Wall Street Journal | February 22, 2011 | Shane Romig
Of DOW JONES NEWSWIRES
BUENOS AIRES (Dow Jones)–Telecom Argentina SA (TEO, TECO2.BA), one of the country’s largest phone companies, saw its fourth-quarter net profit rise sharply on the back of higher broadband internet and wireless sales.
Telecom Argentina posted a fourth-quarter profit of 512 million pesos ($128 million), a 28% gain from the year ago period, Chief Executive Franco Bertone said at a press conference Tuesday.
The full-year profit in 2010 rose 30% on the year to ARS1.8 billion, with net sales increasing 20% to ARS14.7 billion, Bertone said.
While the company struggled to deal with high inflation, it benefited last year from fully paying off its debt, Bertone said.
Argentina’s inflation last year was about 25%, according to private sector economists. Bertone said that he expects inflation this year to be similar to 2010, with the company’s total costs rising about 10%.
Meanwhile, the board has proposed a cash dividend payment of ARS915.5 million, or ARS0.93 per share, for this year, after paying out dividends of ARS1 billion in 2010.
The debt payoff also eliminated the foreign exchange risk associated with servicing dollar debt with peso revenues, Bertone said. The company doesn’t plan to take on new debt by tapping capital markets, he added.
While paying off its debt caused financing costs to drop to nothing, it also caused the company’s tax bill to jump 27% due to the loss of tax breaks associated with its debt.
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