Telefonica Moviles Obtains Highest Organic Growth in its History in
Fourth Quarter 2003 and Posts Full-Year Net Profit of 1.608 Billion
Euros MADRID, Spain, February 19 /PRNewswire-FirstCall/ -- - The
Board of Directors will propose to the Annual General Shareholders'
Meeting the payment of a gross dividend of 0.1838 euros per share
charged to 2003 earnings. The proposed dividend, which has a total
value of 796 million euros, represents an increase of 5% over the
previous year's dividend. - Increased activity in the fourth
quarter of the year led to a rise of over 4.2 million customers in
this period (an annual increase of 25%), bringing the Group's total
managed customers to over 52 million. - Operating revenues grew
10.2% (in the first nine months of the year the increase was 7.0%)
to 10.070 billion euros. Telefonica Moviles Espana reported a 10.7%
increase in revenue, while Latin American operators' revenue rose
12.1% in euros, although this figure would be 27.7% without the
impact of exchange rates and the incorporation of TCO. - EBITDA
advanced 19.5% to 4.463 billion euros, after growing 22% in the
fourth quarter. The consolidated EBITDA margin was 44.3%, 3.4 p.p.
higher than in 2002. - Consolidation of leadership in Spain, both
in terms of customers and traffic. Telefonica Moviles Espana
captured over 553,000 customers in the fourth quarter, leading to
full-year growth of 7% in total client numbers, to over 19.66
million. Traffic carried by the operator's networks increased by
18% in minutes. ARPU rose 3.7%, thanks to a rise in both voice (+
3.0%) and data (+ 8.8%) ARPU. - In Brazil, the net gain in the
fourth quarter was 2.2 million customers (with a 50,1% estimated
average share of adds for the quarter), bringing the full-year
total to over 20.6 million. MOU rose to 103 minutes and revenues
from data services to 3.3% of all revenues in the fourth quarter. -
Telefonica Moviles Mexico exceeded all its marketing targets,
capturing over 725,000 customers in the fourth quarter, bringing
its total customer base to over 3.5 million. The company thus
achieved a sound position from which to capture a significant part
of the potential growth in the Mexican market: at the end of 2003
its GSM network covered 96 towns and cities andits distribution
network tripled to 6,200 points of sale. NOTES ON THE PRESENTATION
OF RESULTS The financial statements for 2003 reflect the real
composition of the Telefonica Moviles Group, with no difference
from the corresponding information submitted on a regular basis to
the CNMV (the Spanish SEC). The financial statements and management
discussions appearing in this report corresponding to 2002 refer to
pro-forma data (Combined Pro-forma Financial Statements), which
could give rise to differences with respect to the corresponding
information submitted to the CNMV. For a correct understanding of
this report, a reconciliation of the pro-forma financial
information for 2002 and that included in the public information
submitted on a regular basis to the CNMV has been carried out. The
financial statements for 2002 were prepared on the assumption that
all companies in which Telefonica Group held a stake as of 1
January 2002, and which as of 31 December 2002 had been transferred
and/or sold toTelefonica Moviles, are included in Telefonica
Moviles Group financial statements from the moment of their
incorporation to Telefonica Group. The consolidated financial
statements for Telefonica Moviles Group do not include the mobile
operators in Chile and Puerto Rico managed by Telefonica Moviles.
