America Movil Lags Earnings, Revenues Up on Mobile Demand
America Movil S.A.B. de C.V. (AMX) reported third-quarter 2014 earnings per ADR (American Depositary Receipt) of 22 cents, missing the Zacks Consensus Estimate of 41 cents. The results also declined 37.9% from 36 cents earned in the year-ago quarter. Total revenue of $16,319 million in the third quarter improved 4.0% year over year and exceeded the Zacks Consensus Estimate of $16,273 million.
Segment wise, Services revenues were around $14,700 million, up 3.8% year over year. Equipment revenues were $1,646 million, up 6.2% year over year on growing demand for smartphones and tablets.
Total costs and expenses in the reported quarter increased 5.8% year over year to $11,225.4 million. Quarterly EBITDA grew 0.4% year over year to $5,120 million. EBITDA margin stood at 31.3% compared with 32.5% in the year-ago quarter.
Subscriber Statistics
America Movil's total subscriber base reached 364.4 million as on Sep 30, 2014, up 1.8% year over year. This figure includes 286.8 million wireless subscribers, 34.0 million landlines subscribers, 22.2 million broadband accesses and 21.4 million pay-TV units. The postpaid subscriber base, pay-TV units and broadband access increased 5.6%, 12.2% and 8.5%, respectively, year over year.
Results by Prime Regional Segments
Quarterly revenues from Mexico, America Movil's home ground, declined 0.8% year over year to $5,006.7 million. However EBITDA grew 1.2% to $2,244.1 million. Mexican ARPU (average revenue per user) decreased 0.6% year-over-year to $12.29 and the churn rate deteriorated 50 bps (basis points) year over year to 4.2%.
Revenues from Brazilian operations climbed 6.5% year over year to $659.7 million. EBITDA also increased 17.5% to $162 million. Brazilian ARPU remained flat year over year $1.11 while churn rate deteriorated 20 bps year over year to 3.3%.
America Movil's U.S. operations (Tracfone) witnessed 15.5% year-over-year growth in revenues to $1,726 million. However, EBITDA decreased 23.4% to $157 million. ARPU increased 2.6% year over year to $20, while the churn rate improved 10 bps year over year to 4.0%.
Liquidity
At the end of third-quarter 2014, America Movil had around $7,083.1 million of cash and marketable securities compared with $3,845 million at the end of 2013. Total debt, at the end of the reported quarter was around $43,424.6 million against $42,222.1 million at the end of 2013.
Latest Developments
America Movil currently has a Zacks Rank #3 (Hold).The government of Mexico has decided to reform its highly monopolistic telecommunications sector. The intention behind this reform is to instill competition by encouraging the entry of other operators. In this regard, regulator Federal Telecommunications Institute (popularly known as IFT), identified telecom behemoth America Movil as the dominant player in the telecom market.
America Movil’s wireline division, Telmex, currently controls around 80% of the Mexican market, whereas its wireless division, Telcel, holds about a 70% market share. The IFT wants to restrict the maximum hold of a company in the market to 50%.
America Movil has formed a committee to strategically assess various structural, commercial, technological opportunities available to the company after the imposition of the new regulations. According to industry sources, the company is negotiating with several foreign telecom giants including AT&T Inc. (T), Bell Canada – a division of BCE Inc. (BCE), China Mobile Ltd. (CHL) and SoftBank Corp. to divest some parts of its telecom assets.
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