TELMEX PRESS RELEASE: FIRST QUARTER 2006 APRIL 27,2006

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Private Issuer

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

the Securities Exchange Act of 1934

For the month of April 2006

Commission File Number: 333-13580

Teléfonos de México, S.A. de C.V.

(Exact Name of the Registrant as Specified in the Charter)

Telephones of Mexico

(Translation of Registrant's Name into English)

Parque Vía 190

Colonia Cuauhtémoc

México City 06599, México, D.F.

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F....Ö .....Form 40-F.........

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

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

Yes ..... No...Ö ..

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

 

 

 

______________________________________________________________________________

Mexico City, April 27, 2006.

(3) Net debt is defined as short-term liabilities plus long-term debt, less cash and equivalents.

 

Highlights

4.5 billion pesos Senior Notes: In January 2006, in financial markets outside of Mexico, TELMEX sold 4.5 billion pesos of 8.75% Senior Notes due 2016.

Shareholders' Meetings: On March 8, the Board of Directors resolved to: (i) call for the Ordinary Shareholders' Meeting to be held on March 30, 2006, to submit a proposal to increase by 15 billion Mexican pesos the funds to purchase the company's own shares; (ii) call for the Special Shareholders' Meeting to be held on April 27, 2006, in order to discuss the designation of Board Members to be appointed by holders of Series "L" Shares; and (iii) call for the Annual Shareholders' Meeting to be held on April 27, 2006, in order to discuss, among other matters, the approval of the Board of Directors report and financial statements for fiscal year 2005; the ratification of the activities of the Board of Directors; the designation or ratification, as the case may be, of the members of the Board of Directors, and to submit the proposal to declare a cash dividend of $0.41 Mexican pesos per outstanding share in four equal payments of $0.1025 Mexican pesos per share from the net tax profit account. The proposed dividend payments are to be made in Mexico on June 22, 2006, September 21, 2006, December 21, 2006, and March 22, 2007.

Increase of funds to purchase the company's own shares: On March 30, 2006, The Ordinary Shareholders' Meeting resolved to increase the amount of funds that can be allocated to purchase the company's own shares by 15 billion pesos. At that date, the balance was approximately 15,215 million pesos.

 

 

Acquisition of equity interest in CANTV: On April 3, 2006, TELMEX and América Móvil announced that through an equally owned joint venture they entered into an agreement with Verizon Communications, Inc. ("Verizon") to acquire Verizon's equity interest in Compañía Anónima Nacional Teléfonos de Venezuela (CANTV) for an aggregate purchase price of US$676.6 million in cash. The purchase price represents US$3.01 per ordinary CANTV share held by Verizon (or $21.10 per CANTV American Depositary Share held by Verizon. The joint venture will acquire Verizon's equity stake in CANTV indirectly through the purchase of a Verizon subsidiary holding company that holds all the CANTV ordinary shares and American Depositary Shares owned by Verizon. Verizon's equity stake in CANTV represents approximately 28.51% of the outstanding capital stock of CANTV. The purchase is subject to regulatory approvals and other conditions.

Consolidated Income Statements

Revenues: In the first quarter, revenues from Teléfonos de México and its subsidiaries in Mexico and Latin America totaled 41,555 million pesos, 0.4% lower than the same period of 2005. The decrease was mainly due to lower revenues from calling party pays, measured service and international long distance. Of total consolidated revenues, voice revenues represented 76.9% and data transmission revenues represented 19.1%.

Costs and expenses: Costs and expenses in the first quarter totaled 28,756 million pesos, 1.5% lower than the same period of the previous year, mainly due to the decrease of interconnection costs as a result of the 10% reduction in the calling party pays rate and lower costs related to depreciation and amortization, international settlement, and prepaid cards.

EBITDA (1) and operating income: EBITDA (1) totaled 18,822 million pesos in the first quarter, a decrease of 2.8% compared with the same period of 2005. The EBITDA margin was 45.3%, 1.1 percentage point lower than the first quarter of 2005. Operating income totaled 12,799 million pesos, 2% higher than the first quarter of 2005. The operating margin was 30.8%, 0.7 percentage point higher than the operating margin in the first quarter of the previous year.

