Telmex Press Release: Third Quarter 2007 October 22,2007

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 October 2007

Commission File Number: 333-13580

Teléfonos de México, S.A.B. 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-

----------------------------------------------------------------------------------------------------------

Highlights

3rd Quarter 2007

Market

Market Share*

Number of Services

Fixed, mobile and voice services of cable companies

21%

More than 85 million

Fixed voice services including the ones provided by mobile and cable companies

85%

More than 21 million

*Estimated

Country

Mexico

USA

Canada

Spain

Brazil

Argentina

Colombia

Number of LSA

397

25,000

3,010

508

5,360

2,904

1,048

Thousand inhabitants/ LSA

262.3

12.0

10.8

86.9

34.8

13.4

44.6

 

 

 

 

Consolidated Income Statements

Revenues: In the third quarter, consolidated revenues increased 2.1% compared with the same period of the previous year, reaching 48.146 billion pesos. Major contributors were increases of 8.7% in Internet revenues, 6.2% in corporate networks, 16.3% in interconnection revenues, related to domestic and international calling party pays service, and 34.0% in other revenues, comprised primarily of Tiendas TELMEX (TELMEX stores) and Yellow Pages. For the period, local service revenues and international long distance revenues decreased 7.8% and 6.3%, respectively.

Costs and expenses: In the third quarter, costs and expenses decreased 3.3% compared with the same period of 2006, totaling 34.003 billion pesos. The previous year's period included a non-recurring charge equivalent to 3.1 billion pesos (515 million reais) related to the ICMS tax (Imposto Sobre Circulação de Mercadoria e Prestação de Serviços) in Brazil. Other significant cost factors in the third-quarter comparison were the increase in interconnection expenses in Mexico from domestic and international calling party pays, higher costs related to computer sales and the integration of cable TV companies in Colombia. These effects were partially offset by initiatives to control costs and optimize resource use. If the non-recurring charge in 2006 were eliminated, costs and expenses would have increased 5.9%.

EBITDA (1) and operating income: Consolidated EBITDA (1) totaled 20.483 billion pesos in the third quarter, an increase of 11.0% compared with the same period of 2006. The EBITDA margin was 42.5%. Consolidated operating income totaled 14.143 billion pesos, 17.9% higher than the third quarter of 2006, producing a margin of 29.4%.

Other revenues and expenses: Other revenues of 264 million pesos were primarily related to the market value of the company's financial investments.

Comprehensive financing result: Comprehensive financing cost produced a charge of 658 million pesos in the quarter. This resulted from: i) net interest charge of 1.384 billion pesos, 42.8% lower than the same period of 2006, due to recognition of the market value of interest rate swaps, offset by the increase in the level of indebtedness ii) a net exchange loss of 308 million pesos from the third-quarter exchange rate devaluation of 0.1277 pesos per dollar, offset by the 6.140 billion dollars in dollar-peso hedges (weighted average exchange rate: 10.9844 pesos per dollar) and 1.111 billion dollars in dollar-reais hedges (weighted average exchange rate: 2.0144 reais per dollar), and iii) a gain of 1.034 billion pesos in the monetary position.

Majority net income: Majority net income in the third quarter totaled 9.3 billion pesos, 38.4% higher than the same period of the previous year. Earnings per share were 47 Mexican cents, an increase of 42.4% compared with the same period of the previous year, and earnings per ADR were 87 US cents, an increase of 61.1% compared with the same period of 2006.

Investments: For the nine months, consolidated capital expenditures (capex) was the equivalent of 1.204 billion dollars, of which 77.2% was used for growth projects in the voice, data and transport infrastructure, 21.5% for operational support projects and operating needs, and 1.3% for social telephony.

Debt: Gross total debt at September 30 was the equivalent of 10.413 billion dollars, of which 7.3% is short-term and 92.7% is long-term. Additionally, 79.0% is in foreign currency and 44.7% of the total debt has fixed interest rate that converts to 58.1% if 14.160 billion pesos of interest rate swaps at an average interest rate of 8.563% are included. Consolidated net debt (3) decreased in the quarter the equivalent of approximately 375 million dollars, totaling 7.172 billion dollars.

