America Movil
(
AMX
), the largest telecom carrier in Latin America, has reported
fourth-quarter earnings per ADR of 30 cents. The results missed
the Zacks Consensus Estimate of 50 cents and were slightly below
31 cents earned in the year-ago quarter.
Total revenue was MXN$198.0 billion ($15.1 billion), down 1.1%
year over year but above the Zacks Consensus Estimate of $14.9
billion. The decline was primarily due to unfavorable exchange
rate fluctuations. Excluding this impact, total revenue was up
5.8% year over year.
Total revenue for the year increased 6.0% year over year to
MXN$775.1 billion ($60.0 billion).
Segment wise,
Services
revenues were MXN$176.8 billion ($13.7 billion), down 2.1% year
over year on currency fluctuations. However, excluding the
impact, service revenues grew 5.2% driven by mobile data services
and PayTV. Within this wireless service revenues segment, data
revenues rose 33.3% while Mobile voice revenues dipped 1.7%.
Pay TV revenues increased 20% year over year on subscriber
growth. Fixed-line voice revenues declined 7.2% year over
year.
Equipment
revenue was MXN$21.2 billion ($1.6 billion), up 8.2% year over
year on the growing demand for smartphones.
Total costs and expenses in the reported quarter were up 2.4%
year over year at MXN$136.4 billion ($10.5 billion). On a
year-over-year basis, other costs, cost of equipment and selling,
general and administrative expenses increased 47.6%, 5.6% and
2.8%, respectively. However, the cost of service declined 0.6%
year over year.
Total cost for 2012 increased 9.0% year over year to MXN$514.2
billion ($39.1 billion) based on 16.2%, 13.4%, 8.3% and 5.4% rise
in cost of equipment, other costs, cost of service and , selling,
general and administrative expenses, respectively.
Quarterly EBITDA fell 8.0% year over year to MXN$61.7 billion
($4.8 billion). EBITDA margin dropped 240 basis points year over
year to 31.1% due to increased costs associated with the
infrastructural development of wireless and wireline networks in
Mexico and Brazil along with the related costs of increasing
post-paid and PayTV subscriber bases.
For 2012, EBITDA increased 0.4% year over year to MXN$260.9
billion ($19.9 billion) but EBITDA margin dropped 180 basis
points to 33.7%.
Subscriber Statistics
America Movil's total subscriber base reached 326 million in
December 2012, up 8.7% year over year. Within this, wireless and
fixed-line subscribers were 262 million and 64 million,
respectively, increasing 8.2% and 10.8% year over year.
Results by Key Markets
Quarterly revenues from Mexico, America Movil's home turf,
climbed 0.5% year over year to MXN$70 billion ($5.4 billion).
Mexican ARPU (average revenue per user) increased 2.6% and the
churn rate declined 2.0% year over year.
Revenues from the Brazilian operation climbed 3.3% year over
year to BRL7.9 billion ($3.8 billion) in the fourth quarter.
Brazilian ARPU and churn rate fell 12.3% and 0.3%,
respectively.
America Movil's U.S. operation (Tracfone) saw a 30.8%
year-over-year growth in fourth quarter revenues to reach $1.4
billion. U.S. ARPU increased 14.9% year over year, while the
churn rate dropped 0.2% year over year.
Liquidity
At the end of 2012, America Movil had around MXN$45.5 billion
($3.5 billion) of cash and cash equivalents compared with
MXN$64.5 billion ($5.2 billion) as of December 31, 2011. Total
long-term debt was around MXN$404.1 billion ($30.8 billion)
compared with MXN$368.0 billion ($29.7 billion) at year-end
2011.
Other Stocks
Cellcom Israel Ltd.
(
CEL
), which has a Zacks Rank #1 (Strong Buy) is another stock in
this sector worth considering.
Our Analysis
We believe that continued demand in wireless data and PayTV
services and a growing subscriber base, in particular post-paid
users, bode well for the company's profitability. The company
launched 4G services in Mexico in 2012, providing market share
gains and a competitive advantage.
Despite being the undisputed market leader in the Latin
American telecom market, America Movil remains highly exposed to
competitive threats from Brazilian and Mexican rivals like
Telefonica
(
TEF
) and
Grupo Televisa
(
TV
). Additionally, regulatory issues across the company's major
markets, reduced MTRs and subsidies over handsets could be
detrimental to its future growth.
America Movil has a Zacks Rank #3 (Hold).
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