 

Comprehensive financing cost: Comprehensive financing cost was 984 million pesos in the quarter compared with 1,008 million pesos in the first quarter of 2005. This result was due to: (i) a decrease of 13% in net interest because of a lower cost of debt, (ii) a higher exchange loss from the impact of the first-quarter's exchange rate variation of 0.24 pesos per dollar; partially offset by the gain that hedges produced; and (iii) a gain in the monetary position of 599 million pesos during the quarter.

Majority net income: Majority net income totaled 7,593 million pesos in the first quarter, 12.8% higher than the same period of the previous year due to lower comprehensive financing cost and its effect on taxes. Earnings per share in the first quarter, based on the number of shares outstanding at March 31, 2006 (21,446,265,270 shares) was 0.35 pesos per share compared with 0.29 pesos per share in the same period of 2005 and earnings per ADR were 0.65 dollars compared with 0.48 dollars in last year's first quarter.

Investments: In the first quarter, consolidated investment was the equivalent of 318 million dollars, of which 76.1% was used for growth and modernization projects, 11.7% for operational support projects, 8.7% for operational needs and for 3.5% social telephony

Repurchase of shares: During the quarter, the company used 7,449 million pesos to repurchase 598,817,000 of its own shares.

Debt: Gross total debt at March 31 was the equivalent of 7.847 billion dollars, a reduction of 645 million dollars compared with the fourth quarter of 2005. Of total gross debt, 6.8% is short-term, 84.9% is in foreign currency that is fully hedged for the amount of 6.909 billion dollars of which 92.9% is related to hedges of dollars to pesos and the rest to hedges of dollars to reais. Also, 47.5% of gross total debt carries a fixed rate and by adding interest rate swaps for 15,900 million pesos at March 31, 2006 the percentage increases to 66%.

At March 31, 2006, the company's consolidated net debt (3) increased the equivalent of 302 million dollars during the quarter to a total of 6.622 billion dollars.

 

 

 

 

 

 

 

MEXICO Operating Results

Fixed lines in service

From January to March, 276 thousand fixed lines were added, reflecting 444 thousand connections and 168 thousand disconnections, bringing the total to 18 million 650 thousand fixed lines in service, an annual increase of 6.4%. It is important to mention that of total fixed residential lines in service that pay monthly rent, 58.4% of these lines do not make more than 100 calls that are included in the monthly rent. Additionally, we have 1.9 million prepaid lines that do not have fixed monthly rent and only pay for the calls they make.

Local traffic

During the quarter, 6,653 million local calls were made, an increase of 0.2% compared with the first quarter of the previous year. The low growth in local calls was primarily due to intense competition from local and cellular operators.

Long distance traffic

In the first quarter, domestic long distance traffic rose to 4,374 million minutes, an increase of 1.8% compared with the same period of last year. International long distance outgoing minutes in the quarter totaled 467 million, an increase of 7% compared with the same period of the previous year. In the first quarter, incoming international long distance minutes totaled 1,650 million, an increase of 33%. The incoming-outgoing ratio was 3.5 in the first quarter and 2.8 in the same period of 2005.

Interconnection

Interconnection traffic totaled 9,015 million minutes in the quarter, 7.7% more than in the same period of the previous year. In the first quarter, calling party pays traffic increased 2.3% from a year ago. In the first quarter, traffic originated by the cellular system and terminated on TELMEX's network increased 7.4% compared with the same period of the previous year. Interconnection traffic generated by local and long distance operators increased 9.4%.

Corporate networks

From January to March billed line equivalents* in the corporate data transmission market increased 31.8% compared with the same quarter of 2005, reaching 2.1 million billed line equivalents.

*Billed line equivalents of 64 Kbps.

Internet

In the first quarter, high speed Prodigy Infinitum service (ADSL) totaled 1 million 213 thousand customers, 82.4% higher than the same period of 2005. During the first quarter, 180 thousand Infinitum accounts were added. Total Internet access accounts including Prodigy Infinitum and dial-up were 2 million 237 thousand in the quarter, 20.6% higher than the first quarter of 2005.

 

.

 

 

Mexico Financial Results

Revenues: In the first quarter, revenues from operations in Mexico totaled 30,298 million pesos, 2.3% lower than the same period of the previous year, mainly due to lower calling party pays and local revenues.