Repurchase of shares: For the nine months, the company used 10.481 billion pesos to repurchase its own shares. Of that total, 2.653 billion pesos were applied during the third quarter to repurchase 139,517,900 shares.

(3) Net debt is defined as total debt less cash and cash equivalents and marketable securities.

 

Mexico Operating Results

 

At September 30, customers have signed up for more than 3 million telecommunications service packages, 20.8% higher than the same period of 2006. In addition to providing benefits for our customers, these packages generate a continuous revenue flow for TELMEX, which exceeded the year-earlier total by 41.8%.

Lines in service and local traffic

At the end of the third quarter, there were 18.2 million lines in service, 45 thousand fewer than a year earlier. The decrease was mainly due to more competition in the most attractive segments of the market and the increase in broadband services that in some cases represent a substitution for traditional lines.

During the third quarter, local traffic decreased 6.1% compared with the same period in 2006, with a total of 6.324 billion local calls. Local traffic volume is still affected by competition from local and mobile telephony and by the migration of our switched traffic to corporate networks, a trend that strengthens the data business although it adversely affects local traffic. Also affecting local traffic results is the migration of dial-up Internet services to Infinitum broadband services (ADSL).

At September 30, customers used approximately 1.3 million local service packages that generate a fixed revenue flow. These packages reflected an increase of 66.1% compared with the previous year.

Long distance

Domestic long distance (DLD) traffic decreased 0.9% compared with the third quarter of 2006, totaling 4.632 billion minutes, mainly due to the decrease in termination traffic with long distance operators to the DLD packages as well as to the integration of domestic calling party pays service in November 2006, which registered 634 million minutes in the quarter.

In the quarter, outgoing international long distance (ILD) traffic increased 4.3% compared with last year's third quarter, totaling 499 million minutes. Incoming international long distance traffic, including international calling party pays traffic, increased 5.3% compared with the same period of the previous year, totaling 1.893 billion minutes. The incoming-outgoing ratio was 3.8x.

At September 30, there were 1.5 million packages generating fixed revenues for the long distance business, a decrease of 2.3% compared with 2006.

Interconnection

In the third quarter, interconnection traffic increased 15.7% compared with the third quarter of the previous year, totaling 11.678 billion minutes. Calling party pays traffic increased 60.6% as a result of incorporating traffic from domestic and international calling party pays. If this effect were eliminated, local calling party pays traffic would have increased 5.5%, reflecting mobile telephony growth.

Internet and corporate networks

In Mexico during the third quarter, 296 thousand broadband Infinitum (ADSL) accounts were added, bringing the total to approximately 2.7 million services. Of the total of 3.1 million Internet users, 85% are broadband Infinitum users. Currently, close to 13% of homes have access to broadband services and in TELMEX's case, Infinitum services increased 68.2%. Mexico has one of the highest growth rates in this type of service among all countries that are members of the OECD. (OECD Communications Outlook 2007).

 

In the third quarter, TELMEX launched the Todo México sin límites (All Mexico without limits) package that includes fixed line rent, broadband Infinitum service, unlimited local calls and domestic long distance minutes, as well as digital services for 869 pesos (999 pesos per month VAT included).

 

In the corporate market, billed line equivalents for data transmission increased 17.2% compared with last year's third quarter, bringing the total to 2.6 million line equivalents of 64 Kbps.

Mexico Financial Results

Revenues: In the third quarter, revenues from the operations in Mexico totaled 33.295 billion pesos, an increase of 0.7% compared with the same period of the previous year. Revenues from interconnection services increased 27.5% due to domestic and international calling party pays services. Other revenues increased 21.9% mainly due to higher sales in Tiendas TELMEX (TELMEX Stores) and to the Yellow Pages business. The increase in revenues partially offset the reduction in real terms of local, long distance, corporate networks and Internet prices.

