Unfortunately, this milestone achievement came at a big cost. Expenses were up 7.3% overall -- 16% when you factor out depreciation. The increased costs came largely from employment expenses and operating costs related to the push to sell digital television and broadband services. This led to a 7% drop in EBITDA margin, down to 42.7%. This drop cut heavily into net income, which came in at $7.2 million, 41.5% lower than the $12.3 million seen the year before.
Telefonica Chile has been quite successful at migrating customers in its flexible plans and bundled offerings. These plans include combinations of voice, broadband, and digital television services. Just as AT&T
The cost impact of this diversification left investors unimpressed, though, as shares of Telefonica Chile are down more than 5% since Monday's close. While the turnaround that resulted in revenue growth is impressive and an important milestone, profitable growth is what matters most. For the time being, this still appears elusive for Telefonica Chile.
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Fool contributor Dave Mock hasn't grown much in five years, either, but he doubts that trend will reverse. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy speaks the universal language of love.
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