 

 

Costs and expenses: In the first quarter, total costs and expenses from the operations in Mexico were 18,965 million pesos, a decrease of 3.5% compared with the same period of the previous year. This decrease was due to lower cost of sales and services, lower interconnection costs related to the calling party pays rate, and lower depreciation and amortization charges.

EBITDA (1) and operating income: EBITDA (1) totaled 15,870 million pesos in the first quarter, a decrease of 3.6%. The EBITDA margin was 52.4%; a decrease of 0.6 percentage point compared with the first quarter of 2005. Operating income totaled 11,333 million pesos, 0.3% lower than the first quarter of 2005, and the operating margin was 37.4%, 0.8 percentage point higher than the first quarter of 2005.

Investments: In Mexico total investments were 136 million dollars, of which 71.8% was used for growth and modernization projects, 18% for operational support projects, 8.1% for social telephony and 2.1% for operating needs.

Debt: In the first quarter, gross total debt was the equivalent of 7.107 billion dollars, a decrease of 693 million dollars. Of total gross debt, 5.5% is short-term, 84.1% is in foreign currency that is fully hedged, and 47% carries a fixed rate (67.4% considering interest rate swaps).

At March 31, 2006 net debt (3) in Mexico increased the equivalent of 256 million dollars during the quarter to a total of 6.162 billion dollars.

 

Latin America Financial Results

The following financial information is presented in the local currency of the country in which each Latin American subsidiary operates, according to each country's generally accepted accounting principles, and is based on continuing operations before eliminating inter-company operations among companies of the TELMEX Group.

Brazil

In the first quarter, revenues totaled 2,037 million reais, an increase of 5.2% compared with the same period of the previous year. Costs and expenses in the quarter increased 3%, totaling 1,792 million reais. During the quarter, Embratel signed a commercial agreement with Net Serviços de Comunicação to offer voice, data and video services in one package. This service was launched March 21 and by March 31 had sold 6,500 packages. Embratel also increased its corporate data customer base, reaching 1.8 million 64 Kbps billed line equivalents. The increase in total costs and expenses was mainly due to an increase in charges related to FUST (Telecommunications Service Universal Fund), to the revised service concession, and to increased maintenance and equipment costs (handsets) generated by higher local service sales, partially offset by decreased interconnection costs mainly from the reduction of local access rates (TU-RL). Operating income and EBITDA (1) totaled 241 and 528 million reais, respectively, with annual increases of 23% and 11.1%, respectively. The operating margin was 11.8% and the EBITDA margin was 25.9%.

Chile

In the first quarter, revenues from the operations in Chile totaled 16,418 million Chilean pesos, 2.1% higher than the previous year. The voice business, representing 67.4% of total revenues, benefited from higher local traffic levels. Costs and expenses totaled 15,613 million Chilean pesos, 0.2% higher than the first quarter of last year. Transport and interconnection decreased 0.7%, and cost of sales and services increased 4.9%. Operating income reached 805 million Chilean pesos compared with 496 million Chilean pesos in the same quarter of 2005. The operating margin was 4.9% in the first quarter of 2006 compared with an operating margin of 3.1% in the same period of 2005. EBITDA (1) in the quarter was 3,426 million Chilean pesos compared with 3,138 million Chilean pesos in the same period of 2005 with margins of 20.9% and 19.5%, respectively.

Argentina

In the first quarter, revenues from the operations in Argentina totaled 83 million Argentinean pesos, 25.1% higher than the same period of 2005. Operating costs and expenses increased 40% and totaled 88 million Argentinean pesos in the first quarter due to higher transport and interconnection cost, depreciation, and advertising expenses. In the quarter, EBITDA (1) totaled 7 million Argentinean pesos, compared with 11 million Argentinean pesos in the same period of 2005. The EBITDA margin for the quarter was 8% compared with 17% in last year's first quarter.

Colombia

Revenues from these operations during the first quarter totaled 42,068 million Colombian pesos, 86.6% higher than the same period of 2005 mainly due to the addition of several corporate customers. Costs and expenses increased 46.5%, totaling 28,876 million Colombian pesos. Depreciation increased 35.7% in the quarter due to more acquisition of telecommunications equipment. In the quarter, operating income and EBITDA (1) totaled 13,192 and 20,469 million Colombian pesos, respectively, with margins of 31.4% and 48.7%, respectively.

