) reported disappointing second quarter of 2012 with earnings per
ADR of 26 cents missing the Zacks Consensus Estimate of 45 cents.
Moreover, earnings per ADR decreased a whopping 51.7% year over
year from 53 cents per share, hurt by unfavorable foreign currency
Net profit during the quarter was MXN$13.3 billion
(approximately $980.6 million), down 45.5% year over year
Total revenue was MXN$191.7 billion (approximately $14.2
billion), up 9.3% year over year but below the Zacks Consensus
Estimate of $14.5 billion. The year-over-year growth in revenue was
mainly fueled by an increase in wireless subscribers and higher
revenues from wireless data and Pay TV services.
revenue was MXN$175.5 billion (approximately $12.9 billion), up 9%
year over year. Within the wireless service revenue segment, mobile
data revenue (which is the prime contributor of growth) grew 32%
year over year. Pay TV revenue increased 23% year over year.
However, Fixed voice revenues declined 7.7% on slowdown in the long
revenue was MXN$16.3 billion (approximately $1.2 billion), up 11.6%
year over year on higher demand for smartphones.
Total costs and expenses in the reported quarter were up 12.7%
year over year to around MXN$126.3 billion (approximately $9.3
billion). On a year-over-year basis, cost of service, cost of
equipment, and, selling, general and administrative expense
increased 13.9%, 21.4% and 6%, respectively.
Quarterly EBITDA increased 3.1% year over year to MXN$65.5
billion (approximately $4.8 billion). However, EBITDA margin
plunged 210 basis points (bps) to 34.1% from 36.2% in the year-ago
quarter. Quarterly EBIT dropped 1% year over year to approximately
MXN$39.1 billion (approximately $2.9 billion). EBIT margin
contracted 210 bps to 20.4% from 22.5% in the year-ago quarter.
America Movil's total subscriber base reached 313 million, up
7.8% year over year. Within this total customer base, wireless and
fixed-line subscribers were 251.8 million and 61.2 million,
respectively, with the figures increased 6.7% and 12.4% year over
Among fixed-line customers, 30 million were subscribed to fixed
voice (landlines), 16.1 million to fixed-broadband and 15.1 million
Results from Key Markets
In the second quarter, revenue from Mexico, America Movil's home
turf, climbed 3.3% year over year to MXN$66.5 billion
(approximately $4.92 billion). Mexican ARPU (average revenue per
user) increased 6.4% to MXN$175 (approximately $13) and the churn
rate increased 50 bps year over year to 3.5%.
Revenue from Brazil climbed 4.1% year over year to BRL7.5
billion (approximately $3.8 billion). ARPU fell 15.3% year over
year to BRL16 (approximately $8.2), while the churn rate increased
40 bps year over year to 3.9%.
America Movil's U.S. operation (Tracfone) saw a 3.6%
year-over-year growth in revenue to $0.95 billion. ARPU increased
7.4% year over year to $9, while churn rate remained flat at
At the end of second quarter, America Movil had around MXN$62.4
billion in cash and cash equivalents compared with MXN$64.5 billion
as of December 31, 2011. Total debt was around MXN$31 billion
compared with MXN$28.3 billion at year-end 2011. Capital
expenditures were MXN$53.2 billion.
Increased penetration of 3G wireless services in Latin America
and the company's foray into 4G services this year and the growing
demand for smartphones augur well for the company's growth.
However, competitive pressures from Brazilian and Mexican rivals
), declining fixed-line subscriber rate, mounting debt and
regulatory issues might limit the company's financials in the near
term. Thus, we maintain a long-term Neutral recommendation on
Currently, the company has a Zacks#2 Rank, implying a short-term
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