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Grupo Iusacell Announces Second Quarter Results
Strong Quarterly Growth in Subscriber Base
July 28, 1997
Media contacts: | Cynthia M. Pelini |
Mexico City, Mexico - Grupo Iusacell, S.A. de C.V. (NYSE: CEL and
CEL.D) reported that its subscriber base at June 30, 1997 was 281,740
customers versus 250,727 customers as of March 31, 1997, an increase
of 31,013 subscribers, or 12.4%. The company reported revenues of
$428.5 million pesos in the second quarter of 1997, a 12.6% increase
over first quarter revenues, with all results stated on a June 30,
1997 constant purchasing power basis.1 The increase in revenues is
due to strong subscriber growth, aided by price increases implemented
during the second quarter. Earnings before Interest, Taxes,
Depreciation and Amortization (EBITDA) were $70.3 million pesos in the
second quarter of 1997, compared to $72.9 million pesos in the first
quarter of 1997. Primarily due to a substantially lower gain from
monetary correction, the company reported a net loss of $67.1 million
pesos in the second quarter of 1997 compared to a net loss of $33.1
million pesos in the first quarter of 1997.
Tom Bartlett, President and CEO of Grupo Iusacell, noted,
"Accelerating subscriber growth demonstrates the success of our
restructuring plan for Iusacell. With the appointment of Fulvio del
Valle as Director General, Iusacell has a seasoned management team in
place to build on the positive momentum of the business. With the
successful completion of our U.S. $375 million financing program, we
have lowered our cost of capital and are assured of the resources
necessary to support a new level of success in the marketplace."
Operationally, Grupo Iusacell reported total service costs of $181.7
million pesos in the second quarter of 1997, a 34.0% increase from
total service costs of $135.6 million pesos reported in the first
quarter of 1997. The higher level of service costs in the second
quarter of 1997 is attributable to increased expenses incurred to
support the extension of Iusacell's long distance coverage. Sales,
general and administrative expenses were $197.9 million pesos in the
second quarter of 1997, a 3.9% increase from the $190.4 million pesos
reported in the first quarter of 1997.
In early April of this year, the company restructured its workforce,
thereby eliminating approximately 240 positions, primarily in
non-sales and marketing areas. Also in the second quarter, Iusacell
signed additional exclusive long-term contracts with independent
distributors. Since the assumption of control by certain of Bell
Atlantic's subsidiaries in February 1997, Iusacell has doubled its
points of sale to 508 throughout its four regions.
Fulvio del Valle, the Director General of Iusacell, noted, "We are
well on track to exceeding the growth targets which Tom Bartlett has
set for Iusacell, with an annualized subscriber growth rate of 49%,
demonstrating the success of our commitment to leading-edge quality of
training, distribution and customer care, as well as the highest
standards of quality in our network. These structural improvements
are the key to margin expansion and profitable growth. Subscriber
growth is driving a higher level of revenue growth and I am pleased
with the rebound in contract net adds this quarter. I believe that we
can continue to achieve revenue growth close to the level of
subscriber growth. With the reaction from our sales force to our new
sales compensation program, the pace of development in our retail
channel, distribution growth, and the customer response to our new
image, Iusacell's market share is growing."
Grupo Iusacell also reported that, on July 25, it received a
disbursement of U.S. $275 million under its financing program,
consisting of a bond offering of U.S. $150 million and a syndicated
bank credit of $125 million. Accompanying these facilities is a U.S.
$100 million revolving credit which carries a twelve month drawdown
availability period.
Howard F. Zuckerman, Chief Financial Officer of Grupo Iusacell, noted,
"I am pleased with the support shown to Grupo Iusacell with the
successful placement of this total financing package of U.S. $375
million. We are well-positioned to support the rapid growth of our
cellular business and other opportunities in the Mexican
telecommunications marketplace. Upward pricing and ongoing cost
reductions, as well as continued top-line growth, will contribute to
improving cash flow from operations."
Average monthly minutes of use (MOU) per subscriber for the second
quarter of 1997 were 106, as compared to 108 in the first quarter of
1997. This decline is attributable to a normal industry trend of
lower MOU's as the cellular subscriber base expands, as a result of
growth in both the contract and prepay subscriber bases. Average
monthly revenue per subscriber declined to $463 pesos in the second
quarter of 1997, versus $469 pesos in the first quarter of 1997;
average monthly revenue per subscriber is not adjusted to reflect
constant peso purchasing power as of June 30, 1997. Grupo Iusacell
significantly improved contract churn for the second quarter of 1997
by reducing it to 2.73% as compared with 3.13% in the first quarter of
1997.
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Grupo Iusacell is a leading independent 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 population. Since February 1997, the Company has
been under the operating and management control of Bell Atlantic
which, through certain subsidiaries, owns 42% of the capital stock of
Grupo Iusacell.
Operating Highlights
Second Quarter First Quarter
1997 1997 % Change
Subscribers (EOP) 281,777 250,727 12.4
Net Subscriber Additions 31,050 17,821 74.2
Avg Monthly MOU / Sub 106 108 (1.9)
Avg Monthly Rev / Sub 463 469 (1.3)
Avg Monthly Contract Churn 2.73 3.13 (12.8)
Number of Employees 2,050 2,339 (12.4)
The comparisons above are on an "as reported" basis.
The Company is reporting results in conformance with Mexican GAAP
which requires the restatement of prior period financials to reflect
constant peso reporting .