America Movil (AMX) Lags Earnings, Tops Revenues In Q3

AmericaMovil S.A.B. de C.V. (NYSE:AMX) reported mixed financial results in third-quarter 2016. While the top line improved on a year-over-year basis, the bottom line missed the same.

Quarterly earnings per ADR (American Depository Receipt) of 3 cents were below the Zacks Consensus Estimate of 17 cents.

Total revenue of approximately $13,322 million highlighted an improvement of 11.8% on a year-over-year basis. Segment-wise, Services revenues were around $11,431 million, up 9.1% year over year. Equipment revenues totaled $1,891.2 million, up 30.8% year over year on growing demand for smartphones and tablets.

Total cost and expenses in the third quarter increased 16.1% year over year to $9,708.6 million. Quarterly EBITDA improved 1.5% year over year to $3,613.33 million. EBITDA margin was 27.1% compared with 29.9% in the year-ago quarter.

Liquidity

At the end of the third quarter of 2016, America Movil had around $4,010.31 million of cash and marketable securities compared with $5,415.44 million at the end of 2015. Total debt, at the end of the reported quarter, was around $37,623.89 million versus $36,449.54 million at 2015-end. The debt-to-capitalization ratio at third quarter 2016 end was 0.48 compared with 0.53 at 2015 end.

Subscriber Statistics

America Movil's total subscriber count was approximately 366.2 million as of Sep 30, 2016, down 0.5% year over year. This figure includes 283.9 million wireless subscribers, 33.7 million landlines, 26.5 mil­lion broadband accesses and 22 million pay-TV units.

Results by Prime Regional Segments

Quarterly revenues from Mexico, America Movil's home ground, declined 2.4% year over year to $3,546.7 million. EBITDA declined 24.6% to $1,103.9 million. Mexican ARPU (average revenue per user) decreased 15.7% year over year to $6.83 while the churn rate was 4.5%, compared with 3.9% in the third quarter of 2015.

Revenues from Brazilian operations inched up 0.1% year over year to $484.09 million. EBITDA decreased 2.2% to $128.47 million. Meanwhile, Brazilian ARPU came in at $0.74, flat year over year while the churn rate was 3.8% compared with 3.5% in the year-ago quarter.

Revenues from America Movil's U.S. operation (Tracfone) increased 9.7% year over year to $1,888 million. EBITDA improved a substantial 41.1% to $148 million. ARPU rose 6.6% year over year to $22, while the churn rate the churn rate was 4.3% 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 its profit margin in the region. Stringent regulatory measures and intensifying competition were the primary factors behind the dismal performance. The company has also beenfacing intense competitive pressurefrombehemoths like Telefonica SA (NYSE:T) and AT&T Inc. (NYSE: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. Although Oi may be too large to be acquired by any of the companies but its data centers, fiber networks and mobile operations make lucrative buyout options.

However, America Movil’s Brazilian operation, Claro is being challenged by Vivo, which is owned by Telefonica Brazil SA (NYSE: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 currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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