PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
Brasília, D.F., 71.215-000
Federative Republic of Brazil
annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F ______
in paper as permitted by Regulation S-T Rule 101(b)(1)__.
in paper as permitted by Regulation S-T Rule 101(b)(7)__.
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes ______ No ___X___
registrant in connection with Rule 12g3-2(b):
GROSS REVENUE OF R$ 4.0 BILLION AND
NET INCOME OF R$ 248.3 MILLION IN THE 1Q08
Brasília, April 22, 2008 - Brasil Telecom Participações S.A. (BOVESPA: BRTP3/BRTP4; NYSE: BRP) announces its consolidated results for the first quarter of 2008 (1Q08). The Company’s financial statements are presented in millions of Reais, except where stated otherwise, and prepared in conformity with generally accepted accounting principles in Brazil.
HIGHLIGHTS
-
Consolidated net income totaled R$248.3 million, 46.2% up year-on-year.
-
Consolidated gross revenue came to R$4,036.1 million, 3.6% up year-on-year while consolidated net revenue stood at R$2,762.0 million, 2.6% up year-on-year.
-
Gross data communication revenue totaled R$791.0 million, 23.0% up year-on-year. ADSL users came to 1,637,300, 18.3% up year-on-year.
-
Mobile telephony net revenue continued increasing, totaling R$426.1 million, 10.7% up year-on-year. BrT Móvel’s EBITDA stood at R$14.7 million, 236.3% up year-on-year. The number of mobile users came to 4.6
million, 25.8% up year-on-year.
-
The number of lines in service (LIS) stood at 8,036,000, virtually in line with the 4Q07, but 2.9% down on the 1Q07.
- Internet Group providers closed the quarter with 1.3 million broadband subscribers, 16.2% up year- on-year, maintaining its market leadership in region II.
| IR CONTACTS | ||
| Paulo Narcélio (CFO and IRO) | Phone: (55 61) 3415-1140 | ri@brasiltelecom.com.br |
| Flávia Menezes (IR Manager) | Phone: (55 61) 3415-1256 | flavia@brasiltelecom.com.br |
| Aline Sonntag | Phone: (55 61) 3415-8537 | aline.sonntag@brasiltelecom.com.br |
| Daniela Santos | Phone: (55 61) 3415-8334 | daniela.santos@brasiltelecom.com.br |
| Lélia Werner | Phone: (55 61) 3415-1123 | lw@brasiltelecom.com.br |
| Maria Lúcia Rocha | Phone: (55 61) 3415-1291 | malu@brasiltelecom.com.br |
| MEDIA CONTACTS | ||
| Wellington Silva (Assistant Director) | Phone: (55 61) 3415-9657 | wellingtons@brasiltelecom.com.br |
| César Borges (Manager) | Phone: (55 61) 3415-1378 | cesarb@brasiltelecom.com.br |
Brasil Telecom Participações S.A. controls Brasil Telecom S.A.,a telecommunications company that provides wireline services, including national and international calls, and mobile telephony, as well as public telephony, data communication, network and supplementary and value-added services in the states of Rondônia,, Acre, Mato Grosso, Mato Grosso do Sul, Tocantins, Goiás, Santa Catarina, Paraná and Rio Grande do Sul and in the Federal District. Its coverage area corresponds to 24% of the population (approximately 44 million), 27% of GDP (around R$ 420 billion in 2003) and 33% of national territory (close to 2.8 million km2).
| Brasil Telecom Participações S.A. | Page 1 of 22 |
INCOME STATEMENT
| R$ Million | 1Q07 | 4Q07 | 1Q08 | DQuarter | D 12 Months | |||||
| GROSS REVENUES | 3,897.1 | 4,130.2 | 4,036.1 | -2.3% | 3.6% | |||||
| FIXED TELEPHONY | 2,824.4 | 2,852.0 | 2,779.0 | -2.6% | -1.6% | |||||
| Local Service | 1,648.0 | 1,659.3 | 1,588.8 | -4.2% | -3.6% | |||||
| Public Telephony | 129.0 | 137.8 | 134.1 | -2.7% | 3.9% | |||||
| Long Distance Service | 756.3 | 743.5 | 763.6 | 2.7% | 1.0% | |||||
| Interconnection | 85.0 | 107.8 | 81.4 | -24.5% | -4.2% | |||||
| Lease of Means | 89.7 | 95.5 | 103.6 | 8.5% | 15.5% | |||||
| Supplementary and Value Added Services | 106.3 | 99.3 | 99.5 | 0.2% | -6.4% | |||||
| Other | 10.0 | 8.8 | 7.9 | -9.8% | -20.9% | |||||
| MOBILE TELEPHONY * | 429.7 | 542.9 | 466.1 | -14.2% | 8.5% | |||||
| Services | 377.5 | 468.1 | 426.5 | -8.9% | 13.0% | |||||
| Merchandise Sales (Handsets and Accessories) | 52.2 | 74.8 | 39.5 | -47.2% | -24.2% | |||||
| DATA COMMUNICATIONS | 642.9 | 735.3 | 791.0 | 7.6% | 23.0% | |||||
| Deductions | (1,206.2) | (1,254.1) | (1,274.1) | 1.6% | 5.6% | |||||
| NET REVENUES | 2,690.9 | 2,876.1 | 2,762.0 | -4.0% | 2.6% | |||||
| OPERATING COSTS AND EXPENSES | (1,738.9) | (1,973.7) | (1,851.2) | -6.2% | 6.5% | |||||
| Personnel | (151.3) | (182.1) | (216.7) | 19.0% | 43.3% | |||||
| Materials | (77.3) | (108.3) | (75.4) | -30.3% | -2.4% | |||||
| Subcontracted Services | (564.5) | (583.2) | (540.9) | -7.2% | -4.2% | |||||
| Interconnection | (576.5) | (613.9) | (563.6) | -8.2% | -2.2% | |||||
| Advertising and Marketing | (24.8) | (64.8) | (42.4) | -34.6% | 71.0% | |||||
| Provisions and Losses | (218.3) | (298.0) | (279.1) | -6.3% | 27.9% | |||||
| Other | (126.2) | (123.6) | (133.0) | 7.6% | 5.3% | |||||
| EBITDA | 952.0 | 902.3 | 910.7 | 0.9% | -4.3% | |||||
| EBITDA Margin | 35.4% | 31.4% | 33.0% | 1.6 p.p. | -2.4 p.p. | |||||
| Depreciation and Amortization | (650.1) | (586.1) | (546.4) | -6.8% | -16.0% | |||||
| EARNINGS BEFORE FINANCIAL RESULT (EBIT) | 301.9 | 316.2 | 364.4 | 15.2% | 20.7% | |||||
| Financial Result | (333.3) | (120.9) | (242.8) | 100.9% | -27.2% | |||||
| Financial Revenues | 161.4 | 322.8 | 211.4 | -34.5% | 31.0% | |||||
| Financial Expenses | (227.0) | (260.5) | (187.1) | -28.2% | -17.6% | |||||
| Interest on Equity | (267.8) | (183.2) | (267.2) | N.A. | N.A. | |||||
| EARNINGS AFTER FINANCIAL RESULT | (31.4) | 195.4 | 121.5 | -37.8% | N.A. | |||||
| Non-Operating Revenues (Expenses) | 3.5 | (11.8) | 17.0 | N.A. | 391.3% | |||||
| Goodwill Amortization | (0.1) | - | - | N.A. | N.A. | |||||
| Other | 3.6 | (11.8) | 17.0 | N.A. | 374.7% | |||||
| EARNINGS BEFORE INCOME AND SOCIAL | (28.0) | 183.6 | 138.6 | -24.5% | N.A. | |||||
| CONTRIBUTION TAXES | ||||||||||
| Income and Social Contribution Taxes | 0.0 | (92.0) | (52.4) | -43.1% | N.A. | |||||
| EARNINGS BEFORE PROFIT SHARING | (27.9) | 91.6 | 86.2 | -5.9% | N.A. | |||||
| Minority Interest | (70.0) | (69.1) | (105.1) | 52.0% | 50.2% | |||||
| EARNINGS BEFORE REVERSION OF INTEREST ON | (97.9) | 22.5 | (18.9) | N.A. | -80.7% | |||||
| EQUITY | ||||||||||
| Reversion of Interest on Equity | 267.8 | 183.2 | 267.2 | N.A. | N.A. | |||||
| NET INCOME | 169.9 | 205.6 | 248.3 | 20.8% | 46.2% | |||||
| Net Income/shares - R$ ** | 0.4686 | 0.5673 | 0.6850 | 20.8% | 46.2% | |||||
| Net Income/ADR - US$ | 1.2741 | 1.6014 | 1.9583 | 22.3% | 53.7% | |||||
| * The values of 1Q07 were reclassified, including the data communications revenue (VAS). | ||||||||||
| **The values of 1Q07 are per 1,000 shares. | ||||||||||
| Brasil Telecom Participações S.A. | Page 2 of 22 |
BRT MÓVEL
