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FORM 6 - K

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Report of Foreign Issuer

Pursuant to Rule 13a - 16 or 15d - 16 of the

Securities Exchange Act of 1934

For the month of April 2006

 

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NATIONAL TELEPHONE COMPANY OF VENEZUELA (CANTV)

(Translation of Registrant’s Name into English)

 

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EDIFICIO CANTV

AVENIDA LIBERTADOR

CARACAS, VENEZUELA

(Address of Principal Executive Offices)

 

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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      X            Form 40-F              

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

Yes                      No      X    

If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82 -             

 

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Attached to this report is a copy of the first quarter press release and supplemental data, dated April 26, 2006, pertaining to the financial condition and results of operations at and for the quarter ended March 31, 2006, as well as revised forecasts for the registrant’s operations for the fiscal year ending December 31, 2006. The consolidated financial information of the registrant included in the press release and the supplemental data were prepared on the basis of International Financial Reporting Standards, which differ in certain important respects from accounting principles generally accepted in the United States. The financial results for the quarter ended March 31, 2006 are unaudited.

The earning projections for the fiscal year ending December 31, 2006 included in the attachment contain forward-looking statements. The registrant desires to qualify for the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, and consequently is hereby filing cautionary statements identifying important factors that could cause the registrant’s actual results to differ materially from those set forth in the attachment.

The registrant’s earning projections are based on a series of projections and estimates regarding the economy and the telecommunications industry in Venezuela in general. The projections and estimates regarding the telecommunications industry may be affected by the state of the economy in Venezuela and abroad, the effects of competition, the pricing of services, tariff-setting regulations and the success of new products, new services and new businesses. No assurance can be given that the registrant’s actual results will not vary significantly from the projected earnings.

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From:		Compañía Anónima Nacional Teléfonos de Venezuela (Cantv) NYSE: VNT BVC: TDV.d             April 26, 2006		For Release:   Contact:		FOR IMMEDIATE RELEASE   Cantv Investor Relations +011 58 212 500-1831 (Main) +011 58 212 500-1828 (Fax) Email: invest@cantv.com.ve   The Global Consulting Group César Villavicencio 646 284-9423 (US) Email: cvillavicencio@hfgcg.com

CANTV ANNOUNCES FIRST QUARTER 2006 RESULTS

Revenue and free cash flow increased 32.3% and 72.1%, respectively. Nearly 400 thousand net

additions increased our mobile subscriber base to nearly 5.6 million. 2006 Guidance revised

increasing year-end mobile subscribers from 6.3 to 7.8 million.

HIGHLIGHTS

 

n	Consolidated revenues increased a robust 32.3% over first quarter 2005 due to sustained growth in our mobile and broadband services

 

n	Our mobile and broadband customer bases posted 75.1% and 68.5% increases, respectively, over first quarter 2005

 

n	First quarter mobile net additions of nearly 400 thousand subscribers increased our mobile customer base to nearly 5.6 million subscribers

 

n	Continued strong ABA (ADSL) sales increased our customer base to almost 327 thousand subscribers, a 75.4% increase over first quarter 2005

 

n	Sustained growth momentum in switched access lines generated 6.6% gain over first quarter 2005

 

n

A one time gain of the sale of the Company’s 1.2% equity investment in INTELSAT occurred in first quarter 2005 affects EBITDA and net income comparison with first quarter 2006. Net of this effect, first quarter 2006 EBITDA would have been 16.6% higher than a year ago and net income would have been 0.2% lower than a year ago

 

n	Strong operating cash flow drove a 72.1% increase in free cash flow over first quarter 2005

 

n	First quarter 2006 CAPEX of Bs. 166.8 billion in line with prior 2006 Guidance

 

n

2006 Guidance has been revised to reflect strong performance on our mobile segment. 2006 year-end mobile subscribers estimated range mid-point has been increased from 6.3 million to 7.8 million. Our revised 2006 revenues, EBITDA and net income mid-point estimates are 5.3%, 5.3% and 8.6% higher than previous guidance, respectively. Updated estimates mid-points increased 11.0% for CAPEX and declined 1.5% for free cash flow

 

CONTENTS
• Key financial and operating Indicators		2
• Revenue analysis:		2
Fixed		3
Mobile		5
• Expense and margin analysis		7
Total operating expenses		7
EBITDA and EBITDA margin		7
Interest income and exchange gain, net and taxes		8
Net income		8
• Cash flow analysis		8
Capital expenditures		8
Total debt		9
• Other developments		9
Dividends		9
Proposed sale of Verizon’s stake in Cantv to Telmex and América Móvil		9
Pension adjustment decision		10
CONATEL – Taxes review		10
• Financial statements data		11
Income statement data		11
Balance sheet data		12
Cash flow data		13
• Reconciliation of non-GAAP financial measures		14
• 2006 Revised Guidance		15
• Company profile		16
• Glossary of key terms		16

Financial results are stated in accordance with International Financial Reporting Standards (IFRS). Translation of financial statements data to US$ has been performed solely for the convenience of the reader, converting bolivar amounts at the current official exchange rate of Bs. 2,150 per US$1.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 1

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KEY FINANCIAL AND OPERATING INDICATORS

Figure 1 - Key Financial Highlights and Operating Indicators

Billions of Bs. and %

 

		1Q06			1Q05			Inc./(Dec.)			%
Revenues		1,441.5			1,089.7			351.8			32.3	%
EBITDA		431.6			441.6			(10.0	)		(2.3	)%
EBITDA Margin		30	%		41	%		(1,100	)bps		N.M.
Net Income		183.9			294.9			(111.0	)		(37.6	)%
CAPEX		166.8			120.4			46.4			38.5	%
Free Cash Flow		188.4			109.5			78.9			72.1	%
Debt payments		25.8			25.4			0.4			1.6	%

 

		1Q06		1Q05		Inc./(Dec.)			%
Subscribers (thousands)
Fixed		3,457.9		3,126.5		331.4			10.6	%
Switched access lines		3,114.4		2,922.7		191.7			6.6	%
Residential		2,410.0		2,244.7		165.3			7.4	%
Non-residential		597.8		582.7		15.1			2.6	%
Public Telephones		106.6		95.3		11.3			11.8	%
Broadband		343.5		203.8		139.7			68.5	%
ABA (ADSL) lines		326.6		186.1		140.5			75.4	%
Private Circuits		16.9		17.7		(0.8	)		(4.5	)%
Mobile		5,587.5		3,191.1		2,396.4			75.1	%
Postpaid		271.3		223.2		48.1			21.6	%
Prepaid		5,316.2		2,967.9		2,348.3			79.1	%
Traffic (millions of minutes)
Fixed Local		3,131		3,426		(295	)		(8.6	)%
Fixed DLD and ILD		590		634		(44	)		(6.9	)%
Mobile		1,209		653		556			85.1	%

N.M.= Not meaningful

Note: further details are disclosed in additional tables posted in Cantv’s Investor Relations web page

REVENUE ANALYSIS

 

Strong mobile and broadband revenues continued to drive top line growth

Operating revenues totaled Bs. 1,441.5 billion during first quarter 2006, a Bs. 351.8 billion (32.3%) increase over first quarter 2005.