Costs and expenses: In the third quarter, total costs and expenses were 21.013 billion pesos, an increase of 4.3% compared with the third quarter of 2006. This increase was mainly due to higher interconnection costs (domestic and international calling party pays) and higher costs of telephone handsets and equipment for customers. If costs from domestic and international calling party pays were eliminated, costs and expenses would have decreased 2.3% compared with last year's third quarter as a result of cost control initiatives and lower depreciation and amortization charges.

EBITDA (1) and operating income: EBITDA (1) totaled 16.764 billion pesos in the third quarter, a decrease of 3.9% compared with the same period of last year. The EBITDA margin was 50.3%. Operating income totaled 12.282 billion pesos in the third quarter and the operating margin was 36.9%.

 

 

International Operations Results

The following financial information is presented in the local currency of each country, according to that country's generally accepted accounting principles, before eliminating inter-company operations among companies of the TELMEX Group.

Brazil

Embratel's efforts have been focused on consolidating its position in the corporate data business and on increasing the local service offering in the mass market. These efforts increased line equivalents 29.9% and lines in service 31.5% compared with the third quarter of last year. Additionally, at September 30 the company provided Net Fone (triple play services) through Net Serviços to 469 thousand customers.

Revenues: In the third quarter, revenues totaled 2.2 billion reais, 5.8% higher than the same quarter of the previous year. Higher revenues were mainly due to the 37.1% increase in local service revenues that offset the 1.5% decrease in domestic long distance revenues.

  • Local: In the third quarter, local revenues reached 333 million reais, 37.1% higher than the same period of 2006 due to the 31.5% increase in local service users.

  • Domestic long distance: Domestic long distance revenues totaled 1.030 billion reais, 1.5% lower than the third quarter of 2006 due to the 3.6% decrease in traffic, partially offset by a 2.2% increase in the average revenue per long distance minute.

  • International long distance: In the quarter, international long distance revenues totaled 128 million reais, 1.7% higher than the same period of 2006, because the average revenue per long distance minute decreased 2.7%, partially offset by the 4.5% increase in traffic.

Corporate networks and Internet: The combined effect of the higher number of services and the rate adjustments generated revenues by the data and Internet access of 567 million reais, 0.8% lower than the same period of 2006.

Costs and expenses: Costs and expenses were 1.892 billion reais in the quarter, a decrease of 20.6% from the 2006 period, which included a non-recurring charge of 515 million reais related to the ICMS tax (Imposto Sobre Circulação de Mercadoria e Prestação de Serviços). If this effect were eliminated, costs and expenses would have been similar to the same period of 2006 mainly due to higher personnel expenses and higher costs of telephone handsets related to growth in local services, offset by the rationalization of resource use.

EBITDA (1) and operating income: EBITDA (1) totaled 575 million reais in the third quarter compared with a loss of 40 million reais in the same period of 2006, producing a margin of 26.4%. Operating income totaled 294 million reais in the quarter, producing a margin of 13.5%.

Colombia

In Colombia, efforts in the voice and data businesses have been focused on consolidating the corporate and SME segments. Those initiatives are reflected in the increase of 67.1% in line equivalents compared with last year's third quarter. In the cable TV business, we are in the process of integrating the operations of the recently acquired companies. Through these companies' integrated network, we currently cover more than 2.5 million homes.

In Colombia, revenues totaled 127.674 billion Colombian pesos in the third quarter, 185.2% higher than the same period of 2006. Higher revenues were mainly due to expanding relationships with several corporate customers and the integration of the cable TV companies, which contributed 81.614 billion Colombian pesos to third-quarter results.

