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(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F:   ý      Form 40-F:   o 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)):

Yes:   o      No:   ý 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)):

Yes:   o      No:   ý 

(Indicate by check mark whether the registrant by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes:   o      No:   ý 

 

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André Machado Mastrobuono
CEO, CFO and Head of Investor Relations
Ricardo Antunes Agostini
Finance Executive Director
Renata Pantoja
Investor Relations Manager
Phone: +55 (31) 9933-3535

 

 

 

TELE NORTE CELULAR PARTICIPAÇÕES S.A.

REPORTS THIRD QUARTER 2007 RESULTS

 

 

- EBITDA of R$26.3 million, or 23.0% of net service revenues in the 3Q07

- Net additions of 20,383 clients in the quarter

- Net debt of R$173.9 million at the end of the quarter, R$19 million lower than the previous quarter

- Highest prepaid ARPU since the 1Q04

 

 

Belo Horizonte, Brazil, November 07, 2007 – Tele Norte Celular Participações S.A. (BOVESPA: TNCP3 (Common)/TNCP4 (Preferred); NYSE: TCN), the holding Company of the wireless telecommunications service provider in the States of Amapá, Amazonas, Maranhão, Pará and Roraima in Brazil, today announced its results for the third quarter of 2007 (3Q07). Net additions amounted to 20,383 clients in the quarter, increasing the Company’s client base to 1,311,865. In the 3Q07, EBITDA reached R$26.3 million, representing 23.0% of net service revenues. Year-to-date EBITDA reached R$83.6 million, representing 24.9% of net service revenues. When compared to the same period of previous year, the Company registered an increase of 39.1% in the year-to-date EBITDA and 3.3 p.p. in EBITDA margin.

 

Operating Highlights:

 

Client base of 1,311,865 in the 3Q07

 

The Company’s client base reached 1,311,865 in the third quarter of 2007, representing increases of 1.6% and 3.0% when compared to the 2Q07 and 3Q06, respectively. Net additions totaled 20,383 clients in the quarter. Year-to-date client base increased 8,3%.

 

In the third quarter of 2007, prepaid segment increased by 2.1%, reaching 1,103,510 clients, or 84% of the total base. The postpaid base decreased by 2,722 clients, ending the quarter with 208,355 clients or 16% of the total base.

 

www.telenorteholding.com.br - 1/13

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CLIENT BASE (000s)

 

 

 

 

Churn Rate

 

 

Blended annualized churn rate reached 47.7% in the 3Q07, higher than the 42.7% registered in the previous quarter, as a consequence of the increase in the prepaid churn rate. When compared to the 47.9% posted in the 3Q06, blended annualized churn rate remained practically stable.

 

Annualized churn rate for the postpaid segment reached 23.1% in the 3Q07, lower than the 26.7% recorded in the 2Q07. This reduction was due to the initiatives for retention of high value clients. When compared to the 3Q06, annualized churn rate for the postpaid segment remained practically stable.

 

Prepaid annualized churn rate totaled 52.5% in the 3Q07, a reduction of 1.5 p.p. when compared to the 3Q06. When compared to the 46.0% posted in the 2Q07, the prepaid churn rate increased by 6.4 p.p., reflecting the period’s seasonality.

 

CHURN RATE (annualized)

 

 

 

www.telenorteholding.com.br - 2/13

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Operating Revenues

 

Net service revenues totaled R$114.7 million in the 3Q07, an increase of R$2.2 million, or 1.9% over the previous quarter, due to the 0.8% increase in total traffic (0.4% in incoming and 1.1% in outgoing traffics). When compared to the 3Q06, the first quarter with the adoption of the full billing, net service revenues increased by R$7.0 million or 6.5% in the quarter, due to a better quality client base and return of campaigns to stimulate use of cellular phones.

 

Data revenues totaled R$5.3 million in the 3Q07, lower than the R$6.0 million posted in the 2Q07 and the R$6.6 million recorded in the 3Q06.

