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Revenues from operations
Revenues from operations totaled Ps. 2,988 million in the fourth quarter of year 2013 from Ps. 2,418 million for the same period in 2012, an increase of Ps. 570 million or 24%.
Revenues from operations totaled Ps. 10,286 million in the twelve month period ended
Sources of Revenues
IMPORTANT DISCLOSURE. Unless otherwise stated, comments in this section exclude revenues generated by our major wholesale customer (see note 9 for further information).
Local services. Local service revenues totaled Ps. 760 million in the fourth quarter of 2013, compared to Ps. 876 million for same period in 2012, representing a decrease of Ps. 117 million, explained by Ps. 76 million, Ps. 16 million and Ps. 24 million decreases in monthly rents, measured service and cellular revenues, respectively. Average customers declined 11%, contributing to a decline in monthly rents of 11%. The 30% decrease in measured services is explained by 21% decreases in billed-traffic volume and 12% decrease in prices. The 17% decrease in cellular revenue is explained by a 10% decrease in prices resulting from a market trend linked to lower interconnection tariffs, and an 8% decline in cellular billed-traffic. Revenues coming from monthly rents represented 79% of local revenues during the three month period ended
Long distance services. Revenues amounted to Ps. 254 million in the fourth quarter of 2013, compared to Ps. 276 million for same period in 2012, an 8% decrease. Billed-traffic volume remained unchanged, however revenues decreased due to an 8% decline in billed-traffic prices. For the twelve month period ended
Internet & Video. Quarterly revenues totaled Ps. 289 million, compared to Ps. 224 million in the same period in 2012, a 29% or Ps. 66 million increase driven by the new video or pay-TV service and the increase in mass-market, or, “on-demand” internet services revenues, which increased 11% year-over-year. During the twelve month period ended on
Data & Network. Data and network revenues amounted to Ps. 438 million in the fourth quarter of 2013, compared to Ps. 493 million in the same period in 2012, an 11% or Ps. 55 million decrease driven by 12% and 10% declines in private lines and dedicated internet revenues respectively. Competitive pressures on prices and migration to all-included integrated services explain the decline in revenues. During the twelve month period ended on
Integrated Services & Equipment Sales. Quarterly revenues totaled Ps. 823 million in the fourth quarter of 2013, from Ps. 284 million in the same quarter of previous year, a 190% increase mainly explained by integrated service and equipment sales transactions with state and federal government entities. For the twelve month period ended
International traffic. In the fourth quarter of 2013, international traffic revenues totaled Ps. 313 million, an increase of Ps. 167 million or 115% versus the same quarter of previous year, explained by an increase in prices attributable to a change in the mix towards higher priced international mobile traffic vs. on-net and off-net traffic. In peso terms, the price increase was slightly strengthened by a 1% depreciation of the Mexican peso vis-À-vis the US dollar. For the twelve month period ended
Other services. Quarterly revenues from other services totaled Ps. 67 million in the fourth quarter of 2013, from Ps. 74 million in the same quarter of previous year, a decrease of 10%. For the twelve month period ended
Revenues by segment *(Excludes International Traffic and Major Wholesale Customer)
Mass Market. Revenues totaled Ps. 872 million in the fourth quarter of 2013, compared to Ps. 921 million for the same quarter in 2012, a decrease of 5%, mainly due to a 13% decrease in both local and long distance revenues, partially compensated by a 32% increase in internet and video services. For the twelve month period ended
Enterprise (including Government). Revenues for this segment amounted to Ps. 1,598 million in the three month period ended
Interconnection, Public Telephony and Carriers. Revenues for this segment declined 23%, from Ps. 208 million in the fourth quarter 2012 to Ps. 160 million in 2013, mainly due to a 44% decrease in dedicated internet revenues. For the twelve month period ended
Local Calls. Local calls excluding our largest wholesale customer totaled 419 million calls in the fourth quarter of 2013, compared to 461 million calls for same period in 2012, representing a decrease of 9%. Billed local calls decreased 19 million or 21%, while local calls included in commercial offers decreased by 23 million or 6%. Residential and business customers contributed with 2 million and 17 million calls, respectively, to the decline in billed local calls. Local calls included in commercial offers represented 83% of total calls in the fourth quarter of 2013, compared to 80% in the year-earlier quarter. For the twelve month period ended
Cellular (“Calling Party Pays”). Minutes of use of calls completed to a cellular line excluding our largest wholesale customer amounted to 169 million in the three month period ended
Long distance. Excluding our largest wholesale customer, which represents 12% of total volume, outgoing long distance minutes amounted to 550 million for the three month period ended