Costs and expenses increased 292%, totaling 135.400 billion Colombian pesos, mainly due to the incorporation of the cable companies, which accounted for 96.484 billion Colombian pesos, and to higher personnel expenses to serve the small and medium-sized market. In the quarter there was an operating loss of 7.726 billion Colombian pesos compared with operating income of 10.228 billion Colombian pesos in the year-ago third quarter, mainly due to higher depreciation charges related to the update of cable infrastructure. In the third quarter, EBITDA (1) totaled 20.793 billion Colombian pesos with a margin of 16.3%, compared with EBITDA (1) of 18.636 billion Colombian pesos in the same period of the previous year.

Argentina

In the quarter, revenues from the operations in Argentina totaled 102.1 million Argentinean pesos, an increase of 15.0% compared with the same period of the previous year, due to increases in revenues in the corporate and Internet businesses and local services of 28.6% and 56.0%, respectively, partially offset by the decrease in interconnection revenues with other operators.

Operating costs and expenses totaled 99.8 million Argentinean pesos in the quarter, an increase of 11.6% due to higher commissions and network maintenance costs related to growth in local services.

In the quarter, EBITDA (1) totaled 20.2 million Argentinean pesos, an increase of 57.8% compared with the same period of 2006 with a margin of 19.8%. Operating income rose to 2.4 million Argentinean pesos in the quarter compared with a loss of 0.6 million Argentinean pesos in the same period of the previous year.

Chile

Revenues from the operations in Chile reached 18.645 billion Chilean pesos, 11.9% more than the third quarter of 2006. Revenues from the corporate networks and Internet access businesses rose 8.1%, while local services revenues increased 40.2%. Long distance revenues decreased 9.9% as this market declined because of migration to mobile services and private networks.

In the third quarter, costs and expenses totaled 19.417 billion Chilean pesos, an increase of 11.0% compared with the same period of the previous year. Costs of sales and services increased 23.9% due to higher network maintenance costs related to growth in local services. Commercial, administrative and general expenses increased 10.3% due to higher personnel and advertising expenses for the launch of the new multi-service packages over the WiMax platform. In the quarter, there was an operating loss of 772 million Chilean pesos compared with an operating loss of 823 million Chilean pesos in the same period of the previous year. EBITDA (1) totaled 2.431 billion Chilean pesos, producing a margin 13.0%.

Peru

In the third quarter, revenues totaled 66.0 million New Soles, 23.8% higher than the same period of the previous year. The data business, which represents 36.1% of total revenues, increased 36.0%. In the quarter, voice business revenues decreased 2.4% compared with the same period of 2006 since the 13.6% increase in local revenues was offset by the decrease in interconnection revenues with other operators.

In the third quarter, costs and expenses increased 32.8%, reflecting increases of 12.3% in transport and interconnection costs and 57.7% in commercial, administrative and general expenses due to the integration of the cable TV companies. EBITDA (1) totaled 14.2 million New Soles, 9.0% lower the same period of 2006, with a margin of 21.5%.

 

 

Consolidated Relevant Figures

[ In millions of Mexican pesos with purchasing power at September, 2007 unless otherwise indicated ]

 

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

Revenues

Ps.

48,146

Ps.

47,168

2.1

Ps.

142,601

Ps.

139,540

2.2

EBITDA (1)

20,483

18,461

11.0

59,939

59,112

1.4

EBITDA margin (%)

42.5

39.1

3.4

42.0

42.4

(0.4)

Operating income

14,143

11,996

17.9

40,890

38,926

5.0

Operating margin (%)

29.4

25.4

4.0

28.7

27.9

0.8

Net income

9,300

6,721

38.4

26,547

22,268

19.2

Earnings per share (pesos)

0.47

0.33

42.4

1.35

1.09

23.9

Earnings per ADR (dollars) (2)

0.87

0.54

61.1

2.48

1.82

36.3

Outstanding shares (millions)

19,621

20,338

(3.5)

19,621

20,338

(3.5)

Equivalent ADRs (millions) (2)

981

1,017

(3.5)

981

1,017

(3.5)

 

  1. EBITDA: defined as operating income plus depreciation and amortization. Go to www.telmex.com in the Investor Relations section where you will find the reconciliation of EBITDA to operating income.
  2. One ADR represents 20 shares.
  3. Net debt is defined as total debt less cash and cash equivalents and marketable securities.

