By Anthony Harrup
MEXICO CITY--Mexican telecommunications giant América Móvil saw
its net profit fall in the second quarter on flat sales as the
company faces increased competition and regulatory measures in
Mexico that limited revenue growth.
The company controlled by billionaire Carlos Slim reported a net
profit of 14.05 billion pesos ($902 million) in the April through
June period, a 16% decline from the second quarter of 2014.
Financial costs fell from a year before, but taxes were higher. The
net profit was equivalent to 21 Mexican cents a share, or 27 U.S.
cents per American depositary receipt.
Revenue in the quarter slipped 0.1% to 220 billion pesos, as
gains in Central and South America and Europe were partly offset by
lower sales in Mexico. Mexico revenue fell 2.4% from a year before,
led by a continued decline in voice traffic that was partly
compensated by growth in data services. The downward revenue trend
in Mexico has begun to stabilize, the company said.
América Móvil disconnected 850,000 wireless subscribers during
the second quarter, including 739,000 in Brazil, but added 559,000
in Mexico. It ended the quarter with 288.8 million wireless
subscribers, and 78.9 subscriptions to fixed-line services,
including phone, broadband and pay television.
Earnings before interest, taxes, depreciation and amortization,
or Ebitda, a measure of operating cash flow, fell 5% from a year
before to 68.33 billion pesos in the second quarter.
América Móvil had been expected to report net profit of 9.9
billion pesos on revenue of 222.9 billion pesos, with Ebitda at
68.3 billion pesos, according to the median estimates of seven
equities analysts consulted by The Wall Street Journal.
The Mexican business has been affected by regulations imposed on
América Móvil in the past year as the country's dominant carrier,
such as the elimination of roaming charges and the requirement that
it complete incoming calls from rival networks free of charge.
As a result of the telecommunications overhaul, U.S. heavyweight
AT&T Inc. bought wireless operators Grupo Iusacell and Nextel
Mexico for $4.4 billion this year, and plans to invest $3 billion
through 2018 to expand its services.
AT&T is joining its Mexican and U.S. networks in a "North
American Mobile Service Area" of 400 million potential consumers,
and has begun allowing its Mexican customers to use their plans for
voice, data and messaging while in the U.S., as well as to call
friends and family in the U.S. who are on the AT&T network.
T-Mobile US Inc. also said recently that it is dropping charges
for calls and texts to and from Mexico and Canada.
América Móvil's local wireless unit Telcel responded Thursday
with its own "Without Borders" plan, which for about $3 more a
month allows its postpaid customers free calls to and from the U.S.
and eliminates roaming charges when they travel north of the
border.
"It will be the same as if you were in Mexico," América Móvil
Chief Executive Daniel Hajj said at a news conference, adding that
the company is working to extend the plan to Canada soon, and will
have a similar deal for prepaid clients.
The executive noted that with AT&T and Spain's Telefónica SA
as rivals, it is competing with some of the world's biggest phone
companies. "We have invested more than $10 billion in the past five
years, and we will invest $6 billion in the next three years," Mr.
Hajj said. "This will force all the other operators in Mexico to
invest."
Write to Anthony Harrup at anthony.harrup@wsj.com
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