Peru

In the first quarter, revenues from operations in Peru totaled 51 million New Soles, 16% higher than the same period of the previous year. The voice business, which represented 64.1% of total revenues, increased 13.2% due to growth in local traffic, mainly from the increase in digital trunks serving the corporate market. Costs and expenses in the quarter increased 10.8% because depreciation increased 13.3%. Operating income for the quarter totaled 1.5 million New Soles compared with an operating loss of 0.7 million New Soles in the same period of 2005. The operating margin for the quarter was 3%. EBITDA (1) totaled 14 million New Soles in the first quarter, producing a margin of 28.3% compared with EBITDA (1) of 11 million New Soles and a margin of 24.3% in the first quarter of last year.

 

 

 

 

 

 

 

Consolidated Relevant Figures

(millions of Mexican constant pesos as of March, 2006 unless otherwise indicated)

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

Revenues

Ps.

41,555

Ps.

41,726

(0.4)

Ps.

42,129

(1.4)

EBITDA (1)

18,822

19,372

(2.8)

18,684

0.7

EBITDA margin (%)

45.3

46.4

(1.1)

44.3

1.0

Operating income

12,799

12,542

2.0

12,668

1.0

Operating margin (%)

30.8

30.1

0.7

30.1

0.7

Net income

7,593

6,730

12.8

7,929

(4.2)

Earnings per share (pesos)

0.35

0.29

20.7

0.36

(2.8)

Earnings per ADR (dollars) (2)

0.65

0.48

35.4

0.66

(1.5)

Outstanding shares (millions)

21,446

23,311

(8.0)

22,045

(2.7)

Equivalent ADRs (millions) (2)

1,072

1,166

(8.0)

1,102

(2.7)

(1) EBITDA: defined as operating income plus depreciation and amortization. Go to telmex.com in the Investor

Relations section where you will find the reconciliation of EBITDA to operating income.

(2) One ADR represents 20 shares.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico Financial Results

[ millions of Mexican constant pesos as of March, 2006]

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

Revenues

Ps.

30,298

Ps.

31,021

(2.3)

Ps.

32,143

(5.7)

EBITDA

15,870

16,455

(3.6)

16,722

(5.1)

EBITDA margin (%)

52.4

53.0

(0.6)

52.0

0.4

Operating income

11,333

11,365

(0.3)

12,098

(6.3)

Operating margin (%)

37.4

36.6

0.8

37.6

(0.2)

Latin America Financial Results

The financial information presented here is calculated in the currency of the country in

which each Latin America subsidiary operates, according to that country's generally

accepted accounting principles, and is based on continuing operations.

Brazil

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

(millions of Brazilian reais of each period)

Revenues

$

2,036.9

$

1,935.8

5.2

$

1,947.7

$

4.6

EBITDA

527.6

474.8

11.1

356.7

47.9

EBITDA margin (%)

25.9

24.5

1.4

18.3

7.6

Operating Income

240.8

195.8

23.0

110.7

117.5

Operating margin (%)

11.8

10.1

1.7

5.7

6.1

Chile

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

(millions of Chilean constant pesos as of March, 2006)

Revenues

$

16,417.8

$

16,074.8

2.1

$

16,151.0

$

1.7

EBITDA

3,425.5

3,138.2

9.2

3,067.1

11.7

EBITDA margin (%)

20.9

19.5

1.4

19.0

1.9

Operating Income

804.9

495.9

62.3

402.7

99.9

Operating margin (%)

4.9

3.1

1.8

2.5

2.4

Argentina

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

(millions of Argentinean pesos of each period)

Revenues

$

83.2

$

66.5

25.1

$

84.4

$

(1.4)

EBITDA

6.7

11.3

(40.7)

(1.1)

NA

EBITDA margin (%)

8.0

17.0

(9.0)

(1.3)

9.3

Operating Income

(4.7)

3.8

NA

(6.4)

NA

Operating margin (%)

(5.7)

5.7

(11.4)

(7.6)

1.9

Colombia

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

(millions of Colombian pesos of each period)

Revenues

$

42,067.7

$

22,541.7

86.6

$

35,769.4

$

17.6

EBITDA

20,468.9

8,190.5

149.9

16,052.6

27.5

EBITDA margin (%)

48.7

36.3

12.4

44.9

3.8

Operating Income

13,191.7

2,827.0

366.6

9,238.6

42.8

Operating margin (%)

