February 4, 2011 / 12:27 AM / 9 years ago

UPDATE 2-Mexico's Telmex profit slumps 32 pct on tax hit

* Net profit of 3.39 bln pesos below estimates

* EBITDA and revenues also miss, taxes higher

* Sheds 291k line, adds 835k broadband, yr/yr (Adds detail on broadband subscribers)

MEXICO CITY, Feb 3 (Reuters) - Billionaire Carlos Slim’s Telmex, Mexico’s leading fixed-line phone operator, posted on Thursday a surprisingly steep 32 percent drop in fourth-quarter net profit on lower revenue and higher taxes.

Telmex TMX.N said its quarterly net profit was 3.39 billion pesos ($275 million) compared to 4.99 billion pesos in the same period last year.

A Reuters poll of seven analysts projected net profit of 3.91 billion pesos. [ID:nN01115085]

Earnings were hit by a 70 percent leap in the tax bill.

The former monopoly is being pressured from all sides, as it faces rising competition from cable companies offering TV, phone service and Internet access and as customers drop fixed-lines for mobile phones. Regulations bar Telmex from offering TV service, which the company says puts it at a competitive disadvantage.

Slim consolidated Telmex and regional fixed-line operator Telmex Internacional within his flagship mobile provider America Movil (AMXL.MX)(AMX.N) last year, creating one of the world’s top telecommunications companies.

Telmex shed 291,000 lines during the quarter leaving it with 15.591 million lines in service at the end of 2010. It added 835,000 broadband Internet connections compared to the fourth quarter of 2009.

Despite the broadband additions revenue from data services fell from last year when Telmex recognized revenue from several major projects.

Overall revenue fell 6 percent to 27.958 billion pesos. Earnings before interest, tax, depreciation and amortization (EBITDA) fell 9.4 percent to 11.087 billion pesos. Revenue and EBITDA also both were below estimates.

Telmex shares TELMEXL.MX edged down 0.09 percent to 10.76 pesos before its earnings release. The shares, one of the laggards on the Mexico City bourse, have declined almost 1 percent in the last twelve months compared to a nearly 18 percent gain in America Movil’s stock.

$1 = 12.3103 pesos at end-Dec. Reporting by Michael O'Boyle and Tomas Sarmiento; Editing by Bernard Orr

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