America Movil net income slumps 8.2% on financing charge

Latin American telecoms giant America Movil disappointed markets with the publication of fourth-quarter results that showed an 8.2% fall in net income, to MXN15 billion ($1.2 billion), compared with the same period last year.

The operator blamed the decline on a one-off financing charge of MXN10.5 billion, including a foreign exchange loss of MXN4.8 billion due to the appreciation of the euro against other currencies.

Analysts had been expecting net profits to increase by up to 50%.

Latin American telecoms giant America Movil disappointed markets with the publication of fourth-quarter results that showed an 8.2% fall in net income, to MXN15 billion ($1.2 billion), compared with the same period last year.

The operator blamed the decline on a one-off financing charge of MXN10.5 billion, including a foreign exchange loss of MXN4.8 billion due to the appreciation of the euro against other currencies.

Analysts had been expecting net profits to increase by up to 50%.

Pressure on the bottom line also came from the expansion of its lower-margin pay-TV services and the take-up of expensive smartphones, which the operator continues to subsidize.

Meanwhile, revenues fell by 1.1%, to MXN198 billion, but would have grown by 5.8% were it not for the impact of exchange-rate fluctuations.

Investments in Europe, where America Movil (Mexico City, Mexico) has recently acquired stakes in Telekom Austria (Vienna, Austria) and KPN (The Hague, Netherlands), led to an increase in net debt, up to MXN372.2 billion at the end of the quarter from MXN332.1 billion a year earlier.

Despite the increase, America Movil is still able to report a ratio for net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) of just 1.4, much lower than figures reported by Europe’s biggest operators.

In a statement, America Movil said that in the fourth quarter “economic activity faced significant headwinds throughout the world with the recessionary situation in much of Europe appearing set to continue throughout 2013 and with US economy slowing down sharply”.

The operator signed up a total of 5.6 million mobile-phone customers during the quarter, giving it a total of 261.6 million subscribers, and said its fixed-line business also grew by 10.8% year on year.

Its fastest-growing operations were in Central America and Peru and also included its TracFone business in the US.