31.4

12.5

18.9

25.8

5.6

Peru

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

(millions of New Soles of each period)

Revenues

$

50.7

$

43.7

16.0

$

51.5

$

(1.6)

EBITDA

14.4

10.6

35.8

13.9

3.6

EBITDA margin (%)

28.3

24.3

4.0

27.0

1.3

Operating Income

1.5

(0.7)

NA

1.5

0.0

Operating margin (%)

3.0

(1.5)

4.5

2.9

0.1

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Financial Statements

Consolidated Income Statements

[ millions of Mexican constant pesos as of March, 2006 ]

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

Revenues

Local

Ps.

14,721

Ps.

15,232

(3.4)

Ps.

14,837

(0.8)

Domestic long distance

9,761

9,559

2.1

9,290

5.1

International long distance

3,347

3,438

(2.6)

3,204

4.5

Interconnection

4,119

4,922

(16.3)

4,420

(6.8)

Corporate networks

4,867

4,653

4.6

4,795

1.5

Internet

3,060

2,643

15.8

3,036

0.8

Others

1,680

1,279

31.4

2,547

(34.0)

Total

41,555

41,726

(0.4)

42,129

(1.4)

Costs and Expenses

Cost of sales and services

8,342

8,186

1.9

8,874

(6.0)

Commercial, administrative and general

7,026

6,775

3.7

7,145

(1.7)

Transport and interconnection

7,365

7,393

(0.4)

7,426

(0.8)

Depreciation and amortization

6,023

6,830

(11.8)

6,016

0.1

Total

28,756

29,184

(1.5)

29,461

(2.4)

Operating income

12,799

12,542

2.0

12,668

1.0

Comprehensive financing cost

Net interest

748

860

(13.0)

1,324

(43.5)

Exchange loss, net

835

660

26.5

1,638

(49.0)

Monetary gain, net

(599)

(512)

17.0

(883)

(32.2)

Total

984

1,008

(2.4)

2,079

(52.7)

Income before tax and employee profit sharing

11,815

11,534

2.4

10,589

11.6

Provisions for income tax and employee profit sharing

3,981

4,565

(12.8)

2,669

49.2

Income before equity in results of affiliates and

minority interest

7,834

6,969

12.4

7,920

(1.1)

Equity in results of affiliates

62

(21)

(395.2)

126

(50.8)

Minority interest

(303)

(218)

39.0

(117)

159.0

Majority net income

Ps.

7,593

Ps.

6,730

12.8

Ps.

7,929

(4.2)

EBITDA (1)

Ps.

18,822

Ps.

19,372

(2.8)

Ps.

18,684

0.7

EBITDA margin (%)

45.3

46.4

(1.1)

44.3

1.0

Operating margin (%)

30.8

30.1

0.7

30.1

0.7

 

International Operations

% of

Acquisition

Consolidation

Local exchange

Inflation

Company

Country

ownership

date

date

rate to US dollar

1st quarter

TELMEX Argentina

Argentina

100.0

February 24, 2004

March 1, 2004

3.080

3.73%

Techtel

Argentina

100.0

April 19, 2004

May 1, 2004

3.080

3.73%

Metrored

Argentina

100.0

June 30, 2004

July 1, 2004

3.080

3.73%

Embratel*

Brazil

72.3

July 23, 2004

August 1, 2004

2.172

0.70%

TELMEX Chile

Chile

100.0

February 24, 2004

March 1, 2004

527.700

(0.35%)

TELMEX Corp. (Chilesat)

Chile

99.7

June 8, 2004

July 1, 2004

527.700

(0.35%)

TELMEX Colombia

Colombia

100.0

February 24, 2004

March 1, 2004

2,268.350

1.49%

TELMEX Peru

Peru

100.0

February 24, 2004

March 1, 2004

3.358

0.68%

* Includes TELMEX do Brazil and Net.

 

 

 

Consolidated Balance Sheets

[ millions of Mexican constant pesos as of March, 2006]

March

March

2006

2005

Assets

Cash and short-term investments

Ps.

13,304

Ps.

32,538

Other current assets

35,149

47,077

Plant, property and equipment, net

153,365

159,557

Other assets

7,961

6,210

Goodwill

9,326

8,021

Projected net asset

21,976

26,455

Deferred taxes

6,156

5,876

Total assets

Ps.

