America Movil Profits Slump on Higher Debt Costs
Published on: 1st May 2014
By: Ian Mansfield
Latin American telco America Movil posted a sharp fall in its first quarter profits as increases in revenue and underlying profits were hurt by the Group's higher debt costs.
Revenues rose by 1.3 percent to MXN 195.4 billion, and would have risen faster without currency fluctuations.
The wireless customer base rose by 2.3 million in the quarter, ending the period at 272.2 million. It took nearly a million customers off the total due to inactivity. Most of the subscriber growth came in Mexico and Brazil, which account for 27% and 25% of its customer base respectively.
The landline services added 1.2 million customers, to take its total base to 70.7 million.
The company however posted a net profit that nearly halved to MXN 13.9 billion (USD1.1 billion), compared to MXN 26.9 billion a year ago. Most of the decline was thanks to higher debt interest costs, and no repeat of the foreign exchange gains that it had last year.
"Economic activity continued to improve marginally in much of the developed world during the first quarter of the year, whereas in many developing countries, particularly those more dependent on commodity prices…it decelerated somewhat." the company said in its statement. It saw economic improvements in its core Mexican market, although that market will now be subject to much tighter regulator controls so the firm is unlikely to benefit in the long term.