May 19, 2024

UNE 2015 EBITDA Rises 11%, but IFRS Accounting Triggers Net Loss

Medellin-based telecom giant UNE – formerly owned by public utility EPM but now owned by Sweden-based Millicom – reported a 11% year-on-year rise in 2015 earnings before interest, taxes, depreciation and amortization (EBITDA) to COP$1.4 trillion (US$460 million).

Revenue also grew by 7.3% year-on-year for the company – second-biggest in Colombia. UNE (and subsidiaries including Tigo and Colombia Mobile) offer telephone, cell-phone, cable TV and high-speed internet service throughout Colombia.

However, because the company just switched to International Financial Reporting Standards (IFRS), it was forced to change accounting for useful life of assets, boost its depreciation expense and its finance-lease interest expense.

“This change in accounting principles — added to a higher tax expense as a result of the tax reform of 2014, and the application of the equity method to subsidiaries — is reflected in an [IFRS accounting] net loss of COP$273 billion [US$89 million],” according to UNE.

“The incorporation of the results of the subsidiaries through the equity method mainly includes unrealized exchange differences on the [U.S.] dollar debt of Colombia Mobile S.A. ESP with shareholders, maturing in 2020, due to the 31.6% devaluation of the [Colombia] peso against the dollar during 2015,” according to the company.

UNE’s 2015 results also suffered from a revaluation of its investment in UNE Mobile as well as a differential paid to acquire ETB’s former 25% stake in Colombia Movil.

UNE and its subsidiaries continue to be Colombian telecom market-share leaders with 25.3% of fixed-line telephone connections and 26.6% of internet connections (second place nationally). The company also enjoys a 20.3% share of the national cable-TV market, according to UNE.

As for environmental management, the company announced that it has boosted recoveries of electrical and electronic waste, “achieving more than 1,000 tons [of waste] harvested, 481,000 refurbished computers and proper collection and disposal of more than 24,000 used cellular units and accessories,” according to UNE.

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