America Movil Tops 1Q Earnings
America Movil (AMX), the largest telecom carrier in Latin America, has reported first-quarter 2013 earnings per ADR of 56 cents, moving ahead of the Zacks Consensus Estimate of 48 cents. However, the results decreased 13.6% from 65 cents earned in the year-ago quarter.
Total revenue of MXN$192.9 billion ($15.3 billion) improved marginally by 0.2% year over year and was in-line with the Zacks Consensus Estimate. Strong contributions from key markets across the globe aided the results. Excluding the impact of exchange rates, total revenue was up 6.1% year over year.
Segment wise, Services revenues were MXN$174.5 billion ($13.8 billion), down 1.5% year over year on currency fluctuations. However, excluding the impact, service revenues grew 4.6% driven by mobile data services and PayTV. Within this wireless service revenues segment, mobile data revenues rose 25.6% while PayTV revenues increased 19.8% year over year on subscriber growth. Fixed-line voice revenues also posted 6.6% year-over-year growth.
Equipment revenues were MXN$18.4 billion ($1.5 billion), up 20.1% year over year on the growing demand for smartphones and tablets.
Total costs and expenses in the reported quarter increased 4.2% year over year at MXN$129.1 billion ($10.2 billion).
Quarterly EBITDA dropped 6.8% year over year to MXN$63.8 billion ($5.0 billion). EBITDA margin dropped 250 basis points year over year to 33.1% due to increased costs associated with the infrastructural development of wireless and wireline networks in Mexico and Brazil along with the related costs of increasing post-paid and PayTV subscriber bases.
Subscriber Statistics
America Movil’s total subscriber base reached 328.2 million in Mar 2013, up 7.4% year over year. Within this, wireless and fixed-line subscribers were 262.9 million and 65.3 million, respectively, representing year-over-year growth of 6.9% and 9.5%.
Results by Prime Regional Segments
Quarterly revenues from Mexico, America Movil’s home turf, remained relatively flat at MXN$66.3 billion ($5.2 billion). Mexican ARPU (average revenue per user) decreased 6.3% and the churn rate declined 0.2% year over year.
Revenues from the Brazilian operation climbed 3.0% year over year to BRL7.9 billion ($3.9 billion). Brazilian ARPU and churn rate fell 11.1% and 0.6%, respectively.
America Movil’s U.S. operation (Tracfone) saw a 39.8% year-over-year growth in revenues to reach $1.5 billion. ARPU increased 15.8% year over year, while the churn rate dropped 0.2% year over year.
Liquidity
At the end of the first quarter, America Movil had around MXN$37.0 billion ($2.9 billion) of cash and cash equivalents compared with MXN$45.5 billion ($3.6 billion) as of Mar 31, 2012. Total long-term debt was around MXN$379.3 billion ($30.0 billion) compared with MXN$404.0 billion ($31.9 billion) at the end of first quarter 2012.
The company’s capital expenditure in the quarter netted MXN$20.4 billion ($1.6 billion) and bought back shares of MXN$16.0 billion ($1.3 billion).
Other Stocks
Research In Motion Limited (BBRY), which has a Zacks Rank #2 (Buy) is another stock outside the U.S. market that is worth considering.
Of the other foreign telecom companies, France T (FTE) will likely release its earnings on Wednesday, Apr 24, while Telefonica S.A. (TEF) is expected to do the same on Wednesday, May 8.
Our Analysis
We believe America Movil’s competitive position remains stronger in Latin America given its focus on contract wireless services, broadband (wireline and wireless) and PayTV subscription.
However, the company remains highly exposed to competitive threats from its Brazilian and Mexican rivals. Additionally, regulatory issues across the company’s major markets, interconnection rate declines and subsidies over handsets could be detrimental to its future growth.
America Movil has a Zacks Rank #3 (Hold).
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