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America Movil (AMX) Lags Q4 Earnings, Revenues Rise Y/Y

Mexican telecom behemoth America Movil S.A.B. de C.V. AMX reported mixed financial results in the fourth quarter of 2016. While the top line improved on a year-over-year basis, the bottom line missed the Zacks Consensus Estimate.

Quarterly loss per ADR (American Depository Receipt) of 9 cents was worse than the Zacks Consensus Estimate of a loss of 4 cents per ADR.

Total revenue of approximately $13,578 million highlighted an improvement of 16.9% on a year-over-year basis. Segment-wise, Services revenues were around $11,265 million, up 15.1% year over year. Equipment revenues totaled $2,323 million, up 26.5% year over year on growing demand for smartphones and tablets.

Total cost and expenses in the fourth quarter increased 22.2% year over year to $10,264.4 million. Quarterly EBITDA improved 2.9% year over year to $3,310.1 million. However, EBITDA margin was 24.4% compared with 27.7% in the year-ago quarter.

Liquidity

At the end of 2016, America Movil had around $3,935 million of cash and marketable securities compared with $5,415.4 million at the end of 2015. At the end of 2016, total debt was around $35,673.2 million compared with $36,449.5 million at 2015-end. The debt-to-capitalization ratio at 2016 end was 0.70 compared with 0.53 at 2015 end.

Subscriber Statistics

America Movil's total subscriber count was approximately 363 million as of Dec 31, 2016, down 0.8% year over year. This figure includes 280.572 million wireless subscribers, 33.9 million landlines, 27 million broadband accesses and 22 million pay-TV units.

Results by Prime Regional Segments

Quarterly revenues from Mexico, America Movil's home ground, inched up 0.3% year over year to $3,665.2 million. EBITDA declined 23.6% to $1,025.5 million. Mexican ARPU (average revenue per user) decreased 11.5% year over year to $6.653 while the churn rate was 4.9%, compared with 4.5% in the fourth quarter of 2015.

Revenues from Brazilian operation are down 3.6% year over year to $443.5 million. EBITDA decreased 2.4% to $120.5 million. Meanwhile, Brazilian ARPU came in at $4.35, slumped 13.2% year over year while the churn rate was 5.5% compared with 5.1% in the year-ago quarter.

Revenues from America Movil's U.S. operation (Tracfone) increased a substantial 20.4% year over year to $2,115 million. EBITDA improved a whopping 209.4% to $239 million. ARPU rose 13.5% year over year to $23, while the churn rate was 4.7% compared with 4.1% in the year-ago quarter.

Recent Developments

America Movil, which has been ruling the Mexican market for quite some time now, has been witnessing a decline in profit margin in the region. Stringent regulatory measures and intensifying competition were the primary factors behind the dismal performance. Further, the company has been facing intense competitive pressure from big telecom operators like Telefonica SA TEF and AT&T Inc. T in Mexico who are gradually expanding their foothold in the market.

Hence, America Movil is focused on shifting its business centre from to Brazil through the purchase Oi S.A., the biggest telecommunications company in the country. However, America Movil’s Brazilian operation, Claro is being challenged by Vivo, which is owned by Telefonica Brazil SA VIV. Telefonica Brasil operates as the leading telephone operator in Brazil following the establishment of Vivo as the commercial brand for all services.

America Movil, S.A.B. de C.V. Price, Consensus and EPS Surprise

 

America Movil, S.A.B. de C.V. Price, Consensus and EPS Surprise | America Movil, S.A.B. de C.V. Quote

America Movil currently carries a Zacks Rank #3 (Hold). You can see   the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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