 

 

 

Consolidated Statements of Income

[ In millions of Mexican pesos with purchasing power at September, 2007 ]

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

Revenues

Local

Ps.

15,337

Ps.

16,628

(7.8)

Ps.

46,132

Ps.

48,845

(5.6)

Domestic long distance

10,892

10,579

3.0

32,194

32,602

(1.3)

International long distance

3,290

3,513

(6.3)

9,893

10,816

(8.5)

Interconnection

5,812

4,998

16.3

17,519

14,238

23.0

Corporate networks

6,343

5,971

6.2

18,865

18,218

3.6

Internet

3,742

3,441

8.7

10,973

9,882

11.0

Other

 

2,730

 

2,038

34.0

 

7,025

 

4,939

42.2

Total

48,146

47,168

2.1

142,601

139,540

2.2

Costs and expenses

Cost of sales and services

9,707

9,052

7.2

28,836

28,640

0.7

Commercial, administrative and general expenses

8,303

11,615

(28.5)

25,074

27,192

(7.8)

Transport and interconnection

9,653

8,040

20.1

28,752

24,596

16.9

Depreciation and amortization

 

6,340

 

6,465

(1.9)

 

19,049

 

20,186

(5.6)

Total

34,003

35,172

(3.3)

101,711

100,614

1.1

Operating income

14,143

11,996

17.9

40,890

38,926

5.0

Employee profit sharing

730

815

(10.4)

2,315

2,412

(4.0)

Other (revenues) and expenses, net

(264)

46

NA

(2,491)

(149)

*

Comprehensive financing cost

Net interest

1,384

2,420

(42.8)

4,294

4,190

2.5

Exchange loss, net

308

577

(46.6)

1,186

1,601

(25.9)

Monetary gain, net

 

(1,034)

 

(979)

5.6

 

(1,550)

 

(1,517)

2.2

Total

658

2,018

(67.4)

3,930

4,274

(8.0)

Equity interest in net income of affiliates

(285)

(164)

73.8

(690)

(344)

100.6

Income before income tax

13,304

9,281

43.3

37,826

32,733

15.6

Income tax

3,926

2,881

36.3

11,000

10,148

8.4

 

 

 

 

 

 

 

 

 

 

Income before equity in minority interest

9,378

6,400

46.5

26,826

22,585

18.8

Minority interest

(78)

321

NA

(279)

(317)

(12.0)

 

 

 

 

 

 

 

 

 

 

Majority net income

Ps.

9,300

Ps.

6,721

38.4

Ps.

26,547

22,268

19.2

EBITDA (1)

Ps.

20,483

Ps.

18,461

11.0

Ps.

59,939

59,112

1.4

EBITDA margin (%)

42.5

39.1

3.4

42.0

42.4

(0.4)

Operating margin (%)

29.4

25.4

4.0

28.7

27.9

0.8

 

* Higher than 1,000%

Consolidated Balance Sheets

[ In millions of Mexican pesos with purchasing power at September, 2007 ]

September

September

2007

2006

Assets

Cash and cash equivalents

Ps.

34,534

Ps.

25,871

Other current assets

46,172

44,229

Plant, property and equipment, net

163,311

170,671

Other assets

20,297

10,585

Goodwill, net

13,341

9,469

Net projected asset

16,377

21,638

Deferred taxes

 

7,130

 

6,484

Total assets

Ps.

301,162

Ps.

288,947

Liabilities and stockholders' equity

Short-term debt and current portion of long-term debt

Ps.

8,301

Ps.

8,814

Other current liabilities

41,519

38,483

Long-term debt

105,409

100,929

Labor obligations

2,628

2,488

Deferred taxes

 

17,242

 

17,279

Total liabilities

175,099

167,993

Stockholders' equity

Majority stockholders' equity

123,513

108,379

Minority interest

 

2,550

 

12,575

Total stockholders' equity

 

126,063

 

120,954

Total liabilities and stockholders' equity

Ps.

