October 18, 1999

Media contact: Investor Contact:
Ian C. Muir, Director of Investor Relations

  • Record EBITDA margin of 36%; EBITDA up 50% over third quarter 1998
  • Record 181,000 net adds
  • 163,000 digital contract subscribers
  • More than 1.1 million cellular subscribers, 80% over third quarter 1998
  • Digital CDMA network and Single Billing Cellular System fully operational

Mexico City -- Nuevo Grupo Iusacell, S.A. de C.V. [BMV: IUSACELL, NYSE: CEL], today announced record operating cash flow for the third quarter of 1999. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $374 million, versus $249 million in the third quarter last year.

The Company's record performance came as a result of strong operating results, including revenues of $1.052 billion, driven by growth in digital contract subscribers and average revenue per user (ARPU). Iusacell ended the quarter with more than 1.1 million cellular customers and recorded its fourth consecutive quarter of positive net income.

As a result of continued revenue growth, productivity improvements and cost containment, EBITDA grew 50% over third quarter 1998. EBITDA margin increased to a record 36% in third quarter 1999, versus 30% in third quarter 1998

Iusacell has implemented its digital network on all its cell sites, which resulted in a 53% increase in depreciation costs when compared with third quarter 1998. The Company posted an operating profit of $3 million, despite the higher depreciation charge this quarter.

"We've already begun translating recent successes like our single cellular billing platform and our digital coverage over 100% of our cell sites into significant competitive advantages. Iusacell's new single rate plan is a great example of how we used that advantage to quickly and responsively meet the needs of a specific Mexican market segment," said Tom Bartlett, CEO of Iusacell and President and CEO of Bell Atlantic International Wireless.

Operating Performance

In the third quarter of 1999, compared to the same quarter last year, total revenues were up 25% and the cellular subscriber base grew 80%. Service revenues increased 28% for the same period.

"Iusacell will continue to focus on high quality, high value products, services and customer care. Our digital network and state-of-the-art systems are now well positioned to support the continued rapid growth of our digital subscriber base," stated Fulvio Del Valle, President and Director General of Iusacell.

The Company has a base of 163,000 digital contract customers, an increase of 58% in the past three months. This digital growth includes the accelerated migration of analog contract subscribers in the third quarter. To enhance its Nuevo MilenioTM digital packages and further penetrate the contract market, the Company launched its "one single rate" plan for local, national long distance and international long distance to the United States and Canada and roaming calls on September 26th. The new product should generate added long distance and roaming traffic. Based on the positive consumer response, the one single rate plan has been extended to the Company's prepaid customer base. Iusacell expects the balance of the year to show strong contract subscriber growth in all of its operating regions.

The Company's decision to extend the life of its VIVATM prepay card by 185 days has resulted in the retention, in the last two quarters, of approximately 130,000 subscribers as "incoming calls only" customers who otherwise would have been deactivated. This strategy has resulted in additional revenue for the quarter. The Company will retain these "incoming calls only" customers as long as they continue to contribute to profitability.

The six-month trial pricing for Calling Party Pays (CPP) will end in October 1999. In the first five months since CPP was launched, Iusacell has experienced at least 8% increase in traffic due to CPP, with a considerable increase in the percentage of incoming calls and cellular to cellular calls. The Company expects to see continued growth of incoming and cellular to cellular traffic volumes.

The Company continues to improve accessibility to all our products while especially facilitating replenishment of our prepaid products, expand its distribution network in the last 12 months by 111% to more than 5,800 points of sale (POS). There are now 1,112 full service outlets (96 directly owned) and an additional 4,739 points of sale for prepay cards. This expanded distribution, together with the features of the VIVATM prepay platform, has helped drive the strong growth in prepay subscribers since third quarter 1998.

Third quarter 1999 contract minutes of use (MOUs) and contract ARPUs increased 6% and 15%, respectively, compared with third quarter 1998. This improvement was primarily driven by growth in digital subscribers, value-added services and the impact of calling party pays. Excluding the incoming-only customers, further penetration of the prepaid market resulted in a 9% decrease in blended MOUs but a 1% increase in ARPUs, when comparing third quarter 1999 over the same period in the previous year.

Cash operating expenses per subscriber decreased to $737 in the third quarter, a 32% reduction from the $1,085 recorded in third quarter last year. Contract subscriber acquisition cost increased from US$354 in the third quarter 1998 to US$386 in the third quarter 1999 as the Company's strategy for accelerating digital customer base growth increased the need for higher-cost digital handsets.

