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Net Servicos profit, subscriptions up

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CIOL Bureau
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SAO PAULO, BRAZIL: Net Servicos de Comunicacao, Brazil's largest cable services provider, reported a third-quarter profit on Wednesday as pay television and broadband Internet subscriptions surged and a stronger real trimmed debt-servicing costs.

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The company posted net income of 245.6 million reis ($141 million), reversing a loss of 62.8 million reis in the year-earlier period, it said in a securities filing.

Profit almost doubled from 129.8 million reis in the second quarter of 2009, the company said.

Pay television subscriptions climbed 25 percent from a year earlier to 3.65 million. Broadband Internet subscribers soared 35 percent to 2.79 million, while fixed-line telephone clients jumped 63 percent to 2.49 million.

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The results underscore the resilience of Brazil's consumer demand amid the steepest economic downturn in almost two decades. Net said it is directing most investment toward capturing more customers, signaling it sees room for subscription growth in TV, Internet and phone services -- the so-called triple package.

A 7 percent rise in the real (BRBY: Quote, Profile, Research), Brazil's currency, led to a 113.3 million reis gain in the company's financial statements, or the difference between non-operating revenues and expenses, Net said.

The gain on exchange rate-related operations was 64.3 million, compared with a loss of 117.2 million reais a year earlier.

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The company cited "the appreciation of the real against the U.S. dollar and its positive impact on the dollar-denominated debt from ... the perpetual bonds and purchase of equipment from foreign suppliers."

Revenue excluding cancellations totaled 1.20 billion reis, up 26 percent from a year earlier, "proving that the company maintains an appropriate sales policy to attract new clients," the filing said.

Selling, general and administrative expenses rose 21 percent.

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Earnings before interest, taxes, depreciation and amortization -- a measure of cash flow gauging the ability to profit from core operations, -- totaled 322.5 million reis, up 31 percent from a year earlier.

EBITDA, excluding expenses related to sales, jumped 30 percent from the second quarter.

The company is co-owned by Brazil's Organizacoes Globo, Latin America's largest media group, and Mexican telecommunications giant Telefonos de Mexico.

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