301,162

Ps.

288,947

 

 

Mexico Operating Results

% Inc. vs.

3Q 2007

2Q 2007

1Q 2007

4Q 2006

3Q 2006

3Q 2006

Lines in service (thousand units)

18,157

18,202

18,284

18,251

18,601

(2.4)

Local traffic (million units)

Local calls

6,324

6,295

6,278

6,491

6,734

(6.1)

Interconnection minutes (A) (B)

11,678

11,373

10,833

10,339

10,090

15.7

Long distance traffic (million minutes)

Domestic long distance (A)

4,632

4,599

4,470

4,561

4,672

(0.9)

International long distance

(incoming and outgoing) (B)

2,392

2,445

2,465

2,349

2,276

5.1

Billed line equivalents 64kbps (thousands)

2,598

2,484

2,347

2,330

2,217

17.2

Internet (thousands)

3,147

2,923

2,784

2,660

2,492

26.3

Prodigy (Dial-up)

470

542

657

837

900

(47.8)

Infinitum (ADSL)

2,677

2,381

2,127

1,823

1,592

68.2

  1. Includes domestic long distance calling party pays traffic
  2. Includes international long distance calling party pays traffic

 

 

Mexico Financial Results

Mexico Statements of Income

[ In millions of Mexican pesos with purchasing power at September, 2007 ]

 

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

Revenues

Local

Ps.

13,464

Ps.

14,446

(6.8)

Ps.

40,829

Ps.

43,360

(5.8)

Domestic long distance

4,362

4,625

(5.7)

13,003

13,689

(5.0)

International long distance

2,321

2,579

(10.0)

7,096

7,903

(10.2)

Interconection

5,674

4,450

27.5

16,993

12,869

32.0

Corporate networks

2,772

2,712

2.2

8,077

8,174

(1.2)

Internet

2,671

2,581

3.5

7,951

7,364

8.0

Other

 

2,031

 

1,666

21.9

 

5,175

 

3,970

30.4

Total

33,295

33,059

0.7

99,124

97,329

1.8

Costs and expenses

Cost of sales and services

7,564

7,616

(0.7)

22,855

22,954

(0.4)

Commercial, administrative and general expenses

4,904

4,872

0.7

14,670

14,918

(1.7)

Transport and interconnection

4,063

3,133

29.7

12,496

9,201

35.8

Depreciation and amortization

 

4,482

 

4,521

(0.9)

 

13,473

 

14,327

(6.0)

Total

21,013

20,142

4.3

63,494

61,400

3.4

 

 

 

 

 

 

 

 

 

 

Operating income

Ps.

12,282

Ps.

12,917

(4.9)

Ps.

35,630

Ps.

35,929

(0.8)

EBITDA (1)

Ps.

16,764

Ps.

17,438

(3.9)

Ps.

49,103

Ps.

50,256

(2.3)

EBITDA margin (%)

50.3

52.7

(2.4)

49.5

51.6

(2.1)

Operating margin (%)

36.9

39.1

(2.2)

35.9

36.9

(1.0)

 

 

Mexico statements of income- Third Quarter

[ In millions of Mexican pesos with purchasing power at September, 2007 ]

 

 

Communities served by competition *

Communities not served by competition *

Total

Revenues

Local

9,597

3,867

13,464

Domestic long distance

3,862

500

4,362

International long distance

2,012

309

2,321

Interconection

4,819

855

5,674

Corporate networks

2,772

-

2,772

Internet

2,493

178

2,671

Others

1,963

68

2,031

Total

27,518

5,777

33,295

Costs and Expenses

Operating costs and expenses

8,253

4,215

12,468

Interconnection

3,470

593

4,063

Depreciation and amortization

2,805

1,677

4,482

Total

14,528

6,485

21,013

Operating income

12,990

(708)

12,282

EBITDA (1)

15,795

969

16,764

EBITDA margin (%)

57.4

16.8

50.3

Operating margin (%)

47.2

(12.3)

36.9

*Estimated figures

 

 

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 third quarter of 2007 and 2006.

