Brazilian telecommunications company Tele Norte Leste Participacoes SA (TNLP4.BR) is moving beyond its 2008 acquisition of Brasil Telecom, and focusing on growth opportunities in mobile telephony, high-speed internet and pay TV, a senior company executive said Friday.

"In 2011 we will continue to grow in some specific markets," said finance manager Alex Zornig in a call with analysts.

Late Thursday, the firm, which is known as Oi, said revenue and profit were weighed down in the fourth quarter by its fixed-line business, which has been in decline for some time. The poor results there weren't quite offset by growth in mobile, internet and pay TV.

The firm reported a profit of 284 million Brazilian reais ($172 million) for the fourth quarter of 2010, down 47% from the third quarter. The fourth-quarter reversed a loss of BRL597 million reported in the fourth quarter 2009, when the company posted a one-off charge of BRL1.3 billion related to its acquisition of Brasil Telecom.

Revenues in the fourth quarter were BRL7.3 billion, down less than 1% on the quarter and 4% on the year, while earnings before interest, taxes, depreciation and amortization, or Ebitda, were BRL2.27 billion, down 19% on the quarter and up 3% on the year.

According to Credit Suisse, the slightly weaker performance could dissuade minority investors from participating in the capital increase scheduled for this month, which will see Portugal Telecom SGPS SA (PT) take a small but significant stake in the Tele Norte Leste group.

The results "did not provide a positive catalyst, so our base case scenario is for low minority participation in upcoming capital increases," Credit Suisse said. Tele Norte Leste's existing controlling shareholders and Portugal Telecom "may account for nearly all of the capital increase," it said.

The company said it signed up 2.1 million clients in 2010, ending the year with 64 million customers, of which 20 million had fixed lines, 39.3 million had mobile phones, 4.4 million had broadband and 275,000 in pay TV.

Oi invested BRL3.1 billion in 2010, down from BRL5.12 billion in 2009. Zornig said the company is looking to ramp up investments again to between BRL5 billion-6 billion in 2011, and that its profitability would be reduced from 2010 levels as a result.

"The margins in 2010 won't be repeated in 2011 if we continue to see growth as we've seen so far in January," Zornig said. "When you invest to grow, you pay a bit up front to gain in the future."

Oi ended the year with BRL18.7 billion in net debt, down BRL3.2 billion from a year ago. The ratio of net debt to Ebitda fell to 1.8 times versus 2.2 times at the end of 2009. Total debts were BRL29.9 billion, flat from a year ago, while cash on hand totaled BRL11.2 billion cash, Zornig said.

-By Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082 +55 11 3544 7082; matthew.cowley@dowjones.com

--Rogerio Jelmayer contributed to this article.
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