Quarter-over-quarter revenue growth was driven by 72.5% and 10.8%, increases in mobile and fixed line revenues, respectively. Fixed line revenues reflects a 45.8% growth in its broadband component.

As a percentage of total revenues, first quarter mobile revenues increased from 34.8% in first quarter 2005 to 45.4% in first quarter 2006 (see Figure 2).

Figure 2 - Revenues

Cantv’s business growth efforts were reflected in our first quarter revenues. Each of our two business segments contributed to the overall 32.3% revenue growth.

The 10.8% revenue increase in our fixed line segment was largely a result of the 68.5% growth in broadband customers. Excluding broadband, our fixed line business’ revenues increased 3.0% over the same period last year. The improvement was driven by 19.4% higher IXC fixed to mobile outgoing revenues combined with the sustained fixed wireless subscriber growth. Local services residential tariffs remained frozen.

Mobile revenue growth was driven by the segment’s robust subscriber and traffic growth.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 2

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Fixed

Sustained growth in fixed-switched access lines

Switched Access Lines:

Lines in service increased 6.6% on a year-over-year basis surpassing the 3.1 million mark.

Nearly 17 thousand net additions were generated during first quarter 2006 reflecting sustained subscriber growth. These net additions were 57.0% lower than those generated during the same period in 2005 (see Figure 3).

Figure 3 – Switched Access Lines in Service

First quarter 2006 growth was driven by a 25,312 increase in residential lines combined with 2,040 new public telephony lines. These increases were partially offset by a 10,625 non-residential lines reduction. Our prepaid product continues to drive our fixed line growth with first quarter net additions of 24,394 lines.

Local Service Revenues:

 

Local service revenues decrease 0.6% driven by reduced traffic and freeze tariffs

First quarter 2006 local service revenues of Bs. 220.1 billion were Bs. 1.3 billion lower (0.6%) than revenues during the same period in 2005. The slight decrease primarily reflects the decrease in local usage traffic. Local services residential tariffs continue to be frozen.

Figure 4 - Local Service Revenues

 

		(in millions of Bs.)
		1Q06		1Q05		Inc./(Dec.)			%
Monthly recurring charge		126,785		123,978		2,807			2.3	%
Installation & Equipment		10,862		6,763		4,099			60.6	%
Usage		82,431		90,637		(8,206	)		(9.1	)%
Total		220,078		221,378		(1,300	)		(0.6	)%

The 60.6% increase in installation and equipment revenues over first quarter 2005 was primarily attributable to a 61.6% increase in fixed wireless equipment residential sales.

Local usage revenues declined 9.1% due primarily to a 10.5% decrease in unbundled (billed) minutes. As shown in Figure 5, the 10.5% decrease in local services traffic was attributable to 9.9%, 7.4% and 28.4% reductions in residential, non-residential and public telephony traffic, respectively, partially offset by an increase in the weighted average price per minute of 1.2%. The higher average price was driven by the increase in prepaid minutes as a percentage of total traffic from 5.8% in first quarter 2005 to 9.7% in first quarter 2006. Prepaid usage is priced at a higher tariff than postpaid traffic.

Figure 5 - Local Unbundled Minutes

 

		(in millions)
		1Q06		1Q05		Inc./(Dec.)			%
Residential		1,388		1,541		(153	)		(9.9	)%
Non-residential		686		741		(55	)		(7.4	)%
Public telephony		131		183		(52	)		(28.4	)%
Total		2,205		2,465		(260	)		(10.5	)%

The 28.4% reduction in public telephony traffic was driven by mobile services substitution, and was comprised of a 60.6% decrease in traffic generated by traditional payphones partially offset by a 9.5% increase in traffic generated through telecommunication centers. Our customers have increasingly opted to use telecommunication centers due to the security and value added services they offer. The Company has encouraged this substitution due to the vulnerability of traditional payphones to vandalism that threaten this service reliability.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 3

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Domestic Long Distance Revenue:

DLD revenues and traffic decreased 5.4% and 11.5%, respectively

Domestic long distance (DLD) revenues decreased Bs. 3.9 billion (5.4%) compared to first quarter 2005, while traffic decreased 11.5% (see Figure 6).

Figure 6 - DLD Revenues and Traffic

 

		Revenues (in millions of Bs.)										Minutes (in millions)
		1Q06		1Q05		Inc./(Dec.)			%			1Q06		1Q05		Inc./(Dec.)			%
Residential		18,435		18,114		321			1.8	%		131		130		1			0.8	%
Non-residential		27,984		29,951		(1,967	)		(6.6	)%		143		158		(15	)		(9.5	)%
Public telephony		8,767		10,697		(1,930	)		(18.0	)%		66		76		(10	)		(13.2	)%
Total Unbundled		55,186		58,762		(3,576	)		(6.1	)%		340		364		(24	)		(6.6	)%
Bundled plans		14,814		15,229		(415	)		(2.7	)%		158		199		(41	)		(20.6	)%
Total		70,000		73,991		(3,991	)		(5.4	)%		498		563		(65	)		(11.5	)%

Compared to the same period in 2005, first quarter 2006 residential unbundled DLD revenues increased 1.8% to Bs. 18.4 billion mainly due to a 0.8% increase in residential DLD unbundled traffic combined with a 1% increase in weighted average tariff.

The traffic decrease, mainly attributable to mobile service substitution, was most pronounced in our bundled DLD plans (20.6%) than in our unbundled DLD service (6.6%). Due to restrictions imposed by CONATEL, mobile services providers may not bill domestic long distance usage.