247,237

Ps.

285,734

Liabilities and stockholders' equity

Current portion of long-term debt

Ps.

5,840

Ps.

26,938

Other current liabilities

28,925

36,090

Long-term debt

80,088

84,995

Labor obligations

2,183

1,848

Deferred taxes

14,965

18,951

Total liabilities

132,001

168,822

Stockholders' equity

Majority sotckholders' equity

103,953

102,261

Minority interest

11,283

14,651

Total stockholders' equity

115,236

116,912

Total liabilities and stockholders' equity

Ps.

247,237

Ps.

285,734

 

 

 

Consolidated Free (4) and Net Cash Flow

(millions of Mexican constant pesos as of March, 2006)

March 2006

Net Income Majority

Ps.

$7,593

+ Depreciation and amortization

6,023

+ Items not requiring the use of resources

(429)

Resources provided by operating activities

13,187

- Working capital

3,163

- Investment in the telephone plant

3,387

- Investment in associated companies

679

- Inventories for the operation

(52)

Free cash flow

6,010

Resources used:

- Share repurchase

7,449

- Dividend payments

2,046

- Financing amortizations

11,818

Resources provided:

+ New financing

5,396

Net cash flow

Ps.

(9,907)

(4) Free cash flow is calculated by resources provided by operating activities

resulting from variations in working capital, investment in the telephone plant

and inventories for the operation.

 

 

 

 

 

 

 

 

 

 

 

 

 

Mexico Financial Results

Mexico Income Statements

[ millions of Mexican constant pesos as of March, 2006]

%

%

1Q 2006

1Q 2005

Inc.

4Q 2005

Inc.

Revenues

Local

Ps.

13,736

Ps.

14,131

(2.8)

Ps.

13,916

Ps.

(1.3)

Domestic long distance

4,304

4,339

(0.8)

4,396

(2.1)

International long distance

2,481

2,517

(1.4)

2,416

2.7

Interconection

3,891

4,501

(13.6)

4,207

(7.5)

Corporate networks

2,584

2,517

2.7

2,774

(6.8)

Internet

2,155

1,923

12.1

2,179

(1.1)

Others

1,147

1,093

4.9

2,255

(49.1)

Total

30,298

31,021

(2.3)

32,143

(5.7)

Costs and Expenses

Cost of sales and services

6,975

6,980

(0.1)

7,554

(7.7)

Commercial, administrative and general

4,642

4,495

3.3

4,657

(0.3)

Transport and interconnection

2,811

3,091

(9.1)

3,210

(12.4)

Depreciation and amortization

4,537

5,090

(10.9)

4,624

(1.9)

Total

18,965

19,656

(3.5)

20,045

(5.4)

Operating income

Ps.

11,333

Ps.

11,365

(0.3)

Ps.

12,098

Ps.

(6.3)

EBITDA (1)

Ps.

15,870

Ps.

16,455

(3.6)

Ps.

16,722

Ps.

(5.1)

EBITDA margin (%)

52.4

53.0

(0.6)

52.0

0.4

Operating margin (%)

37.4

36.6

0.8

37.6

(0.2)

Mexico Balance Sheets

[ milions of Mexican constant pesos as of March, 2006]

March

March

2006

2005

Assets

Cash and short-term investments

Ps.

10,174

Ps.

26,902

Other current assets

23,330

33,424

Investment in non-consolidated subsidiaries (5)

32,179

21,738

Plant, property and equipment, net

119,379

125,411

Other assets

5,902

3,633

Projected net asset

21,976

25,612

Total assets

Ps.

212,940

Ps.

236,720

Liabilities and stockholders' equity

Current portion of long-term debt

Ps.

4,288

Ps.

17,910

Other current liabilities

16,012

21,697

Long-term debt

73,545

76,501

Labor liabilities

141

-

Deferred taxes

14,969

18,347

Total liabilities

108,955

134,455

Majority stockholders'equity

103,953

102,261

Minority interest

32

4

Total stockholders'equity

103,985

102,265

Total liabilities and stockholders'equity

Ps.

212,940

Ps.

236,720

(5) Investment related to foreing subsidiaries

 

Mexico Operating Results

% Inc. vs.