Third quarter 1999 net income was $103 million, mainly reflecting integral financing gains. This compares with a net loss of $1.5 billion in third quarter 1998.

Financial Condition

Capital Expenditures. Iusacell's capital expenditures were US$25 million during third quarter 1999, primarily used to accelerate the deployment of digital infrastructure and the continued expansion of Iusacell's long distance fiber optic network. All cell sites in Regions 5, 6, 7 and 9 now provide digital coverage.

Liquidity. During the third quarter, the Company funded its operations, capital expenditures, handset purchases and interest payments through internally generated cash flow, proceeds totaling US$34 million from the primary equity and rights offerings and vendor handset financing.

Debt. Debt, including Interest-bearing trade notes payable, as of September 30, 1999 totaled US$472 million, representing a US$33 million increase from third quarter 1998. This additional debt was used primarily to finance deployment of the Company's 100% digital network. All of the debt is U.S. dollar-denominated, with maturities averaging 3.0 years. Iusacell's debt-to-capital ratio was 45.6% at the end of the quarter, versus 60.4% at September 30, 1998.

Other Business Developments

Restructuring and Recapitalization Plan. In the third quarter, Iusacell completed its share exchange and rights offers. 99.9% and 95.5% of outstanding Series "D" and "L" shares, respectively, were exchanged. The rights offer received an 82.1% subscription rate, which resulted in gross proceeds to New Iusacell of US$12.9 million. At the expiration of the exchange and rights offers, New Iusacell successfully completed a primary and secondary share offering for a combined 125 million shares (12.5 million American Depositary Shares). As a result of these offers, Iusacell's public float increased by 14.7 million ADRs or 128%.

Year 2000 Compliance. All required modifications or replacements of mission critical systems and internal network elements had been implemented by the end of the third quarter of 1999. All required modifications or replacements are scheduled to be completed by the end of October 1999. US$17 million have already been spent or committed to complete the Year 2000 compliance program.

The Company's Year 2000 compliance program is, in large part, dependent on third party vendors and interconnecting carriers. The Company can not assure that all significant third parties will implement timely corrective measures necessary on their part to prevent disruption of service or to ensure correct billing and payments. In that event, the Company will, in most cases, be able to implement contingency plans to minimize or eliminate potential billing and service disruption.


Nuevo Grupo Iusacell, S.A. de C.V. (New Iusacell) was organized as a limited liability stock company under the laws of Mexico on August 6, 1998. As a result of the exchange offer completed in August 1999, New Iusacell holds substantially all of the capital stock of Grupo Iusacell, S.A. de C.V. (Old Iusacell).

Grupo Iusacell, S.A. de C.V. (NYSE: CEL.Y; BMV: IUSACEL) (Old Iusacell) is a leading independent telecommunications company in Mexico. It provides wireless cellular service in four of Mexico's nine regions in the central portion of Mexico (including Mexico City) covering a total of 67 million POPs, representing approximately 69% of the country's total population.

New Iusacell and Old Iusacell have been under the management and operating control of subsidiaries of Bell Atlantic Corporation.

Note: This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Discussion of factors that may affect future results is contained in our filings with the Securities and Exchange Commission.

For any additional information please check our web page at: http://www.iusacell.com.mx.

List of the following financial statements attached:

Consolidated Income Statements:

  • Three months ended September 30, 1999 and 1998
  • Three months ended September 30, 1999 and June 30, 1999
  • Nine months ended September 30, 1999 and 1998 New Iusacell Consolidated Balance Sheets
    • September 30, 1999 Old Iusacell Consolidated Balance Sheets
      • September 30, 1999 and 1998
      • September 30, 1999 and June 30, 1999

        1 Unless otherwise noted, all monetary figures are in Mexican Pesos and restated as of September 30, 1999 in accordance with Mexican GAAP, except for ARPU (which is in nominal pesos).

      • Recent Articles

        07.01.2020 | Corporate

        During this unprecedented period challenging the world’s health and economy, Verizon stands ready to serve our customers.

        06.25.2020 | Corporate

        Verizon leads the industry in protecting more than 75 million consumer, business and prepaid wireless lines with Call Filter, which helps curb unwanted robocalls made to consumers.