Telecom Argentina SA said Friday that net income fell 52 percent in the fourth quarter as government caps prevented the company from raising rates even as inflation boosted expenses.
Profit dipped to 130 million pesos ($35.6 million) in the October to December period, from to 270 million pesos last year, Argentina's third-largest mobile phone service provider said. Analysts at the Buenos Aires-based consultancy Grupo SBS had predicted a 38 percent drop.
Regulations freezing mobile phone fees kept the Buenos Aires-based company from raising rates to keep up with soaring administrative, advertising and rent costs, a company filing said.
Operating costs rose 15 percent to $8.6 billion pesos in 2008, while sales rose just 10 percent, the company said.
Argentina's official inflation index reached 7.2 percent last year, although independent economists claim that yearly consumer price gains are closer to 20 percent, but have been underreported since 2007 to save the government money on inflation-linked bonds.
Telecom Argentina shares fell 0.5 percent to 5.37 pesos in Buenos Aires ahead of the earnings report. Telecom Italian and an Argentine investor group are majority shareholders in the company.
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