As regards changes in the consolidation perimeter, we would
highlight the following: Telefonica Moviles' stake in the share
capital of Grupo Pegaso Telecomunicaciones has been fully
consolidated since September 2002. On 27 December 2002, Brasilcel,
the Joint Venture with Portugal Telecom in which each of the
partners has a 50% stake, was constituted by transferring 100% of
both Groups' direct and indirect shareholdings in various Brazilian
cellular operators -TeleSudeste Celular, CRT Celular and TeleLeste
Celular by Telefonica Moviles and Telesp Celular Participacoes and
an additional stake in CRT Celular by Portugal Telecom. From this
date Telefonica Moviles Group's financial statements include the
consolidation of Brasilcel (and accordingly, Tele Sudeste Celular,
CRT Celular, Tele Leste Celular and Telesp Celular Participacoes
-which incorporates Tele Centro Oeste Participacoes since May
2003-) using the proportional integration method. Afterthe
agreement reached with Terra Lycos in 1Q03 for the restructuring of
Telefonica Moviles Interacciona (formerly Terra Mobile), Telefonica
Moviles consolidates 100% of this company in its financial
statements. This company had already been fully consolidated since
September 2001. Following the acquisition of 61.10% of the ordinary
shares with voting rights -equivalent to 20.37% of the total share
capital- of Tele Centro Oeste Celular Participacoes, S.A. (TCO)
through Telesp Celular Participacoes, S.A., this company has been
fully consolidated in Brasilcel's financial statements since 1 May
2003. The sale of 100% of Telefonica Mobile Solutions' to TS
Telefonica Sistemas SA, a company belonging to the Telefonica
Group, took place in June, with effect from March 2003. Since that
date, it is not integrated within Telefonica Moviles' consolidation
perimeter. In July 2003 Medi Telecom carried out a capital
increase, as a result of which Telefonica Moviles increased its
stake to 32.18%. Following the acceptance of the takeover bid for
the ordinary shares with voting rights by the minority shareholders
of Tele Centro Oeste, TCP has increased its stake in TCO to 86.58%
ordinary shares, which represents 28,87% of the company's total
share capital (not including treasury stock). In December 2003 the
Group's Austrian subsidiary, 3G Mobile Telecommunications GmbH was
sold to the mobile operator Mobilkom Austria. Since then the
Company no longer belongs to the Group's consolidation perimeter.
This presentation to analysts contains, and during the reading of
this there may be expressed statements that constitute,
forward-looking statements (as commonly accepted and within the
meaning of the Private Securities Litigation Reform Act (USA) of
1995) intents, projections, expectations or forecasts made by the
Company at the date of said document. These may refer to various
aspects such as the customer base; growth in the Company's business
and the market share of its various businesses; the Company's
results and other aspects of its activity and situation. Such
forward looking statements are not guarantees of future performance
and involve risks and uncertainties, and actual results may differ
materially from those in the forward looking statements as a result
of various factors. Telefonica Moviles reported net profit of 1.608
billion euros in 2003, compared to losses of 3.725 billion euros in
2002. Excluding the impact of the net extraordinary provisions
booked in 2002, the Group would have reported a year-over-year net
profit increase of 14.4%. These results are the consequence of a
solid operating performance in a year shaped by strong commercial
activity, especially in the second half of the year, reflecting
Telefonica Moviles' high organic growth profile. These results
enable Telefonica Moviles' Board of Directors to propose the
payment of a dividend of 0.1838 euros per share for approval at its
Annual General Shareholders' Meeting, in line with the company's
commitment to increase thedividend by more than inflation. The
proposed dividend, which has a total value of 796 million euros,
represents a 5% increase over that of the previous year. The date
proposed for payment of the dividend is June, 2004. Strong growth
in operating revenues and EBITDA, coupled with efficient
investment, enabled consolidated free cash flow generation
(consolidated free cash flow = EBIT (1-t) + Amortisation and
Depreciation - Capex - capitalised opex) in the year of 2.184
billion euros (+19% vs. 2002) despite the rollout of the GSM
network in Mexico. Telefonica Moviles obtained significant growth
in operating revenue. Over the year as a whole this amounted to
10.070 billion euros , a year-over-year increase of 10.2%. Revenue
growth accelerated over the year. Year-over-year growth in the
fourth quarter was 19.7% while in the previous quarter it had been
15.4%. Assuming constant exchange rates and excluding the impact of
the acquisition of TCO, revenues would have grown 14.1% in 2003
year-over-year. Consolidated revenue growth was mainly driven by
the increase in the customer base. Telefonica Moviles increased its
managed customer base by more than 10.6 million in 2003, an annual
increase of over 25%. Noteworthy was the strong commercial activity
during the Christmas season in all areas of operations, achieving
net adds of over 4.2 million customers in 4Q03. This marked the
highest quarterly organic growth in the Group's history. Telefonica
Moviles ended 2003 with more than 52 million managedcustomers.