 

Net equipment revenues totaled R$5.3 million in the quarter, lower than the R$7.2 million recorded in the 2Q07, as a result of lower handset sales. When compared to the 3Q06, net equipment revenues were reduced by R$9.0 million due to higher volume of direct sales from manufacturers to the Company’s dealers.

 

In the third quarter 2007, handset subsidies for client acquisition totaled R$2.6 million or R$14.6 per gross addition, higher than the R$1.6 million or R$9.1 per gross addition recorded in the 2Q07. This increase is related to actions to face stronger competition and Fathers’ Day campaign. When compared to the 3Q06, handset subsidies for client acquisition remained fairly stable.

 

As a result, total net revenues reached R$120.1 million in the 3Q07, practically in line with the R$119.8 million recorded in the previous quarter. When compared to the 3Q06, total net revenues were reduced by R$2.0 million.

 

Operating costs and expenses

 

In the 3Q07, cost of services totaled R$49.8 million, higher than the R$47.1 million recorded in the previous quarter. This was mainly due to the increase in interconnection costs and higher volume of outgoing minutes. When compared to the 3Q06, cost of services was reduced by R$0.6 million.

 

Selling and marketing expenses in the 3Q07 totaled R$24.7 million, in line with the R$24.5 million recorded in both 2Q07 and 3Q06.

 

Customer acquisition cost in the 3Q07 reached R$142, slightly above the R$141 recorded in the 2Q07, due to higher subsidies expenses and the Fathers’ Day campaigns. When compared to the third quarter of 2006, customer acquisition cost increased by R$12, as a consequence of higher expenses related to acquisition discounts, personnel and sales campaigns.

 

Retention costs totaled R$15.7 million in the 3Q07, higher than the R$13.1 million recorded in the 2Q07, as a consequence of higher expenses with subsidies, discounts and relationship programs. When compared to the 3Q06, retention costs decreased by R$1.2 million as a consequence of rationalization of retention and relationship campaigns.

 

General and administrative expenses reached R$11.5 million in the 3Q07, a 19.4% increase over the R$9.7 million recorded in the previous quarter, mainly due to higher expenses with administrative consulting services and accounting reallocation of civil contingencies. When compared to the 3Q06, G&A expenses increased by R$5.7 million in the 3Q07 also as a result of higher consulting expenses and accounting reallocation of civil contingencies

 

www.telenorteholding.com.br - 3/13

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Other operating revenues reached R$3.1 million in the 3Q07 and are related to recognition of tax credits (mainly PIS/Cofins).

 

Bad debt provisions totaled R$2.8 million in the 3Q07, practically in line with the R$2.6 million recorded in the previous quarter. When compared to the 3Q06, bad debt decreased by R$0.5 million, due to the introduction of stricter rules governing the client acquisition process, focused on credit analysis and new collection actions. As a percentage of net service revenues, 3Q07 bad debt provisions totaled 2.4%, versus 2.3% and 3.1% posted in the 2Q07 and 3Q06, respectively. As a percentage of total net revenues, bad debt provisions totaled 2.3% in the 3Q07.

 

BAD DEBT PROVISIONS (R$ million)

 

 

 

 

Average Revenue Per User (ARPU)

 

Postpaid MOU (minutes of use) totaled 246 in the 3Q07, higher than the 244 recorded in the previous quarter, as a result of period seasonality. When compared to the 3Q06, postpaid MOU increased by 18 minutes due to a better quality client base and campaigns to stimulate the use of cell phones.

 

Postpaid ARPU reached R$86.7 in the 3Q07, lower than the R$86.9 recorded in the 2Q07. When compared to the 3Q06, postpaid ARPU increased by R$1.8 in the quarter as a result of a better quality client base.

 

Prepaid MOU totaled 43 in the 3Q07, in line with the previous quarter. When compared to the 3Q06, 3 minutes of use per client were added as a result of a better quality client base and campaigns to stimulate the use of phone credits.

