UPDATE: Portugal Tel 4Q Net Profit Down 83% On Lower Revenue

Portugal Telecom SGPS SA (PT) Thursday said fourth-quarter net profit dropped 83% due to restructuring costs and a decline in domestic wireline and mobile revenue.

Portugal's biggest telecommunications company by market value said net profit fell to EUR54.5 million in the fourth-quarter from EUR312.1 million a year earlier. PT's fourth-quarter earnings were the first to not include a contribution from Brazilian mobile telephone company Vivo Participacoes SA (VIV) after the company sold its stake in Vivo to Telefonica SA (TEF) in September for EUR7.5 billion.

PT restated its earnings for the rest of 2010 and for 2009 to remove Vivo's operating results. The company's 2010 net profit, however, was buoyed by a first installment of the payment from Telefonica of EUR5.5 billion. PT's 2010 net profit rose to EUR5.67 billion from EUR684.7 million in 2009.

PT's fourth-quarter wireline revenue dropped 5% to EUR476.3 million, while mobile revenue fell around 11% to EUR342.1 million. Total fourth-quarter revenue dropped to EUR949.7 million from EUR961.3 billion in the same period a year earlier.

European telecommunication companies are increasingly reliant on high growth markets to fuel growth as competition and regulation weigh on mature markets at home. While data revenue is soaring due the surge in smartphones and the growth of broadband, fixed-line voice revenue is under pressure, while some customers are also cutting spending due to the financial crisis and government austerity measures, which include tax hikes.

"The quarterly results show PT's revenue in its domestic business is still pressured by the macroeconomic context and competition dynamics," said Millennium BCP analyst Alexandra Delgado. However, both mobile and wireline margins were very positive, she added.

In the fourth quarter, PT was also hit by EUR134.7 million in restructuring costs, mainly related to workforce reductions and other cost efficiency efforts.

Fourth-quarter earnings before interest, taxes, depreciation and amortization decreased to EUR362.5 million from EUR379.9 million.

At 1254 GMT, PT's shares traded up 1.2% at EUR8.33.

Company Web site: http://www.portugaltelecom.pt

-Contributed by Carla Canivete of Webtexto to Dow Jones Newswires; [phone]; [e-mail]