Mexico Local Service Business

Statements of income

[ In millions of Mexican pesos with purchasing power at September, 2007 ]

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

Revenues

Access, rent and measured service

Ps.

13,221

Ps.

14,416

(8.3)

Ps.

40,022

Ps.

43,069

(7.1)

LADA interconnection

978

1,195

(18.2)

2,949

3,487

(15.4)

Interconnection with operators

392

412

(4.9)

1,193

1,175

1.5

Interconnection with cellular

3,678

4,016

(8.4)

10,907

11,588

(5.9)

Other

2,945

2,431

21.1

9,663

7,805

23.8

Total

21,214

22,470

(5.6)

64,734

67,124

(3.6)

Costs and expenses

Cost of sales and services

5,738

5,514

4.1

16,648

16,511

0.8

Commercial, administrative and general

4,724

4,489

5.2

13,075

13,290

(1.6)

Interconnection

2,524

2,958

(14.7)

7,797

8,718

(10.6)

Depreciation and amortization

2,908

2,953

(1.5)

8,832

9,503

(7.1)

Total

15,894

15,914

(0.1)

46,352

48,022

(3.5)

Operating income

Ps.

5,320

Ps.

6,556

(18.9)

Ps.

18,382

Ps.

19,102

(3.8)

EBITDA (1)

Ps.

8,228

Ps.

9,509

(13.5)

Ps.

27,214

Ps.

28,605

(4.9)

EBITDA margin (%)

38.8

42.3

(3.5)

42.0

42.6

(0.6)

Operating margin (%)

25.1

29.2

(4.1)

28.4

28.5

(0.1)

Mexico Long Distance Service Business

Statements of income

[ In millions of Mexican pesos with purchasing power at September, 2007 ]

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

Revenues

Domestic long distance

Ps.

5,105

Ps.

4,420

15.5

Ps.

15,322

Ps.

13,012

17.8

International long distance

2,547

2,252

13.1

8,068

6,839

18.0

Total

7,652

6,672

14.7

23,390

19,851

17.8

Costs and expenses

Cost of sales and services

1,178

1,274

(7.5)

3,914

4,108

(4.7)

Commercial, administrative and general

1,567

1,429

9.7

4,418

4,229

4.5

Interconnection to the local network

2,101

1,053

99.5

6,587

3,064

115.0

Depreciation and amortization

561

603

(7.0)

1,705

1,894

(10.0)

Total

5,407

4,359

24.0

16,624

13,295

25.0

Operating income

Ps.

2,245

Ps.

2,313

(2.9)

Ps.

6,766

Ps.

6,556

3.2

EBITDA (1)

Ps.

2,806

Ps.

2,916

(3.8)

Ps.

8,471

Ps.

8,450

0.2

EBITDA margin (%)

36.7

43.7

(7.0)

36.2

42.6

(6.4)

Operating margin (%)

29.3

34.7

(5.4)

28.9

33.0

(4.1)

 

%

Brazil Operating Indicators

3Q2007

3Q2006

Inc.

Domestic long distance minutes

3,479

3,607

(3.6)

(millions)

International long distance minutes

537

513

4.5

(millions)

Line equivalents of 64 kbps ( thousands)

2,743

2,112

29.9

Access to local service (thousands)

2,408

1,831

31.5

Net Fone users (thousands)

469

115

306.0

 

Income Statements Brazil

[ millions of historic Brazilian reais]

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

Revenues

Local (A)

$R

332.7

$R

242.7

37.1

$R

917.7

$R

673.9

36.2

Domestic long distance

1,030.0

1,045.3

(1.5)

3,064.0

3,150.7

(2.8)

International long distance

127.6

125.5

1.7

377.5

388.3

(2.8)

Corporate networks

439.9

457.8

(3.9)