 

Prepaid ARPU totaled R$17.6 in the 3Q07, higher than the R$17.1 recorded in the previous quarter. When compared to the third quarter of 2006, prepaid ARPU increased by R$3.5 due to a better quality client base and campaigns to stimulate the use of prepaid credits.

 

As a result, blended MOU reached 76 minutes, lower than the 77 registered in the 2Q07 and in line with the 76 recorded in the 3Q06. Blended ARPU totaled R$28.7 in the 3Q07, lower than the R$28.9 posted in the 2Q07 and higher than the R$27.9 recorded in the 3Q06.

 

www.telenorteholding.com.br - 4/13

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ARPU (R$)

 

 

 

 

Estimated market share of 21.1% in the 3Q07

 

Market share was estimated at 21.1% in the 3Q07, versus 21.9% registered in the 2Q07. In a year-to-date basis, the company reduced its market share in 1.1 p.p., representing half of the reduction registered in the same period of the previous year reflecting the successful change in company strategy. Total gross sales share in the 3Q07 was estimated at 22.7%, lower than the 24.7% recorded in the previous quarter.

 

EBITDA of R$26.3 million in the 3Q07

 

EBITDA and EBTIDA margin (excluding handset revenues) in the 3Q07 totaled R$26.3 million and 23.0% of net service revenues, respectively, compared to the R$28.9 million and 25.6% posted in the 2Q07. When compared to the 3Q06, EBITDA and EBTIDA margin increased

by 23.7% (R$5.1 million) and 3.2 p.p., respectively.

 

EBITDA (R$ million)

 

 

 

 

www.telenorteholding.com.br - 5/13

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Depreciation and amortization

 

Depreciation and amortization expenses totaled R$27.0 million in the 3Q07, in line with the

R$ 27.1 million recorded in the 2Q07 and slightly higher than the R$26.3 million posted in the 3Q06.

 

Net financial expense of R$9.5 million

 

 

Note: a) Interest expense: includes financial expenses related to debt, losses on hedging operations (if any), taxes on gains with hedge operations and revenues from interest on own capital (if any); b) Interest income: includes results of cash investing activities, clients’ interest and gains on hedging operations (if any); and, c) Foreign exchange gain (loss): almost exclusively reflects currency devaluation changes on debt principal and interest payable.

 

DETAILED FINANCIAL INCOME/EXPENSE INFORMATION

 

 

* Net financial expenses not related to debt are primarily associated with taxes such as CPMF and IOF.

 

Negative net result of R$8.2 million in the quarter

 

Net result was negative in R$8.2 million in the 3Q07, or R$1.216 per ADS (R$1.216 per share), versus a net loss of R$4.7 million, or R$0.698 per ADS (R$0.014 per thousand shares) recorded in the 2Q07.

 

Total debt of R$201.7 million

 

On September 30, 2007, the Company’s total debt amounted to R$201.7 million, of which R$157.6 million related to short and long-term debt and R$44.2 million related to accounts payable from hedging operations. Short and long-term debt (R$157.6 million) was entirely denominated in US Dollars and hedged.

 

www.telenorteholding.com.br - 6/13

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Net debt of R$173.9 million

 

On September 30, 2007, the Company’s total debt was partially offset by cash (cash equivalents and short-term cash investments) in the amount of R$27.9 million, resulting in a

net debt of R$173.9 million. When compared to the 2Q07, net debt was reduced by R$19 million.

 

NET DEBT (R$ million)

 

 

 

Investments totaled R$5.3 million in the quarter

 

During the third quarter of 2007, Amazônia Celular’s capital expenditures reached R$5.3 million. The breakdown of such investments is as follows:

 

CAPEX BREAKDOWN

 

 

 

 

Debt payment schedule

 

 

 

 

www.telenorteholding.com.br - 7/13

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Financial Ratios

 

 

 

(1) Last twelve months.

* Excluding the effects of additional provisions related to disputes concerning the payment of value added tax (ICMS) on activations, monthly subscription fees and VAS.

 

 

 

*****************

 

 

 

For further information please contact:

 

Tele Norte Celular Participações S.A.