Growth in the customer base and higher traffic carried on the
networks of Group operators underpinned an 8.5% year-over-year
increase in services revenues in 2003 to 8.872 billion euros. The
increase in the first nine months of the year was7.1%. By regions,
Telefonica Moviles Espana's operating revenues exceeded 7.495
billion euros, a year-over-year increase of 10.7%. Growth was 16.4%
in the fourth quarter of the year, thanks to strong commercial
activity in this period. Here we would highlight the good
performance of service revenue, which increased by 9.9% in 2003 as
a whole. Service revenues advanced 9.1% in the first nine months of
the year and by 12.4% in the fourth quarter, boosted by
year-over-year increases in the total customer base (6.8%) and in
ARPU -average revenue per user- (3.7%). Latin American operators
contributed 26% of consolidated revenues in 2003, with a
year-over-year increase in absolute terms of 12.1% in euros.
Excluding the impact of exchange rates and the incorporation of TCO
into the Group's consolidation perimeter, revenues would have shown
growth of 27.7% vs. 2002. Telefonica Moviles exercised tight
control of operating expenses, which grew nearly 5 p.p. less than
revenues despite the increased commercial activity. Personnel
expenses fell 11%, representing 4.8% of operating revenues in 2003,
compared with 6.0% in 2002. Consolidated EBITDA in 2003 amounted to
4.463 billion euros, 19.5% higher than in 2002. Excluding the
impact of exchange rates andthe incorporation of TCO into the
Group's consolidation perimeter, consolidated EBITDA would have
shown growth of 20.6%. With EBITDA growing faster than revenues,
the consolidated EBITDA margin advanced 3.4 p.p. from 2002 to
44.3%. In quarterly terms, EBITDA grew 22.0% in the fourth quarter
of 2003 compared to the same period of 2002. As a result, the
EBITDA margin in the fourth quarter of the year reached 39.6%, an
improvement of almost 1 p.p. on the same period of the previous
year despite the net add being 5.2 times larger. The decline in the
margin in 4Q03 vs. 3Q03 was due to increased commercial activity in
the year's last quarter. By geographic regions, Telefonica Moviles
Espana's EBITDA recorded an annual increase of 12.9% in 2003, with
an EBITDA margin of 52.6%. The increase in the last twelve months
has been 1 p.p. EBITDA for the consolidated Latin American
subsidiaries rose 4.7% vs 2002, assuming constant exchange rates
and excluding TCO's incorporation to the consolidation perimeter.
This was fuelled by higher EBITDA in Brazil and Argentina, which
offset the negative contribution from operations in Mexico after
the heavy commercial efforts made during the year (e.g. brand
launch, increased coverage, introduction of GSM services).However,
in euros, EBITDA for the consolidated Latin American subsidiaries
showed a year-over-year decrease of 2.3% (-13.6% in the first nine
months of the year). Losses from companies consolidated by the
equity method fell 49% mainly due to a 61% decrease in losses
attributable to the Group through its stake in IPSE 2002 ( -38
million euros) and the improvement in Medi Telecom results
following a 31% decline in losses (-38 million euros attributable
to Telefonica Moviles). Net financial losses increased 19.6%, due
mostly to incorporations to the consolidation perimeter. Remember
that in the first half of 2002 financial expenses associated with
the acquisition of the UMTS licence in Germany were capitalised.
Consolidated net financial debt at December 2003 stood at 5.087
billion euros, 27% lower than at the end of 2002. This was mostly
the result of strong internal cash flow generation and was achieved
despite the changes in the Group's consolidation perimeter in the
previous twelve months. Proportional net financial debt at the end
of the year stood at 5.799 billion euros, 25% less than at December
2002. The amortisation of goodwill on consolidation grew 16.8% due
to the changes in the consolidation perimeter mentioned above. No
significant extraordinary items were booked in 2003. In 2003, capex
for Telefonica Moviles totalled 1.214 billion euros, a 32%
increase, mostly deriving from the rollout of the GSM network in
Mexico, which required an investment of 483 million euros.
Investment in other countries where the Group operates was
virtually unchanged from the year before. Regarding capitalised
expenses in 2003, only the provision for the fee for the spectrum
assigned to Telefonica Moviles Espana for the future operation of
UMTS technology was recorded (22.4 million euros). In 2003, the
Spanish cellular market grew by nearly 4 million new customers,
reaching an estimated size of over 37.5 million customers by the
end of December (+12% vs. 2002). This led to a penetration rate of
88.1%%, 8.3 p.p. higher than at the end of 2002. The market was
particularly dynamic in the last quarter of the year, with
approximately one-third of the annual increase in customers coming
in this period. Telefonica Moviles Espana ended the year with over
19.6 million customers, 7% more than at the end of 2002.