| R$ Million | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| GROSS REVENUES | 541.3 | 657.1 | 576.8 | -12.2% | 6.6% | |||||
| Services | 489.1 | 582.2 | 537.2 | -7.7% | 9.8% | |||||
| Subscription | 101.4 | 104.2 | 97.1 | -6.8% | -4.2% | |||||
| Utilization | 121.5 | 153.3 | 135.8 | -11.4% | 11.8% | |||||
| Interconnection | 239.1 | 284.0 | 261.3 | -8.0% | 9.3% | |||||
| Other Revenues | 9.8 | 9.4 | 9.3 | -0.7% | -5.4% | |||||
| Data Communications | 17.2 | 31.4 | 33.7 | 7.4% | 95.7% | |||||
| Merchandise Sales (Handsets and Accessories) | 52.2 | 74.8 | 39.5 | -47.2% | -24.2% | |||||
| Deductions | (156.3) | (174.2) | (150.7) | -13.5% | -3.6% | |||||
| NET REVENUES | 385.0 | 482.9 | 426.1 | -11.8% | 10.7% | |||||
| OPERATING COSTS AND EXPENSES | (380.6) | (472.5) | (411.4) | -12.9% | 8.1% | |||||
| Personnel | (18.7) | (18.7) | (17.1) | -8.5% | -8.2% | |||||
| Materials | (55.9) | (86.4) | (56.7) | -34.3% | 1.4% | |||||
| Subcontracted Services | (93.7) | (100.9) | (99.5) | -1.4% | 6.1% | |||||
| Interconnection | (128.0) | (165.4) | (145.8) | -11.8% | 13.9% | |||||
| Advertising and Marketing | (10.2) | (16.3) | (12.6) | -22.7% | 23.5% | |||||
| Provisions and Losses | (14.6) | (23.9) | (21.4) | -10.1% | 46.5% | |||||
| Other | (59.4) | (61.1) | (58.2) | -4.7% | -2.1% | |||||
| EBITDA | 4.4 | 10.3 | 14.7 | 42.3% | 236.3% | |||||
| EBITDA Margin | 1.1% | 2.1% | 3.4% | 1.3 p.p. | 2.3 p.p. | |||||
| Depreciation and Amortization | (94.5) | (100.2) | (107.4) | 7.2% | 13.6% | |||||
| EARNINGS BEFORE FINANCIAL RESULT | (90.2) | (89.8) | (92.7) | 3.2% | 2.8% | |||||
| Financial Result | 10.6 | 15.8 | 25.8 | 63.1% | 143.4% | |||||
| Financial Revenues | 22.7 | 37.2 | 41.3 | 11.0% | 82.1% | |||||
| Financial Expenses | (12.1) | (21.4) | (15.5) | -27.6% | 28.2% | |||||
| EARNINGS AFTER FINANCIAL RESULT | (79.5) | (74.0) | (66.9) | -9.6% | -15.9% | |||||
| Non-Operating Revenues (Expenses) | - | (3.8) | (0.0) | -100.0% | ||||||
| EARNINGS BEFORE INCOME AND SOCIAL | (79.5) | (77.8) | (66.9) | -14.0% | -15.9% | |||||
| CONTRIBUION TAXES | ||||||||||
| Income and Social Contribution Taxes | 27.1 | 26.4 | 22.5 | -14.8% | -17.0% | |||||
| NET EARNINGS (LOSSES) | (52.5) | (51.4) | (44.4) | -13.6% | -15.3% | |||||
| Brasil Telecom Participações S.A. | Page 3 of 22 |
OPERATING PERFORMANCE
WIRELINE
With the purpose of building customer loyalty, Brasil Telecom launched Pluri packages, which enable clients to integrate wireline, mobile and broadband services.
In order to expand telephone services in segments with lower consumption, Brasil Telecom continued to promote the “Total Control” plan, a prepaid wireline service offered through an approach geared to areas where it is technically available. By the close of the 1Q08, 113,000 customers had already joined this plan, 43% of whom had never had wireline services before.
Table 1: Operating Data
| FIXED LINE PLANT | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Lines Installed (Thousand) | 10,388.5 | 10,376.5 | 10,380.1 | 0.0% | -0.1% | |||||
| Additional Lines Installed (Thousand) | (34.5) | 8.4 | 3.6 | -57.3% | N.A. | |||||
| Lines in Service - LIS (Thousand) | 8,279.6 | 8,033.9 | 8,036.3 | 0.0% | -2.9% | |||||
| Residential | 5,560.3 | 5,420.2 | 5,435.2 | 0.3% | -2.2% | |||||
| Non-Residential | 1,248.7 | 1,228.2 | 1,237.3 | 0.7% | -0.9% | |||||
| Public Telephones | 275.5 | 281.8 | 280.3 | -0.5% | 1.7% | |||||
| Hybrid Terminals | 561.8 | 440.9 | 412.0 | -6.6% | -26.7% | |||||
| Other (Including PBX) | 633.3 | 662.8 | 671.5 | 1.3% | 6.0% | |||||
| Additional LIS (Thousand) | (138.1) | (30.3) | 2.4 | N.A. | N.A. | |||||
| Active Lines (LIS - Blocked Lines) | 8,038.5 | 7,846.1 | 7,825.6 | -0.3% | -2.6% | |||||
| Blocked Lines | 241.1 | 187.8 | 210.7 | 12.2% | -12.6% | |||||
| Average LIS (Thousand) | 8,348.6 | 8,049.1 | 8,035.1 | -0.2% | -3.8% | |||||
| LIS/100 Inhabitants | 18.8 | 18.2 | 18.2 | 0.0% | -3.2% | |||||
| Public Telephones/1,000 Inhabitants | 6.3 | 6.4 | 6.3 | -0.5% | 1.4% | |||||
| Public Phones/100 Lines Installed | 2.7 | 2.7 | 2.7 | -0.6% | 1.8% | |||||
| Utilization Rate | 79.7% | 77.4% | 77.4% | 0.0 p.p. | -2.3 p.p. | |||||
In the 1Q08, Brasil Telecom had 3.6 million local wireline alternative plan lines and 845.100 long-distance wireline alternative plan lines. At the close of the quarter, the share of local alternative plans came to 44.8% of the lines in service, as a result of the strategy of approaching the market in an increasingly segmented manner.
Table 2: Alternative Plans
| FIXED LINE PLANT | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Alternative Local Plans (thousand) | 3,124.3 | 3,543.0 | 3,603.8 | 1.7% | 15.3% | |||||
| Alternative Long Distance Plans (thousand) | 616.1 | 805.9 | 845.1 | 4.9% | 37.2% | |||||
Traffic
The year-on-year decline in traffic was due to the 3.8% reduction in average lines in service in the period and the fact that there were fewer business days in the 1Q08.
VC-1 traffic totaled 670.8 million minutes, 3.1% down year-on-year, chiefly due to the migration from wireline to wireless.
The 5.6% year-on-year decline in long-distance traffic was partially offset by the increase in VC-2 and VC-3 traffic thanks to certain value-added products (the partnership with Big Brother Brasil, for instance).
| Brasil Telecom Participações S.A. | Page 4 of 22 |
Table 3: Traffic
| TRAFFIC | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Exceeding Local Pulses (Million) | 1,433.8 | - | - | N.A. | N.A. | |||||
| Exceeding Minutes (Million) | 114.2 | 2,631.4 | 2,433.8 | -7.5% | N.A. | |||||
| VC-1 (Million Minutes) | 692.3 | 718.0 | 670.8 | -6.6% | -3.1% | |||||
| Long Distance Minutes (Million) | 1,438.4 | 1,377.0 | 1,357.5 | -1.4% | -5.6% | |||||
| Long Distance | 1,128.3 | 1,059.8 | 992.3 | -6.4% | -12.1% | |||||
| VC-2 | 168.1 | 178.5 | 207.0 | 16.0% | 23.1% | |||||
| VC-3 | 141.9 | 138.8 | 158.2 | 14.0% | 11.5% | |||||
| * In the 3Q07, there was the tariff conversion from pulses to minutes for 100% of the clients. | ||||||||||
Table 4: Traffic Indicators
| INDICATORS - TRAFFIC | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Exceeding Pulses/Average LIS/Month | 57.2 | 0.0 | 0.0 | N.A. | N.A. | |||||
| Exceeding Minutes/Average LIS/Month | 4.6 | 109.0 | 101.0 | -7.4% | N.A. | |||||
| DLD Minutes/Average LIS/Month | 57.4 | 57.0 | 56.3 | -1.2% | -1.9% | |||||
| Fixed-Mobile Minutes/Average LIS/Month | 40.0 | 42.9 | 43.0 | 0.3% | 7.4% | |||||
In the 1Q08, Brasil Telecom maintained its leadership position, recording an average market share of 84.6% in the intra-regional segment and 89.7% in the intra-sector segment. The company’s market share reached 64.3% in the inter-regional segment and increased by 0.2 p.p. in the international segment to 38.8% .
