On Jun 27, 2014, we issued an updated research report on
). The company's bottom line missed the Zacks Consensus Estimate in
the first quarter of 2014 and was also way below the year-ago
number. However, the top line exceeded the Zacks Consensus Estimate
and also increased on a year-over-year basis.
The Zacks Consensus Estimate for second quarter earnings is
pegged at 46 cents per ADR, representing growth of 46.8% year over
America Movil continues to dominate the Latin American wireless
market, mainly Mexico, Brazil and Columbia. The company has
ventured beyond its legacy wireline and wireless services and has
significantly expanded the Pay-TV platform, which remains as one of
the highest revenue contributors.
We expect growth to accelerate further with America Movil's
entry into the lucrative video service market of Mexico. Regulatory
issues have barred the company from entering the cable service
market in Mexico as America Movil already boasts a flourishing
phone business in the nation. However, with the new regulatory
reforms in the Mexican telecom market now in place, America Movil
might foray into the Mexican Pay-TV market, making way for future
America Movil is developing new generation broadband networks,
both in fixed and mobile platforms and plans to spend approximately
$8-$9 billion over the next four years for the expansion of data
networks. This development should boost data revenues of the
) has already supplied an end-to-end 4G LTE network to Claro
Uruguay, a division of America Movil.
On the flip side, we are worried over
) plan to buy satellite-TV operator,
), which may negatively impact America Movil's market position.
DIRECTV is an existing competitor of America Movil in Latin
America. To obtain regulatory approval in Latin America for the
DIRECTV deal, AT&T is selling off its 8.4% interest in America
Movil. While the ongoing repurchase program allows America Movil to
acquire AT&T's shares sold in the open market, America Movil
reportedly has no plans to buy any significant stake held by
AT&T. Although, attainment of the 8.4% interest will boost
returns for America Movil's shareholders, it is likely to expand
the debt position of the company, resulting in a higher leverage
America Movil currently has a Zacks Rank #3 (Hold).
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