Investor Relations Department

André Mastrobuono / Ricardo Agostini / Renata Pantoja / Carolina Anastasia

Phone: (+55 31) 9933-3535

E-mail: ri@telepart.com.br

 

 

 

 

This press release contains forward-looking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of the Company's management. The words "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "predicts," "projects" and "targets" and similar words are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Accordingly, the future results of the Company’s operations may be different from the Company's current expectations, and the reader should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments.

 

 

www.telenorteholding.com.br - 8/13

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OPERATIONAL DATA

		2006						2007						Var. % (3Q07/2Q07)
		3rd Quarter		4th Quarter		1st Quarter		2nd Quarter		3rd Quarter		YTD
Licensed Pops (in millions)		17.6		17.6		17.6		17.6		17.6		17.6		-0.3%
Clients		1,273,256		1,210,780		1,256,134		1,291,482		1,311,865		1,311,865		1.6%
Postpaid		240,941		232,271		219,614		211,077		208,355		208,355		-1.3%
Prepaid		1,032,315		978,509		1,036,520		1,080,405		1,103,510		1,103,510		2.1%
MOU Incoming
Postpaid		82		84		80		83		83		82		0.3%
Prepaid		25		28		26		27		27		27		-1.5%
MOU Outgoing
Postpaid		146		155		152		161		163		158		1.3%
Prepaid		15		17		18		16		16		16		2.6%
Total Outgoing Traffic (Million of Minutes)		152.0		158.9		156.5		153.3		155.0		464.8		1.1%
Total Incoming Traffic (Million of Minutes)		136.9		142.9		133.1		139.7		140.3		413.1		0.4%
Average Revenue per User - ARPU (R$)		27.9		28.6		28.4		28.9		28.7		28.7		-0.7%
Postpaid		84.9		75.2		85.4		86.9		86.7		86.3		-0.3%
Prepaid		14.1		17.3		15.8		17.1		17.6		16.9		3.1%
Service Revenues (R$ millions)
Monthly Fee		20,675		11,219		19,926		19,126		17,741		56,793		-7.2%
Outgoing Traffic		34,470		38,079		33,794		36,974		39,226		109,994		6.1%
Incoming Traffic		50,310		55,043		52,130		54,091		55,291		161,512		2.2%
Other		2,317		2,297		2,598		2,378		2,484		7,459		4.5%
TOTAL		107,772		106,638		108,447		112,570		114,742		335,759		1.9%
Data Revenues (% of net serv. revenues)		6.1%		5.8%		6.4%		5.3%		4.6%		5.4%		-0.7 p.p.
Cost of Services (R$ millions)
Leased lines		9,416		8,900		8,548		8,742		9,794		27,084		12.0%
Interconnection		29,189		27,920		24,655		25,894		27,522		78,071		6.3%
Rent and network maintenance		5,050		5,767		6,152		5,471		6,354		17,977		16.2%
FISTEL and other taxes		5,830		3,554		6,448		6,095		5,721		18,264		-6.1%
Other		901		227		1,128		882		444		2,454		-49.7%
TOTAL		50,386		46,369		46,931		47,083		49,835		143,849		5.8%
Churn - Annualized Rate		47.9%		86.4%		35.9%		42.7%		47.7%		42.2%		5,0 p.p.
Postpaid		22.8%		27.4%		27.0%		26.7%		23.1%		25.7%		-3,6 p.p.
Prepaid		54.0%		100.5%		37.9%		46.0%		52.5%		45.7%		6,5 p.p
Cost of Acquisition (R$)		130		96		139		141		142		141		0.9%
Retention Costs (% of net serv. revenues)		15.7%		13.3%		13.8%		11.6%		13.7%		13.0%		2,1 p.p
CAPEX (R$ millions)		5.6		27.8		3.3		(2.5)		5.3		6.0		-307.4%
Number of locations served		214		212		212		213		213		213		0.0%
Number of cell sites		681		690		693		692		697		697		0.7%
Number of switches		14		14		14		14		14		14		0.0%
Headcount		829		814		374		359		391		391		8.9%
Market Share		23.5%		22.2%		22.3%		21.9%		21.1%		21.1%		0.8 p.p.

