Due from related companies | 17,804,241 | 18,955,395 | Other creditors | 43,442,784 | 11,778,267 | |||||
| Inventories | 7,394,458 | 6,304,792 | Due to related companies | 36,711,277 | 35,280,046 | |||||
| Refundable taxes | 26,543,370 | 3,523,331 | Provisions | 2,928,751 | 3,615,278 | |||||
| Prepaid expenses | 3,263,832 | 3,696,583 | Withholdings | 13,663,834 | 12,434,527 | |||||
| Deferred taxes | 17,479,856 | 15,573,413 | Unearned income | 6,287,306 | 8,873,625 | |||||
| Other current assets | 13,253,879 | 8,233,562 | ||||||||
| Total current assets | 367,257,331 | 349,834,435 | Total current liabilities | 321,099,496 | 212,698,272 | |||||
| FIXED ASSETS | 29,983,691 | 30,160,212 | LONG-TERM LIABILITIES | |||||||
| Land | Banks and financial institutions | 223,667,594 | 361,858,978 | |||||||
| Construction and infrastructure works | 860,566,307 | 859,440,005 | Debentures | 70,086,797 | 71,604,416 | |||||
| Machinery and equipment | 3,094,817,050 | 3,001,088,897 | Sundry creditors | 67,596,384 | 32,109,568 | |||||
| Other fixed assets | 360,708,786 | 361,441,587 | Provisions | 35,113,778 | 38,579,806 | |||||
| Technical revaluation | 10,197,772 | 10,150,184 | Deferred Taxes | 45,473,963 | 50,861,471 | |||||
| Less: accumulated depreciation | 3,116,050,751 | 2,949,567,766 | Other long-term liabilities | 3,523,118 | 4,034,041 | |||||
| Fixed assets-net | 1,240,222,855 | 1,312,713,119 | Total long term liabilities | 445,461,634 | 559,048,280 | |||||
| MINORITY INTEREST | 196,169 | 378,953 | ||||||||
| OTHER ASSETS | EQUITY | |||||||||
| Investments in related companies | 8,140,896 | 9,107,651 | Paid-in capital | 904,735,562 | 962,550,650 | |||||
| Investments in other companies | 4,524 | 4,524 | Reserve | 7,237,884 | 1,925,101 | |||||
| Goodwill | 14,978,627 | 16,890,923 | Other reserves | (3,916,211) | (2,456,640) | |||||
| Long-term debtors | 14,238,539 | 15,162,639 | Retained earnings: | 6,135,148 | 15,066,934 | |||||
| Intangibles | 43,288,099 | 42,383,948 | Prior years | 10,942,980 | 25,281,821 | |||||
| Amortization (less) | (21,391,552) | (15,514,798) | (Losses) Income for the period | 1,044,732 | 1,137,836 | |||||
| Other long-term assets | 14,210,363 | 18,629,109 | Provisory Dividends (less) | 5,852,564 | 11,352,723 | |||||
| Total other assets | 73,469,496 | 86,663,996 | Total equity | 914,192,383 | 977,086,045 | |||||
| TOTAL ASSETS | 1,680,949,682 | 1,749,211,550 | TOTAL LIABILITIES AND EQUITY | 1,680,949,682 | 1,749,211,550 | |||||
9
COMPAÑIA DE TELECOMUNICACIONES DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWELVE MONTHS PERIOD ENDED AS OF MARCH 31, 2008 VS. 2007
Figures in Thousand of Constant Ch$ as of March 31, 2008
| 2008 | 2007 | |||
| NET CASH PROVIDED DUE TO OPERATING ACTIVITIES | 42,343,120 | 64,048,403 | ||
| Net income (Gain) | 1,044,732 | 1,137,836 | ||
| Result from asset sales | (34,664) | (1,362,675) | ||
| Gain (loss) in sale of fixed assets | (34,664) | (1,362,675) | ||
| Charges (credits) to income not affecting cash flow: | 60,969,646 | 67,069,010 | ||
| Depreciation | 51,362,709 | 54,323,839 | ||
| Intangibles amortization | 1,430,213 | 1,458,960 | ||
| Write-off and provisions | 8,044,893 | 5,946,269 | ||
| Equity earnings from related companies (less) | (353,746) | (311,178) | ||
| Equity losses from related companies | 0 | 26,341 | ||
| Amotization of goodwill | 390,094 | 390,094 | ||
| Price-level restatement (net) | (1,233,789) | 4,966,438 | ||
| Gain (loss) on foreign currency transactions | (94,818) | (176,737) | ||
| Other credits not affecting cash flow | (18,027) | (215,586) | ||
| Other charges not affecting cash flow | 1,442,117 | 660,570 | ||
| Decrease (increase) in current assets: | 1,104,618 | 2,914,103 | ||
| (Increase) Decrease in trade receivables | 241,767 | 5,295,951 | ||
| (Increase) Decrease in inventories | (306,905) | (92,555) | ||
