America Movil 3rd-quarter profit nearly halves

Reuters

By Elinor Comlay

MEXICO CITY, Oct 24 (Reuters) - Latin America's biggestphone company, America Movil, on Thursday reported aquarterly profit that fell by almost half, missing analysts'expectations, as customers made fewer phone calls and thecompany's financing costs soared.

The company, controlled by billionaire Carlos Slim, saidprofit in the July-September period dropped 46 percent to 16.384billion pesos ($1.25 billion), from 30.45 billion pesos in thesame period a year earlier.

Analysts on average expected a profit of 25.656 billionpesos, according to a Reuters survey.

The company, which took on more debt to fund ambitiousacquisitions in the last year, had a financing cost in thequarter of 10.8 billion pesos, including a foreign exchange lossof 2.9 billion pesos.

The slowing economy in its core markets, particularly inMexico, also hurt America Movil's bottom line.

America Movil said its core profit, or earnings beforeinterest, taxes, depreciation and amortization, fell 5.8 percentto 63.3 billion pesos.

Almost half of the company's core profit comes from Mexico,where service revenues, or income from customers' phone calls, dropped 1.4 percent.

"It's a weak report ... but I think the market was alreadyexpecting that," said Julio Zetina, analyst at Vector Casa deBolsa in Mexico City. "It's clear that the economy in LatinAmerica is less dynamic in (the company's) biggest markets."

America Movil shares closed down 1.09 percent at 13.58 pesosbefore the company reported its quarterly results.

Total revenue rose 0.7 percent to 194.221 billion pesos,helped by gains from selling more expensive mobile phones, whichoffset a drop in revenue as customers made fewer calls.

EUROPEAN EXPANSION

America Movil, which earlier this month said it wouldabandon a plan to buy Dutch telecoms company KPN, hasbeen seeking acquisitions outside of Latin America in the lasttwo years to offset a squeeze on its revenue in Mexico.

The company's earnings that come from Mexico are underthreat from a sweeping telecoms reform package that could forceSlim to sell some of America Movil assets.

But the foreign acquisitions have led the company toincrease its total debt load 23 percent to US$39.4 billion atthe end of September, compared with $32 billion at the end oflast year.

And with the KPN deal off the table at least in the shortterm, America Movil's strategy in Europe is unclear.

The company is likely to face questions from analysts on itsconference call on Friday at 1400 GMT about the decision to pullback from KPN.

View Comments (0)