Bundled plans helped curb DLD revenue decline. Unbundled DLD revenues decreased 6.1% over same period last year and was in line with the 6.6% decrease in unbundled traffic. Bundled DLD revenues, however, only decreased 2.7% despite a 20.6% overall decline in bundled traffic.

International Long Distance Revenues and Net Settlements:

ILD revenues increased 5.1% driven by 2.9 billion increase in revenues on outgoing minutes charged to customers

First quarter 2006 international long distance (ILD) revenues of Bs. 29.7 billion (2.4% of total revenues) reflects a 5.1% increase over first quarter 2005 results, mainly due to a Bs. 2.9 billion (10.3%) increase in outgoing revenues partially offset by Bs. 1.4 billion decrease in net settlements revenues (see Figure 7).

Figure 7 - ILD Revenues and Traffic

 

		Revenues (in millions of Bs.)											Minutes (in millions)
		1Q06			1Q05		Inc./(Dec.)			%			1Q06		1Q05		Inc./(Dec.)		%
Incoming minutes		15,446			16,129		(682	)		(4.2	)%		138		85		53		62.4	%
Outgoing minutes		16,627			15,875		751			4.7	%		92		71		21		29.6	%
Net Settlements		(1,180	)		253		(1,434	)		N.M.			46		14		32		228.6	%
Incoming/Outgoing ratio		0.93			1.02		(0.09	)		(8.6	)%		1.50		1.20		0.30		25.3	%
Outgoing minutes charged to customers		30,909			28,022		2,887			10.3	%		74		65		9		13.8	%
Total		29,729			28,275		1,453			5.1	%		120		79		9		51.9	%

The increase in revenues from outgoing minutes charged to customers results from the 13.8% increase in outgoing traffic partially offset by a 2.8% reduction in weighted average tariffs.

The decline in net settlements revenues results from a reduction in tariffs partially offset by an increase in traffic with improved incoming/outgoing ratio. Lower incoming tariffs are primarily attributable to the Company’s efforts to maximize market share in response to competitive pressures. Most of incoming traffic goes through our IP platform allowing us to offer competitive prices. The results of this strategy is evidenced in the improved incoming/outgoing traffic ratio achieved by the Company through negotiations with key operators involving higher commitments for inbound traffic combined with improved quality of service.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 4

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Interconnection Revenues (Outgoing Fixed to Mobile and Incoming):

Increase in IXC revenues driven mainly by 19.4% increase in outgoing fixed to mobile revenues

First quarter 2006 15.5% quarter-over-quarter increase in total interconnection revenues was attributable to a 19.4% increase in outgoing revenues partially offset by a 10.6% decrease in total incoming revenues (see Figure 8).

Figure 8 - Interconnection Revenues and Traffic

 

		Revenues (in millions of Bs.)										Minutes (in millions)
		1Q06		1Q05		Inc./(Dec.)			%			1Q06		1Q05		Inc./(Dec.)			%
Local F-M Outgoing		135,854		118,830		17,024			14.3	%		418		375		43			11.5	%
DLD F-M Outgoing		68,605		52,395		16,210			30.9	%		220		177		43			24.3	%
Total Outgoing		204,459		171,225		33,234			19.4	%		638		552		86			15.6	%
Incoming		23,096		25,827		(2,731	)		(10.6	)%		420		518		(98	)		(18.9	)%

The increase in outgoing traffic and the reduction in incoming revenues reflect the significant growth in the mobile market and its impact on traffic as other operators completed their installation of interconnection points.

The 14.3% and 30.9% increases in local and DLD fixed to mobile (F-M) outgoing revenues were driven by 11.5% and 24.3% respective traffic increases over the same period last year combined with 2.6% and 5.3% weighted average rate increases.

Broadband:

Broadband revenues increased 45.8%

Broadband revenues increased Bs. 59.2 billion (45.8%) on a quarter-over-quarter basis to Bs. 188.4 billion, increasing its share of Company’s total revenues from 11.9% in 2005 to 13.1% in 2006. The increase was due to a Bs. 40.1 billion (75.7%) increase in ABA (ADSL) revenues combined with a Bs. 19.0 billion (25.0%) increase in private circuits revenues (see Figure 9).

Figure 9 - Broadband Revenues and Subscribers

 

		Revenues (in millions of Bs.)									Subscribers (thousands)
		1Q06		1Q05		Inc./(Dec.)		%			1Q06		1Q05		Inc./(Dec.)			%
Private circuits		95,246		76,202		19,044		25.0	%		16,887		17,677		(790	)		(4.5	)%
ABA (ADSL)		93,180		53,040		40,140		75.7	%		326,557		186,146		140,411			75.4	%
Total		188,426		129,242		59,184		45.8	%		343,444		203,823		139,621			68.5	%

ABA (ADSL) subscribers increased to 57.7% of total Internet subscribers

ABA (ADSL) lines continued its strong increase trend, with 75.4% quarter-over-quarter growth measured at the end of the first quarter. As of March 2006, our ABA (ADSL) customer base totaled nearly 327 thousand lines. Our continued investment and commercial efforts to improve and promote our broadband offerings have fuelled the strong ABA (ADSL) sales momentum and taken advantage of the low market penetration rate in this sector.

Internet subscribers grew 44.2% on a year-over-year basis from 392 thousand to 565 thousand. ABA (ADSL) subscribers increased as a percentage of total Internet subscribers from 47.5% at the end of first quarter 2005 to 57.7% at the end of first quarter 2006.

Mobile

Mobile revenues increased by 72.5% in 1Q06

First quarter mobile revenues increased 72.5% on a quarter-over-quarter basis to Bs. 654.3 billion, increasing its share of the Company’s total revenues from 34.8% to 45.4%.

The quarter-over-quarter growth in mobile revenues resulted from an 81.3% gain in traffic, largely driven by the 75.1% increase in our customer base and 101.0% increase in equipment sales.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 5

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Subscribers:

Nearly 400 thousand net additions in 1Q06, 371.5% higher than in 1Q05 drove the mobile subscriber base to nearly 5.6 million

By the end of first quarter 2006, the mobile customer base reached nearly 5.6 million subscribers, a 75.1% increase on a year-over-year basis. Our postpaid and prepaid subscriber bases individually posted increases of 21.6% and 79.1%, respectively.

