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Mexico America Movil 4Q Net Up 49.4% to MXN15.86 Billion

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MEXICO CITY (Dow Jones) Mexican wireless carrier America Movil said Tuesday its fourth quarter net profit rose 49.4% on the back of strong subscriber growth and expanding margins.

Net profit was 15.86 billion pesos ($1.46 billion), or MXN0.45 a share, up from MXN10.61 billion, or MXN0.30 a share, in the fourth quarter of 2006, the company said in a press release.

Net earnings per American Depositary Receipt were $0.84, up from $0.54 in the year-ago period.

America Movil's total sales rose 25.8% year-over-year to MXN85.21 billion.

"Most of our subsidiaries exhibited double-digit service revenue growth year-on-year in local currency in spite of the important price reductions seen in most markets. As prices came down, traffic went up," America Movil said.

The market had expected net profit of MXN14.05 billion, or MXN0.40 a share, on revenue of MXN83.35 billion, according to the median forecast of 11 analysts surveyed by Dow Jones Newswires.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, increased 28.3% to MXN32.85 billion, while the company's Ebitda margin expanded to 38.5% from 37.8% a year ago as revenue grew faster than costs.

Helping the bottom line was a lower tax bill in the quarter, with America Movil reporting a 55.1% drop in income and deferred taxes to MXN2.8 billion.

"I liked how they consolidated their subscriber base with 10 million (new adds) during the quarter. It was bigger than expected. But the Ebitda margin was a little soft," said Raul Ochoa, an equity analyst at Scotia Capital.

For the full year, net profit rose 31.9% to MXN58.59 billion, and sales grew 28.2% to MXN311.58 billion.

America Movil has opted to return increasing ammounts of cash to shareholders given its modest investment needs, limited acquisition opportunities, and massive cash flow, with Ebitda reaching MXN126.77 billion in 2007.

America Movil said last year it financed MXN54.2 billion in share buybacks and dividends, capital expenditures for MXN34.6 billion, and acquisitions in Puerto Rico and Jamaica for MXN25.3 billion from cash flow.

America Movil's net debt stood at MXN92.7 billion at the end of December, up MXN22.6 billion from the year-ago period.

The company added about 10 million mobile clients in the quarter, bringing its total wireless subscriber base to 153.4 million in 16 countries at the end of December.

Of the net additions, nearly 2.5 million were in Mexico, where the company's Telcel unit finished the quarter with 50 million subscribers.

Telcel's revenue grew 8.5% to MXN34.03 billion, while Ebitda rose 6.5% to MXN17.53 billion.

Last December, the Federal Competition Commission, or CFC, started a probe of Mexico's mobile telephony market, where three out of every four users are Telcel clients.

In its second-largest market, Brazil, America Movil added 2.2 million subscribers to finish the quarter with 30.2 million.

Revenue rose 22.4% to 2.86 billion reals ($1.63 billion), while Ebitda more than doubled to BRL675 million.

In Colombia, the company grew its subscriber base by nearly 1.1 million to 22.3 million, and in Argentina, Uruguay and Paraguay added about 1.1 million to close the year with a combined 14.6 million clients.

America Movil said it launched third-generation wireless services in Brazil, Argentina, and Chile during the fourth quarter, with plans to launch in 13 cities in Mexico this month.

"Our enhanced UMTS/HSDPA wireless networks enable our clients to have access to value added services at high-speed data transmission rates, including wireless broadband accesses. By year-end 2008 we will cover the main cities in Latin America," the company said.

America Movil's local L shares fell 6.5% to close at MXN31.29 amid a 4.6% drop in Mexico's benchmark IPC stock index following weak U.S. economic data. The shares are down 6.5% year to date.

-By Ken Parks, Dow Jones Newswires, 52-55-5080-3453, ken.parks@dowjones.com

(END) Dow Jones Newswires

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