RGUs(8) and Customers. As of
Voice RGUs (lines in service). As of
Broadband RGUs (broadband subscribers). Broadband subscribers increased 3% year-over-year totaling 506 thousand as of
Video subscribers. Axtel launched its pay-television service, AXTEL TV, on
Line equivalents (E0 equivalents). We offer from 64 kilobytes per second (“KBps”) up to 200 megabytes per second (“MBps”) dedicated data links in all of our thirty-nine existing cities. We account for data links by converting them to E0 equivalents in order to standardize our comparisons versus the industry. As of
Cost of Revenues and Operating Expenses
Cost of Revenues. For the three month period ended
Gross Profit. Gross profit is defined as revenues minus cost of revenues. For the fourth quarter of 2013, the gross profit accounted for Ps. 1,939 million, an increase of 11% or Ps. 191 million compared with the same period in year 2012. The gross profit margin decreased from 72.3% to 64.9% year-over-year, significantly influenced by the international traffic margin, which declined from 6% to less than 3% year-over-year. For the twelve month period ended
Operating expenses. In the fourth quarter of year 2013, operating expenses totaled Ps. 1,190 million, Ps. 14 million or 1% higher than the Ps. 1,176 million recorded in the same period in year 2012, explained mainly by Ps. 49 million increase in rents due to the towers lease expense, partially offset by Ps. 24 million decrease in maintenance related to buildings vacated during fourth quarter 2012 and first quarter 2013. For the twelve month period ended
Adjusted EBITDA, D&A and Operating Income
Adjusted EBITDA(5). The Adjusted EBITDA totaled Ps. 749 million for the three month period ended
Depreciation and Amortization(10). Depreciation and amortization totaled Ps. 815 million in the three month period ending on
Operating Income (loss). In the three month period ended
CFR, Indebtedness, Cash, Investments and Derivative Instruments
Comprehensive financial result. Net interest expense for the fourth quarter 2013 decreased Ps. 61 million vis-À-vis the fourth quarter 2012, due to the debt reduction implemented in the first quarter of 2013. During the fourth quarter 2013, a 0.5% peso depreciation against the U.S. dollar generated a Ps. 41 million FX loss. In the fourth quarter of 2012, an FX loss of Ps. 80 million was generated by a 0.7% peso depreciation. Concerning variations in the fair value of financial instruments, these are explained by 17% increase and 9% decrease in the price of AXTELCPO during the fourth quarters of 2013 and 2012, respectively, which affected the valuation of AXTEL’s position held in its own stock through the zero-strike-calls instruments. The Ps. 737 million comprehensive financial gain for year ended in
Debt. At the end of the fourth quarter of 2013, total debt decreased Ps. 3,602 million in comparison with the same date in 2012, explained by (i) a Ps. 2,663 million net reduction related to the January and
Cash. As of the end of the fourth quarter of 2013, the cash and equivalents balance totaled Ps. 1,292 million, compared to Ps. 608 million a year ago, and Ps. 633 million at the beginning of the quarter. As of the end of the quarter, 49 percent of the cash balance was maintained in dollars, the rest in pesos.
Capital Investments. In the fourth quarter of 2013, capital investments totaled Ps. 884 million, or
Other Investments. As of
Derivative Instruments. The following table summarizes the Company’s derivatives position as of
|AXTEL receives||AXTEL pays||Other|
|Zero-strike Equity Call Option|
|Notional||30.4 million AXTELCPO|
|Value||30.4 million AXTELCPO||Strike price: ˘1 per CPO|
|Valuation||Ps. 142.3 million|
At the end of the quarter, the Company’s balance sheet recorded a liability of Ps. 117 million to reflect an implicit derivative instrument embedded in its Senior Secured Convertible Notes, per applicable accounting standards.
Information as of
Cash and equivalents. As of
Accounts Receivable. As of
Property, plant and equipment, net. As of
Total liabilities were Ps. 12,355 million as of
Accounts payable & accrued expenses. On
Liquidity and Capital Resources
Historically we have relied primarily on vendor financing, the proceeds of the sale of securities, internal cash from operations and the proceeds from bank debt to fund our operations, capital expenditures and working capital requirements. Additionally, and subject to (i) market conditions, (ii) our liquidity position and (iii) contractual obligations, from time to time, we might acquire senior secured and unsecured notes in the open market or in privately negotiated transactions. Although we believe that we will be able to meet our debt service obligations and fund our operating requirements in the future with cash flow from operations, we may seek additional financing with commercial banks or in the capital markets from time to time depending on market conditions and our financial requirements. We will continue to focus on investments in property, systems and infrastructure and working capital management, including the collection of accounts receivable and management of accounts payable.
