Mexico's America Movil Sees $3.2 Billion Capex, 3G In 2007"
MEXICO CITY -(Dow Jones)- Mexican mobile operator America Movil said Thursday it plans to make $3.2 billion in capital expenditures this year, a portion of which will be used to deploy UMTS third-generation phone services in several countries.
"The strategy for UMTS is to roll out in 30 to 40 cities in Latin America this year," said Daniel Hajj, the company's chief executive, in a conference call with analysts.
"Prices of (UMTS) handsets are going down. I think they are going to be affordable for Latin Americans," he said.
America Movil said Wednesday its first-quarter net profit soared 52.5% year-on-year to 15.80 billion pesos ($1.45 billion), or MXN0.45 a share, on the back of strong revenue growth and higher margins.
The market was expecting net profit of MXN11.50 billion, or MXN0.33 a share, according to the median forecast of 10 analysts surveyed by Dow Jones Newswires.
Commenting on the company's better-than-expected results, Chief Financial Officer Carlos Garcia Moreno said analysts had overestimated equipment sales and underestimated service revenue.
America Movil added nearly 6.5 million wireless subscribers in the quarter, bringing its total to 131.2 million, of which 44.8 million were in Mexico.
The company's Brazilian unit Claro added 727,000 subscribers to reach 24.6 million at the end of March, while Ebitda margin increased to 27.4% from 13.4%.
Hajj said competition is set to increase in Brazil as rival Vivo Participacoes - jointly owned by Spain's Telefonica and Portugal Telecom - deploys its GSM network.
Regarding the company's proposed acquisition of an indirect stake in Telecom Italia, Hajj said America Movil is still looking at its options, including partnering with other investors.
"Of course we are interested in partnering with Italian partners," he said.
America Movil, fixed-line operator Telefonos de Mexico, and AT&T announced April 1 they were in exclusive negotiations with Italian conglomerate Pirelli to buy 66% of unlisted holding company Olimpia, which controls 18% of Telecom Italia's ordinary shares.
AT&T subsequently withdrew from the talks, while America Movil and Telmex said they are continuing to look at different options for a potential investment in Olimpia.
"The way we are doing things in Telecom Italia is we will have a minority non-controlling share in Telecom Italia," said Hajj, adding he didn't see a deal closing before the end of the exclusivity period Monday.
Analysts see the Olimpia talks as part of a broader plan by the Mexican companies to gain control of Telecom Italia's wireless and fixed-line assets in Latin America, which include Telecom Argentina, Brasil Telecom, and TIM Participacoes.
"We think that the partnership in one of the largest operations in Europe and Latin America would give us a lot of expertise and other things," Hajj said.
America Movil, which has a presence in 15 countries, has grown into Latin America's largest mobile operator through acquisitions and organic growth.
When asked about media reports that America Movil was eyeing cable TV assets in Honduras and other Central American countries, Hajj said the company's strategy in that region continues to include both wireless and fixed-line services.
America Movil had more than 2.9 million fixed-lines and 8.6 million wireless subscribers in the region at the end of March.
"We have full service companies in Central America and the Caribbean and in those places we are interested in (providing) the full service: voice, data and video. If we need to buy a cable company we are going to do it," the executive said.
At around 1:10 p.m. EDT, the local L shares of America Movil were up 3.5% to MXN29.54 on the Mexican stock exchange.
By Ken Parks, Dow Jones Newswires; 52-55-5080-3453; ken.parks@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 26th April 2007