 

www.telenorteholding.com.br - 9/13

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INCOME STATEMENT (BR GAAP)

 

 

		(in R$ 000)
		2006						2007						Var. % (3Q07/2Q07)
		3rd Quarter		4th Quarter		1st Quarter		2nd Quarter		3rd Quarter		YTD
Service Revenues - GROSS		179,776		192,202		191,604		185,995		189,513		567,112		1.9%
Equipment Revenues - GROSS		20,395		16,559		9,970		10,729		7,663		28,362		-28.6%
Total Revenues - GROSS		200,171		208,761		201,574		196,724		197,176		595,474		0.2%
Taxes		(78,124)		(91,138)		(86,135)		(76,969)		(77,121)		(240,225)		0.2%
Service Revenues - NET		107,772		106,638		108,447		112,570		114,742		335,759		1.9%
Equipment Revenues - NET		14,275		10,985		6,992		7,185		5,313		19,490		-26.1%
Total Revenues - NET		122,047		117,623		115,439		119,755		120,055		355,249		0.3%
Cost of Services		50,386		46,369		46,931		47,083		49,835		143,849		5.8%
Cost of Equipment		16,726		13,526		7,758		8,737		7,873		24,368		-9.9%
Selling & Marketing Expenses		24,510		23,473		23,318		24,535		24,749		72,602		0.9%
Bad Debt Expense		3,318		5,465		3,330		2,637		2,800		8,767		6.2%
General & Administrative Expenses		5,824		52,170		8,718		9,655		11,530		29,903		19.4%
Other operating expense (income)		-		(9)		(3,012)		(1,765)		(3,066)		(7,843)		73.7%
EBITDA		21,283		(23,371)		28,396		28,873		26,334		83,603		-8.8%
%		19.7%		-21.9%		26.2%		25.6%		23.0%		24.9%		-2,6 p.p.
Depreciation & Amortization		26,264		31,314		28,176		27,074		27,046		82,296		-0.1%
Interest Expense		12,880		31,306		18,929		24,297		19,056		62,282		-21.6%
Interest Income		(2,125)		(3,177)		(2,808)		(2,192)		(1,528)		(6,528)		-30.3%
Foreign Exchange Loss (Gain)		1,827		(4,257)		(8,559)		(13,616)		(8,067)		(30,242)		-40.8%
Others		386		326		14		(627)		504		(109)		-180.4%
Income Taxes		(5,001)		(12,424)		-		-		-		-		-
Minority Interests		(3,129)		(17,263)		(1,763)		(1,388)		(2,527)		(5,678)		82.1%
Net Income (loss)		(9,819)		(49,196)		(5,593)		(4,675)		(8,150)		(18,418)		74.3%
Number of shares (thousand)*		335,084,155		335,084,155		335,084,155		335,084,155		6,701,682		6,701,682		n/a
Earnings per thousands shares (R$)**		(0.029)		(0.147)		(0.017)		(0.014)		(1.216)		(2.748)		n/a
Earnings per ADS (R$)		(1.465)		(7.341)		(0.835)		(0.698)		(1.216)		(2.748)		n/a
(1) Interest paid: 3Q06 - R$7,312 thousand; 4Q06 - R$4,806 thousand; 1Q07 - R$7,820 thousand; 2Q07 - R$3,904 thousand; and, 3Q07 - R$6,961 thousand.
* 3Q07 and YTD 2007: number of shares.
** 3Q07 and YTD 2007: earnings per share (R$).
N/A - share grouping

 

 

 

www.telenorteholding.com.br - 10/13

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BALANCE SHEET (BR GAAP)

 

