America Movil Misses Q2 Earnings, Revs Up on Wireless Growth - Analyst Blog

By
A A A

AmericaMovil ( AMX ) reported second-quarter 2014 earnings per ADR of 42 cents, missing the Zacks Consensus Estimate of 46 cents. However, the results improved 34.4% from 31 cents earned in the year-ago quarter.

Total revenue of MXN$202.6 billion ($15.6 billion) in the second quarter improved 4.0% year over year and exceeded the Zacks Consensus Estimate of $15 billion.

Segment wise, Services revenues were MXN$180.6 billion ($13.9 billion), up 3.6% year over year. Equipment revenues were MXN$22 billion ($1.7 billion), up 7.4% year over year on growing demand for smartphones and tablets.

Total costs and expenses in the reported quarter increased 4.6% year over year to MXN$136.0 billion ($10.5 billion). Quarterly EBITDA grew 2.4% year over year to MXN$66.6 billion ($5.1 billion). EBITDA margin dropped 50 basis points (bps) year over year to 32.9%.

Subscriber Statistics

America Movil's total subscriber base reached 338.7 million in June 2014, up 3.0% year over year. The total number comprised wireless and fixed-line subscribers of 267 million and 72 million, representing year-over-year growth of 1.8% and 7.5%, respectively. PayTV subscribers climbed 13.7% year over year to 20.3 million.

Results by Prime Regional Segments

Quarterly revenues from Mexico, America Movil's home ground, grew 0.2% year over year to MXN$69.7 billion ($5.4 billion). Mexican ARPU (average revenue per user) decreased 1.1% year over year to MXN$169.00 ($13.01) and the churn rate deteriorated 120 bps year over year to 4.8%.

Revenues from the Brazilian operation climbed 8.5% year over year to BRL 8.8 billion ($3.9 billion). Brazilian ARPU remained flat year over year at BRL 16.00 ($6.70) while churn rate improved 10 bps year over year to 3.4%.

America Movil's U.S. operations (Tracfone) witnessed 14.8% year-over-year growth in revenues to $1.7 billion. ARPU increased 7.2% year over year to $21.00, while the churn rate improved 20 bps year over year to 3.8%.

Liquidity

At the end of the second quarter, America Movil had around MXN$94.1 billion ($3.8 billion) as of Jun 30, 2014. Total long-term debt was around MXN$412.3 billion ($36.4 billion) and capital expenditure totaled MXN$45.6 billion ($10.2 billion).

Our Analysis

We believe America Movil has a strong grip over the Latin American wireless market thanks to consistent subscriber growth. Increased penetration of 4G mobile services and a competitive pricing policy are expected to boost the company's growth in the future. Further, America Movil is concentrating on expanding the Pay-TV platform, which remains one of its highest revenue contributors. America Movil's various collaborations will likely enhance its network within Latin America as well as in offshore key markets such as Asia and the Middle East. Nevertheless, we prefer to stay on the sidelines considering unstable economic conditions, regulatory issues, high spending associated with promotional activity and stiff competition from carriers like Telefonica Brasil, S.A. ( VIV ), Grupo Televisa ( TV ) and NII Holdings Inc. ( NIHD ).

America Movil has a Zacks Rank #3 (Hold).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

GRUPO TELEVISA (TV): Free Stock Analysis Report

AMER MOVIL-ADR (AMX): Free Stock Analysis Report

TELEF BRASIL SA (VIV): Free Stock Analysis Report

NII HLDGS-CL B (NIHD): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: TV , AMX , VIV , NIHD

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

85,467,945
  • $16.74 ▼ 0.30%
83,530,302
  • $12.49 ▲ 85.31%
68,697,805
  • $42.55 ▼ 0.77%
58,516,965
  • $101.63 ▼ 0.03%
49,234,469
  • $74.58 ▼ 3.74%
39,038,134
  • $8.56 ▲ 2.27%
37,813,410
  • $49.38 ▼ 5.24%
37,004,144
  • $46.24 ▼ 0.97%
As of 9/15/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com