America Movil's 1Q Net Falls 5.5% to MXN13.8 Billion
Published on: 24th Apr 2008
Note -- this news article is more than a year old.
MEXICO CITY (Dow Jones) Mexico's America Movil, Latin America's largest mobile operator, said Thursday its first quarter net profit fell 5.5% due to higher financing costs and spending on third generation wireless networks.
Net profit was 13.8 billion pesos ($1.32 billion), or MXN0.40 a share, down from MXN14.57 billion, or MXN0.41 a share, in the first quarter of 2007, the company said in a press release.
Net earnings per American Depositary Receipt were $0.74, down from $0.75 a year earlier.
Starting this year, Mexican corporations no longer use inflation accounting and report their results in nominal figures.
"The new methodology affects only marginally our operating results, but has more of an impact on financing costs," the company said.
Comprehensive financing costs soared to MXN3.25 billion, up from MXN847 million pesos in the first quarter of 2007.
America Movil's total sales rose 20.6% on the year to MXN81.3 billion, while costs and expenses climbed 22.7% to MXN47.39 billion due to the launch of third-generation, or 3G, wireless services.
Earnings before interest, taxes, depreciation and amortization, or Ebitda, a measure of cash flow, increased 17.8% to MXN33.94 billion, while the company's Ebitda margin narrowed to 41.7% from 42.7% a year earlier.
The market had expected net profit of MXN17.02 billion, or MXN0.49 a share, on revenue of MXN84.68 billion, according to the median forecast of 11 analysts surveyed by Dow Jones Newswires.
"Our operations initiated 2008 very much along the lines seen throughout most of 2007, with a marked tendency for airtime prices to drop practically across the board but with traffic responding strongly to the lower prices," the company said.
America Movil reduced its net debt in the quarter by MXN5.3 billion to MXN87.4 billion at the end of March, helped by cash flow that allowed it to fund capital expenditures for MXN4.8 billion and share buybacks worth MXN6.3 billion.
The company added 5.7 million mobile clients in the quarter, bringing its total wireless subscriber base to 159.2 million at the end of March.
Of the net additions, 1.5 million were in Mexico, where the company's Telcel unit finished the quarter with 51.5 million subscribers in 16 countries.
In its No. 2 market, Brazil, America Movil added 953,000 subscribers to finish the quarter with 31.2 million.
America Movil said it launched 3G services like broadband Internet access during the quarter in Mexico, Colombia, Peru, El Salvador, Honduras and Nicaragua.
"We are now offering 3G services in 14 countries in Latin America and the Caribbean," the company said. "Over time, 3G will allow us to provide new services and shall result in new revenue streams."
America Movil's local L shares, which are up 1.4% on the year versus a 7.5% rise in the benchmark IPC stock index, fell 0.7% to close at MXN33.96 Thursday.
-By Ken Parks, Dow Jones Newswires; 52-55-5080-3453; email@example.com
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