Citing slow growth in Mexico and a "soft patch" for the U.S. economy at the start of the second quarter, America Movil saw its profits drop by 25.4 percent year over year to $895 million (14.05 billion pesos). Consolidated revenues were $13.8 billion (220 billion pesos), up 1.5 percent from the same period last year.
Its net profit missed analyst expectations of $910,000 (14.48 billion pesos) for the quarter. The carrier saw a (12.9 billion peso) loss due to currency fluctuations as Latin American countries' currencies slumped against the U.S. dollar, and its operating profit also fell.
America Movil saw a 2 percent jump in profits in its Central America and Caribbean region, with revenue of just over $1 billion ($15.91 billion pesos). However, in Puerto Rico and the rest of the region the company saw its wireline local and long-distance traffic continue to drop, with voice revenues dropping 5.2 percent. In Mexico, the carrier's fixed-line revenues fell 5.4 percent to $1.55 billion (24.7 billion pesos).
"The Fed continues to affirm that they expect their first interest rate increase in years to take place in 2015, with market expectations centering in a September move. Against this backdrop we are seeing a mixed bag of economic indicators throughout Latin America, with Mexico's economy appearing to be gaining momentum—retail sales have exceeded expectations--, Brazil's continuing to go deeper into negative territory, Colombia assimilating the blow to the economy from the drop in oil prices and the rest of the region experiencing relatively stable, albeit decelerating, economic growth."
America Movil also announced the launch of its $3.17 (50 peso) monthly "Sin Fronteras," (No Borders) plan, which enables its postpaid customers in Mexico to call the U.S. and be charged for a local call with no long distance charges. Conversely, "in the U.S. our clients will be able to use the minutes, SMS and data under their plans as if they were in Mexico, with no roaming charges." While the plan is for mobile customers it's a clear move to retain voice customers in Mexico as the government overhauls the telecom sector, and as U.S. Tier 1 giant AT&T (NYSE: T) moves into their territory.
America Movil is also making an effort to up its competitive ante against AT&T, which will enter Mexico's TV market when it completes its acquisition of DirecTV, with plans to plans to build a new $50 billion fiber-to-the-home (FTTH) network. The telco is in the process of completing a five-year plan to build a 500,000-kilometer network that will support an enhancement of its residential service set with a focus on pay-TV services.
AT&T has not announced specific plans about what it will do in Mexico's TV market, but it's likely that it will serve up pay-TV services through its acquired subsidiaries Iusacell and Nextel in the next two years.
For more:
- visit America Movil's investor page
- see this Reuters story
- see this Telecompaper story
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