Additions of nearly 400 thousand net subscribers drove a 7.7% sequential increase over our fourth quarter 2005 customer base. Compared to the same period a year ago, first quarter 2006 net additions were 371.5% higher.

Figure 10 – Mobile subscribers

Our competitive success in first quarter 2006 reflects the continuation of 2005 business strategies that focused on improved demand forecasts optimized provisioning of terminal equipment, particularly of low cost handsets, and a superior network. As evidenced by recent market opinion surveys, Cantv’s mobile network receives top marks in both quality and coverage.

Usage and ARPUs:

Total usage grew 81.3% compared with 1Q05

1,383 million minutes of use (outgoing and incoming) were generated during first quarter 2006, a 81.3% increase compared to first quarter 2005 (see Figure 11).

Figure 11 - Mobile Minutes

 

		(in millions)
		1Q06		1Q05		Inc./(Dec.)		%
Outgoing		1,209		653		556		85.1	%
Incoming		174		110		64		58.2	%
Total		1,383		763		620		81.3	%
Incoming from related parties		275		209		66		31.6	%

Our bundled offers continue to channel most of the outgoing traffic growth. The overall 85.1% increase in first quarter 2006 outgoing minutes resulted from a 152.6% increase in bundled traffic combined with a 38.8% growth in unbundled minutes.

During first quarter 2006, blended ARPU declined 5.4% to Bs. 43,085 driven by new customers subscribing to our prepaid bundled plans (“Pégate durísimo” and “Rumbear”). These plans targets lower income segments of the market. Postpaid ARPU grew 9.1% to Bs. 174,307 (see Figure 12).

Figure 12 - Mobile ARPU

 

		(in Bs.)
		1Q06		1Q05		Inc./(Dec.)			%
Prepaid		36,395		36,988		(593	)		(1.6	)%
Postpaid		174,307		159,708		14,599			9.1	%
Blended		43,085		45,561		(2,476	)		(5.4	)%

SMS revenues increased 118.2%

SMS continued to deliver strong revenue growth. First quarter 2006 SMS revenues totaled Bs. 158.5 billion, a 118.2% increase over first quarter 2005. Approximately 2.4 billion messages, a 108.6% increase over the same 2005 period, were sent by our customers during the quarter. SMS represented 19.7% of the Company’s total first quarter mobile revenues.

Handset sales represented 14.3% of mobile revenue

Handset sales during first quarter 2006 increased 101.0% on a quarter-over-quarter basis and accounted for 14.3% of mobile revenues. The Company sold 650 thousand handsets for Bs. 93.8 billion during first quarter 2006. Improved purchasing power of lower income segments combined with the Company’s efforts to source lower cost handsets have contributed to the significant growth in subscribers.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 6

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EXPENSE AND MARGIN ANALYSIS

Total Operating Expenses

Total operating expenses increase of 41.5% driven by higher handset sales and labor and pension expense

First quarter 2006 total operating expenses increased Bs. 356.0 billion or 41.5%, to Bs. 1,213.8 billion compared to first quarter 2005. The increase reflects Bs. 361.7 billion, or 55.8% increase in operating expenses excluding depreciation and amortization, partially offset by Bs. 5.7 billion, or 2.7% decrease in depreciation and amortization expense.

Operations, maintenance, repairs and administrative expenses increased Bs. 235.7 billion or 44.9% primarily from Bs. 97.8 billion or 126.2% increase in cost cellular handsets sales, combined with: (i) Bs. 81.9 billion labor and benefit related expenses driven by the higher pension expense resulting from the 2005 Supreme Court Ruling and salary increases; ii) Bs. 25.8 billion increase in contractor expenses supporting customer service; and (iii) Bs. 47.6 billion increase mainly related to fixed and mobile network maintenance, cost of mobile services, and legal contingencies.

Interconnection cost increased Bs. 26.6 billion or 22.9% due to 5.1% increase in traffic volumes over first quarter of 2005.

Concession and other taxes increased 61.8% as a result of the higher revenue base and additional municipal taxes effective January 1, 2006. The Municipal Public Power Law, enacted on June 8, 2005, imposed up to a 1% tax on gross revenues for telecommunications activities.

Provision for uncollectible decreased Bs. 9.6 billion or 42.9%, relative to first quarter 2006 due to changes in our fixed telephony uncollectible policy. The provision was previously based on a percentage of gross revenues. The provision is now based on an aging analysis of accounts receivable which yields a result more accurately aligned to current collections experience.

Other expenses, net of Bs. 0.4 billion were recorded in first quarter 2006 compared to other income, net, in first quarter 2005 of Bs. 72.9 billion. This variance reflects the first quarter 2005 Bs. 71.3 billion gain recognized on the sale of our 1.2% investment in International Satellite Telecommunications Organization (INTELSAT).

The Bs. 5.7 billion decrease in depreciation and amortization expenses relative to first quarter 2006 was attributable to certain mobile network assets reaching the end of their useful lives.

EBITDA and EBITDA Margin

EBITDA of Bs. 431.6 billion, 16.6% higher than a year ago when adjusted for one time gain

First quarter EBITDA decreased 2.3% to Bs. 431.6 billion from Bs. 441.6 billion in first quarter 2005. As a percentage of revenues, this reflected a 1,100 basis points decrease in our margin. The decrease resulted from an increase of 32.3% in revenues offset by a 55.8% increase in operating expenses excluding depreciation and amortization. The increase in operating expenses excluding depreciation and amortization was primarily due to the 2005 Bs. 71.3 billion INTELSAT sale as well as the higher cost of sales driven by the sharp increase in cellular handset sales.

Figure 13 – EBITDA

Excluding the Bs. 71.3 billion one time effect of the 2005 INTELSAT gain, first quarter 2005 EBITDA would have been Bs. 370.3 billion, therefore 2006 EBITDA would have been 16.6% higher than first quarter 2005 EBITDA.

Please refer to Reconciliation of Non-GAAP financial measures section on page 14 for a reconciliation of EBITDA to GAAP financial measures.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 7

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Interest Income and Exchange Gain, net and Taxes

Lower interest income and exchange gain, net and higher taxes

Interest income and exchange gain, net decreased Bs. 26.5 billion or 56.6% to Bs. 20.3 billion compared to first quarter 2005. Interest income decreased Bs. 4.6 billion or 17.0% due to lower average interest rates partially offset by Bs. 1.1 billion of interest income related to the net present value of long term accounts receivable from government entities collected during the period. First quarter interest expense decreased Bs. 4.2 billion or 68.4% due to lower debt. Exchange gain decreased by 99.9% or Bs. 26.2 billion in first quarter of 2006 compared to the same period in 2005 mainly due to the Bs. 39.4 billion exchange gain recognized from the sale of the investment in INTELSAT in first quarter 2005.

