CEL Discusses Operations, Debt, and Expectations
Note: CEL is currently trading at US$0.68/share.
====
Thursday August 1, 1:17 pm Eastern Time
Press Release
SOURCE: Grupo Iusacell, S.A. de C.V.
Iusacell Discusses Its Operations, Debt Structure and
Expectations
* Operational improvements expected in the second
half of 2002 * Capital expenditure reduction and right-
sizing on track * No major principal debt maturities in
2002 and 2003 * Interest payments on Senior Notes
due 2006 are secured for 2002 * No event of default
has occurred * Profitability in 1H02 improved over
previous periods * 10 additional Company-owned
stores opened in 2Q02
MEXICO CITY, August 1 /PRNewswire-FirstCall/ --
Grupo Iusacell, S.A. de C.V. (NYSE: CEL - News; BMV:
CEL) (Iusacell or the Company) today announced that
no event of default has occurred for any of the
Company's obligations, and Management does not
anticipate any such event of default will occur in the
near future.
Note: The symbols "$" and US$" refer to Mexican pesos
and U.S. dollars, respectively.
Responding to the decline in the price of the
Company's U.S. traded ADRs, Carlos Espinal,
Iusacell's newly appointed CEO, commented, "There is
absolutely no specific event or cause that is triggering
this selling activity. We are confident that our business
is headed in the right direction and our financial
position is sound."
Although a major ratings agency downgraded
Iusacell's debt earlier in the week, the Company
believes that its decision was heavily influenced by
negative market conditions in the telecom sector, as
several other carriers in the world had been
downgraded in the past 90 days. Iusacell has no major
principal payments due in the 2002 and 2003
timeframe, and 2002 interest payments on its Senior
Notes due 2006 are covered by funds in an escrow
account.
The Company is in full compliance with all financial
and operating ratios of its debt instruments as of the
end of the second quarter and has no reason to believe
it will not comply with all of these covenants in the
future.
Management believes that it is taking the responsible
actions to position the Company for long-term viability
that will lead to top-line revenue growth. The Company
believes that prudent cash management, enhanced
value propositions to our customers and leveraging
existing network capacity will enable Iusacell to add
high-value subscribers and improve EBITDA margins
in the coming quarters.
Iusacell is implementing actions to reduce postpaid
churn, which has decreased sequentially over the past
three quarters, improving to 3.2% for the second
quarter down from the 4.2% peak posted in the third
quarter of 2001.
The Company's existing network capacity and the
current level of build-out in our PCS regions in northern
Mexico allowed Iusacell to reduce capital expenditures.
Iusacell carefully evaluated these capital expenditure
cutbacks which, while important for our long term
business model, will not compromise 2002 or 2003
subscriber growth. As stated in the second quarter
Earnings Release, the revised 2002 capex budget, to
be internally funded, is approximately US$130 million,
versus the US$250 million originally projected.
Management believes that with the immediate action
plan being implemented; the right-sizing of its
operations and focus on higher-value propositions as
well as the continued support from its two principal
shareholders, the Company's performance will
improve in the following quarters.
Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE: CEL; BMV:
CEL) is a wireless cellular and PCS service provider in
seven of Mexico's nine regions, including Mexico City,
Guadalajara, Monterrey, Tijuana, Acapulco, Puebla,
Leon and Merida. The Company's service regions
encompass a total of approximately 91 million POPs,
representing approximately 90% of the country's total
population. Iusacell is under the management and
operating control of subsidiaries of Verizon
Communications Inc. (NYSE: VZ - News).
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, the Company claims the
protection of the safe harbor for forward-looking
statements contained in the Private Securities
Litigation Reform Act of 1995. Listed below are some
important factors which could affect future results and
could cause those results to differ materially from
those expressed in the forward-looking statements:
materially adverse changes in the business
environment in Mexico, such as the change in value of
the peso, the imposition of exchange controls, inflation
levels above those in the U.S. and economic
downturns; Iusacell's ability to develop new
technologies and hire and retain qualified personnel;
the Company's ability to obtain debt or equity financing
necessary to pursue business opportunities; and
Iusacell's ability to adapt to rapid technological change
and significant competition.
* Investor Contacts:
* Russell A. Olson
* Chief Financial Officer
* 011-5255-5109-5751
* russell.olson@iusacell.com.mx
* Carlos J. Moctezuma
* Manager, Investor Relations
* 011-5255-5109-5780
* carlos.moctezuma@iusacell.com.mx
SOURCE: Grupo Iusacell, S.A. de C.V. |
