By Anthony Harrup
MEXICO CITY--Mexican telecommunications company América Móvil
SAB reported a sharp drop in fourth-quarter net profit as exchange
losses resulting from a weaker Mexican peso and lower operating
profit offset modest revenue growth.
The company, controlled by billionaire Carlos Slim, on Tuesday
reported net profit of 3.6 billion pesos ($240 million), compared
with 16.3 billion pesos in the fourth quarter of 2013.
Revenue in the October-December quarter was 229.3 billion pesos,
a 2.7% increase when counting year-ago sales at Telekom Austria,
which América Móvil began consolidating in the third quarter of
2014.
Earnings before interest, taxes, depreciation and amortization,
or Ebitda, a measure of operating cash flow, slipped 0.7% to 67.7
billion pesos, while operating profit fell 11% to 33.6 billion
pesos.
The company attributed the drop in net profit to a 42% increase
in financial costs, largely from noncash exchange losses caused by
the effects a weaker Mexican peso on the company's debt
exposure.
The fourth quarter was marked by the depreciation of a number of
currencies in Latin America against the U.S. dollar, including the
Brazilian real, the Colombian peso and the Mexican peso. The
Mexican peso weakened around 11% in 2014 on the decline in world
oil prices and expectations that the U.S. Federal Reserve will
start raising interest rates this year, making emerging market
assets less attractive to investors.
América Móvil said it ended last year with 289.4 million
wireless subscribers, after adding 2.6 million during the fourth
quarter. The company also had 34.4 million fixed lines, 22.6
million broadband Internet subscribers, and 21.5 million TV
subscribers.
Mexican mobile unit Telcel ended the fourth quarter with 71.5
million wireless subscribers, closely followed by Brazil with 71.1
million.
In Mexico, gains in mobile data revenue and lower subsidies on
handsets offset the negative effects of regulations imposed on
América Móvil as the dominant carrier, given its market share above
50%. Under new laws, Telcel can't charge competitors for completing
incoming calls on its network, but has to pay rivals to connect
outgoing calls. The company said it is challenging the measures in
court.
América Móvil is also planning to sell assets to lower its
market share to less than 50% and avoid the dominance
regulations.
AT&T Inc., which has widely been seen as a candidate to buy
assets from América Móvil, has made a head start in Mexico with the
acquisition this year of wireless provider Iusacell for $2.5
billion, and has reached agreement to buy NII Holdings Inc.'s local
unit Nextel Mexico for about $1.9 billion.
The acquisitions will give the U.S. telecom company around 12
million subscribers, making it the No. 3 operator by subscribers
behind Telcel and Spain's Telefónica, which has about a 20% market
share.
América Móvil said Tuesday the AT&T deals mean a significant
change in the structure of competition in the mobile market.
"There are now three important operators with global scale
participating in the sector, which points the way towards greater
investments and a rapid development of the telecommunications
sector in our country," the company said.
AT&T Chief Executive Randall Stephenson has cast some doubt
as to whether the U.S. company will buy assets from Mr. Slim.
AT&T believes it has what it needs to be successful in Mexico
whether or not América Móvil sells, he said last month in a
conference call.
"We have all we can handle right now in Mexico," he said.
Thomas Gryta contributed to this article.
Write to Anthony Harrup at anthony.harrup@wsj.com
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