America Movil S.A.B. de C.V.
), the largest telecom carrier in Latin America has reported
first quarter earnings per ADR of 30 cents. The results missed
the Zacks Consensus Estimate of 41 cents and were way below 56
cents earned in the year-ago quarter.
Total revenue was MXN$195.4 billion ($14.9 billion), up 1.3%
year over year and above the Zacks Consensus Estimate of $14.4
billion. At constant exchange total revenue was up 6.9% year over
revenues were MXN$175.9 billion ($13.4 billion), up 0.8% year
over year, while excluding the impact of currency fluctuations,
grew 5.2% on wireless voice and fixed data services growth.
revenues were MXN$19.6 billion ($1.49 billion), up 6.1% year over
year on the growing demand for smartphones.
Total costs and expenses in the reported quarter increased
1.1% year over year at MXN$130.6 billion ($9.9 billion). On a
year-over-year basis, other costs, cost of equipment, and
selling, general and administrative expenses increased 5.9%, 6.4%
and 1.3%, respectively. However, the cost of service declined
1.6% year over year.
Quarterly EBITDA increased 1.7% year over year to MXN$64.9
billion ($4.9 billion). EBITDA margin improved 10 basis points
year over year to 33.2%
America Movil's total subscriber base reached 342.9 million at
the end of Mar 2014, up 4.5% year over year. Within this,
wireless and fixed-line subscribers were 272.2 million and 31.4
million, respectively, increasing 3.5% and 8.2% year over year.
The company added 2.3 million wireless customers during the
quarter including 1.4 million customers from the acquisition of
Results by Key Markets
Quarterly revenues from Mexico, America Movil's home turf,
climbed 4.1% year over year to MXN$67.8 billion ($5.15 billion).
Mexican ARPU (average revenue per user) increased 0.3% and the
churn rate moved up 0.5% year over year.
Revenues from the Brazilian operation climbed 8.5% year over
year to BRL8.6 billion ($3.6 billion) in the first quarter.
Brazilian ARPU rate fell 0.9% while churn improved 0.1%.
America Movil's U.S. operation (Tracfone) saw 9.6%
year-over-year growth in first quarter revenues to reach $1.66
billion. U.S. ARPU increased 3.5% year over year, while the churn
rate increased 0.1% year over year.
At the end of the first quarter, America Movil had around
MXN$40.7 billion ($3.1 billion) of cash and cash equivalents
compared with MXN$48.2 billion ($3.7 billion) as of Dec 31, 2013.
Total long-term debt was around MXN$431.8 billion ($32.8 billion)
compared with MXN$464.5 billion ($35.3 billion) at year-end 2013.
At the end of the quarter, net debt to EBITDA ratio came in at
We remain encouraged by the company's progress in the LTE
(Long-Term Evolution) space with the launch of services in Mexico
and Brazil. Further, growth in its post-paid subscriber base
owing to expansion in LTE network will lead to market share
expansion. Unprecedented adaptation of smartphones will also be
accretive to revenue growth in the future.
However, we are concerned about the interconnection rate
reductions in both Mexico and Brazil, which are putting pressure
on its margins. Additionally, regulatory issues in key markets,
aggressive promotional activities and depreciation of local
currencies may affect the company's performance. Despite being
the undisputed market leader in the Latin American telecom
market, America Movil remains highly exposed to competitive
threatsfrom Brazilian and Mexican rivals like
America Movil has a Zacks Rank #3 (Hold).
Shenandoah Telecommunication Co.
), which has a Zacks Rank #1 (Strong Buy) is a stock worth
considering in this sector.
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