Income tax expense increased Bs. 80.2 billion in first quarter 2006 to Bs. 64.1 billion, compared to the Bs. 16.1 billion benefit recorded during the same period in the previous year. The current tax provision increased by Bs. 61.1 billion mainly due to a higher taxable income. The deferred tax benefit totaled Bs. 19.1 billion in first quarter 2006, compared to Bs. 38.3 billion recorded in first quarter 2005. The decline was attributable to lower increase in book and tax basis differentials as well as timing differences related to uncollectible.

Net Income

Net income of Bs. 183.9 billion represents a 0.2% reduction when adjusted for one time gain

First quarter net income totaled Bs. 183.9 billion, compared to Bs. 294.9 billion in first quarter of 2005.

The Bs. 111.0 billion reduction in net income was driven by the Bs. 10.0 billion decline in EBITDA, Bs. 80.2 billion increase in income tax expense, combined with the Bs. 39.4 billion one time exchange gain contribution that the sale of INTELSAT represented in first quarter 2005.

When first quarter 2005 is adjusted for the one time effect of the sale of INTELSAT, first quarter 2006 net income would have would have been Bs. 184.2 billion, 0.2% lower than a year ago.

 

CASH FLOW ANALYSIS

Stronger cash generation allowing for a 38.5% increase in CAPEX and 72.1% increase in free cash flow

Free cash flow (FCF) for first quarter 2006 totaled Bs. 188.4 billion, 72.1% higher than Bs. 109.5 billion reported in first quarter 2005. The Bs. 78.9 billion year-over-year FCF increase was driven by a Bs. 125.3 billion increase in net cash provided by operating activities partially offset by a Bs. 46.4 billion increase in CAPEX (see Reconciliation of Non-GAAP financial measures on page 14). The increase in cash from operations was largely composed of a Bs. 63.0 billion reduction in uses of working capital and Bs. 58.4 billion in cash earnings (net income adjusted for non-cash items).

Cash used in financing activities totaled Bs. 32.5 billion, primarily reflecting debt repayment of Bs. 25.8 billion.

The Company’s net cash position totaled Bs. 1,175.9 billion as of March 31, 2006, compared to Bs. 994.3 billion as of December 31, 2005 (see Reconciliation of Non-GAAP financial measures on page 14).

 

Capital Expenditures

CAPEX continues to focus on CDMA-1X, ADSL and information systems

Capital expenditures for first quarter 2006 totaled Bs. 166.8 billion, a Bs. 46.4 billion (38.5%) increase over the same 2005 period. 2006 Capital expenditures continue to be focused on: i) expansion of our CDMA-1X network footprint to support projected mobile and fixed wireless demand; ii) deployment of backbone and data networks to sustain growth in our ABA (ADSL) and other data product lines; iii) deployment of Evolution Data Optimized (EvDO) technology for wireless broadband services; iv) the substitution of analog switches with multi-service access nodes to support service enhancements and increase operating efficiency; and v) integration and transformation of the Company’s information systems.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 8

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Total Debt

During first quarter 2006, Cantv’s debt payments totaled Bs. 25.8 billion, including Bs. 4.7 billion (US$2.2 million) for International Finance Corporation (IFC) loans, Bs. 9.9 billion (¥541.0 million) to Japan’s Eximbank, and repayments of Bs. 11.2 billion of commercial paper. During the first quarter 2005, payments of Bs. 25.4 billion included Bs. 15.5 billion (US$7.2 million) for the IFC loans and Bs. 9.9 billion (¥541.0 million) to Japans’ Eximbank.

As of March 31, 2006, the Company’s debt totaled Bs. 78.6 billion, a Bs. 222.1 billion decrease compared to debt balances as of March 31, 2005.

Total debt represented 2.4% as a percentage of Equity as of March 31, 2006 compared to 8.0% as of March 31, 2005.

OTHER DEVELOPMENTS

Dividends

During the March 31, 2006 annual Shareholders’ Meeting, an ordinary dividend of Bs. 700 per share (US$2.28 per ADS) was approved to be paid on April 27, 2006 to shareholders of record on April 18, 2006.

Since dividends are paid in bolivars, under the exchange control regime implemented in January 2003 the repatriation of dividends for American Depositary Shares (ADS) holders and foreign investors must be requested from CADIVI (the Government’s Commission for Administration of Foreign Exchange). The timing for request and approval depend on the fulfillment of extensive formalities and documentation. The portion related to ADS holders and foreign investors is deposited in Venezuelan banks until CADIVI issues approval for the conversion of bolivars to US dollars and then sent to the corresponding foreign banks.

The last dividend that the Company paid received approval for conversion to US dollars by CADIVI for ADS holders and other foreign investors 82 and 140 days, respectively, after payment in bolivars (April 27, 2005).

Proposed sale of Verizon’s stake in Cantv to Telmex and América Móvil

On April 3, 2006, Cantv was notified that Verizon Communications Inc. (Verizon) had entered into a definitive agreement to sell its indirect 28.5% interest in Cantv to an entity jointly owned by Teléfonos de México, S.A. de C.V. (Telmex) and América Móvil, S.A. de C.V. (América Móvil). According to announcements published by the parties, the joint venture Telmex-América Móvil would acquire Verizon’s indirect equity stake in Cantv through the purchase of a Verizon subsidiary holding company that holds all of Cantv’s ordinary shares and ADS owned by Verizon. According to these announcements, the aggregate purchase price for Verizon’s stake would be US$676.6 million in cash, representing approximately US$3.01 per ordinary share (US$21.10 per ADS) held by Verizon. The transaction is subject to regulatory approvals and other conditions.

According to the announcements issued by the parties, the joint venture Telmex-América Móvil has also agreed, subject to regulatory approvals, that following closing of the purchase of Verizon’s equity interest in Cantv, the joint venture Telmex-América Móvil will make a tender offer for any and all of the remaining shares of Cantv at the same price paid to Verizon for each share, and the purchase price in bolivars would be at the bolivar equivalent of such price based on the official exchange rate.

