Mexico's America Movil Upgrades '06 Subscriber Outlook By 2 Million

MEXICO CITY -(Dow Jones)- Mexican wireless phone company America Movil on Wednesday raised its 2006 new subscriber target by 2 million customers and affirmed its capital expenditure plan.

"On the forecast for subscribers we have been saying around 20 million to 22 million, and I think we are moving a little bit to 22 million to 24 million subscribers," chief executive Daniel Hajj said during a conference call with analysts.

America Movil added 32.2 million new subscribers in 2005.

At the same time Hajj said the company's $3 billion capital expenditure plan was on track. "We are not changing anything on the capex," he said.

America Movil added 7.3 million wireless subscribers in the first quarter, bringing its total to 100.6 million.

However, its wireless subscriber base increased 51.7% from the year-ago quarter thanks to several acquisitions and strong growth in its key markets of Mexico, Brazil, and Colombia.

Hajj said margins in Mexico, where it is the market leader with 37.6 million subscribers, improved thanks to more rational pricing by competitors and lower costs.

The Ebitda margin in Mexico expanded by more than eight percentage points year-on-year to 50.3% at the end of the first quarter.

In America Movil's second-largest market, Brazil, Hajj sees a 10% Ebitda margin for the full year compared with 15.6% in the first quarter due to seasonal factors.

Sales and competition tend to be higher in the second and fourth quarters because of holidays like Mother's Day and Christmas, which in turn pressures margins.

"I think we are going to grow more in the second and fourth quarter than in this quarter. I think 10% for the full year is our forecast and we feel we are going to do that forecast," he said.

Chief financial officer Carlos Garcia-Moreno said the company has observed a general improvement in margins in most of its Latin American operations as slower subscriber growth has translated into lower subscriber acquisition costs.

"You are seeing a trend for subscriber acquisition costs to come down relative to service revenue and that is helping to drive margin expansions across the board," Garcia-Moreno said.

America Movil's Ebitda margin for the first quarter was 36.2%, up from 32.5% for the same period last year.

America Movil reported Tuesday net profits of 9.95 billion pesos ($913 million), or MXN0.28 a share, beating analyst expectations of MXN5.74 billion or MXN0.18 a share.

The company's L shares trading on the Mexican Stock Exchange were up 0.1% at MXN21.00 at 1500 GMT on Wednesday.

-By Ken Parks, Dow Jones Newswires; (5255) 5080-3453, ken.parks@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 3rd May 2006