Graph 1: LD Traffic Share – Quarterly Average
* The LD traffic shares hereby presented refer to the traffic originated in Brasil Telecom’s wireline network in its area of concession (Region II of the PGO – General Concession Plan).
| Brasil Telecom Participações S.A. | Page 5 of 22 |
MOBILE TELEPHONY
Mobile telephony operations reached 4,577,600 users, or 314,900 net additions in the quarter. BrT Móvel’s client base grew by 25.8% year-on-year.
By the end of the quarter, the mobile client base comprised 829,300 post-paid subscribers (18.1% of BrT Móvel’s clients) and 3,748,200 prepaid subscribers. The decline of 14.2% in the post-paid base was chiefly due to the migration of customers from the hybrid into the prepaid plan.
Gross additions totaled 668,900, 49.6% up on the 1Q07. This result reflects the success of the plans and promotions offered by BrT Móvel and the increased point-of-sale capillarity.
BrT Móvel has maintained its profitable growth strategy and adopted market practices. Its subscriber acquisition cost (SAC) stood at R$77.6, 20.6%, down on the 1Q07, due to the 51.0% reduction in subsidies mainly as a result of the higher number of prepaid additions compared to post-paid additions.
BrT Móvel’s market share in Region II was 13.7% at the end of the quarter, 0.8 p.p. up on the 1Q07. BrT Móvel sustained its position as the third major operator in terms of market share in the Federal District and the states of GO, TO, MT, AC and RO.
Table 5: Operating Data
| Key Operational Data | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Clients (Thousand) | 3,638.1 | 4,262.7 | 4,577.6 | 7.4% | 25.8% | |||||
| Post-Paid | 967.0 | 855.8 | 829.3 | -3.1% | -14.2% | |||||
| Pre-Paid | 2,671.1 | 3,406.9 | 3,748.2 | 10.0% | 40.3% | |||||
| Net Additions (Thousand) | 261.3 | 238.9 | 314.9 | 31.8% | 20.5% | |||||
| Post-Paid | (26.9) | (1.1) | (26.4) | 2408.3% | -1.6% | |||||
| Pre-Paid | 288.2 | 239.9 | 341.3 | 42.3% | 18.4% | |||||
| Gross Additions (Thousand) | 447.2 | 837.2 | 668.9 | -20.1% | 49.6% | |||||
| Post-Paid | 65.0 | 96.4 | 75.1 | -22.1% | 15.6% | |||||
| Pre-Paid | 382.2 | 740.8 | 593.8 | -19.8% | 55.4% | |||||
| Cancellations (Thousand) | 185.9 | 598.3 | 354.0 | -41% | 90% | |||||
| Post-Paid | 91.8 | 97.4 | 101.5 | 4.2% | 10.6% | |||||
| Pre-Paid | 94.1 | 500.9 | 252.5 | -49.6% | 168.5% | |||||
| Annualized Churn | 21.2% | 57.8% | 32.0% | -25.7 p.p. | 10.8 p.p. | |||||
| Post-Paid | 37.5% | 45.5% | 48.2% | 2.7 p.p. | 10.7 p.p. | |||||
| Pre-Paid | 14.9% | 61.0% | 28.2% | -32.7 p.p. | 13.3 p.p. | |||||
| SAC (R$) | 97.8 | 82.7 | 77.6 | -6.2% | -20.6% | |||||
| Market Share | 12.9% | 13.2% | 13.7% | 0.5 p.p. | 0.8 p.p. | |||||
| Served Localities | 830 | 873 | 873 | 0.0% | 5.2% | |||||
| % of Population Covered | 87% | 87% | 88% | 0.8 p.p. | 0.8 p.p. | |||||
| Base Stations | 2,417 | 2,642 | 2,645 | 0.1% | 9.4% | |||||
| Switches | 10 | 11 | 11 | 0.0% | 10.0% | |||||
| Employees | 611 | 616 | 629 | 2.1% | 2.9% | |||||
| Brasil Telecom Participações S.A. | Page 6 of 22 |
DATA
In the 1Q08, Brasil Telecom added 69,500 ADSL users to its base, which totaled 1,637,300 at the close of the quarter, up by 18.3% over the 1Q07. ADSL penetration (ADSL/LIS) came to 20.4% in the 1Q08, versus 16.7% in the 1Q07. Moving on with the expansion of the broadband network, Brasil Telecom reached 80% of the municipalities with ADSL coverage, the highest percentage among large operators.
Graph 2: ADSL Users
INTERNET SERVICE PROVIDERS
Internet Group, Brasil Telecom’s Internet unit comprising the activities of iG, iBest and BrTurbo, is Brazil’s second largest broadband provider, with 1.3 million clients, 16.2% up on the same period the year before.
Internet Group also has 4 million dial-up clients and is the 4th largest national portal in terms of audience, with more than 12.1 million residential visitors every month (source: IBOPE – March/08). Considering iG and BrTurbo subscribers, the group maintained its market leadership in Region II.
| Brasil Telecom Participações S.A. | Page 7 of 22 |
ECONOMIC-FINANCIAL PERFORMANCE
REVENUE
Table 6: Consolidated Operating Gross Revenue
| R$ Million | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| GROSS REVENUES | 3,897.1 | 4,130.2 | 4,036.1 | -2.3% | 3.6% | |||||
| FIXED TELEPHONY | 2,824.4 | 2,852.0 | 2,779.0 | -2.6% | -1.6% | |||||
| Local Service | 1,648.0 | 1,659.3 | 1,588.8 | -4.2% | -3.6% | |||||
| Subscription | 862.6 | 909.1 | 891.2 | -2.0% | 3.3% | |||||
| Activation | 6.6 | 3.2 | 2.3 | -26.3% | -64.6% | |||||
| Local Traffic | 302.6 | 254.7 | 228.3 | -10.4% | -24.5% | |||||
| VC-1 | 465.7 | 487.5 | 463.0 | -5.0% | -0.6% | |||||
| Lease of Facilities | 0.3 | 0.3 | 0.3 | -0.4% | -4.4% | |||||
| Other | 10.3 | 4.4 | 3.7 | -17.9% | -64.6% | |||||
| Public Telephony | 129.0 | 137.8 | 134.1 | -2.7% | 3.9% | |||||
| Long Distance Service | 756.3 | 743.5 | 763.6 | 2.7% | 1.0% | |||||
| Intra-Sector | 213.9 | 218.0 | 206.2 | -5.4% | -3.6% | |||||
| Intra-Region | 68.4 | 63.7 | 58.4 | -8.3% | -14.7% | |||||
| Inter-Region | 60.8 | 58.6 | 55.1 | -6.0% | -9.4% | |||||
| International | 11.7 | 11.0 | 10.0 | -9.1% | -14.9% | |||||
| VC-2 | 202.6 | 199.1 | 216.8 | 8.9% | 7.0% | |||||
| Fixed Origin | 73.7 | 75.7 | 74.6 | -1.5% | 1.2% | |||||
| Mobile Origin | 128.8 | 123.4 | 142.2 | 15.3% | 10.4% | |||||
| VC-3 | 198.9 | 193.2 | 217.1 | 12.4% | 9.2% | |||||
| Fixed Origin | 97.2 | 95.6 | 99.4 | 4.0% | 2.2% | |||||
| Mobile Origin | 101.6 | 97.6 | 117.7 | 20.6% | 15.8% | |||||
| Interconnection | 85.0 | 107.8 | 81.4 | -24.5% | -4.2% | |||||
| Fixed-Fixed | 56.7 | 75.0 | 51.4 | -31.5% | -9.5% | |||||
| Mobile-Fixed | 28.2 | 32.8 | 30.0 | -8.5% | 6.4% | |||||
| Lease of Means | 89.7 | 95.5 | 103.6 | 8.5% | 15.5% | |||||
| Supplementary and Value Added Services | 106.3 | 99.3 | 99.5 | 0.2% | -6.4% | |||||
| Other | 10.0 | 8.8 | 7.9 | -9.8% | -20.9% | |||||
| MOBILE TELEPHONY | 429.7 | 542.9 | 466.1 | -14.2% | 8.5% | |||||
| Services | 377.5 | 468.1 | 426.5 | -8.9% | 13.0% | |||||
| Subscription | 101.4 | 104.2 | 97.1 | -6.8% | -4.2% | |||||
| Utilization | 109.5 | 151.5 | 134.7 | -11.1% | 23.0% | |||||
| Additional for Calls Received | 1.5 | 1.8 | 1.8 | -1.1% | 14.9% | |||||
| Roaming | 4.8 | 2.7 | 3.6 | 35.5% | -24.3% | |||||
| Interconnection | 139.6 | 171.7 | 151.8 | -11.6% | 8.7% | |||||
| Other Services | 3.5 | 4.9 | 3.9 | -20.0% | 11.2% | |||||
| Data Communications | 17.2 | 31.4 | 33.7 | 7.4% | 95.7% | |||||
| Merchandise Sales (Handsets and Accessories) | 52.2 | 74.8 | 39.5 | -47.2% | -24.2% | |||||
| DATA COMMUNICATIONS | 642.9 | 735.3 | 791.0 | 7.6% | 23.0% | |||||
| Deductions | (1,206.2) | (1,254.1) | (1,274.1) | 1.6% | 5.6% | |||||
| % of Gross Revenue | 31.0% | 30.4% | 31.6% | 1.2 p.p. | 0.6 p.p. | |||||
| NET REVENUES | 2,690.9 | 2,876.1 | 2,762.0 | -4.0% | 2.6% | |||||
| Net Service Revenues | 2,660.2 | 2,822.8 | 2,733.9 | -3.2% | 2.8% | |||||
| Net Handsets Revenues | 30.7 | 53.3 | 28.1 | -47.2% | -8.4% | |||||
| Brasil Telecom Participações S.A. | Page 8 of 22 |
Brasil Telecom’s consolidated gross revenue reached R$4,036.1 million in the 1Q08, 3.6% higher than in the 1Q07 thanks to the increased participation of data communication and mobile telephony services in consolidated revenue, as well as to the tariff adjustments of 2.14% in services and 3,29% in VC’s in July last year.