| (Increase) Decrease in other current assets | 1,169,756 | (2,289,293) | ||
| Increase (decrease) in current liabilities: | (20,659,217) | (5,616,134) | ||
| Increase (decrease) due to related companies, | ||||
| related with operating activities | (22,111,577) | 7,306,624 | ||
| Increase (decrease) in accrued interest payable | (18,731) | 1,238,688 | ||
| Increase (decrease) in income tax payable, net | 299,928 | 0 | ||
| Increase (decrease) in other accounts payable related with non operating result | 505,196 | (10,717,331) | ||
| Increase (decrease) in value-added tax, net, and other | 665,967 | (3,444,115) | ||
| Income (loss) of minority interest | (81,995) | (93,737) | ||
10
COMPAÑIA DE TELECOMUNICACIONES DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE TWELVE MONTHS PERIOD ENDED AS OF MARCH 31, 2008 VS. 2007
Figures in Thousand of Constant Ch$ as of March 31, 2008
| 2008 | 2007 | |||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | 0 | 0 | ||
| NET CASH USED IN INVESTING ACTIVITIES | (27,724,113) | (24,118,631) | ||
| Sale of fixed assets | 249,300 | 1,389,438 | ||
| Sale of other investments | 1,798,667 | 2,127,902 | ||
| Additions to fixed assets (less) | (27,422,080) | (27,635,971) | ||
| Other disbursements | (2,350,000) | - | ||
| NET CASH FLOW FOR THE PERIOD | 14,619,007 | 39,929,772 | ||
| PRICE-LEVEL RESTATEMENT EFFECT ON CASH AND CASH EQUIVALENTS | (692,419) | (79,690) | ||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 13,926,588 | 39,850,082 | ||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 79,176,079 | 44,761,993 | ||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 93,102,667 | 84,612,075 | ||
11
| OPERATING COSTS | ||||||||||||||||||||||||
| Ch$ millions as of March 31, 2008 | Var.% | Var.% | Var.% | Var.% | ||||||||||||||||||||
| 1Q06 | 1Q07 | 07/06 | 2Q06 | 2Q07 | 07/06 | 3Q06 | 3Q07 | 07/06 | 4Q06 | 4Q07 | 07/06 | |||||||||||||
| Personnel | (20,723) | (18,952) | -8.5% | (21,449) | (23,940) | 11.6% | (20,392) | (22,494) | 10.3% | (20,304) | (20,272) | -0.2% | ||||||||||||
| Direct costs of operations | (16,609) | (18,761) | 13.0% | (18,379) | (21,701) | 18.1% | (19,547) | (20,770) | 6.3% | (18,259) | (23,283) | 27.5% | ||||||||||||
| Commercial Costs | (10,733) | (16,540) | 54.1% | (12,544) | (17,462) | 39.2% | (11,662) | (16,338) | 40.1% | (12,436) | (17,123) | 37.7% | ||||||||||||
| Uncollectables | (5,904) | (5,383) | -8.8% | (5,303) | (4,406) | -16.9% | (4,041) | (4,818) | 19.2% | (4,166) | (5,177) | 24.3% | ||||||||||||
| Others | (24,940) | (25,443) | 2.0% | (20,445) | (23,163) | 13.3% | (21,385) | (24,211) | 13.2% | (21,713) | (21,797) | 0.4% | ||||||||||||
| Total Operating Costs | (78,910) | (85,078) | 7.8% | (78,119) | (90,672) | 16.1% | (77,027) | (88,631) | 15.1% | (76,879) | (87,653) | 14.0% | ||||||||||||
| Depreciation | (55,630) | (55,456) | -0.3% | (57,345) | (54,694) | -4.6% | (56,247) | (53,786) | -4.4% | (55,111) | (52,650) | -4.5% | ||||||||||||
12
PHYSICAL STATISTICS
| IQ | IIQ | IIIQ | IVQ | IQ | ||||||
| 2007 | 2007 | 2007 | 2007 | 2008 | ||||||
| Total lines in service at the end of period | 2,185,041 | 2,181,717 | 2,179,739 | 2,179,205 | 2,157,376 | |||||
| Average number of lines in service (quarterly) | 2,196,788 | 2,183,452 | 2,180,512 | 2,182,542 | 2,166,097 | |||||
| Flexible plans (number of lines) (2) | 1,494,377 | 1,548,249 | 1,584,847 | 1,617,837 | 1,632,388 | |||||
| Number of lines installed (1) | 3,020,434 | 3,023,567 | 3,027,141 | 3,032,522 | 3,037,364 | |||||
| Public telephones in service at end of period | 22,295 | 22,217 | 22,109 | 21,918 | 21,974 | |||||
| Effective minutes of local traffic measured by second (million) | 2,113 | 2,149 | 2,051 | 2,082 | 1,831 | |||||
| DLD traffic (thousands of minutes) | 134,335 | 136,547 | 129,931 | 142,387 | 138,598 | |||||