1,337.4

1,364.7

(2.0)

Internet

126.7

113.2

12.0

372.9

330.1

13.0

Others

125.4

78.6

59.6

326.5

230.7

41.5

Total

2,182.3

2,063.1

5.8

6,396.0

6,138.4

4.2

Costs and Expenses

Cost of sales and services

289.3

271.6

6.5

822.9

808.5

1.8

Commercial, administrative and general

456.3

986.8

(53.8)

1,420.3

1,829.9

(22.4)

Transport and interconnection

861.2

844.2

2.0

2,503.1

2,499.0

0.2

Depreciation and amortization

285.6

282.0

1.3

847.1

834.1

1.6

Total

1,892.4

2,384.6

(20.6)

5,593.4

5,971.5

(6.3)

Equity in results of affiliates

(4.3)

26.5

NA

(98.6)

48.3

NA

Operating income

$R

294.2

$R

(348.0)

NA

$R

901.2

$R

118.6

659.9

EBITDA (1)

$R

575.4

$R

(39.6)

NA

$R

1,649.7

$R

1,001.0

64.8

EBITDA margin (%)

26.4

(1.9)

28.3

25.8

16.3

9.5

Operating margin (%)

13.5

(16.9)

30.4

14.1

1.9

12.2

* Higher than 1,000%

(A) Includes Interconnection

Results of International Operations

The following financial information is presented in the local currency of the country in which each Latin America 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.

Argentina

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

(millions of historic Argentinean pesos)

Revenues

$

102.1

$

88.8

15.0

$

281.7

$

257.6

9.4

EBITDA

20.2

12.8

57.8

54.8

27.1

102.2

EBITDA margin (%)

19.8

14.4

5.4

19.5

10.5

8.9

Operating Income

2.4

(0.6)

NA

4.6

(9.4)

NA

Operating margin (%)

2.4

(0.6)

3.0

1.6

(3.6)

5.2

Colombia

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

(millions of historic Colombian pesos )

Revenues

$

127,674.4

$

44,769.2

185.2

$

307,362.2

$

129,893.0

136.6

EBITDA

20,793.2

18,636.3

11.6

81,181.7

58,516.8

38.7

EBITDA margin (%)

16.3

41.6

(25.3)

26.4

45.1

(18.7)

Operating Income

(7,725.8)

10,228.2

NA

19,839.0

34,868.0

(43.1)

Operating margin (%)

(6.1)

22.8

(28.9)

6.5

26.8

(20.3)

Chile

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

(millions of Chilean constant pesos as of September, 2007)

Revenues

$

18,644.6

$

16,664.1

11.9

$

54,463.2

$

52,073.5

4.6

EBITDA

2,430.8

1,955.2

24.3

6,802.2

8,660.6

(21.5)

EBITDA margin (%)

13.0

11.7

1.3

12.5

16.6

(4.1)

Operating Income

(772.1)

(822.6)

(6.1)

(3,825.6)

549.5

NA

Operating margin (%)

(4.1)

(4.9)

0.8

(7.0)

1.1

(8.1)

Peru

%

%

3Q2007

3Q2006

Inc.

9 months 07

9 months 06

Inc.

(millions of historic New Soles)

Revenues

$

66.0

$

53.3

23.8

$

185.8

$

157.2

18.2

EBITDA

14.2

15.6

(9.0)

40.6

44.8

(9.4)

EBITDA margin (%)

21.5

29.3

(7.8)

21.9

28.5

(6.6)

Operating Income

0.0

3.7

(100.0)

(2.2)

7.4

NA

Operating margin (%)

0.0

6.8

(6.8)

(1.2)

4.7

(5.9)

 

----------------------------------------------------------------------------------------------------------

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: October 22, 2007.

TELÉFONOS DE MÉXICO, S.A.B. DE C.V.

By: __________________

Name: Adolfo Cerezo Pérez
Title: Chief Financial Officer

Ref: Telmex Press Release: Third Quarter 2007.