Pursuant to the requirements of Venezuelan law, the Board of Directors of Cantv will make its recommendation with respect to the tender offer following publication of the offering documents.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 9

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Pension adjustment decision

As of the date of this release, the case regarding the adjustment of pensions payable to Cantv’s retirees remains in execution stage and is being administered by a lower Court: “Juzgado Quinto de Primera Instancia de Sustanciación, Mediación y Ejecución del Área Metropolitana de Caracas”. This Court appointed the Venezuelan Central Bank (Banco Central de Venezuela) to perform the necessary calculations to determine the actual amounts of retroactive payments due to the beneficiaries from Cantv. The Venezuelan Central Bank requested additional information from the Company which has been duly submitted.

In compliance with the July 26, 2005 Social Chamber of the Venezuelan Supreme Court’s decision, Cantv pensioners and retirees signed into the decision have been receiving pension payments since February 1, 2006 at least equal to the Venezuelan minimum wage.

CONATEL – Taxes review

In December 2004, CONATEL provided the initial results of their review of Cantv’s 2000 as well as Movilnet and Cantv.Net’s 2000 to 2003 telecommunications tax payments. The Telecommunications Law bases the tax on revenues and CONATEL objected to the Company’s deduction of uncollectible write-offs and customer discounts from its tax base. In addition, CONATEL objected to Movilnet’s exclusion of net interconnection revenues from their tax base for the Special Telecommunications Tax of Wireless Services. In January 2006, the Company received CONATEL’s final Administrative Summary indicating total additional taxes, penalties and interest of Bs. 8.1 billion for Cantv, Bs. 92.9 billion for Movilnet and Bs. 0.7 billion for Cantv.Net. Based on the opinion of external legal advisors, the Company considers these tax assessments to be groundless.

In February 2006, the Company introduced the applicable administrative resources and is currently expecting for a response from CONATEL.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 10

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FINANCIAL STATEMENTS DATA

Income statement data

For the quarters ended March 31, 2006 and 2005

(Expressed in millions of bolivars and millions of US dollars, except per share amounts)

 

		Bs. 2006			% of total operating revenues			Bs. 2005			% of total operating revenues			US$ 2006			US$ 2005			% Increase (Decrease)
Operating Revenues
Fixed revenues
Local services		220,078			15.3	%		221,378			20.3	%		102			103			(0.6	)%
Domestic long distance		70,000			4.9	%		73,991			6.8	%		33			34			(5.4	)%
International long distance		30,909			2.1	%		28,022			2.6	%		14			13			10.3	%
Net settlements		(1,180	)		(0.1	)%		253			0.0	%		(1	)		—			N.M.
Total international long distance		29,729			2.1	%		28,275			2.6	%		13			13			5.1	%
Fixed to mobile - Outgoing		204,459			14.2	%		171,225			15.7	%		95			80			19.4	%
Interconnection incoming		23,096			1.6	%		25,827			2.4	%		11			12			(10.6	)%
Total interconnection		227,555			15.8	%		197,052			18.1	%		106			92			15.5	%
Other wireline-related services		33,752			2.3	%		29,603			2.7	%		16			14			14.0	%
Internet dial-up		17,301			1.2	%		14,486			1.3	%		8			7			19.4	%
Other telecommunications-related services		311			0.0	%		16,305			1.5	%		—			8			(98.1	)%
Total Internet dial-up and other		51,364			3.6	%		60,394			5.5	%		24			29			(15.0	)%
Private circuits		95,246			6.6	%		76,202			7.0	%		45			35			25.0	%
ABA (ADSL)		93,180			6.5	%		53,040			4.9	%		43			25			75.7	%
Total broadband		188,426			13.1	%		129,242			11.9	%		88			60			45.8	%
Total fixed revenues		787,152			54.6	%		710,332			65.2	%		366			331			10.8	%
Mobile revenues		654,307			45.4	%		379,394			34.8	%		304			176			72.5	%
Total operating revenues		1,441,459			100.0	%		1,089,726			100.0	%		670			507			32.3	%
Operating Expenses
Provision for uncollectibles		12,746			0.9	%		22,312			2.0	%		6			10			(42.9	)%
Operations, maintenance, repairs and administrative		760,513			52.8	%		524,785			48.2	%		353			244			44.9	%
Interconnection cost		142,996			9.9	%		116,369			10.7	%		67			54			22.9	%
Concession and other taxes		93,232			6.5	%		57,614			5.3	%		43			27			61.8	%
Other expenses (income), net		408			0.0	%		(72,918	)		(6.7	)%		—			(34	)		N.M.
		1,009,895			70.1	%		648,162			59.5	%		469			301			55.8	%
EBITDA		431,564			29.9	%		441,564			40.5	%		201			206			(2.3	)%
EBITDA Margin		30	%		0.0	%		41	%		0.0	%		30	%		41	%		(1,100	)bps
Depreciation and amortization		203,922			14.1	%		209,599			19.2	%		95			98			(2.7	)%
Total operating expenses		1,213,817			84.2	%		857,761			78.7	%		564			399			41.5	%
Operating Income		227,642			15.8	%		231,965			21.3	%		106			108			(1.9	)%
Interest Income and Exchange Gain, net
Interest income		22,215			1.5	%		26,775			2.5	%		10			13			(17.0	)%
Interest expense		(1,941	)		(0.1	)%		(6,144	)		(0.6	)%		(1	)		(3	)		(68.4	)%
Interest income and exchange gain, net		34			0.0	%		26,185			2.4	%		—			12			(99.9	)%
Interest income and exchange gain, net		20,308			1.4	%		46,816			4.3	%		9			22			(56.6	)%
Income before Income Taxes		247,950			17.2	%		278,781			25.6	%		115			130			(11.1	)%
Income Tax
Current		(83,188	)		(5.8	)%		(22,135	)		(2.0	)%		(38	)		(11	)		275.8	%
Deferred		19,120			1.3	%		38,261			3.5	%		9			18			(50.0	)%
Total income tax		(64,068	)		(4.4	)%		16,126			1.5	%		(29	)		7			N.M.
Net Income		183,882			12.8	%		294,907			27.1	%		86			137			(37.6	)%
Net Income Attributable to:
Equity holders of the Company		184,195			12.8	%		293,606			26.9	%		86			136			(37.3	)%
Minority interest		(313	)		(0.0	)%		1,301			0.1	%		—			1			N.M.
Net Income		183,882			12.8	%		294,907			27.1	%		86			137			(37.6	)%
Earnings per Share		237						380						0.11			0.18			(37.6	)%
Earnings per ADS (based on 7 shares per ADS)		1,659						2,660						0.78			1.24			(37.6	)%
Average Shares Outstanding (in millions)		776						776						776			776

