AM registers profit drop in 4Q11 on higher financing costs

10 Feb 2012

Latin American telecoms giant America Movil (AM) has released its financial results for the last three months of 2011, revealing a 36.2% year-on-year slump in net income. The company cited the core reasons for the decline as the depreciation of the peso in the quarter coupled with an increase in net debt arising from share buybacks and the purchases of stock of Telefonos de Mexico (Telmex), Telmex Internacional, Net Servicos and StarOne. These factors, AM said, brought about an increase in its comprehensive financing costs, which totalled MXN11.10 billion (USD872 million) in 4Q11, representing a more than three-fold increase from the MXN2.70 billion reported in the same period of 2010.

As a result of these increases, for the three months to end-December 2011 AM saw a net income of MXN16.23 billion, down from MXN25.52 billion in 4Q10. Fourth quarter service revenues, however, grew by 12.6% y-o-y to reach MXN162.39 billion, with the company noting that turnover growth had been led by mobile data service revenues, which increased by 27% y-o-y at constant exchange rates. By comparison, turnover from fixed broadband services increased by 15% compared to the year-ago quarter, with pay-TV revenue rising by 48% against 4Q10. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the three-month period was 3.9% at MXN64.55 billion, with the group noting that gains in the Andean countries helped to offset small declines in some other countries, including Mexico (lower due to interconnection rate reductions) and Brazil (down due to costs associated with growth of the group’s wireless and pay-TV base there).

AM finished 2011 with 299.6 million total accesses, up 8.3% against end-2011, with wireless subscribers accounting for the bulk of that total, 241.8 million, a 7.4% increase year-on-year. Net additions for the last quarter of 2011 were just 304,000, but the company noted that these numbers reflected the impact of a change in methodology for counting active subscribers in Mexico, Colombia and Ecuador. The revision in counting methodology – which now excludes lines that have not had any airtime recharge over a given period – resulted in net disconnections of 2.3 million, 2.4 million and 151,000 in Mexico, Colombia and Ecuador, respectively. Fixed revenue generating units meanwhile reached 57.88 million at end-December 2011, up 12.3% compared with the 51.53 million reported a year earlier. Pay-TV, the group said, was the fastest growing sector, registering an annual increase in subscribers of 33.1%, while broadband and fixed line voice accesses rose by 15.6% and 3.4% respectively.

United Kingdom, America Movil (AM)