1Q 2006

4Q 2005

3Q 2005

2Q 2005

1Q 2005

1Q 2005

Lines in service (thousand units)

18,650

18,375

18,135

17,852

17,536

6.4

Prepaid lines

1,976

1,857

1,729

1,585

1,408

40.3

Lines with monthly rent

16,674

16,518

16,406

16,267

16,128

3.4

Connections

444

497

458

485

501

(11.4)

Disconnections

168

258

174

169

138

22.3

Gain

276

239

284

316

364

(24.2)

Penetration (%)

Digital services

41.9

41.4

40.9

40.1

39.2

2.7

Free voice mail (Buzón TELMEX)

49.8

49.3

47.9

46.1

43.7

6.1

Packages ( thousand units)

Paquete TELMEX

271

156

-

-

-

-

Lada 100 (Domestic+International)

1,278

1,201

1,181

1,123

1,072

19.2

Local Traffic

[ million units ]

Local calls

6,653

6,638

6,778

6,622

6,642

0.2

Interconnection minutes

9,015

8,807

8,804

8,812

8,373

7.7

Long Distance Traffic

[ million minutes]

Domestic long distance

4,374

4,478

4,577

4,501

4,297

1.8

International long distance

(incoming and outgoing)

2,117

2,011

1,815

1,627

1,677

26.2

Billed line equivalents 64kbps (thousands)

2,113

2,011

1,738

1,668

1,604

31.8

Internet (thousands)

2,237

2,116

2,025

1,927

1,855

20.6

Prodigy (Dial-up)

1,024

1,082

1,121

1,156

1,190

(13.9)

Infinitum (ADSL)

1,213

1,033

904

772

665

82.4

Penetration (%)

14.4

13.8

13.3

12.8

12.4

2.0

 

 

 

 

 

 

 

Mexico Local and Long Distance Accounting Separation

Based on Condition 7-5 of the Amendments of the Concession Title of Teléfonos de México, the

commitment to present the accounting of the local and long distance services is presented

below for the first quarter of 2006 and 2005.

Mexico Local Service Business

Income Statements

[ millions of Mexican constant pesos as of March, 2006 ]

%

1Q 2006

1Q 2005

Inc.

Revenues

Access, rent and measured service

Ps.

13,632

Ps.

14,117

(3.4)

LADA interconnection

1,036

1,062

(2.4)

Interconnection with operators

342

453

(24.5)

Interconnection with cellular

3,514

4,048

(13.2)

Other

2,165

2,153

0.6

Total

20,689

21,833

(5.2)

Costs and expenses

Cost of sales and services

4,817

5,188

(7.2)

Commercial, administrative and general

4,062

3,799

6.9

Interconnection

2,679

3,032

(11.6)

Depreciation and amortization

3,015

3,389

(11.0)

Total

14,573

15,408

(5.4)

Operating income

Ps.

6,116

Ps.

6,425

(4.8)

EBITDA (1)

Ps.

9,131

Ps.

9,814

(7.0)

EBITDA margin (%)

44.1

45.0

(0.9)

Operating margin (%)

29.6

29.4

0.2

Mexico Long Distance Service Business

Income Statements

[ millions of Mexican constant pesos as of March, 2006 ]

%

1Q 2006

1Q 2005

Inc.

Revenues

Domestic long distance

Ps.

4,082

Ps.

4,119

(0.9)

International long distance

2,152

2,204

(2.4)

Total

6,234

6,323

(1.4)

Costs and expenses

Cost of sales and services

1,409

1,372

2.7

Commercial, administrative and general

1,299

1,292

0.5

Interconnection to the local network

912

940

(3.0)

Depreciation and amortization

598

691

(13.5)

Total

4,218

4,295

(1.8)

Operating income

Ps.

2,016

Ps.

2,028

(0.6)

EBITDA (1)

Ps.

2,614

Ps.

2,719

(3.9)

EBITDA margin (%)

41.9

43.0

(1.1)

Operating margin (%)

32.3

32.1

0.2

 

 

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 27, 2006.

TELÉFONOS DE MÉXICO, S.A. DE C.V.

By: /s/__________________          

Name: Adolfo Cerezo Pérez
Title: Chief Financial Officer

 

Ref: Teléfonos de México, S.A. de C.V. - Press Release First Quarter 2006.