 

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Table of Contents

Balance sheet data

As of March 31, 2006 and December 31, 2005

(Expressed in millions of bolivars and millions of US dollars)

 

		March 31, 2006		December 31, 2005		US$ 2006		US$ 2005
Assets
Non-Current Assets:
Property, plant and equipment, net of accumulated depreciation of Bs. 14,106,903 and Bs. 13,942,782, respectively		3,444,875		3,483,063		1,602		1,620
Cellular concession, net		148,668		150,088		69		70
Long-term accounts receivable from Venezuelan Government entities		24,093		64,377		11		30
Deferred tax asset		849,351		830,231		395		386
Information systems (software), net		344,845		342,349		160		159
Other assets		86,581		71,433		41		33
Total non-current assets		4,898,413		4,941,541		2,278		2,298
Current Assets:
Other current assets		85,508		62,552		41		30
Inventories, spare parts and supplies, net		338,510		312,255		157		145
Accounts receivable from Venezuelan Government entities		219,611		188,095		102		87
Accounts receivable, net of provision for uncollectibles of Bs. 67,385 and Bs. 71,286, respectively		692,907		687,039		322		320
Cash and temporary investments		1,254,522		1,098,629		583		511
Total current assets		2,591,058		2,348,570		1,205		1,093
Total assets		7,489,471		7,290,111		3,483		3,391
Stockholders’ Equity and Liabilities
Stockholders’ Equity		3,303,103		3,669,069		1,536		1,707
Non-Current Liabilities:
Long-term debt		48,769		63,338		23		29
Deferred income tax liability		—		—		—		—
Provision for legal and tax contingencies		132,927		134,513		62		63
Pension and other post-retirement benefit obligations		1,276,788		1,230,166		593		572
Total non-current liabilities		1,458,484		1,428,017		678		664
Current Liabilities:
Current portion of the long-term debt		29,811		40,992		14		19
Accounts payable		1,106,401		1,161,580		515		540
Accrued employee benefits		116,039		92,608		54		43
Current portion of pension and other post-retirement benefit obligations		358,504		348,532		167		162
Income tax payable		88,554		77,352		41		36
Dividends payable		543,278		—		253		—
Deferred revenue		185,991		184,518		87		86
Concession tax		63,915		75,412		30		35
Subscriber rights		71,294		69,462		33		32
Other current liabilities		164,097		142,569		75		67
Total current liabilities		2,727,884		2,193,025		1,269		1,020
Total liabilities		4,186,368		3,621,042		1,947		1,684
Total stockholders’ equity and liabilities		7,489,471		7,290,111		3,483		3,391

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 12

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Table of Contents

Cash flow data

For the quarters ended March 31, 2006 and 2005

(Expressed in millions of bolivars and millions of US dollars)

 

		Bs. 2006			Bs. 2005			US$ 2006			US$ 2005
Operating Activities:
Net income		183,882			294,907			86			137
Adjustments to reconcile net income to net cash provided by operating activities:
Exchange gain, net		(34	)		(26,185	)		—			(12	)
Minority interest		313			(1,301	)		—			(1	)
Depreciation and amortization		203,922			209,599			95			98
Current income tax		83,188			22,135			38			11
Deferred income tax (benefit)		(19,120	)		(38,261	)		(9	)		(18	)
Provision for inventories obsolescence		2,491			(3,654	)		1			(2	)
Provision for legal and tax contingencies		5,678			6,403			3			3
Provision for uncollectibles		12,746			22,312			6			10
Gain in sale of investment		—			(71,260	)		—			(33	)
Changes in current assets and liabilities		(182,452	)		(245,448	)		(85	)		(114	)
Changes in non-current assets and liabilities		64,569			60,637			30			28
Net cash provided by operating activities		355,183			229,884			165			107
Investing Activities:
Acquisition of information systems (software), net of disposals		(20,352	)		(23,417	)		(9	)		(11	)
Acquisition of property, plant and equipment, net of disposals		(146,458	)		(96,964	)		(68	)		(45	)
Net cash used in investing activities		(166,810	)		(120,381	)		(77	)		(56	)
Free Cash Flow		188,373			109,503			88			51
Financing Activities:
Proceeds from borrowings		—			45,851			—			21
Payments of debt		(25,835	)		(25,398	)		(13	)		(12	)
Purchase of shares for the workers benefit fund		(6,645	)		(2,633	)		(3	)		(1	)
Net cash (used in) provided by financing activities		(32,480	)		17,820			(16	)		8
Increase in cash and temporary investments before effect of exchange rate changes on cash and temporary investments		155,893			127,323			72			59
Effect of exchange rate changes on cash and temporary investments		—			30,596			—			14
Increase in cash and temporary investments		155,893			157,919			72			73
Cash and temporary investments:
Beginning of the period		1,098,629			967,543			511			450
End of the period		1,254,522			1,125,462			583			523

 

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Reconciliation of Non-GAAP financial measures

(Expressed in millions of bolivars and millions of US dollars)

 

