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Telecom Cost Management Issues Drive PT to 'Lackluster' 3Q Results

Telecom Cost Management

Telecom Cost Management Featured Article


November 09, 2010

Telecom Cost Management Issues Drive PT to 'Lackluster' 3Q Results

By David Sims, TMCnet Contributing Editor


According to stock analyst Allan Nichols, Portugal Telecom (News - Alert) reported “lackluster third-quarter results, but provided favorable information on its plans for the cash it received from selling its stake in Vivo VIV.”


After adjusting for the sale of Vivo, Nichols said, the firm's reported revenue in the quarter “increased 0.3 percent from the year-ago period. The wireless side continues to struggle, declining 10.5 percent despite adding 241,000 subscribers or 3.4 percent growth.”

The average revenue per user fell 12 percent, which Nichols attributed to “the weak economy, mobile termination rate (MTR) cuts, and customers moving to tariff plans. With MTR rate cuts expected to continue and the Portuguese economy still struggling due to government- implemented austerity measures, we expect that the wireless business will continue to decline in 2011, but at a slower rate.”

Costs are a major problem: “While PT's revenue managed to increase slightly, that was not the case for its margins,” Nichols said, explaining that the firm's EBITDA margins dropped from 41.8 percent to 40.1 percent, “as the cost of building out its television network and acquiring content more than offset the growth in revenue from television. That said, what we thought was most important was PT's plans for the cash it received from selling Vivo.”

In October TMC’s (News - Alert) Rajani Baburajan reportedthat Portugal Telecom and Alcatel-Lucent (News - Alert) formed an agreement to conduct a symmetrical 10Gbps gigabit passive optical network (10G GPON) trial.

With great bandwidth potential, 10G GPON technology allows a broadband speed of 10Gbps in both the upstream and downstream directions. The technology can be used to provide advanced and innovative services to residential as well as business users. The upstream bandwidth potential of 10G GPON will become more important with the popularity of services such as cloud computing, remote storage that lead to significant increase in uploading.


David Sims is a contributing editor for TMCnet. To read more of David’s articles, please visit his columnist page. He also blogs for TMCnet here.

Edited by Juliana Kenny


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