Telmex plans to hold phone rates steady in 2005
Telmex said on Wednesday it plans to hold rates steady in 2005 and pledged to look for ways to increase productivity to keep margins strong.
"The only way we can retain profitability in the future is by increasing productivity, not by raising tariffs," Telmex's Chief Executive Jaime Chico Pardo said during a conference call with analysts.
"We haven't increased tariffs in the last four years and we don't plan to increase tariffs next year."Telefonos de Mexico (Telmex), the leading Mexican telephone company, opted to freeze local phone rates in 2000 due to a sluggish economy.
The move constrained the company's growth in Mexico as the use of cheaper cellular phones became more widespread, prompting Telmex to look south for new markets.Telmex, owned by businessman Carlos Slim, launched a series of acquisitions this year, buying telephone, cable and data- transmission assets in Argentina, Brazil, Chile, Colombia and Peru.
With the acquisition of Brazil's long-distance operator Embratel, which Telmex completed in July, the Mexican company tapped into Latin America's No. 1 economy. But the Embratel operation is pressuring Telmex's profit margins and raising its debt.
"We plan to increase productivity in order to maintain our margins," Chico Pardo said, without elaborating.Embratel earlier this week posted a third-quarter net loss and took a steep charge for tax and labor costs.
The company, facing tough competition in the Brazilian long-distance market, anticipated more charges in the current quarter related to its restructuring under Telmex.
(From Reuters, October 20, 2004)
____________