UPDATE: Brazil Vivo 1Q Net Up On Better Operational Performance

Brazil's leading cellular operator, Vivo Participacoes SA (VIV, VIVO4.BR), on Thursday said first-quarter net profit nearly quadrupled due to improvement in its operational performance and the reduction of its costs with depreciation.

Net profit rose to 710.2 million Brazilian reals ($438 million) from BRL191.9 million a year earlier.

Vivo reported net revenue of BRL4.81 billion in the period, up from BRL4.23 billion the year before.

The company's costs with depreciation and amortization totaled BRL545.8 million, down from BRL871.3 million.

Vivo's earnings before interest, taxes, depreciation and amortization, or Ebitda, rose to BRL1.65 billion from BRL1.27 billion. The Ebitda margin, a measure of profitability over net revenue, was 34.3% in the quarter, up from 30.1% in the year-earlier period.

"Vivo closed the first quarter of 2011 with another set of impressive results. When compared to the first quarter of last year, profits rose 270% and Ebitda almost 30%. In addition, service revenue grew 14.7%, while costs increased only by 6.8%. In other words, we are doing more with less, intelligently exploring our scale and our competitive edges," Vivo President Roberto Lima said in a statement.

"The operating cash generation for the quarter (BRL826 million) represents an annual growth exceeding 110%. It is a performance that emerges from firmly rooted foundations, not contingent on favorable causal episodes or facts. This is what we call sustainable growth," he added.

The company ended the period with a total of 62 million clients, up from 53.9 million in the first quarter of 2010.

Vivo is controlled by Spain's Telefonica SA (TEF, TEF.MC).

The company said it invested BRL339.7 million in its operations in the first quarter, up from 328.7 million in the year-ago period.

-By Rogerio Jelmayer, Dow Jones Newswires; 5511-3544-7071; rogerio.jelmayer@dowjones.com

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