SAO PAULO, Brazil, Oct. 21 /PRNewswire-FirstCall/ -- Net Servicos de Comunicacao S.A. (Bovespa: NETC3 and NETC4; Nasdaq: NETC; and Latibex: XNET), today announces its results for the third quarter of 2008 ("3Q08"). With its strategy focused on growth with profitability, delivery of higher quality products and services to its clients and investments in projects to remain competitive in the long run, the Company once again, in 3Q08, has posted results in line with this strategy. The Pay TV Service base closed the quarter with 2,923,000 clients, a 22% increase versus 3Q07. The Broadband client base reached 2,059,000 clients in the quarter, a 60% upturn on 3Q07 and the number of Voice clients increased 208% year-on-year to 1,532,000 clients. Net additions in the quarter were the highest ever in the Company's history. The Company's financial result was also consistent with the ongoing growth strategy. The quarter closed with Net Revenue of R$ 948.0 million, up 27% on the R$ 747.4 million in 3Q07, due to the increase in number of clients, and the increased ARPU (Average Revenue Per User). ARPU in 3Q08 was R$ 135.63, 5.6% higher than the R$ 128.47 registered in 3Q07. Even with the healthy sales performance of NetFone.com, the product with lower subscription rates, ARPU continued to grow, demonstrating the Company's capacity to increase its client base and offer value-added products, thus increasing the profitability of its client base. Operating Costs ended the quarter at R$ 460.3 million, increasing by 26% when compared to the R$ 365.0 million registered in 3Q07. As a percentage of revenue, they remained stable at 48.6%. Main reasons for this increase were the continuous investments made to improve customer services, high usage of the link due to the growth in the broadband client base and higher programming costs due to a larger Pay TV client base. Selling, General and Administrative Expenses totaled R$ 231.6 million, increasing by 37% over the R$ 168.9 million registered in 3Q07. While General and Administrative Expenses increased 10% year-on-year, representing 11% of Net Revenue, a 13% decrease year-on-year, Selling Expenses increased by 82%, representing 13% of Net Revenue, versus 9% in 3Q07. This increase in Selling Expenses was due to the substantial increase in the sales of all of the Company's products during the quarter. EBITDA before Selling Expenses totaled R$ 370.5 million, increasing 36% year-on-year. EBITDA margin before Selling Expenses was 39%, versus 36% in 3Q07, reflecting the significant growth in our client base, which was the key factor behind the EBITDA margin remaining stable at 26%. EBITDA totaled R$ 246.5 million in the quarter, 21% higher than the R$ 204.0 million registered in 3Q07. Due to the US dollar-denominated debt in the Company's balance sheet, the strong weakening of the Brazilian Real against the US Dollar resulted in foreign exchange losses of R$ 117.3 million in the quarter. However, it must be highlighted that these losses did not affect the Company's cash position as it did not carry out any risky operations in the foreign exchange market and that its cash generation and position remain solid to fund the investments necessary for executing its accelerated growth strategy. The Company contracts foreign exchange hedging only for the import volumes estimated and payment of interest on debt over the term set by the Financial Committee. Another important issue to be considered is that, of the total debt in US Dollars, 43% relates to perpetual bonds, which do not represent any refinancing risk, and the remaining 57% relates to a loan from Banco Inbursa, maturing between 2017 and 2019. The Company does not have any short or medium-term debts in US Dollars. In line with the Company's focus on acquiring strategic assets, on August 29, NET announced the acquisition of ESC 90, a leading provider of Pay TV and broadband services in Brazil. ESC 90 has 31,000 Pay TV clients and 24,000 broadband clients, and operates under the "NET" brand in Vitoria and Vila Velha in the state of Espirito Santo. Its 593 km network covers 106,000 homes. This acquisition, which is awaiting ANATEL's approval, will improve the Company's market share by increasing its area of operations without any network overlap. DATASOURCE: Net Servicos de Comunicacao S.A. CONTACT: IR Contact: Adriana Godinho, IR Manager, or Maria Siqueira, IR Analyst, (55 11) 2111-2785, or , both of NETC Web site: http://ir.netservicos.com.br/

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