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America Movil (AMX - Analyst Report) reported fourth-quarter 2013 earnings per ADR of 37 cents, missing the Zacks Consensus Estimate of 44 cents. However, the results improved 23% from 30 cents earned in the year-ago quarter.

Total revenue of MXN$204.1 billion ($15.6 billion) in the fourth quarter improved 3.1% year over year and was above the Zacks Consensus Estimate of $15 billion. Total revenue for the full year grew 1.4% year over year to MXN$786.1 billion ($61.6 billion)

Segment wise, Services revenues were MXN$178.2 billion ($13.7 billion), up 0.8% year over year. Equipment revenues were MXN$25.9 billion ($2 billion), up 22.5% year over year on growing demand for smartphones and tablets.

Total costs and expenses in the reported quarter increased 3.8% year over year to MXN$140.6 billion ($10.8 billion). Quarterly EBITDA grew 1.4% year over year to MXN$63.5 billion ($4.9 billion). EBITDA margin dropped 50 basis points year over year to 31.1%.

For the full year, total costs and expenses increased 3.9% year over year to MXN$530.4 billion ($41.6 billion). EBITDA fell 3.4% year over year to MXN$255.7 billion ($20 billion). EBITDA margin fell 170 basis points year over year to 32.5%.

Subscriber Statistics

America Movil’s total subscriber base reached 339 million in Dec 2013, up 4.2% year over year. Of the total, wireless and fixed-line subscribers were 270 million and 69 million, representing year-over-year growth of 3.2% and 8.2%, respectively.

Results by Prime Regional Segments

Quarterly revenues from Mexico, America Movil’s home ground, grew 2.3% year over year to MXN$71.6 billion ($5.5 billion). Mexican ARPU (average revenue per user) decreased 4.5% year over year to MXN$165.00 ($12.67) and the churn rate deteriorated 20 basis points year over year to 4.3%.

Revenues from the Brazilian operation climbed 10.9% year over year to BRL 8.8 billion ($3.9 billion). Brazilian ARPU remained flat year over year at BRL 16.00 ($7.03) while churn rate improved 10 basis points year over year to 3.6%.

America Movil’s U.S. operation (Tracfone) saw 13.8% year-over-year growth in revenues to $1.5 billion. ARPU increased 9.3% year over year, while the churn rate improved 30 basis points year over year to 3.6%.


At the end of the fourth quarter, America Movil had around MXN$48.2 billion ($3.8 billion) of cash and cash equivalents compared with MXN$45.5 billion ($3.6 billion) as of Dec 31, 2012. Total long-term debt was around MXN$464.5 billion ($36.4 billion) compared with MXN$404.0 billion ($31.9 billion) at the end of 2012. The company’s capital expenditure netted MXN$129.6 billion ($10.2 billion).

Our Analysis

We believe America Movil has a strong grip over the Latin American wireless market thanks to consistent subscriber growth. Increased penetration of 4G mobile services and a competitive pricing policy are expected to boost the company’s growth. Further, America Movil is concentrating on expanding the PayTV platform, which remains one of its highest revenue contributors. America Movil’s various collaborations will likely enhance its network within Latin America as well as in offshore key markets such as Asia and the Middle East. Nevertheless, we prefer to stay on the sidelines considering unstable economic conditions, regulatory issues, high spending associated with promotional activity and stiff competition from carriers like Telefonica Brasil, S.A. (VIV - Analyst Report), Grupo Televisa (TV - Analyst Report) and NII Holdings Inc. (NIHD - Analyst Report).

Currently, America Movil has a Zacks Rank #2 (Buy).

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