Local service gross revenue totaled R$1,588.8 million, 3.6% down on the 1Q07, chiefly due to the 24.5% drop in gross revenue from local traffic and the decline in the number of subscribers, partially offset by the 3.3% increase in gross subscription revenue.
Gross revenue from public telephony stood at R$134.1 million, 3.9% higher than in the 1Q07, chiefly due to the tariff increase.
Interconnection revenue amounted to R$81.4 million, 4.2% down on the R$85.0 million recorded in the 1Q07 chiefly due to the 18.3% reduction in TU-RL in 2007.
Gross revenue from data communications stood at R$791.0 million, 23.0% up on the 1Q07 mainly as a result of the 18.3% increase in the ADSL client base.
Consolidated mobile telephony gross revenue totaled R$466.1million, R$426.5 million of which from services and R$39.5 million from the sale of handsets and accessories. Consolidated mobile telephony service gross revenue rose by 13.0% over the 1Q07 due to the expansion of the client base and the launch of new service plans.
Graph 3: Data Communication and Mobile Telephony Revenue
Wireline ARPU (excluding data communications) reached R$78.89, 1.3% up on the 1Q07, reflecting tariff increases. Including data communications, ARPU stood at R$101.35, 6.0% higher than in the 1Q07, thanks to growing ADSL penetration and revenue.
ADSL ARPU came to R$68.92, 3.4% down on the R$71.34 recorded in the 1Q07 due to promotions featuring more aggressive discounts to encourage adhesion to Turbo products.
Mobile telephony ARPU amounted to R$29.80 chiefly due to a change in incoming traffic leading to an estimated impact of approximately R$22 million in net interconnection revenue.
| Brasil Telecom Participações S.A. | Page 9 of 22 |
Table 7: Mobile ARPU
| R$ Thousand | 1Q07 | 4Q07 | 1Q08 | D Trimestre | D 12 Meses | |||||
| (+) Gross Revenues | 541.3 | 657.0 | 576.7 | -12.2% | 6.6% | |||||
| (-) Handsets | (52.2) | (74.8) | (39.5) | -47.2% | -24.2% | |||||
| Gross Service Revenues | 489.1 | 582.2 | 537.2 | -7.7% | 9.8% | |||||
| (-) Taxes and Deductions | (134.8) | (152.6) | (139.2) | -8.8% | 3.3% | |||||
| Net Service Revenues | 354.3 | 429.6 | 398.0 | -7.4% | 12.3% | |||||
| Mobile-Mobile Interconnection Fee (Full Bill) | 98.4 | - | - | - | N.A. | |||||
| Other Net Service Revenues | 255.9 | 429.6 | 398.0 | -7.4% | 55.5% | |||||
| (-) Roaming | (1.8) | 0.6 | (1.0) | N.A. | -43.9% | |||||
| Net Quarterly Revenues | 352.5 | 430.2 | 397.0 | -7.7% | 12.6% | |||||
| Net Monthly Revenues | 117.5 | 143.4 | 132.3 | -7.7% | 12.6% | |||||
| Average Number of Clients | 3,514.0 | 4,140.6 | 4,439.6 | 7.2% | 26.3% | |||||
| ARPU (R$) | 33.43 | 34.63 | 29.80 | -13.9% | -10.9% | |||||
| Post-Paid ARPU (R$) | 47.18 | 55.80 | 54.52 | -2.3% | 15.6% | |||||
| Pre-Paid ARPU (R$) | 28.11 | 29.13 | 24.07 | -17.4% | -14.4% | |||||
| Brasil Telecom Participações S.A. | Page 10 of 22 |
COSTS AND EXPENSES
Table 8: Consolidated Operating Costs and Expenses
| R$ Million | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| GROSS REVENUES | 3,897.1 | 4,130.2 | 4,036.1 | -2.3% | 3.6% | |||||
| Deductions | (1,206.2) | (1,254.1) | (1,274.1) | 1.6% | 5.6% | |||||
| NET REVENUES | 2,690.9 | 2,876.1 | 2,762.0 | -4.0% | 2.6% | |||||
| Costs | (1,611.4) | (1,627.7) | (1,555.7) | -4.4% | -3.5% | |||||
| Personnel | (40.1) | (60.8) | (93.2) | 53.1% | 132.0% | |||||
| Materials | (69.5) | (91.1) | (63.4) | -30.5% | -8.8% | |||||
| Subcontracted Services | (815.2) | (846.5) | (801.9) | -5.3% | -1.6% | |||||
| Interconnection | (576.5) | (613.9) | (563.6) | -8.2% | -2.2% | |||||
| Other | (238.7) | (232.7) | (238.3) | 2.4% | -0.2% | |||||
| Depreciation and Amortization | (540.9) | (476.8) | (444.4) | -6.8% | -17.8% | |||||
| Other | (145.6) | (152.4) | (152.9) | 0.3% | 5.0% | |||||
| GROSS PROFIT | 1,079.5 | 1,248.4 | 1,206.2 | -3.4% | 11.7% | |||||
| Sales Expenses | (273.6) | (303.6) | (245.1) | -19.3% | -10.4% | |||||
| Personnel | (60.2) | (64.9) | (62.0) | -4.4% | 2.9% | |||||
| Materials | (6.8) | (15.9) | (11.3) | -28.6% | 65.5% | |||||
| Subcontracted Services | (175.1) | (199.7) | (144.5) | -27.6% | -17.5% | |||||
| Advertising and Marketing | (24.8) | (64.8) | (42.4) | -34.6% | 71.0% | |||||
| Other | (150.3) | (135.0) | (102.1) | -24.3% | -32.0% | |||||
| Depreciation and Amortization | (4.8) | (4.8) | (4.6) | -4.3% | -2.9% | |||||
| Other | (26.7) | (18.3) | (22.7) | 23.7% | -14.9% | |||||
| General and Administrative Expenses | (204.0) | (231.8) | (226.9) | -2.1% | 11.2% | |||||
| Personnel | (44.9) | (49.8) | (54.0) | 8.5% | 20.2% | |||||
| Materials | (0.6) | (1.1) | (0.5) | -50.6% | -10.6% | |||||
| Subcontracted Services | (148.4) | (170.1) | (160.2) | -5.9% | 7.9% | |||||
| Depreciation and Amortization | (6.3) | (6.2) | (7.2) | 16.1% | 14.0% | |||||
| Other | (3.7) | (4.6) | (5.0) | 9.1% | 33.7% | |||||
| Information Technology | (116.0) | (136.2) | (128.6) | -5.6% | 10.8% | |||||
| Personnel | (6.0) | (6.6) | (7.6) | 15.7% | 27.2% | |||||
| Materials | (0.3) | (0.2) | (0.2) | -9.7% | -33.8% | |||||
| Subcontracted Services | (27.0) | (45.4) | (40.3) | -11.2% | 49.2% | |||||
| Depreciation and Amortization | (77.0) | (74.6) | (70.7) | -5.3% | -8.2% | |||||
| Other | (5.7) | (9.4) | (9.7) | 3.9% | 71.0% | |||||
| Provisions and Losses | (218.3) | (298.0) | (279.1) | -6.3% | 27.9% | |||||
| Doubtful Accounts | (95.7) | (83.8) | (119.8) | 43.0% | 25.2% | |||||
| Contingencies | (122.6) | (214.2) | (159.3) | -25.6% | 29.9% | |||||
| Other Operating Revenues (Exp.) | 34.4 | 37.5 | 37.9 | 1.0% | 10.2% | |||||
| Goodwill Amortization | (21.0) | (23.6) | (19.4) | -17.7% | -7.6% | |||||
| Other | 55.4 | 61.1 | 57.3 | -6.2% | 3.4% | |||||
| EARNINGS BEFORE FINANCIAL RESULT | 301.9 | 316.2 | 364.4 | 15.2% | 20.7% | |||||
| (EBIT) | ||||||||||
| R$ Million | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| OPERATING COSTS AND EXPENSES | (2,389.0) | (2,559.8) | (2,397.6) | -6.3% | 0.4% | |||||
| Personnel | (151.3) | (182.1) | (216.7) | 19.0% | 43.3% | |||||
| Materials | (77.3) | (108.3) | (75.4) | -30.3% | -2.4% | |||||
| Subcontracted Services | (564.5) | (583.2) | (540.9) | -7.2% | -4.2% | |||||
| Interconnection | (576.5) | (613.9) | (563.6) | -8.2% | -2.2% | |||||
| Advertising and Marketing | (24.8) | (64.8) | (42.4) | -34.6% | 71.0% | |||||
| Provisions and Losses | (218.3) | (298.0) | (279.1) | -6.3% | 27.9% | |||||
| Other | (126.2) | (123.6) | (133.0) | 7.6% | 5.3% | |||||
| Depreciation and Amortization | (650.1) | (586.1) | (546.4) | -6.8% | -16.0% | |||||
| Brasil Telecom Participações S.A. | Page 11 of 22 |
Graph 4: Operating Costs and Expenses Breakdown
(Excludes Depreciation and Amortization)
Personnel costs and expenses came to R$216.7 million, 43.3% up on the 1Q07. This increase was chiefly due to the internalization of the call center in late 2007, the collective wage increase and labor charges resulting from the downsizing and outsourcing of plant maintenance operations. At the end of the quarter, the BrT group had 16,578 employees, 5,215 of whom in the wireline, data and Internet provider segments, 629 in BrT Móvel and 10,824 in the call center.
