America Movil S.A.B. de C.V. (AMX Quick QuoteAMX - Free Report) reported mixed financial results in second-quarter 2016. While the top line surpassed the Zacks Consensus Estimate, the bottom line missed the same.

Quarterly earnings per ADR (American Depository Receipt) of 13 cents were significantly below the Zacks Consensus Estimate of 24 cents. For the third consecutive quarter, the company’s profit margin in Mexico, its biggest market, fell below the level of 40% (to 33%). Stringent regulatory measures and intensifying competition in Mexico were the primary reasons for the poor performance.

This Zacks Rank #5 (Strong Sell) company is facing intense competitive pressure in Mexico. Telefonica SA (TEF Quick QuoteTEF - Free Report) and AT&T Inc. (T Quick QuoteT - Free Report) are gradually expanding their Mexican foothold. In addition, broadcast TV giant, Grupo Televisa SAB (TV Quick QuoteTV - Free Report) , received regulatory permission to enter the Mexican wireless market.

Total revenue of approximately $12,911 million in the reported quarter rose 6.1% on a year-over-year basis. The top line also outpaced the Zacks Consensus Estimate of $12,457 million. Segment-wise, Services revenues were around $10,590 million, up 3.2% year over year. Equipment revenues totalled $1,780 million, up 27.7% year over year on growing demand for smartphones and tablets.

Total cost and expenses in the second quarter increased 13.7% year over year to $9,137.2 million. Quarterly EBITDA declined 10.7% year over year to $3,354.1 million. EBITDA margin was 26.1% compared with 31.1% in the year-ago quarter.

Liquidity

At the end of the second quarter of 2016, America Movil had around $5,619.3 million of cash and marketable securities compared with $5,918 million at the end of 2015. Total debt, at the end of the reported quarter, was around $37,858.2 million versus $39,853 million at 2015 end. The debt-to-capitalization ratio at second quarter 2016 end was 0.74 compared with 0.77 at 2015 end.

AMER MOVIL-ADR Price, Consensus and EPS Surprise

AMER MOVIL-ADR Price, Consensus and EPS Surprise | AMER MOVIL-ADR Quote

Subscriber Statistics

America Movil's total subscriber count was approximately 364.5 million as of Jun 30, 2016, down 0.9% year over year. This figure includes about 282.9 million wireless subscribers, 33.7 million landlines, 26 million broadband accesses and 22 million pay-TV units.

Results by Prime Regional Segments

Quarterly revenues from Mexico, America Movil's home ground, declined 4.3% year over year to $3,451.3 million. EBITDA plunged 23.7% to $1,139.6 million. Mexican ARPU (average revenue per user) decreased 17.7% year over year to $6.73 while the churn rate was 4.6%, compared with 3.7% in the second quarter of 2015.

Revenues from Brazilian operations inched down 0.1% year over year to $2,591.1 million. EBITDA decreased 4.5% to $678.6 million. Meanwhile, Brazilian ARPU declined 1.9% year over year to $3.71 while the churn rate was 3.7% compared with 3.4% in the year-ago quarter.

Revenues from America Movil's U.S. operation (Tracfone) increased 5% year over year to $1,775 million. EBITDA decreased a substantial 61% to $77 million. ARPU came in at $21, flat year over year, while the churn rate dropped 20 basis points to 4.3%.

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