Accordingly, the operator consolidated its undisputed leadership of
the Spanish market with an estimated market share of 52.4%. In
4Q03, Telefonica Moviles Espana stepped up its commercialefforts,
registering a net gain of 553,000 customers and leading market
growth in the quarter. As regards prepaid to contract migrations,
the volume in 4Q03 was the largest in the Company's history, with
over 357,000 movements. Total migrations duringthe year were 1.2
million, 63% more than in 2002. As a result, contract customers at
the end of the year represented 40.3%% of the total, 5.2 p.p. more
than in 2002. As for customer loyalty measures, there were just
over a million handset upgrades in 4Q03, 11% more than in 4Q02. The
total volume for the year was 4 million, 71% more than in 2002.
Behind this dynamism in customer loyalty was an acceleration in
handset upgrades by contract customers (85% vs. 2002) in the
MoviStar Plus points programme, as well as an increase in upgrades
by prepaid customers through the Estrena programme (nearly 60%).
Alongside this commercial performance was the consolidation of
strong growth in consumption throughout the year. Accordingly,
traffic carried on Telefonica Moviles Espana networks in 4Q03
reached over 9.8 million minutes, a year-over-year increase of 17%.
Annual traffic amounted to 37.7 million airtime minutes, an
increase of 18.2% from 2002. As for customer usage ratios, 2003
also saw the beginningof a clearly upward trend in MOU after
remaining stable in 2002. MOU for the fourth quarter of 2003 again
confirmed its sound growth, amounting to 118 minutes, 10%% more
than in the same period the year before. Annual MOU was 116
minutes, also 10% higher than in 2002. Outgoing MOU fared
especially well, registering double-digit year-over-year growth in
all four quarters of 2003 and totalling 77 minutes for the year as
a whole (+13% vs. 2002). MOU stabilised for the prepaid segment in
2003, despite the sharp increase in the pace of migrations to the
contract segment, but improved for contract customers by 3% vs.
2002. In 2003 as a whole, total SMS messages channeled through the
company's network exceeded 9.302 billion, compared to 8.375 billion
in2002. SMS traffic was particularly high in December when, over
Christmas, 52% of Telefonica Moviles Espana's customers sent at
least one SMS. This led to a more than 4 p.p. increase in the
penetration rate compared to previous months. We would also point
up the huge increase in the latter part of the year in other types
of data services, which led to an increase of over 5 p.p. in the
percentage of non-SMS revenues on total data revenues to 8.8%.
Since 13 February 2004 Telefonica Moviles Espana has been offering
corporate customers `Oficin@ MoviStar UMTS', the first 3G service
to be marketed in Spain by a mobile telephone operator, which
provides high speed data transmission (up to 384 Kbit/second). The
`Oficin@ MoviStar UMTS' pack comprises a PCMCIA UMTS/GPRS card,
which includes a USIM MoviStar card. Thanks to these efforts, total
data revenues in 4Q03 increased by 17% from 4Q02 to nearly 220
million euros. Data revenue for 2003 totalled 844 million euros,
15% more than in 2002. Data ARPU amounted to 3.8 euros in the
fourth quarter of 2003, after accelerating continuously throughout
the second half of the year. Annual data ARPU in 2003 was 3.7
euros, an 8.8% annual advance. Consequently, Telefonica Moviles
Espana managed to reverse the annual trend for its ARPU in 2003,
registering year-over-year growth for the first time in the
Company's history. ARPU for 2003 as a whole was 29.7 euros, 3.7%
more than in 2002. ARPU for 4Q03 was 30.1 euros, a 7%
year-over-year advance. The smaller amount compared to 3Q03 is due
to the seasonal nature of the business and the reduction in call
termination rates. Accordingly, despite the increased commercial
activity of 4Q03, TEM was able to deliver a solid set of earnings:
Operating revenues advanced 16% year-over-year to 2.028 billion
euros in 4Q03, taking total revenue for 2003 to almost 7.5 billion
euros, an annual increase of 10.7%. Service revenues advanced 9.9%,
while handset sales revenue rose 17% thanks to the increased
commercial activity. The combined weight of subscriber acquisition
and retention costs over operating revenues was 7.8% in 2003 and
7.1% for 2003 as a whole, a decline of 0.8 p.p. from 2002. EBITDA
for 4Q03 was 974 million euros (10% higher than in the same quarter
of theprevious year), while accumulated EBITDA for 2003 was 3.941
billion euros, year-over-year growth of 12.9%. The EBITDA margin
for 2003 was 52.6%, 1 p.p. higher than in 2002, confirming TME's
position as one of the sector's most efficient mobile operators.
