America Movil Posts Loss on Brazil, Mexico Currencies Slumpby
Company decided not to sell assets in Mexico: CEO Daniel Hajj
Shares decline 2.3%; stock already down 11% this year
America Movil SAB, Latin America’s biggest wireless carrier, reported a loss in the third quarter, dragged down by sinking currencies in Brazil and Mexico, its home market.
The net loss was 2.88 billion pesos ($174.8 million), Mexico City-based America Movil said in a statement Monday. Analysts predicted profit of 11.5 billion pesos, the average of estimates compiled by Bloomberg. Sales rose 1.2 percent from a year earlier to 223.6 billion pesos, compared with the average 224.4 billion-peso projection.
“Net income was impacted by a significant impact from foreign exchange,” Barclays Plc analyst Amir Rozwadowski said in a note. While the wireless and landline units seem stable from a subscriber perspective, “macroeconomic volatility has had some impact in select regions, most notably Brazil.”
Shares fell 1.7 percent to 14.32 pesos at the close in Mexico City. The stock has declined 13 percent this year.
America Movil has taken a hit from the economic crisis in Brazil, where it gets 17 percent of its sales. Latin America’s largest economy is headed for its worst recession since the 1930s. The Brazilian real endured the biggest decline among the world’s major currencies in the third quarter, sliding 21 percent against the U.S. dollar. The company’s profit margin in Mexico slid to 40.3 percent in the period from 44.8 percent a year earlier. The Mexican peso dropped 7 percent in the quarter.
While both regulatory penalties and a depreciated currency in its home market have cut into the profit of Carlos Slim’s operator, its Central America unit is the company’s fastest growing region, with sales rising 8.3 percent.
‘Not Selling Assets’
President Enrique Pena Nieto last year introduced laws that forced America Movil to reduce their market share below 50 percent or face antitrust penalties designed to curb profits. While the company had announced a breakup of its Mexican assets, it decided against it after AT&T Inc. said it would acquire competing units -- NII Holdings Inc.’s Nextel Mexico business and Grupo Iusacell SA.
“We are not selling assets in Mexico,” America Movil Chief Executive Officer Daniel Hajj said in a call with analysts Tuesday. “We are open to selling customers and doing more MVNO deals.”
The new laws in Mexico also allow America Movil to request a permit to offer broadcast and/or pay-TV services. The company is interested in applying for a license and believes it has complied with the necessary rules to do so, Hajj said.