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To: marginmike who wrote (36916)	7/22/1999 10:41:00 PM
From: 2brasil	Respond to of 152472

these guys cdma?-- Huge cellular growth boosted Mexico's Telmex net By Veronica Galan MEXICO CITY, July 22 (Reuters) - Anchored by huge growth in cellular subscribers, Mexican telecommunication giant Telmex posted higher profits and higher-than-expected revenues in the second quarter, highlighting an earnings report that also featured a big payment from AT&T. Telmex (NYSE:TMX - news) reported second-quarter results late Wednesday, posting a profit of 5.591 billion pesos compared with a profit of 4.157 billion in the prior-year period. ''As expected, cellular was the star of the show, with subscriber growth of 113 percent year over year,'' Patrick Grenham, telecommunications analyst with Salomon Smith Barney, said in a report. Telmex reported 3.25 million cellular subscribers as of June 30 and second-quarter cellular income of 2.87 million pesos, or 47.4 percent higher than the same period a year ago. However, cellular operating costs were up 37.5 percent in the same period, yielding an operating margin of 22.6 percent for the quarter versus 18.5 percent a year ago. Telmex's total revenues came in at 23.4 billion pesos for the second quarter, a growth of 12.6 percent over the same quarter last year, and higher than the average forecast of 8.7 percent growth in a Reuters poll of six analysts . ''The revenues were a little higher than expected. There were some good signs as far as international and domestic long distance,'' said Lars Schonander, chief of research for Santander Investment in Mexico City. However, some of the revenue increase was due to a one-time payment from U.S. long-distance carrier AT&T Corp. (NYSE:T - news), for back fees on international interconnections owed to Telmex. After months of wrangling, Telmex and AT&T signed an agreement in June that set the fee per minute the U.S. carrier owed Telmex for millions of phone calls connected into the Mexican system in 1998 and the first half of this year. In its earnings report, Telmex mentioned the AT&T payment, but not a specific amount. Analysts said it was some $106 million. Analysts anticipated the AT&T payment, but they had not expected increases in long-distance income. Since last year, Telmex and other Mexican long-distance operators have complained of declining international long-distance volume and income, due to rampant ''bypass,'' in which competing carriers get around the Telmex network. But in the second quarter, Telmex said its international long-distance minutes were up 5.7 percent in the first half of the year compared with January-June 1998, and up 14.8 percent in the second quarter compared with April-June 1998. ''Telmex managed to reverse the trend which had seen a decline in the number of minutes billed for international long-distance services,'' Serfin brokerage analysts said in a statement. Telmex did not say why why the international long-distance slowdown had turned around. Several analysts said they expected growth in the margin for earnings before interest, tax, depreciation and amortization (EBITDA), but cost increases in cellular and in local service caused the EBITDA margin to fall to 56.9 percent for the quarter from 57.6 percent in same period last year. However, they said that was somewhat compensated by a better operating margin of 38.0 percent compared with 37.3 percent during the April-June period last year. Telmex, a former state monopoly, is Mexico's largest private company. Though the market is now open to competition, Telmex remains the dominant cellular, long-distance and local phone provider in the country. Controlled by billionaire magnate Carlos Slim, Telmex, or Telfefonos de Mexico, is the heaviest-weighted issue on the Mexican stock exchange and one of the most heavily traded foreign stocks on Wall Street. More Quotes and News: AT&T Corp (NYSE:T - news) Telefonos de Mexico SA de CV (NYSE:TMX - news) Related News Categories: US Market News Help Copyright © 1999 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. See our Important Disclaimers and Legal Information. Questions or Comments?