Net Servicos de Comunicacao SA, Brazil's largest cable services provider, said on Wednesday profit more than quadrupled in the second quarter after pay television and broadband Internet subscriptions surged.
Net income jumped 364 percent to 130 million reais ($68 million) from 28 million reais in the year-earlier period, the company said in a securities filing. Profit was 81.5 million in the first quarter of this year.
Pay television subscriptions surged 28 percent to 3.48 million, driven by a 30 percent gain in contracts for digital TV. Broadband Internet subscribers soared 45 percent in the quarter to 2.61 million, while fixed-line telephone clients more than doubled to 2.29 million in the same period.
The results underscore the resilience of Brazil's consumer demand amid the steepest economic downturn in almost two decades. Sao Paulo-based Net said it still sees room for growth because market penetration of TV, Internet and phone services -- the so-called triple package -- remains too low relative to Brazil's population and household income growth trends.
Delinquencies remained low in the quarter, indicating strong consumer demand and high purchasing power by Net Servicos' customers.
The results are consistent with our accelerated growth strategy and show it has managed to face the challenges that the current financial crisis has presented us with, the company said in the statement. The crisis has continued to exercise little impact on the performance of the economy.
Earnings before interest, taxes, depreciation and amortization -- a measure of cash flow gauging the ability to profit from core operations, -- rose 24 percent to 287 million reais in the quarter ended June 30, compared with 232 million reais in the year-earlier period.
The indicator, known as EBITDA, excluding expenses related to sales, jumped 25 percent to 404 million reais in the quarter from the same period of 2008.
Net debt, including the value of principal and interest on its liabilities, more than doubled in the quarter to 1.12 billion reais from 465 million reais a year earlier after the company issued debt to pay for the acquisition of rival BIGTV.
Debt also rose because of the real currency's BRBY decline against the dollar in the past 12 months.
This indicator remains in a level considered as adequate for the company, Net Servicos said.
The company is co-owned by Brazil's Organizacoes Globo, Latin America's largest media group, and Mexican telecommunications giant Telefonos de Mexico.
Shares of Net fell for the first day in five on Tuesday, shedding 0.43 percent to 20.60 reais in Sao Paulo.
(Reporting by Guillermo Parra-Bernal; editing by Jeffrey Benkoe)