Table 9: Personnel
| EMPLOYEES | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| # of Employees - Call Center | - | 10,866 | 10,824 | -0.4% | N.A. | |||||
| # of Employees - Fixed Telephony | 5,227 | 5,287 | 5,125 | -3.1% | -2.0% | |||||
| # of Employees - Mobile Telephony | 611 | 616 | 629 | 2.1% | 2.9% | |||||
Material costs and expenses came to R$75.4 million, down by 2.4% on the 1Q07, due to the reduction in the cost of goods sold despite the increase in the number of handsets sold.
Third-party costs and expenses, excluding interconnection, advertising and marketing, totaled R$ 540.9 million, 4.2% down the 1Q07, chiefly due to the reduction of R$64 million in the call center line after the internalization in late 2007. This reduction was offset by an increase of R$24.8 million in variable costs related to the operations and R$13.0 million in business consultancy services.
Advertising and marketing expenses totaled R$42.4 million in the 1Q08, R$17.6 million higher than in the 1Q07 due to the quarter’s new product launch campaigns, including Pluri and value-added services (for example, the partnership with Big Brother), in addition to campaigns for the new positioning of iG.
In the 1Q08, provisions for contingencies totaled R$159.3 million, R$36.7 million higher than in the 1Q07, basically due to the tax, civil and labor contingences.
The ratio between losses on accounts receivable and gross revenue reached 3.0%, totaling R$119.8 million, 0.5 p.p. up on the 2.5% recorded in the 1Q07 due to the extension of bill maturities and the respective provisions caused by the postal service strike in the 4Q07 and the increase in co-billing default.
| Brasil Telecom Participações S.A. | Page 12 of 22 |
Table 10: Consolidated Accounts Receivable
| 1Q07 | 4Q07 | 1Q08 | ||||
| Total (R$ Million) | 2,522.7 | 2,565.1 | 2,631.2 | |||
| Due | 62.9% | 65.6% | 65.1% | |||
| Overdue (up to 30 days) | 16.3% | 15.2% | 15.3% | |||
| Overdue (between 31-60 days) | 5.9% | 4.9% | 5.2% | |||
| Overdue (between 61-90 days) | 3.9% | 3.4% | 3.2% | |||
| Overdue (more than 90 days) | 11.0% | 10.9% | 11.2% | |||
Depreciation and amortization costs totaled R$546.4 million, 16.0% down on the 1Q07 due to the increase in fully depreciated items.
Other operating costs and expenses stood at R$133.0million¸ 5.3% higher than in the 1Q07, mainly due to the update of actuarial provisions.
EBITDA
Brasil Telecom’s consolidated EBITDA totaled R$910.7 million in the 1Q08, versus R$952.0 million in the 1Q07. The consolidated EBITDA margin stood at 33.0% in the 1Q08, vis-à-vis 35.4% in the 1Q07.
BrT Móvel’s quarterly EBITDA stood at R$14.7 million, 236.3% up on the 1Q07. It was accompanied by an EBITDA margin of 3.4% .
FINANCIAL RESULT
Table 11: Consolidated Financial Result
| R$ Million | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Financial Revenue | 161.4 | 322.8 | 211.4 | -34.5% | 31.0% | |||||
| Local Currency | 161.4 | 326.8 | 216.7 | -33.7% | 34.3% | |||||
| Foreign Currency | 0.1 | (4.0) | (5.2) | 31.2% | N.A. | |||||
| Financial Expenses | (227.0) | (260.5) | (187.1) | -28.2% | -17.6% | |||||
| Local Currency | (202.0) | (240.7) | (166.8) | -30.7% | -17.4% | |||||
| Foreign Currency | (25.0) | (19.8) | (20.2) | 2.3% | -19.1% | |||||
| Interest on Equity | (267.8) | (183.2) | (267.2) | N.A. | N.A. | |||||
| Financial Result | (333.3) | (120.9) | (242.8) | 100.9% | -27.2% | |||||
Brasil Telecom’s financial result was an expense of R$242.8 million, versus an expense of R$333.3 million in the 1Q07. Excluding the effect of interest on equity, the financial result recorded a positive variation of R$89.9 million chiefly due to (i) lower indebtedness, leading to lower financial expenses in local currency and (ii) the financial income, in the amount of R$65,5 million, resulting from taxes held in Judicial Deposits won by the Company.
NON-OPERATING RESULT
Non-operating result totaled R$17.0 million, 391.3% up on the 1Q07, chiefly due to the sale of investments evaluated at their FINAM (Amazon Investment Fund) and FINOR (Northeast Investments Fund) certificate acquisition cost.
| Brasil Telecom Participações S.A. | Page 13 of 22 |
NET INCOME
Brasil Telecom’s net income stood at R$248.3 million in the 1Q08, equivalent to R$0.6850 per share, and net earnings per ADR came to US$1.9583. In the 1Q07 net income totaled R$169.9 million, equivalent to R$0.4686 per 1,000 shares, while earnings per ADR stood at US$1.2741.
INDEBTEDNESS
Table 12: Indebtedness
| Debt (R$ Million) | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Short Term | 1,459.0 | 496.8 | 514.2 | 3.5% | -64.8% | |||||
| In R$ | 1,196.4 | 255.0 | 284.0 | 11.4% | -76.3% | |||||
| In US$ | 15.1 | 23.2 | 12.8 | -44.8% | -15.5% | |||||
| In Yen | 75.6 | 70.9 | 76.2 | 7.5% | 0.9% | |||||
| In Currency Basket | 60.6 | 28.7 | 28.5 | -0.8% | -53.0% | |||||
| Hedge Adjustment | 111.3 | 119.0 | 112.7 | -5.3% | 1.3% | |||||
| Long Term | 3,608.7 | 3,886.6 | 3,830.1 | -1.5% | ||||||
| In R$ | 2,562.7 | 2,998.7 | 3,043.5 | 1.5% | 18.8% | |||||
| In US$ | 435.3 | 371.8 | 363.2 | -2.3% | -16.6% | |||||
| In Yen | 225.6 | 171.0 | 151.4 | -11.5% | -32.9% | |||||
| In Currency Basket | 100.8 | 66.0 | 58.5 | -11.3% | -41.9% | |||||
| Hedge Adjustment | 284.3 | 279.1 | 213.5 | -23.5% | -24.9% | |||||
| Total Debt | 5,067.7 | 4,383.4 | 4,344.3 | -0.9% | -14.3% | |||||
| (-) Cash | 3,923.9 | 3,364.5 | 3,090.0 | -8.2% | -21.3% | |||||
| (-) Temporary Investments | - | 475.4 | 685.9 | 44.3% | N.A. | |||||
| (-) Governament Title | - | 53.6 | 54.9 | 2.5% | N.A. | |||||
| Net Debt | 1,143.9 | 489.9 | 513.5 | 4.8% | -55.1% | |||||
At the end of the quarter, Brasil Telecom’s consolidated net debt totaled R$513.5 million, 55.1% lower than in the same period the year before chiefly due to period cash flow, the amortization of debentures in the amount of R$ 500 million in April 2007 and the appreciation of the Brazilian Real, which reduced the foreign-currency-denominated debt.
