Tricom 9M net loss grows 51%

Dominican Republic telecoms operator Tricom (NYSE: TDR) saw its net loss for the first nine months of the year expand 51% to US$62mn, from US$41mn last year, as a result of devaluation of the local currency against the US dollar, the company said in a statement. At the end of the third quarter the peso had lost 84% of its value in September 2002, and suffered 23% depreciation in the third quarter itself, Tricom said. The Central Bank reported that the inflation rate was approximately 27% for the first nine months of the year, compared to approximately 5% for the same period in 2002. Total revenues for the nine months decreased 18% year on year, at US$161mn, and adjusted Ebitda was US$44.1mn, down 31% compared to US$64mn in the first nine months of 2002. The net loss in the third quarter widened 43% to US$21mn, stemming from adjusted Ebitda of US$12.6mn, down 42% compared to 3Q02. Third quarter total revenues were US$50mn, down 24% on the previous year. Despite depreciation of the peso Tricom's peso-denominated revenues increased by 10% in the third quarter and 4% over the nine months, compared with the previous year. This was because of price increases and the continued efforts to improve the customer mix, which resulted in a 24% decrease in lines in service compared to September 2002. Tricom ended 3Q03 with 136,000 fixed lines in service. Incoming international long distance revenues and call termination fees increased 4% in the nine-month period, at US$73mn, as a result of higher traffic volume and increased call termination rates. Mobile revenues through to September fell 24% year on year at US$27mn and were down 33% in the third quarter versus 3Q02 at US$8mn, mainly because of peso depreciation. However, the mobile client base was up 4% year on year at 429,000 and ARPU increased 11% during the third quarter because of greater interconnection revenues and an increase in post-paid subscribers. The cable TV subscriber base fell 10% year over year, totaling about 64,000 at the end of the quarter. This compounded the devaluation effect and consequently revenues were down 37% in the nine-month period, at US$10.6mn. Cable revenues for the third quarter were US$3mn, down 48% on 3Q02. Because of peso devaluation Tricom missed a US$11.4mn interest payment on its 11-3/8% Senior Notes due 2004, originally scheduled for September 2, 2003. The company is in active dialogue with its bank lenders as well as an ad hoc committee representing note-holders. Tricom has engaged Bear, Stearns & Co. to assist in evaluating financial and strategic alternatives, and formulate a restructuring plan. The company is also in discussions with a number of strategic and financial investors regarding a potential sale or recapitalization. By midday Wednesday Tricom shares were trading at US$0.85, down 6% from Tuesday's closing price of US$0.90.