America Movil’s Profit Misses Estimates on Currency Losses

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America Movil SAB posted first-quarter profit that missed analysts’ estimates, hurt by weaker currencies including the real in Brazil, its second-biggest market.

Net income dropped 42 percent to 8.23 billion pesos ($536 million), the Mexico City-based company said in a statement Thursday. Analysts predicted 18.1 billion pesos, the average of estimates compiled by Bloomberg. Earnings before interest, taxes, depreciation and amortization, or Ebitda, totaled 68.2 billion pesos, below projections for 68.8 billion pesos. Sales rose 3.1 percent to 220 billion pesos, in line with estimates.

America Movil is growing abroad as new regulations in Mexico, including the elimination of domestic roaming charges that took effect Jan. 1, hurt the company in its home market. Controlled by billionaire Carlos Slim, it serves seven of 10 mobile-phone users in Mexico and was declared dominant in its industry last year by the federal communications regulator.

The company has yet to present a divestment plan announced in July and is said to be adjusting the proposal to make its assets more attractive to potential suitors, including AT&T Inc., people with knowledge of the matter said in January. Instead, AT&T has agreed to buy competing assets -- NII Holdings Inc.’s Nextel Mexico business and Grupo Iusacell SA.

“We are interested in divesting and reducing our market share, but we don’t know exactly how we want to do it,” Daniel Hajj, America Movil’s chief executive officer, said on a conference call with analysts Friday.

Shrinking Margins

Profit margins shrank to 42 percent of Ebitda from 44 percent a year earlier in Mexico, where competitors such as Telefonica SA and Iusacell have taken advantage of new asymmetric rules -- luring users with newer, more affordable plans. Last week, America Movil shareholders approved a spinoff of as many as 11,000 wireless towers in the country, creating Latin America’s second-largest renter of tower space.

The spinoff, to be called Telesites, is expected to take effect by July, Chief Financial Officer Carlos Garcia-Moreno said on the conference call. Shares fell 1.3 percent to 16.89 pesos at 10:45 a.m. in Mexico City trading.

Financing costs reflected foreign exchange losses of 17.8 billion pesos, the company said, mostly on account of the sharp depreciation of the Brazilian real against the U.S. dollar.

America Movil is growing rapidly in Brazil, where the company recently combined its cable, mobile-phone and landline businesses, with a 4.6 increase to about 71.9 million wireless subscribers in the country, closely behind Mexico’s 72.1 million, where it lost clients.

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