At the end of the 1Q08, debt linked to the exchange rate variation, excluding hedge adjustments, totaled R$690.6 million. On March 31, 2008, 53.4% of the debt linked to the exchange rate variation was hedged, leading to a total exposure of only 8.0% .
| Brasil Telecom Participações S.A. | Page 14 of 22 |
Table 13: Indebtedness
| Description | Currency | Annual Cost | Maturity | R$ Million | Long Term % | ||
| Total | Short Term | Long Term | |||||
| Foreign Currency | |||||||
| Financial Institutions I | US$ | Lib6+0.5% | jul/08 - jul/13 | 20.9 | 8.2 | 12.7 | 60.8% |
| Bonds - US$200 MM | US$ | 9.38% | Feb-14 | 354.3 | 4.5 | 349.8 | 98.7% |
| Financial Institutions II | Yen | Jibor6 + 1.92% | Mar-11 | 227.3 | 75.9 | 151.4 | 66.6% |
| Financial Institutions III | Yen | 3.36% | Feb-09 | 0.4 | 0.4 | (0.0) | 0.0% |
| Suppliers I | US$ | 1.75% | Feb-14 | 0.8 | 0.1 | 0.6 | 83.1% |
| Foreign Currency Total | 603.6 | 89.0 | 514.6 | 85.3% | |||
| Local Currency | |||||||
| BRB - Fixed Line | R$ | 2.43% | Dec-33 | 6.2 | 0.0 | 6.1 | 99.4% |
| BRB - GSM | R$ | 2.43% | Dec-33 | 20.0 | 0.1 | 19.8 | 99.4% |
| BNDES | UMBNDES | 5.50% | Apr-11 | 87.0 | 28.5 | 58.5 | 67.3% |
| Public Debenture 4th Emission | R$ | 104% do CDI | Jun-13 | 1,118.2 | 38.2 | 1,080.0 | 96.6% |
| FCO II | R$ | 11.50% | Apr-11 | 23.3 | 7.7 | 15.6 | 67.0% |
| BNDES | R$ | TJLP + 5,5% | Feb-11 | 637.6 | 220.4 | 417.2 | 65.4% |
| BNDES | R$ | TJLP + 2,3% | May-14 | 30.5 | 0.3 | 30.2 | 99.0% |
| BNDES | R$ | TJLP + 4,3% | May-14 | 1,391.4 | 16.9 | 1,374.5 | 98.8% |
| BNDES GSM | R$ | TJLP + 3,5% | Sep-17 | 100.4 | 0.4 | 100.0 | 99.6% |
| Local Currency Total | 3,414.5 | 312.4 | 3,102.0 | 90.9% | |||
| Total Debt before Hedge Adjustments | 4,018.1 | 401.4 | 3,616.6 | 90.0% | ||
| Hedge Adjustments | 326.2 | 112.7 | 213.5 | 65.4% | ||
| TOTAL DEBT | 4,344.3 | 514.2 | 3,830.1 | 88.2% | ||
Table 14: Long Term Debt Amortization Schedule
| Maturity | % Long Term Debt |
| 2009 | 11.8% |
| 2010 | 19.0% |
| 2011 | 20.7% |
| 2012 | 17.1% |
| 2013 | 17.1% |
| 2014 | 12.6% |
| > 2015 | 1.7% |
| Brasil Telecom Participações S.A. | Page 15 of 22 |
CAPEX
Table 15: Investments Breakdown
| R$ Million | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Network Expansion | 48.0 | 141.0 | 38.5 | -72.7% | -19.7% | |||||
| Conventional Telephony | 1.9 | 1.1 | (0.3) | N.A. | N.A. | |||||
| Transmission Backbone | 7.6 | 32.7 | 5.3 | -83.7% | -30.1% | |||||
| Data Network | 38.5 | 85.7 | 30.6 | -64.3% | -20.4% | |||||
| Intelligent Network | 0.1 | 6.5 | 0.7 | -88.6% | 670.2% | |||||
| Network Management Systems | 0.5 | 9.4 | 2.3 | -76.0% | 334.3% | |||||
| Other Investments for Network Expansion | (0.7) | 5.5 | (0.1) | N.A. | -80.4% | |||||
| Network Operation | 48.9 | 66.5 | 46.9 | -29.5% | -4.0% | |||||
| Public Telephony | 0.9 | (1.0) | 0.5 | N.A. | -40.5% | |||||
| Information Technology | 8.2 | 74.9 | 3.8 | -94.9% | -54.0% | |||||
| Expansion Personnel | 18.7 | 21.1 | 20.9 | -0.9% | 12.2% | |||||
| Others | 22.6 | 153.7 | 34.6 | -77.5% | 53.1% | |||||
| Expansion Financial Expenses | 1.2 | 6.2 | 5.1 | -17.8% | 319.1% | |||||
| TOTAL - FIXED LINE TELEPHONY | 148.5 | 462.5 | 150.5 | -67.5% | 1.3% | |||||
| TOTAL - MOBILE TELEPHONY | 4.3 | 146.4 | 9.4 | -93.6% | 119.8% | |||||
| TOTAL INVESTMENT | 152.8 | 608.8 | 159.9 | -73.7% | 4.6% | |||||
| CASH FLOW CONCILIATION | 1Q07 | 4Q07 | 1Q08 | D Quarter | D 12 Months | |||||
| Variation of Economic and Financial | 225.2 | (244.0) | 145.5 | N.A. | -35.4% | |||||
| Investment | ||||||||||
| INVESTMENT CASH FLOW | 378.0 | 364.8 | 305.4 | -16.3% | -19.2% | |||||
CAPEX totaled R$159.9 million in the 1Q08, R$150.5 million of which was invested in wireline, including voice, data and IT, as well as regulatory issues and R$9.4 million in mobile telephony. CAPEX increased by 4.6% year-on-year.
GUIDANCE
Brasil Telecom disclosed its guidance for 2008 at its Investors’ Day, held in Brasília on April 2, 2008 with live webcast in English and Portuguese. The video for the event is available on Brasil Telecom’s Investor Relations website (www.brasiltelecom.com.br/ir).
The goals refer to the indicators of Brasil Telecom Participações S.A. and are reiterated in the tables below:
| Operating Data (thousand) | 2006 | 2007 | Guidance 2008 | |||
| Range | ||||||
| Lines in Service (LIS) | 8,418 | 8,034 | Stable | |||
| Broadband Users | 1,318 | 1,568 | ~ +22% | |||
| Mobile Users | 3,377 | 4,263 | ~ +30% | |||
| Brasil Telecom Participações S.A. | Page 16 of 22 |
| Economic-Financial Data (R$ million) | 2006 | 2007 | Guidance 2008 | |||
| Range | ||||||
| Operating Net Revenue | 10,297 | 11,059 | ~+3.4% | |||
| Operating Costs and Expenses | (6,803) | (7,262) | ~+2.8% | |||
| Consolidated EBITDA | 3,494 | 3,797 | ~ +4.5% | |||
| Mobile Operation EBITDA | (142) | 54 | ~ +200% | |||
| CAPEX (R$ million) | 2006 | 2007 | Guidance 2008 | |||
| Range | ||||||
| Operational / Regulatory / 3G | 1,700 | |||||
| 3G License | - | - | 500 | |||
| Total | 2,200 | |||||
The guidance for the ARPU of our mobile operations was revised as follows:
| ARPU (R$) | 2006 | 2007 | Guidance 2008 | |||
| Range | ||||||
| Wireline | 71.12 | 78.97 | ~ -5% | |||
| ADSL | 67.10 | 71.70 | Stable | |||
| Mobile | 31.30 | 34.20 | ~ -7% | |||
STOCK MARKET
At the end of the 1Q08, Brasil Telecom Participações’ market capitalization, calculated by weighing the price of common and preferred shares, totaled R$12,013.4 million, up by 22.4% on the R$9,816.2 million recorded on March 31, 2007.
In the last twelve months, preferred shares (BRTP4) rose by 29.6% and common shares (BRTP3) increased by 18.9% . In the same period, the Ibovespa and the Itel appreciated by 33.1% and 31.0%, respectively.
Brasil Telecom Participações’ ADR (BRP) moved up by 45.2% in the last twelve months, while the Dow Jones index depreciated by 0.7% . In the last 24 months, BRP outperformed the Dow Jones by 70.0 p.p.
