NET Servicos de Comunicacao S.A. (NETC), the largest cable MSO of Brazil, declared mixed financial results for the first quarter of 2010. Quarterly gross revenue was $930 million, an improvement of 17% year over year. This was mainly due to higher growth of the subscriber base for all of its services.
 
Net revenue (excluding connection cancellations and sales taxes), in the reported quarter, was $706 million, up 16% year over year. This was also better than the Zacks Consensus Estimate of $679 million.
 
Net income, in the first quarter of 2010, was $25.7 million or 7 cents per share compared to a net income of $67 million or 9 cent per share in the year-ago quarter. Quarterly EPS of 7 cents was however well below the Zacks Consensus Estimate of 11 cents.
 
Segment wise, Subscription revenue was $806.7 million, up 16% year-over-year. Hook-up revenue was $5 million, down 70% year over year. Revenue from Other services was $124.3 million, up 43% year over year.
 
At the end of the first quarter 2010, Pay TV subscriber base was 3,776,000, up 13% year-over-year. Out of this, Digital Video subscriber base reached 1,025,000, up 11% year over year and now constitute 27% of total Pay TV subscribers.
 
Broadband subscriber base totaled 2,988,000, up 22% year over year. Out of this, bidirectional household penetration reached 34%.  Fixed Telephone Line in Service was 2,662,000, up 4.1% year over year. Quarterly consolidated ARPU was $75.4, up 1% over the prior-year quarter.
 
Quarterly operating expenses were $336.8 million, up 17% over the prior-year quarter. Operating expenses were 47.7% of the net revenue remains same year over year. Quarterly EBITDA was $206.8 million, an improvement of 30% year over year. EBITDA margin was 29% compared to 26% in the year-ago quarter.
 
In the reported quarter, corporate income tax was $17 million compared to a negative $4.5 million in the year-ago quarter. Net debt (total debt –cash & marketable securities), at the end of the first quarter 2010 was $678 million compared to $640 million at the end of fiscal 2009.
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