Cash Flow Statement
For the three month period ended
Net resources provided by operating activities were Ps. 1,250 million for the three month period ended on
Net resources (used in) provided by investing activities were Ps. (879) million for the three month period ended on
Net resources (used in) provided by financing activities were Ps. 289 million and Ps. 112 million for the three month periods ended on
For the twelve months ended
Net resources provided by operating activities were Ps. 2,559 million for the twelve month period ended on
Net resources (used in) provided by investing activities were Ps. 1,050 million for the twelve month period ended on
Net resources (used in) provided by financing activities were Ps. (2,934) million and Ps. (1,003) million for the twelve month period ended on
Since the beginning of operations of the Company, AXTEL has invested approximately Ps. 38 billion in infrastructure. The Company expects to do more investments in the future, according to the expansion of the network in other geographical areas of
Other important information
1) We are presenting financial information based on International Financial Reporting Standards (IFRS) in nominal pesos for the following periods:
2) Revenues are derived from:
i. Local services. We generate revenue by enabling our customers to originate and receive calls within a defined local service area and by providing offers with local calls, calls completed on a cellular line (“calling party pays,” or CPP calls) and long distance minutes included in the monthly rent. Customers are charged a flat monthly fee for a variety of commercial offers and in certain offers, a per call fee for local calls (“measured service”), a per minute usage fee for CPP calls and value added services.
ii. Long distance services. We generate revenues by providing long distance services (domestic and international completed calls).
iii. Internet & video. We generate revenues by providing “on demand” Internet access and video (Pay-TV) services.
iv. Data & network. We generate revenues by providing data, dedicated Internet and network services, like virtual private networks and private lines, to the enterprise and government segments.
v. Integrated Services & equipment sale. We generate revenues from managed telecommunications services provided to corporate customers, financial institutions and government entities and the sale of customer premises equipment (“CPE”) necessary to provide these services.
vi. International traffic. We generate revenues terminating international traffic from foreign carriers.
vii. Other services. Include, among others, memberships, late payment charges, spectrum, interconnection, activation and wiring and presubscription.
3) Cost of revenues include expenses related to the termination of our customers’ cellular and long distance calls in other carriers’ networks, as well as expenses related to billing, payment processing, operator services and our leasing of private circuit links.
4) Operating expenses include costs incurred in connection with general and administrative matters which incorporate compensation and benefits, the costs of leasing land and towers related to our operations and costs associated with sales and marketing and the maintenance of our network.
5) Adjusted EBITDA is defined as net income plus interest, taxes, depreciation and amortization, and further adjusted for unusual or non-recurring items. For additional detail on the Adjusted EBITDA Reconciliation, go to AXTEL’s web site at www.axtel.mx
6) Earnings per CPO are calculated dividing the net income by the average number of Series A and Series B shares outstanding during the period divided by seven. The number of outstanding Series A and Series B shares was 97,750,656 and 8,678,441,546, respectively, as of
7) Net Debt to Adjusted EBITDA: The figure comes from dividing the net debt at the end of the period by the respective LTM Adjusted EBITDA.
8) Revenue Generating Unit, or RGU, represents individual service subscriber who generates recurring revenue for the Company. Total RGUs include the sum of all lines in service, broadband service customers and video subscribers.
9) Breakdown of AXTEL’s revenues including its major wholesale customer:
|Million Pesos||Q4 2013||Q4 2012||Q3 2013||Dec-13||Dec-12|
|Internet & Video||289||224||274||1,043||799|
|Data & Network||444||495||450||1,860||1,998|
|Int. Service & Eq. Sale||823||284||565||1,884||1,494|
10) Depreciation and amortization includes depreciation of all communications network and equipment and amortization of pre-operating expenses and cost of spectrum licenses, among others.
11) Subject to market conditions, the Company’s liquidity position and its contractual obligations, from time to time, the Company may acquire its senior secured and unsecured notes in the open market or in privately negotiated transactions.
Analyst Coverage: The analysts mentioned below currently cover Axtel S.A.B. de C.V.
Axtel is a Mexican telecommunications company with a significant growth in the broadband segment, and one of the leading companies in information and communication technologies solutions in the corporate, financial and government sectors. The Company serves all market segments -corporate, financial, government, wholesale and residential with the most robust offering of integrated communications services in
AXTELCPO trades on the
Visit AXTEL’s Investor Relations Center on www.axtel.mx
Investor Relations Officer and Corporate Finance Director
Source: Axtel, S.A.B. de C.V.