America Movil seen posting moderate growth in Q4
By Anthony Harrup, Dow Jones Newswires
Monday 11 February 2013
Stronger Mexican peso expected to boost profit at Latin America's biggest mobile operator.
America Movil SAB, Latin America's biggest wireless service provider probably continued on its path of steady but modest growth in the fourth quarter, while a stronger Mexican peso is expected to generate a big jump in net profit.
America Movil's net profit probably rose 50% in the October-December period to 24.5 billion pesos ($1.9 billion), according to the median estimate of six equities analysts consulted by Dow Jones. The increase is expected to reflect slightly higher operating gains and the absence of the hefty foreign exchange loss that affected the bottom line in the fourth quarter of 2011.
America Movil's minority stakes in Royal KPN NV of the Netherlands and Telekom Austria AG, acquired last year as businessman Carlos Slim debuted in the European telecoms market, should also contribute to net profit.
Revenue is expected to be up 8.2% at 196.9 billion pesos, as the company is seen adding 6.1 million wireless subscribers for a total of 262 million across the Americas, and 1.6 million subscriptions to fixed-line services--especially pay television in countries such as Brazil--bringing its total to 64.4 million.
While the stability of the Mexican peso in the fourth quarter was likely supportive of net profit, the peso's relative strength against other currencies such as Brazil's real will likely limit revenue gains in peso terms, several analysts said.
Banorte-Ixe saw increased competition in most markets pressuring results. Special promotions for the holiday season knocked per-minute calling rates down, although an increasing number of smartphone users likely compensated for it, Banorte-Ixe said.
In November, when America Movil unit Telcel launched 4G LTE service in Mexico, Chief Executive Daniel Hajj said around 35% of the unit's 69 million subscribers used data services, including 15% with 3G. Mr. Hajj estimated that between one million and three million users could sign up for 4G in the first year. America Movil also has 4G in Puerto Rico and some Brazilian cities.
Fourth-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, a measure of operating cash flow, is expected to be up 1.7% at MXN65.6 billion.
Stiff competition and increased regulatory pressure, as well as America Movil's foray into Europe, contributed