The quarterly reduction in the EBITDA margin in 4Q03 was the
logical result of the underlying impact of the greater commercial
efforts made in the year's last quarter for the Christmas season.
Capex in 2003 totalled 521 million euros, broadly in line with the
figure for 2002, and equivalent to 7.0% of operating revenues.
Despite strong traffic growth, the company actively ensured service
quality levels were maintained. MOROCCO Medi Telecom ended 2003
with 2.060 million customers, 28.7%% more than in 2002. This marks
an acceleration in growth from previous quarters (+23.4% in 3Q03).
As a result, the company increased its estimated market share to
43%. In 2002, Medi Telecom's market share was 41%. Medi Telecom has
significantly improved its financial results, thanks to growth in
its customer base and cost control. Its EBITDA margin was 38.2% in
4Q03 and 35% for the year as a whole. In absolute terms, EBITDA was
94 million euros compared to 34.5 million euros in 2002 (+173%).
Also in 2003, the operator generated positive operating cash flow
(EBITDA-capex) for the first time ever, of 33 million euros, thanks
to both higher operating profit and a reduction in capex. In
Brazil, Vivo had over 20.6 million customers in 2003, with net adds
of approximately 2.2 million customers in 4Q03. The strong increase
in net adds in the last quarter of the year reflects the strong
growth in the Brazilian market in general and the regions where
Vivo operates in particular. It also reflects the impact ofthe
successful Christmas campaign. This started in November and
emphasised aspects of Community, Group and Family among Vivo
customers. In this context, Vivo has led growth in its areas of
operation, with average net adds of 50% in 4Q03, in spite of the
increasing competitive environment, with a new competitor starting
to operate in some of Vivo's regions (Sao Paulo, due to the
acqusition of BCP by Claro, as well as Bahia-Sergipe and
Parana-Santa Catarina). Over the year as a whole, Vivo has
consolidated its position as Brazilian market leader, with an
average estimated market share of over 56% in its areas of
operation and 45% for Brazil as a whole. The Group stepped up its
commercial activity at TCP and TCO's areas of operations, achieving
net adds of over 1.6 million customers in 4Q03. Despite the sharp
increase in the customer base (+11.8% vs. 3Q03), total MOU in 4Q03
was 103 minutes. This figure was slightly higher than in 3Q03 (101
minutes) . Total MOU in 2003 was 101 minutes. Total ARPUin 4Q03 was
39 reais, vs 40 reais in 3Q03. Total ARPU was 39.5 reais in 2003.
The comparison with 2002 is distorted by the change in accounting
methodology for prepaid revenues in TCP and the incorporation of
TCO to the consolidation perimeter. The growing trend in the use of
data services seen since the beginning of the year continued in
4Q03. These represented 3.3% of service revenue vs. 2.9% in 3Q03
and 2.2% in 2Q02. This greater use of data services was driven by
the increased use of handsets with SMS and WAP. capabilities. Vivo
maintained its position of leadership in the development and
maintenance of data services in Brazil throughout 2003, taking
advantage of the competitive advantages offered by its CDMA 1XRTT
network over other operators. CDMA 1XRTT coverage increased
significantly in 4Q03, reaching 101 cities. As regards the
Brazilian companies' contribution to Telefonica Moviles Group
consolidated results, it should be remembered that comparison
between 2003 and 2002 results is distorted because figures for 2003
include Brasilcel under proportional consolidation -including TCO's
results from 1 May, 2003- while in 2002 the consolidated results
included those of the three companies controlled by Telefonica
Moviles in Brazil at that time. In 4Q03 operating revenues showed
growth in local currency of 9.4% vs. 3Q03, thanks to strong net
adds in the last quarter of the year. Regarding service revenues
(+2.1% vs. 3Q03), we would note that over 60% of net adds were
recorded in December, and therefore, these clients' usage revenues
will be reflected in the next few quarters. EBITDA (-10.1% vs. 3Q03
in reais) was heavily affected by commercial activity in 4Q03, with
a 130% higher net gain compared to 3Q03. The EBITDA margin, after
management fees, was 33% in 4Q03 and. 36.8% in 2003. Total
investments in 2003 were 153.2 million euros. The efforts made by
Telefonica Moviles Mexico in 4Q03 have allowed it to widely surpass
its network and commercial targets. Thus, in addition to
improvements in logistics, the company has significantly increased
the coverage of its GSM network from 17 cities in September to 96
in December 2003, compared to its initial target of 46.