Table 16: Stock Market Performance
| Closing Price as of | Performance | |||||||
| 3/31/2008 | In 1Q08 | In 12 Months | In 24 Months | |||||
| Common Shares (BRTP3) (in R$/shares) | 49.35 | 6.1% | 18.9% | 112.7% | ||||
| Preferred Shares (BRTP4) (in R$/shares) | 23.48 | -9.8% | 26.9% | 50.9% | ||||
| ADR (BRP) (in US$/ADR) | 65.46 | -12.2% | 45.2% | 80.4% | ||||
| IBOVESPA (points) | 60,968 | -4.6% | 33.1% | 60.6% | ||||
| ITEL (points) | 1,319 | 7.8% | 31.0% | 35.9% | ||||
| IGC (points) | 6,116 | -10.1% | 14.8% | 44.3% | ||||
| Dow Jones (points) | 12,263 | -7.6% | -0.7% | 10.4% | ||||
| Market Capitalization (Million) | 12,013.4 | -1.7% | 22.4% | 80.6% | ||||
| Brasil Telecom Participações S.A. | Page 17 of 22 |
Table 17: Theoretical Portfolio Weighting – Jan / April
| Ibovespa | Itel | IGC | ||||
| BRTP3 | 0.364% | 5.901% | 0.253% | |||
| BRTP4 | 0.678% | 14.099% | 0.604% | |||
OWNERSHIP BREAKDOWN
Table 18: Shareholding Structure
| Mar/08 | Common Shares | % | Preferred Shares | % | Total Shares | % |
| Solpart Participações S.A. | 68,356,154 | 51.0% | - | 0.0% | 68,356,154 | 18.8% |
| ADR Free Float | - | 0.0% | 134,453,565 | 58.5% | 134,453,565 | 36.9% |
| Treasury | 1,480,800 | 1.1% | - | 0.0% | 1,480,800 | 0.4% |
| Free Float in Bovespa | 64,194,734 | 47.9% | 95,483,960 | 41.5% | 159,678,694 | 43.9% |
| Total | 134,031,688 | 100.0% | 229,937,525 | 100.0% | 363,969,213 | 100.0% |
| Mar/07 | Common Shares | % | Preferred Shares % | Total Shares | % | |
| Solpart Participações S.A. | 68,356,160,984 | 51.0% | 26 | 0.0% | 68,356,161,010 | 18.8% |
| ADR Free Float | - | 0.0% | 155,120,025,000 | 67.5% | 155,120,025,000 | 42.6% |
| Treasury | 1,480,800,000 | 1.1% | - | 0.0% | 1,480,800,000 | 0.4% |
| Free Float in Bovespa | 64,194,727,219 | 47.9% | 74,817,500,658 | 32.5% | 139,012,227,877 | 38.2% |
| Total | 134,031,688,203 | 100.0% | 229,937,525,684 | 100.0% | 363,969,213,887 | 100.0% |
| * The share grouping for Brasil Telecom S.A. was approved in the Extraordinary Shareholders Meeting on April 27th 2007 in the proportion of 1,000 shares to 1 share of the respective kind. | ||||||
UPCOMING EVENTS
English Conference Call and Webcast: 1Q08 Results
Connection number: (+1 973) 935-8893
Access Code: 42645064
Link: http://www.brasiltelecom.com.br/ir
Date: April 23, 2008
Time: 11:00 a.m. (New York Time)
| Brasil Telecom Participações S.A. | Page 18 of 22 |
ATTACHMENTS
Table 19: Consolidated Balance Sheet
| R$ Million | Mar/07 | Dec/07 | Mar/08 | |||
| CURRENT ASSETS | 7,638.4 | 7,436.0 | 7,829.8 | |||
| Cash, Bank Accounts and High-liquid Investments | 3,923.9 | 3,364.5 | 3,090.0 | |||
| Temporary Investments | - | 475.4 | 685.9 | |||
| Governament Title | - | 53.6 | 54.9 | |||
| Accounts Receivables (Net) | 2,157.7 | 2,189.7 | 2,221.2 | |||
| Deferred and Recoverable Taxes | 1,129.5 | 804.5 | 1,090.1 | |||
| Other Recoverable Amounts | 262.7 | 453.6 | 523.9 | |||
| Inventory | 49.1 | 32.7 | 37.9 | |||
| Contractual Retentions | - | - | - | |||
| Other | 115.6 | 62.0 | 126.0 | |||
| LONG TERM ASSETS | 2,187.7 | 2,967.1 | 3,204.0 | |||
| Loans and Financing | 0.8 | 6.2 | 6.0 | |||
| Deferred and Recoverable Taxes | 1,614.2 | 1,793.2 | 1,802.9 | |||
| Other | 572.7 | 1,167.7 | 1,395.1 | |||
| PERMANENT ASSETS | 7,668.9 | 7,026.2 | 6,629.1 | |||
| Investment (Net) | 311.9 | 201.5 | 172.8 | |||
| Property, Plant and Equipment (Net) | 6,086.4 | 5,664.2 | 5,304.7 | |||
| Property, Plant and Equipment (Gross) | 26,129.1 | 26,974.5 | 27,008.4 | |||
| Accumulated Depreciation | (20,042.8) | (21,310.3) | (21,703.7) | |||
| Intangible (Net) | 1,150.5 | 1,049.6 | 1,049.5 | |||
| Property, Plant and Equipment (Gross) | 2,416.6 | 2,565.1 | 2,653.9 | |||
| Accumulated Depreciation | (1,266.2) | (1,515.6) | (1,604.4) | |||
| Deferred Assets (Net) | 120.2 | 111.0 | 102.2 | |||
| TOTAL ASSETS | 17,495.0 | 17,429.3 | 17,663.0 | |||
| CURRENT LIABILITIES | 5,248.2 | 4,727.4 | 4,865.4 | |||
| Loans and Financing | 1,459.0 | 496.8 | 514.2 | |||
| Suppliers | 1,265.1 | 1,483.0 | 1,376.4 | |||
| Taxes and Contributions | 945.4 | 832.2 | 898.5 | |||
| Dividends Payable | 856.5 | 1,016.5 | 1,248.0 | |||
| Provisions | 220.7 | 298.9 | 257.6 | |||
| Salaries and Benefits | 96.2 | 171.7 | 120.1 | |||
| Consignment for Third Parties | 121.2 | 154.2 | 145.0 | |||
| Authorization for Services Exploration | 154.7 | 78.8 | 100.0 | |||
| Other | 129.3 | 195.2 | 205.7 | |||
| LONG TERM LIABILITIES | 5,186.1 | 5,629.7 | 5,637.8 | |||
| Loans and Financing | 3,608.6 | 3,886.6 | 3,830.1 | |||
| Provisions | 1,186.8 | 1,286.5 | 1,293.0 | |||
| Taxes and Contributions | 73.0 | 173.5 | 217.9 | |||
| Authorization for Services Exploration | 226.1 | 174.6 | 183.3 | |||
| Other | 91.6 | 108.4 | 113.5 | |||
| DEFERRED INCOME | - | - | - | |||
| MINORITY INTEREST | 1,800.9 | 1,825.8 | 1,851.9 | |||
| SHAREHOLDERS' EQUITY | 5,259.9 | 5,246.5 | 5,307.8 | |||
| Capital Stock | 2,596.3 | 2,596.3 | 2,596.3 | |||
| Capital Reserves | 309.2 | 309.2 | 309.2 | |||
| Profit Reserves | 306.3 | 266.0 | 266.0 | |||
| Retained Earnings | 2,068.9 | 2,095.9 | 2,157.3 | |||
| Treasury Shares | (20.8) | (20.8) | (20.8) | |||
| TOTAL LIABILITIES | 17,495.0 | 17,429.3 | 17,663.0 | |||
| * In compliance with CVM Deliberation 488 and 489 the line of Intangible Permanent Asset was created | ||||||
| Brasil Telecom Participações S.A. | Page 19 of 22 |
Table 20: Consolidated Balance Sheet - Holding
| R$ Million | Mar/07 | Dec/07 | Mar/08 | |||
| CURRENT ASSETS | 1,949.0 | 1,959.7 | 2,208.8 | |||
| Cash, Bank Accounts and High-liquid Investments | 1,445.2 | 1,462.9 | 1,487.0 | |||
| Deferred Taxes | 114.9 | 13.7 | 86.8 | |||
| Other Recoverable Amounts | 0.5 | 0.5 | 13.0 | |||
| Dividends / Interest on Equity Receivable | 381.2 | 474.2 | 614.3 | |||
| Other | 7.1 | 8.4 | 7.7 | |||
| LONG TERM ASSETS | 235.7 | 346.8 | 329.6 | |||
| Loans and Financing | - | - | - | |||
| Deferred and Recoverable Taxes | 230.4 | 341.2 | 323.9 | |||
| Other | 5.3 | 5.6 | 5.7 | |||
| PERMANENT ASSETS | 3,733.9 | 3,779.9 | 3,826.9 | |||
| Investment (Net) | 3,732.9 | 3,779.1 | 3,826.2 | |||
| Property, Plant and Equipment (Net) | 0.9 | 0.8 | 0.7 | |||
| Property, Plant and Equipment (Gross) | 52.5 | 52.5 | 52.5 | |||
| Accumulated Depreciation | (51.5) | (51.7) | (51.7) | |||
| Intangible (Net) | 0.0 | 0.0 | 0.0 | |||
| Property, Plant and Equipment (Gross) | 3.9 | 3.9 | 3.9 | |||
| Accumulated Depreciation | (3.9) | (3.9) | (3.9) | |||
| TOTAL ASSETS | 5,918.6 | 6,086.5 | 6,365.3 | |||
| CURRENT LIABILITIES | 651.8 | 824.1 | 1,032.2 | |||
| Suppliers | 0.3 | 0.4 | 0.3 | |||
| Taxes and Contributions | 41.2 | 0.0 | 39.7 | |||
| Dividends Payable | 610.3 | 725.9 | 888.1 | |||
| Consignment for Third Parties | 0.1 | 22.3 | 28.1 | |||
| Other | 0.0 | 75.4 | 76.0 | |||
