América Móvil Swings to Fourth-Quarter Loss -- Update
February 02 2017 - 9:42PM
Dow Jones News
By Anthony Harrup
MEXICO CITY -- Telecommunications company América Móvil SAB said
it made a net loss in the fourth quarter despite higher sales, as a
weaker Mexican peso boosted revenue but also pushed up financial
costs.
Latin America's biggest telecommunications company, controlled
by billionaire Carlos Slim, swung to a net loss of 6.0 billion
pesos ($292 million) in the October-December period from a 15.7
billion-peso profit a year earlier.
Revenue rose 17% to 269.3 billion pesos, a combination of modest
gains in service revenues in local currency terms and the weakening
of the Mexican peso against the U.S. dollar and other Latin
American currencies.
Earnings before interest, taxes, depreciation and amortization,
or Ebitda, a measure of operating cash flow, rose 2.9% to 65.7
billion pesos.
Financial costs in the quarter, including the impact of the
weaker peso, nearly tripled from a year earlier to 28.2 billion
pesos.
The company had been expected to report a net profit of 4
billion pesos on revenue of 261.6 billion pesos, with Ebitda of
68.6 billion pesos, according to the median estimate of analysts
polled by The Wall Street Journal.
América Móvil said it reduced net debt last year by the
equivalent of $3.4 billion, although the 17% depreciation of the
Mexican currency meant that total debt in pesos rose to 630 billion
from 582 billion at the end of 2015.
The company ended last year with 281 million mobile subscribers,
down from 286 million at the end of 2015. Net disconnections in the
fourth quarter were 3.3 million, although the company added 1.3
million postpaid subscribers.
Fixed-line subscriptions rose 2.8% on the year to about 83
million.
The company added 213,000 mobile subscribers to end the year
with 73 million in Mexico, where for the past two years it has
faced competition from U.S. heavyweight AT&T Inc.
AT&T added 3.3 million wireless subscribers in Mexico in
2016, including more than 1.3 million in the fourth quarter,
bringing its total to 12 million.
The U.S. company's fourth-quarter wireless revenue in Mexico
grew 0.8% to $648 million, with gains from subscriber growth partly
offset by the weaker peso and strong competition. It continued to
make operating losses, however, as it invests in expanding its
high-speed mobile broadband network.
Competition among América Móvil, AT&T and Spain's Telefónica
SA have pushed Mexican telecommunications prices down sharply.
Asymmetric regulations on América Móvil, under which the dominant
carrier has to complete incoming calls from rivals without charge
but pay to connect outgoing calls, have cut into mobile unit
Telcel's profit margins.
Revenue in Mexico rose for the first time in more than a year,
although Ebitda fell 24% and was equivalent to 28% of revenue, down
from 36.7% in the fourth quarter of 2015.
América Móvil shares rose 1.6% Thursday on the Mexican stock
exchange to 13.22 pesos ahead of the earnings report.
The decline in the company's margins comes as Mexican regulators
are expected to rule this month on whether the dominance
regulations should be maintained, tightened or eased.
"Given material pricing reductions industrywide and the recent
rise in competition, we believe incremental asymmetric regulations
in the wireless arena seem less likely," Barclays said in a recent
report, adding that the regulatory burden could increase in
last-mile infrastructure sharing known as local loop
unbundling.
Mr. Slim criticized the regulations as "irrational" at a press
conference last week in Mexico City.
"I think it's the only country in the world where we compete
with the world's biggest player and the biggest player in
Iberoamerica, and being national leaders we have to subsidize them
with more than 300 million pesos a month," he said referring to
AT&T and Telefónica.
He also lamented the fact that América Móvil is still barred
from offering television service in Mexico.
That "puts the brakes on investment and puts the brakes on
competition," Mr. Slim said.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
February 02, 2017 21:27 ET (02:27 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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