Additionally, the group has further expanded its distribution
channel, practically tripling its points of sale throughout the
country since the beginning of the year to over 6,200, an increase
of 70% compared to 3Q03. Thus, Telefonica Moviles Mexico has
clearly strengthened its competitive position, allowing the groupto
substantially increase its commercial activity in the second half
of the year. The Christmas campaign was particularly successful -
with over half a million new customers in the month of December.
Net adds in 4Q03 were 725,000 customers, a significant increase on
the previous quarter (191,000) and an estimated net add share for
the quarter of 33%. The customer base increased by over one million
clients in 2003 and Telefonica Moviles Mexico had a client base of
3.5 million at December 2003 (+43% vs. 2002). As a result, the
company increased its market share by 2.1 pp in 2003 to 11%. It is
worth noting that 26% of net adds were GSM clients. In 4Q03, total
MOU was 66 minutes, a decline of 4.7% vs. 3Q03 thanks to the strong
growth in the customerbase. Total MOU in 2003 was 74 minutes. ARPU
in 4Q03 was 185 Mexican pesos, 4.8% less than in 3Q03 (194 pesos)
due to the strong growth in the customer base. In 2003 ARPU was 202
Mexican pesos. Due to the standardisation of the way MOU and ARPU
are calculated in Grupo Telefonica Moviles, previous quarters'
figures were recalculated in 4Q03. As for Telefonica Moviles
Mexico's financial results, it must be remembered that the
year-over-year comparison of 2003 with 2002 is distorted by the
incorporation of Grupo Pegaso Telecomunicaciones from September
2002. Operating revenues in local currency increased 44% in 4Q03
vs. 3Q03, boosted by the strong growth in service revenues (+7.6%),
underpinned by the increase in prepaid recharges at the end of
theyear and the rise in handset sales during the Christmas
campaign. On the other hand, as a result of the strong increase in
commercial activity, the rise in the number of sales points and the
roll out of the GSM network, Telefonica Moviles Mexico has recorded
larger operating losses this quarter. In 2003, EBITDA was -109
million euros, slightly higher than originally forecast, due to the
larger-than-expected increase in the customer base. Total capex in
2003 was 483 million euros, positively affectedby exchange rates.
In 2003 total operating losses and investment stood at 592 million
euros, lower than the company's expectations (700 million euros)
despite greater commercial activity and the increase in network
rollout and points of sale. ARGENTINA In an environment of
stability and economic growth, the Argentine mobile market has
beaten its original targets for 2003 and is consolidating a new
growth phase. Unifon's customer base increased by 12.8% in
full-year 2003 and 8.0% in the fourth quarter of the year over the
third, to reach 1.824 million customers. The group maintains its
position as Argentina's second-largest mobile operator. Net adds in
4Q03 totalled 134,000 new customers (81,000 in 3Q03), boosted by
successful commercial activities, particularly the Christmas and
Mother's Day (October) campaigns. Total traffic in minutes
increased by 13% in 2003 boosted by the larger customer base and
growth in MOU, which rose 10% in 4Q03 vs 3Q03. Compared to 2002,
MOU rose 16%, while ARPU inpesos recorded annual growth of 30%,
driven by higher MOU and higher prices. Unifon recorded a
year-over-year increase in operating revenues of 37% in pesos in
2003, boosted by higher service revenues. Quarter-over-quarter
growth 4Q03 vs 3Q03 was 15%. Despite the increase in commercial
activity in 2003, EBITDA in pesos rose 49%, with a margin of
26.8%%, 2 p.p. higher than in 2002. The smaller margin in 4Q03 vs.
