Increased depreciation charges see AM report 4.7% decline in 4Q net profit

9 Feb 2011

Latin American telecoms giant America Movil (AM) posted a lower-than-expected net profit in the last three months of 2010, with the company reporting that in its fourth fiscal quarter net income had fallen 4.7% year-on-year to MXN24.2 billion (USD2.01 billion). The decline, it said, was related to a significant increase in depreciation charges in the quarter, up from 14.3% of revenues in 3Q10 to 16.5% three months later; the rise was attributed to ‘measures aimed at reflecting the impact that the rapid rate of technological innovation has on both the market values of various types of telecommunication equipment and the need to phase out older technologies.’ Fourth-quarter turnover meanwhile stood at MXN161.95 billion, up 6% against the same period a year earlier, with wireless revenues accounting for 65% of the total, and net service revenues up 5.5% y-o-y. AM did, however, note that growth figures had been understated as a result of the Mexican peso’s appreciation relative to most of the currencies used in its regions of operation; the operator said that if exchange rates had remained constant it would have seen service revenues rise 7.1%. Earnings before interest, tax, depreciation and amortisation (EBITDA) meanwhile were MXN61.24 billion, up 4.8% against the year-ago period.

AM, which is controlled by Mexican billionaire Carlos Slim, has also announced that, having taken control Telmex Internacional (Telint) last year, it plans to launch an offer for the 571.4 million shares in the Latin American fixed line group that it does not already own. It has said it will offer MXN0.1166 per share, bringing the total cost of the stake acquisition to MXN6.66 billion; the holding is equivalent to around 3.2% of Telint’s total stock.

In operational terms, at end-December 2010 AM reported that its combined wireless and fixed line operations had some 276.5 million accesses, an increase of 12.1% on end-December 2009. Wireless subscribers accounted for the lion’s share, or 225 million, up 3.8% y-o-y. The group also counted some 28.4 million fixed line voice customers, and a further 13 million high speed internet subscribers, up 15% and 23.3% against 4Q09 respectively. Pay-TV, which the operator said was its ‘fastest growing division’ with a 31.8% annual increase, accounted for a further 10.1 million customers.

Mexico, America Movil (AM), Telmex Internacional