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FOR IMMEDIATE RELEASE
February 27, 1996
GRUPO IUSACELL ANNOUNCES RESULTS
FOR FULL YEAR
1995
Company Secures US $65M Bridge
Facility
Mexico City, Mexico - Grupo Iusacell S.A. de C.V. (NYSE: CEL and
CEL.D) reported a loss of 569 million pesos for the full year 1995,
compared to a loss of 519 million pesos for the comparable 1994
period, with results stated on a December 31, 1995 constant purchasing
power basis. The loss in 1995 was due primarily to foreign exchange
losses arising from a continued decline in the value of the peso, as
well as a decline in operating margins resulting from the impact of
high domestic inflation on operating expenses. (1) During the fourth
quarter operating cash flow increased 69%, to 71 million pesos, up
from 42 million pesos in the third quarter. Also, fourth quarter
revenues increased 23%, from 335 million pesos in the third quarter,
to 411 million pesos.
"We successfully met the difficult challenges of 1995,"
concluded
Guillermo Amore, Chief Executive Officer of Grupo Iusacell. "We
maintained our base of customers and experienced moderate growth in a
very difficult business environment. In part due to our success in
instituting stringent cost controls, we were able to keep our core
operations cash positive during a major economic crisis. In fact, our
operating cash flow margin increased significantly from the third to
fourth quarter. This success will position the Company for improved
performance in 1996, as the economy recovers and markets open."
He added, "We have recently secured a 65 million dollar bridge
facility, which is anticipated to be replaced with an
intermediate-bond offering. These proceeds will enable Grupo Iusacell
to fund aggressive business expansion in our core business, and
pending final approval, will provide the necessary financing for the
Company's radiotelephony project." Amore also announced that Grupo
Iusacell has recently signed a joint venture agreement through which
the Company will soon offer national paging services to augment its
cellular product line. He added, "As the economy resumes positive
growth in 1996, we believe that we are well positioned to benefit from
renewed strength in the marketplace. Longer term, Grupo Iusacell has
a unique opportunity to become a full-service provider in the
telecommunications marketplace."
Cellular Results
The Company continued to experience growth in its cellular business,
with subscribers increasing 8% for the year, from 194,723 on December
31, 1994, to 210,201 on December 31, 1995. Revenues increased 27% in
nominal terms, but usage was lower, with MOU per month ending the year
at 141. Revenues on a Mexican GAAP basis declined by 16%, reflecting
the inflation-accounting impact of a 52% domestic inflation rate
during 1995.
Difficult economic conditions have resulted in EBITDA margins for the
cellular business ending the fourth quarter at 21%, with overall EBITDA
margins, including start-up costs associated with the Company's
business development activities, at 17% during the fourth quarter.
Edward Kingman, Chief Financial Officer of Grupo Iusacell said, "The
lower EBITDA margins for 1995 are primarily attributable to the impact
of inflation on our cost of doing business and insufficient price
increases to fully recover these expenses." He added,
"However, we are
encouraged by fourth quarter financial results. Fourth quarter revenue
increased 23% over the third quarter figure, and the fourth quarter
EBITDA margin for the entire business increased to 17%, compared to 12%
in the third quarter."
Moving into 1996, management believes there are opportunities to
increase both profitability and growth in its core cellular business.
First, a 30% price increase effective February 1, 1996, coupled with a
15% price increase in April, 1995, is a significant market initiative
to reestablish compensatory margins in this business. In addition,
the Company recently secured a bridge loan to fund expansion of its
core cellular business. Finally, the Company has announced two key
management changes in the cellular business. Alberto Gomez Obregon
has been appointed Vice President of cellular operations. He is a
former McKinsey engagement manager who then worked as General Manager
for Pepsico in Puerto Rico. More recently, he was managing director
in charge of International Vice President of marketing for Grupo
Dina, here in Mexico. William L. Bishop has been appointed Director
of Region 9 cellular operations. He formerly for GTE Information
Services as a general manager, and more recently as President of
Mobilnet CANTV, a cellular company in Caracas, Venezuela.
Radiotelephony
The Company continues to wait for approval from the SCT of its
technical and economic plans to begin widespread deployment of this
service. Test market results with approximately 3,500 subscribers
continue to be encouraging, with a low level of churn and high system
reliability. Capitalized expenditures for the development of
radiotelephony during the fourth quarter amounted to 17 million pesos,
and the Company is pursuing longer-term financing to support the
expansion of the business, pending SCT approvals. Commitment of
Company resources to the project will be carefully matched to actual
deployment of this network and to experienced rates of customer
acquisition.
Long Distance
During 1995, the Company was awarded a concession to provide long
distance services upon the opening of the market in January 1997. The
Company will focus on leveraging its significant market presence in
the cellular and radiotelephony businesses in committing corporate
resources to the development of this business opportunity. Broader
participation in the long distance market is contingent upon the
economics of interconnection agreements which are currently being
negotiated, promulgation of final rules for the long distance
industry, and potential opportunities to partner with other long
distance carriers.
Grupo Iusacell is the leading independent wireless telecommunications
company in Mexico. It is the non-wireline cellular service provider
in four of Mexico's nine regions in the central portion of Mexico
(including Mexico City) covering a total of 65 million POPs -
representing 70% of the country's total. In addition to its cellular
operations, Grupo Iusacell is continuing with its commercial trial of
radiotelephony services, and has recently received a long distance
license. Grupo Iusacell is listed on the Bolsa Mexicana de Valores
and the New York Stock Exchange. Shareowners include the Peralta
family of Mexico, and Bell Atlantic, a major U.S. regional bell
operating company.
Some key operational figures are as follows:
1995 1994 %Change
Subscribers (EOP) 210,201 194,723 7.9
Net Subscriber Additions 15,478 67,362 (77.0)
Avg Monthly MOU/Sub 141 179 (21.2)
Avg Monthly Rev/Sub/Month (Ps) 466 595 (21.7)
Avg Monthly Churn (%) 3.6 2.7 35.6
Number of Employees 1,996 2,267 (12.0)
(1) The company is reporting results in conformance with
Mexican GAAP
which requires restatement of prior period financials to reflect
constant NPs reporting. Given the 52% inflation experienced during
1995, care must be exercised in making inter-period comparisons.
PLEASE NOTE: IF YOU WOULD LIKE A COPY OF OUR COMPLETE RELEASE,
INCLUDING FINANCIAL STATEMENTS, PLEASE CALL 402-222-9918.
####
for more information, contact:
- Juan Pablo Salinas
011-525-104-4120 (from the U.S.)
905-104-4120 (from within Mexico City)