| LONG TERM LIABILITIES | 6.9 | 15.8 | 25.3 | |||
| Taxes and Contributions | 2.5 | 10.8 | 20.0 | |||
| Other | 4.4 | 5.0 | 5.2 | |||
| SHAREHOLDERS' EQUITY | 5,259.9 | 5,246.5 | 5,307.8 | |||
| Capital Stock | 2,596.3 | 2,596.3 | 2,596.3 | |||
| Capital Reserves | 309.2 | 309.2 | 309.2 | |||
| Profit Reserves | 306.3 | 266.0 | 266.0 | |||
| Retained Earnings | 2,068.9 | 2,095.9 | 2,157.3 | |||
| Treasury Shares | (20.8) | (20.8) | (20.8) | |||
| TOTAL LIABILITIES | 5,918.6 | 6,086.5 | 6,365.3 | |||
| * In compliance with CVM Deliberation 488 and 489 the line of Intangible Permanent Asset was created | ||||||
| Brasil Telecom Participações S.A. | Page 20 of 22 |
Table 21: Consolidated Cash Flow
| R$ Million | 1Q07 | 4Q07 | 1Q08 | Quarter | 12 Months | |||||
| OPERATING ACTIVITIES | ||||||||||
| (+) Net Income of the Period | 169.9 | 205.6 | 248.3 | 20.7% | 46.2% | |||||
| (+) Minority Participation | 70.0 | 69.1 | 105.1 | 0.5 | 50.2% | |||||
| (+) Items with no Cash Effects | 763.7 | 707.2 | 716.4 | 0.0 | -6.2% | |||||
| Depreciation and Amortization | 650.2 | 586.1 | 546.4 | -7% | -16.0% | |||||
| Losses with Accounts Receivables | 95.7 | 83.8 | 119.8 | 43.0% | 25.2% | |||||
| Provision for Contingencies | 122.6 | 214.2 | 159.3 | -25.6% | 29.9% | |||||
| Provision for Pension Funds | 11.7 | (3.8) | 32.7 | N.A. | 179.0% | |||||
| Deferred Taxes | (116.5) | (123.9) | (126.9) | 2.4% | 8.9% | |||||
| Taxe Recovery | - | (69.8) | - | N.A. | ||||||
| Results from the Write-off of Permanent Assets | - | 20.7 | (14.4) | N.A. | ||||||
| Gains/Losses in Investments | - | - | (0.4) | |||||||
| (-) Equity Changes | (355.1) | (246.2) | (516.6) | 109.8% | 45.5% | |||||
| Clients' Accounts Receivable | (125.8) | (15.9) | (151.3) | N.A. | 20.3% | |||||
| Inventories | 15.1 | 5.8 | (5.2) | N.A. | N.A. | |||||
| Contract Retentions | - | - | - | N.A. | ||||||
| Personnel, Charges and Social Benefits | (2.3) | (16.8) | 5.6 | N.A. | N.A. | |||||
| Accounts Payable and Provisioned Expenses | 19.7 | (75.8) | 35.4 | N.A. | 79.5% | |||||
| Taxes | (29.3) | 31.8 | (119.9) | N.A. | 309.3% | |||||
| Financial Expenses | (38.8) | (24.9) | (33.0) | 32.8% | -14.9% | |||||
| Authorization for Services Exploration | 25.3 | (52.6) | 29.8 | N.A. | 17.7% | |||||
| Provision for Contingencies | (96.1) | (133.4) | (55.7) | -58.3% | -42.1% | |||||
| Provision for Pension Funds | (9.3) | 16.0 | (77.8) | N.A. | N.A. | |||||
| Other Assets and Liabilities' Accounts | (113.7) | 19.4 | (144.6) | N.A. | 27.1% | |||||
| (=) Cash Flow from Operating Activities | 648.5 | 735.8 | 553.2 | -24.8% | -14.7% | |||||
| INVESTMENT ACTIVITIES | ||||||||||
| Temporary Investments | 89.4 | (323.8) | (212.1) | -34.5% | N.A. | |||||
| Funds from Sales of Permanent Assets | 0.1 | 45.4 | 24.9 | -45.2% | N.A. | |||||
| Court Deposits | (140.5) | (166.8) | (328.8) | 97.1% | 134.0% | |||||
| Investments in Permanent Assets | (378.0) | (364.8) | (305.4) | -16.3% | -19.2% | |||||
| (=) Cash Flow from Investment Activities | (429.0) | (809.9) | (821.4) | 1.4% | 91.4% | |||||
| FINANCING ACTIVITIES | ||||||||||
| Dividens/Interests on Equity paid in the Period | (0.7) | (0.5) | (0.8) | 54.1% | 22.7% | |||||
| Loans and Financing | (268.8) | 399.1 | (5.6) | N.A. | -97.9% | |||||
| Loans Obtained | - | 600.9 | 100.0 | N.A. | ||||||
| Loans Paid | (268.8) | (201.8) | (105.6) | -47.7% | -60.7% | |||||
| (=) Cash Flow from Financing Activities | (269.5) | 398.6 | (6.4) | N.A. | -97.6% | |||||
| CASH FLOW OF THE PERIOD | (50.1) | 324.4 | (274.6) | N.A. | 448.3% | |||||
| CASH, BANK ACCOUNTS and HIGH-LIQUID INVESTMENTS | ||||||||||
| Current Balance | 3,923.9 | 3,364.5 | 3,090.0 | -8.2% | -21.3% | |||||
| Previous Balance | 3,974.0 | 3,040.1 | 3,364.5 | 10.7% | -15.3% | |||||
| Variation | (50.1) | 324.4 | (274.6) | N.A. | 448.1% | |||||
| OPERATING CASH FLOW | 648.5 | 735.8 | 553.2 | -24.8% | -14.7% | |||||
| (+) Investments on Permanent Assets (includes Investment Suppliers) | (378.0) | (364.8) | (305.4) | -16.3% | -19.2% | |||||
| (=) FREE CASH FLOW | 270.4 | 371.0 | 247.8 | -33.2% | -8.4% | |||||
| SUPLEMENTARY INFORMATION TO THE CASH FLOW | ||||||||||
| Income and Social Contribution Taxes Paid | 52.8 | 149.6 | 108.2 | -27.7% | 105.1% | |||||
| Interest Paid on Loans and Financing | 166.5 | 112.4 | 81.0 | -28.0% | -51.4% | |||||
| Brasil Telecom Participações S.A. | Page 21 of 22 |
GLOSSARY
ADSL: Asymmetrical Digital Subscriber Line. System that allows broadband signal transmission through metallic telephone cables. It is the most common DSL technology, which represents a midway transition to fully optical networks.
ARPU: Average Revenue per User, an indicator used in the telecom industry.
CAPEX: Capital Expenditure. The investments made by a company.
EBITDA: Earnings before Interest, Tax, Depreciation and Amortization.
GSM: Global System for Mobile communications. GSM is the world’s most widely used mobile telephony technology and allows users to move around freely and easily with their handsets. The price of GSM handsets is also more attractive, the network is safer and there are constant technological advances.
IoE (Interest on Equity): Shareholder remuneration option, calculated on shareholders’ equity and limited, for tax purposes, to the variation in the long-term interest rate (TJLP). The tax benefit is due to the reduction in the calculation base used for income tax and social contribution tax on net income, given that interest on equity represents a deductible expense in the calculation of these taxes. IoE payments are subject to withholding tax at 15%. Interest on equity may be paid as part of statutory dividends, net of withholding tax.
LIS: Lines in Service. All the lines in a network that are effectively being used.
SAC: Subscriber Acquisition Cost, the average amount spent by a company to acquire a new subscriber.
TUP: Public Phones.
FINANCIAL LEVERAGE RATIO: Net Debt / EBITDA
This document contains forward-looking statements. Such statements do not constitute facts occurred in the past and reflect the expectations of the Company's managers only. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans", "predicts," "projects" and "aims", as well as other similar words, are intended to identify those forward-looking statements, which obviously involve risks or uncertainties predicted or not by the Company. Accordingly, the future results of the Company’s operations may differ from the current expectations, and the reader should not rely exclusively on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments. |
| Brasil Telecom Participações S.A. | Page 22 of 22 |
BRASIL TELECOM PARTICIPAÇÕES S.A. |
||
By: |
/S/ Paulo Narcélio Simões Amaral
|
|
Name: Paulo Narcélio Simões Amaral
Title: Chief Financial Officer |
||
This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.