For the quarters ended March 31, 2006 and 2005				Bs. 2006			Bs. 2005			US$ 2006			US$ 2005
EBITDA
Net Income				183,882			294,907			86			137
Plus / (minus):
Total income tax				64,068			(16,126	)		29			(7	)
Interest income and exchange gain, net				(20,308	)		(46,816	)		(9	)		(22	)
Depreciation and amortization				203,922			209,599			95			98
EBITDA				431,564			441,564			201			206
EBITDA Margin
EBITDA		=		431,564			441,564			201			206
Total operating revenues				1,441,459			1,089,726			670			507
EBITDA Margin				30	%		41	%		30	%		41	%
Cash Earnings
Net income				183,882			294,907			86			137
Plus / (minus):
Exchange gain, net				(34	)		(26,185	)		—			(12	)
Minority interest				313			(1,301	)		—			(1	)
Depreciation and amortization				203,922			209,599			95			98
Current income tax				83,188			22,135			38			11
Deferred income tax (benefit)				(19,120	)		(38,261	)		(9	)		(18	)
Provision for inventories obsolescence				2,491			(3,654	)		1			(2	)
Provision for legal and tax contingencies				5,678			6,403			3			3
Provision for uncollectibles				12,746			22,312			6			10
Gain in sale of investment				—			(71,260	)		—			(33	)
Cash Earnings				473,066			414,695			220			193
Free Cash Flow
Net cash provided by operating activities				355,183			229,884			165			107
Minus:
Net cash used in investing activities				(166,810	)		(120,381	)		(77	)		(56	)
Free cash flow				188,373			109,503			88			51
As of March 31, 2006 and December 31, 2005				March 31, 2006			December 31, 2005			US$ 2006			US$ 2005
Net Cash Position
Cash and temporary investments				1,254,522			1,098,629			583			511
Minus:
Long-term debt				(48,769	)		(63,338	)		(23	)		(29	)
Short-term debt				(29,811	)		(40,992	)		(14	)		(19	)
Net cash position				1,175,942			994,299			546			463

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 14

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2006 REVISED GUIDANCE

MACROECONOMIC INDICATORS

 

		Original range						Revised range
		From			To			From			To
Economic growth
Total GDP Growth		6	%		8	%		6	%		8	%
Oil GDP Growth		0	%		2	%		0	%		2	%
Average oil price (US$ per barrel) *		51.0			57.0			51.0			57.0
Non-Oil GDP Growth		7	%		9	%		7	%		9	%
Communication GDP		13	%		15	%		13	%		15	%
Exchange rate (Bs./US$)
Average		2,150			2,150			2,150			2,150
Year-end		2,150			2,150			2,150			2,150
Devaluation (Year-to-Year)		0	%		0	%		0	%		0	%
Inflation (CPI)
CPI		13	%		15	%		10	%		13	%
WPI		14	%		16	%		11	%		14	%

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*	Venezuelan basket

KEY OPERATING INDICATORS

in thousands

 

								Revised Range
		Original growth range						Growth range						EOY Number
		From			To			From			To			From		To
Fixed
Switched access lines *		3	%		5	%		3	%		5	%		3,206		3,238
ABA (ADSL)**		38	%		48	%		38	%		48	%		400		430
Mobile subscribers		21	%		23	%		45	%		54	%		7,500		8,000
Regulated Tariffs Effective Increase		0.0	%		7.0	%		0.0	%		5.0	%

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*	Excludes ABA (ADSL) and private circuits

**	While EOY numbers in original guidance were correctly stated, growth range from original guidance was stated by mistake at 45%-49%. Correct range of 38%-48% is included herein.

KEY FINANCIAL INDICATORS

in billions of Bs.

 

								Revised range
		Original growth range*						Growth range*						EOY Number
		From			To			From			To			From			To
Revenue		30	%		32	%		35	%		40	%		6,890			7,120
Cash operating expenses		29	%		26	%		34	%		34	%		4,910			4,890
EBITDA		33	%		46	%		38	%		55	%		1,980			2,230
EBITDA Margin (bp and percentages)		59			314			59			314			29	%		31	%
Net Income (loss)		33	%		46	%		41	%		60	%		952			1,080
CAPEX		7	%		17	%		16	%		33	%		1,116			1,271
Free Cash Flow		24	%		39	%		23	%		36	%		854			940

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*	For illustrative purposes, estimated as percentages of adjusted year 2005 figures excluding the effect of the July 26, 2005 Supreme Court's decision on pension litigation

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 15

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COMPANY PROFILE

Cantv, a Venezuelan corporation, is the leading Venezuelan telecommunications services provider with over 3.1 million switched fixed access lines in service, almost 5.6 million mobile subscribers and over 343 thousand broadband subscribers as of March 31, 2006. The Company’s principal strategic stockholder is a wholly-owned subsidiary of Verizon Communications Inc. with 28.5% of the capital stock. Other major stockholders include the Venezuelan Government with 6.6% of the capital stock (Class B Shares), employees, retirees and employee trusts which own 6.7% (Class C Shares) and the remaining 58.2% of the capital stock is held by public and other stockholders.

SAFE HARBOR FOR FORWARD LOOKING STATEMENTS:

This press release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Actual results could differ materially from those predicted in such forward-looking statements. Factors which may cause actual results to differ materially from those discussed herein include economic considerations that could affect demand for telecommunications services and the ability of the Company to make collections, inflation, regulatory factors, exchange controls and occurrences in currency markets, competition, labor relations, legal proceedings and the risk factors set forth in the Company’s various filings with the Securities and Exchange Commission, including its most recently filed Annual Report on Form 20-F. The Company undertakes no obligation to revise these forward-looking statements to reflect events or circumstances after the date hereof, and claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

GLOSSARY OF KEY TERMS

 

ADSL:		Asymmetrical Digital Subscriber Lines.
ARPU:		Average monthly revenue per user excluding terminal equipment sales, taxes and late-payment charges.
Bundled minutes:		Actual minutes used by the customer within the minutes allowed under variously priced monthly customer tariff plans that include a maximum number of allowed minutes within the monthly tariff.
Capital expenditures (CAPEX):		Net cash used in investing activities, including acquisition of property, plant and equipment and information systems.
Cash earnings:		Net income adjusted for non cash items or adjustments to reconcile net income to net cash provided by operating activities.
EBITDA:		Earnings before interest, taxes, depreciation and amortization, equivalent to operating income plus depreciation and amortization.
EBITDA margin:		EBITDA as a percent of total operating revenues.
EPADS:		Earnings per ADS.
Free cash flow (FCF):		Cash flow from operating activities minus cash used in investing activities.
IXC:		Interconnection.
Net cash position:		Cash and temporary investments minus short-term and long-term debt.
SMS:		Short text mobile messaging service.
Switched access lines:		Fixed access lines including Residential, non Residential and Public Telephony.
Total debt:		Short-term plus long-term debt.
Unbundled minutes:		Minutes in excess of the limits set forth in a specific monthly customer tariff plan that are billed to the customer on a per minute basis in addition to the basic monthly tariff plan that the customer has selected.

 

CANTV 1Q06 Earnings Commentary – April 26, 2006		NYSE: VNT BVC: TDV.d 16

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: April 28, 2006