3Q03 was due to the increase in commercial costs. In Euros,
revenues increased by 23.2%and EBITDA by 33.3% vs. 2002,
respectively, despite the Argentinean peso's strong depreciation in
the past 12 months. PERU Telefonica Moviles Peru ended 2003 with
1.507 million customers, with year-over-year growth of 21.6%. The
pick up in growth during the last quarter (11.3% in 9M03 vs. 9M02)
was due to the successful Christmas campaign. This made Telefonica
Moviles Peru market leader with net adds of over 139,000 customers,
putting its estimated net market share gain at 52% for 4Q03 and 45%
for the full year. Operating revenues rose 3.4% in 2003 in local
currency, on the back of the larger customer base. Also, in the
last few months growth in EBITDA in local currency accelerated.
Over the year as a whole this amounted to 8.7% (compared to 6.5% in
the first nine months of 2003). Despite the increase in commercial
activity in 2003, the EBITDA margin advanced 1.7 p.p. to 35.3%,
reflecting the company's rationalisation and cost control policies.
We would highlight the launch of the CDMA 20001xRTT network on
November 27. The first phase was concluded in December 2003. CHILE
Telefonica Movil (a subsidiary of Telefonica CTC Chile managed by
Telefonica Moviles) ended 2003 with 2.270 million customers,
year-over-year growth of 22.7%. The company is market leader in
terms of customer acquisition, with total net adds of 239,000 in
4Q03, vs. 181,000 in 9M03, boosted by the good reception of its GSM
product. These services were launched last April and the operator
now has 422,000 clients usingthis technology, almost 19% of its
total customer base. The increase in the customer base has prompted
an improvement in revenues and EBITDA. The adjusted EBITDA margin
was 32.0%, 0.7 p.p. higher than in 2002. GUATEMALA AND EL SALVADOR:
At the end of December 2003, the total customer base managed by
Telefonica Moviles' operators in Guatemala and El Salvador was
405,000 customers (157,000 in Guatemala and 248,000 in El
Salvador). This implies a 23.5% year-over-year advance compared to
the decline in customer numbers at the beginning of the year. As a
result of increased commercial activity, a net add of 33,000
customers was achieved in 4Q03 compared to 12,000 in 3Q03. The
increase in the customer base explains why the EBITDA margin was
2.6 p.p. lower in 2003 than in 2002. PUERTO RICO Movistar Puerto
Rico, the operator managed by Telefonica Moviles, ended 2003 with
174,600 customers. The company's focus on higher value clients (66%
contract clients in 2003 vs. 54% in 2002) has led to
improvedfinancial results. GLOSSARY ARPU (Average Revenue per
User): Average monthly revenue per customer. This includes revenues
from fees, monthly subscriber fees, traffic -without discounting
traffic promotions-, outgoing roaming and interconnection fees.It
excludes handset sales and revenues from incoming roaming. Loyalty
programs are not considered as lower revenues in the ARPU
calculation The ARPU figures appearing in this report refer to
average ARPU for the quarter.. The average quarterly customer base
is calculated as the average of the average customers bases of the
three months in the quarter. For the Brazilian operators, ARPU is
calculated as service revenues (operating revenues - handset sales)
divided by average customer base. MOU (Minutes of Usage): Average
airtime minutes per customer per month. Airtime minutes include
outgoing traffic (mobile to fixed, on-net mobile and mobile to
other mobile operators) and incoming traffic (fixed to mobile and
other mobile operators to mobile). Churn: Disconnection rate. This
is calculated as the number of disconnections during the period
among the average customer base for the period. Commercial actions:
Includes additions, migrations and handset changes. Active MMS
user: All users who in the last month have sent or received an MMS
message, other than those who only receive promotional MMS. Active
i-mode user: All users who in the last month have accessed i-mode
content during a browsing session. Consolidated net financial debt:
Includes the net financial debt of all companies consolidated by
the full consolidation and proportional integration methods. Net
financial debt is defined as: Long-term debt + Short-term financial
debt, including current maturities - Short-term investments -Cash
and banks. Proportionate net financial debt: Includes the net
financial debt of the companies in which Telefonica Moviles Group
has an economic stake and a significant influence in the
management, weighted in each case by the economic ownership. A
complete version of this press release, including accompanying
tables, is available on our website:
http://www.telefonicamoviles.com/ DATASOURCE: Telefonica Moviles
CONTACT: Contact: Edward Holland, Tel: +34-91-423-4224, Email:
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