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Venezuela's CANTV Posts Loss On Pensions Contingency
Reuters
Venezuela
October 27, 2005
Venezuela's leading telecommunications company CANTV said on Thursday it had posted a third-quarter loss compared with a year-ago profit as it increased contingency funds to cover a court-ordered pensions payment.
CANTV, whose main shareholder is U.S. telephone company Verizon Communications, reported a loss of $203 million, or $1.83 per American Depositary Share, in the quarter ending Sept. 30 compared with net income of $74 million, or 66 cents per ADS, a year earlier.
"This was largely the result of the provision for the pension contingency and increased depreciation and amortization," the company said in its statement.
CANTV posted a loss in its EBITDA or its earnings before interest, tax, depreciation and amortization column of $140 million compared with earnings of $183 million a year ago.
Total revenues for the quarter increased 11 percent to $606 million from $546 million a year ago driven by broadband and mobile sector growth, but offset by a 7.2 percent slide in fixed telephone revenues due to a decrease in tariffs.
Venezuela's Supreme Court earlier this year ordered CANTV to make payments to retired workers and the company raised its reserves to $333 million to cover those contingencies.
CANTV shares were hit hard by the July court ruling ordering it to pay workers demanding increases in pensions from collective contracts in 1993-1994 and 1995-1996. Retirees said the company owes them around $326 million.
Venezuela's left-leaning President Hugo Chavez joined the fray, saying CANTV, which was privatized in 1991, would face the "full force" of the law if it did not heed by the court decision. CANTV had argued the ruling was unconstitutional.
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