										(in R$ 000)
		3Q07		2Q07				3Q07		2Q07
Current Assets						Current Liabilities
Cash & cash equivalents		4,499		3,277		Loans & Financing		84,025		99,170
Tempory Cash Investments		23,381		24,697		Loan Interest		1,323		4,931
Accounts Receivable		82,215		82,471		Suppliers		97,834		92,348
Taxes Receivable		16,899		15,350		Taxes Payable		4,315		7,101
Other Assets		18,417		24,928		Dividends		100		101
		145,411		150,723		Other Current Liabilities		17,316		24,588
								204,913		228,239
Long-term Assets		94,239		94,921		Loans & Financing		73,556		77,048
Deferred Assets		-		-		Other Long-term Liabilities		146,696		137,547
Plant & Equipment						Minority Interest		24,517		27,043
Cost		1,002,537		997,988
Accum Depreciation		(722,791)		(695,891)		Shareholders' Equity		69,714		77,864
		279,746		302,097
		519,396		547,741				519,396		547,741

 

 

CASH FLOW (BR GAAP)

 

	3Q07	YTD
Operating activities
Net loss	(8,150)	(18,418)
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization	27,046	82,296
Foreign exchange gains and indexation (principal)	(11,312)	(29,772)
Unrealized losses (gains) on cross-currency interest	(473)	21,760
Minority interest	(2,527)	(5,678)
Provision for contingencies and other	5,277	6,158
Changes in operating assets and liabilities	7,400	(14,808)
Cash provided by operating activities	17,261	41,538
Investing activities
Cash proceeds from disposals of property and
equipment	33	118
Additions to property and equipment	(5,266)	(6,044)
Cash used in investing activities	(5,233)	(5,926)
Financing activities
Proceeds from issuance of debt	-	150,497
Payment of debt	(10,805)	(204,281)
Dividends paid	(1)	(3)
Cash used in financing activities	(10,806)	(53,787)
Increase (decrease) in cash and cash equivalents	1,222	(18,175)
Cash and cash equivalents, beginning of the period	3,277	22,674
Cash and cash equivalents, end of the period	4,499	4,499

 

 

www.telenorteholding.com.br - 11/13

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GLOSSARY OF KEY INDICATORS

 

I) Average Clients

 

a) Average clients – monthly

 

Sum of clients at the beginning and the end of the month

2

b) Average clients – quarterly and year to date

 

Sum of the average clients for each month of the period

Number of months in the period

 

II) Churn Rate (Annualized)

 

a) Churn % quarterly

 

Sum of deactivations / Sum of average monthly opening clients for the 3 months x 12

3

b) Churn % - year to date

 

YTD deactivations / Sum of avg monthly opening clients since beginning of the year x 12

Number of months in the period

 

III) MOU – Minutes of Use (Monthly)

 

Number of total billable minutes for the period / Average clients for the period

Number of months in the period

 

IV) ARPU – Average Revenue per User

 

Net service revenues for the period (excluding roaming-in revenues)

Average clients for the period

 

V) Client Acquisition Cost

 

(Sum of Marketing salaries, Selling salaries, Consulting (Sales and Marketing),

Commissions, Handsets subsidies, Advertising and promotions,

FISTEL tax (activation tax), less Activation fee for the period)

Number of gross activation in the period

 

VI) Free Cash Flow

 

Free Cash Flow = (EBITDA – CAPEX – Taxes – Net Financial Expenses*

* Considers interest paid.

 

VII) Working Capital Variation

 

Working Capital Variation = (D Current Assets – D Cash & Cash Equivalents ) –

(D Current Liabilities – D Short Term Loans and Financing -D Loan Interest -D Dividends)

 

VIII) Interest Coverage Ratio

 

Interest Coverage Ratio = EBITDA / Interest Paid

 

IX) Current Liquidity Ratio

 

Current Liquidity Ratio = Current Assets / Current Liabilities

 

X) EBITDA

 

EBITDA = Operating Revenues – Operating Costs – Operating Expenses* - Bad Debt

* Does not include profit sharing.

 

www.telenorteholding.com.br - 12/13

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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