NII Holdings, Inc. (USOTC:NIHDQ)
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Reactions to America Movil's (AMX, AMX.MX) annual investor day ranged from delight to disappointment as Latin America's largest communications company reaffirmed expectations of strong cash flow growth, while increasing its capital expenditure plans and dashing hopes for a special dividend.
Company officials told investors and analysts Thursday that they expect capital expenditures to exceed $8 billion next year, well above the $6 billion preliminary estimate that Chief Executive Daniel Hajj gave in an Oct. 28 conference call.
More than $1 billion of that figure would go toward the company's efforts in pay-TV and triple-play services, a move that generated mixed enthusiasm from the investment community. The company expects to adhere to similar capital expenditure levels in the following three years, while boosting its sales and customer base, according to analysts who attended the event.
America Movil predicted annual revenue growth through 2014 of 6% to 8% coupled with an expansion in earnings before interest, taxes, depreciation and amortization, or Ebitda, of 7% to 9% a year. Those projections were in line with market expectations. The company reported net profit of MXN23.41 billion in the third quarter on revenue of MXN153.56 billion. Ebitda in the quarter was MXN63 billion.
Andres Coello, an analyst with BBVA Bancomer, said that "investors were not pleased" with the lack of surprise in America Movil's growth projections, the company's plans for higher capital expenditures, and management's confirmation that they won't be paying a special dividend in 2010. Coello has an underperform rating and 35-peso ($2.85) price target on America Movil shares.
At the end of September, America Movil had 216.8 million wireless users in 17 countries across the Americas. By 2014, the company anticipates it will have close to 300 million wireless clients.
Others were pleased that America Movil plans to plow its profits into growth opportunities, even if that means less surplus cash to be distributed to investors.
UBS analyst Tomas Lajous reiterated his buy recommendation and MXN41 price target on the shares, honing in on America Movil's promise to deliver double-digit cash flow growth. "America Movil currently generates $10 billion in free cash flow per year. We believe no other company in Latin America can do so, even if some others [Petrobras and CVRD] have the potential to do so," Lajous said.
America Movil L shares were up 0.1% to MXN35.55 around midday Friday on the Mexican bourse, trailing a 0.5% rise in the benchmark IPC index.
-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177, email@example.com