(Adds details of earnings, GVT deal)
By Brad Haynes
SAO PAULO, July 29 (Reuters) - Brazilian phone company Telefonica Brasil SA posted a sharper than expected drop in quarterly net income on Wednesday, but its acquisition of broadband provider GVT gave operating profit a boost.
The local unit of Spain’s Telefonica SA reported net profit of 870 million reais ($259.05 million), down 56 percent from a year earlier, when a one-time accounting change boosted earnings.
The company completed the acquisition of GVT in May to bolster its fixed-line business and consolidated operations.
On a pro-forma basis, calculated as if GVT were part of the company since January 2014, Telefonica Brasil reported a net profit of 933 million reais in the second quarter, missing an average forecast of 1.018 billion in a Reuters poll of analysts, who gave pro-forma estimates.
Pro-forma earnings before interest, taxes, depreciation and amortization, a gauge of operating profit known as EBITDA, rose 2.8 percent to 3.132 billion reais, slightly above an average forecast of 3.075 billion.
Considering the acquisition in May, EBITDA rose 16 percent from a year earlier as GVT boosted Telefonica Brasil’s fixed-line revenue by 34 percent.
Mobile revenue, which still makes up nearly 50 percent of sales, rose just 6 percent from a year earlier, less than the nearly 9 percent rise in consumer prices during the period.
Rising inflation and unemployment have eroded consumer demand this year as Latin America’s largest economy fell into a likely recession, spurring dealmaking among telecommunications companies trying to protect earnings.
$1 = 3.3584 Brazilian reais Additional reporting by Caroline Stauffer; Editing by Christian Plumb and Chizu Nomiyama