| Outgoing ILD traffic (thousands of minutes) | 18,038 | 17,720 | 18,648 | 19,657 | 19,597 | |||||
| Access charge traffic (thousands of minutes) | 650,837 | 624,928 | 593,284 | 595,614 | 536,964 | |||||
| Number of lines connected | 100,999 | 114,458 | 111,042 | 112,725 | 90,326 | |||||
| TV customers (end of period) | 129,062 | 171,386 | 197,279 | 219,916 | 231,625 | |||||
| ADSL connections (end of period) | 527,057 | 574,464 | 607,322 | 644,522 | 645,106 | |||||
| (1) | With the purpose of reflecting the complete installed capacity, RDSI circuits and lines have been incorporated |
| (2) | Include lines with flexible plans for corporations |
ANNUAL VARIATION
| IQ | IIQ | IIIQ | IVQ | IQ | ||||||
| 2007 | 2007 | 2007 | 2007 | 2008 | ||||||
| Total lines in service at the end of period | -9.6% | -6.7% | -2.5% | -1.6% | -1.3% | |||||
| Average number of lines in service (quarterly) | -9.5% | -8.4% | -4.9% | -1.9% | -1.4% | |||||
| Flexible plans (number of lines) (2) | 30.0% | 27.4% | 25.2% | 22.1% | 9.2% | |||||
| Number of lines installed (1) | 0.2% | 0.2% | 0.3% | 0.4% | 0.6% | |||||
| Public telephones in service at end of period | -5.0% | -2.1% | -3.5% | -1.7% | -1.4% | |||||
| Effective minutes of local traffic measured by second (million) | -17.1% | -15.8% | -13.6% | -3.9% | -13.3% | |||||
| DLD traffic (thousands of minutes) | -6.7% | 2.5% | -3.2% | 8.9% | 3.2% | |||||
| Outgoing ILD traffic (thousands of minutes) | 4.0% | 7.0% | 13.1% | 10.9% | 8.6% | |||||
| Access charge traffic (thousands of minutes) | -17.6% | -16.6% | -17.3% | -11.9% | -17.5% | |||||
| Number of lines connected | 3.4% | 30.9% | 19.3% | 6.5% | -10.6% | |||||
| TV customers (end of period) | 1544.3% | 276.6% | 133.4% | 79.5% | ||||||
| ADSL connections (end of period) | 47.6% | 37.1% | 30.7% | 30.1% | 22.4% | |||||
13
Compañía de Telecomunicaciones de Chile S.A., the first South American company to list shares on the New York Stock Exchange, is the largest telecommunications enterprise in Chile, providing local service, as well as domestic and international long distance services throughout the country. Additionally, the Company leads the corporate data transmission service as well as broadband in Chile and provides equipment marketing, value-added and digital television services, among others.
This news release contains certain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1996, including but not limited to Compañía de Telecomunicaciones de Chile S.A.’s expectations for its performance for the quarter. Forward looking statements may also be identified by words such as “believes”, “expects”, “anticipates”, “projects”, “intends”, “should”, “seeks”, “estimates”, “future”, or similar expressions. The forward-looking statements included in this news release are based on current expectations, but actual results may differ materially from anticipated future results due to various factors many of which are beyond the control of Compañía de Telecomunicaciones de Chile S.A. and its subsidiaries. Certain factors which could cause the actual results of Compañía de Telecomunicaciones de Chile S.A. and its subsidiaries to differ materially from the expected results include, among others, changes in Chile’s regulatory framework, impact of increased competition and other factors beyond Compañía de Telecomunicaciones de Chile S.A.’s control.
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14
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COMPAÑÍA DE TELECOMUNICACIONES DE CHILE S.A.
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By: |
/S/ Isabel Margarita Bravo C.
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Name: Isabel Margarita Bravo C.
Title: Financial Director |
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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.