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America Movil (AMX) Q2 Earnings Miss, Revenues Rise Y/Y

Mexican telecom behemoth, America Movil S.A.B. AMX, reported mixed financial results in the second quarter of 2017. While revenues grew year-over-year, the bottom line fell below the Zacks Consensus Estimate.

Net income was $771 million, up a whopping 81.8% year over year. However, quarterly earnings per ADR (American Depository Receipt) of 23 cents were well below the Zacks Consensus Estimate of 32 cents.

Total revenue of approximately $13,432 million highlighted an improvement of 4% on a year-over-year basis. Segment-wise, Services revenues were around $11,628 million, up 8.1% year over year. Equipment revenues totaled $1,804 million, down 0.2% year over year.

Total cost and expenses in the second quarter increased 4.4% year over year to $9,696.6 million. Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) improved 13.7% year over year to $3,735.2 million. EBITDA margin was 27.8% compared with 26.1% in the year-ago quarter.

Liquidity

At the end of the second quarter of 2017, America Movil had around $3,786.7 million of cash and marketable securities compared with $3,935 million at the end of 2016. At the end of the reported quarter, total debt was around $33,445.1 million compared with $35,673.2 million at 2016-end. The debt-to-capitalization ratio in second-quarter 2017 was 0.71 compared with 0.70 at the end of 2016.

Subscriber Statistics

As of Jun 30, 2017, America Movil's total subscriber count was approximately 363 million, flat year over year. Total wireless subscriber base was 280.033 million, down 1% year over year. Fixed-line revenue generating units were 82.56 million, up 1.1% year over year. Within this segment, wireline access line was 33.3 million. Broadband access lines were 27.5 million, up 5.7% year over year and Pay-TV units were 21.8 million, down 0.8% year over year.

In the reported quarter, America Movil added a net 215,000 postpaid customers. It gained 565,000 postpaid subscribers but lost 350,000 prepaid customers. The company gained 209,000 broadband connections but lost 278,000 pay-TV ones.

Prime Regional Segments Results

Quarterly revenues from Mexico, America Movil's home ground, increased 1.1% year over year to $3,546.5 million. EBITDA declined 3.3% to $1,119.3 million. Mexican ARPU (average revenue per user) increased 7.5% year over year to $7.377 while the churn rate was 4.1% compared with 4.6% in the prior-year quarter.

Revenues from Brazilian operation are down 3.2% year over year to $2,791.8 million. EBITDA increased 1.5% to $766.8 million. Meanwhile, Brazilian ARPU came in at $4.76, up 9.1% year over year while the churn rate was 3.4% compared with 3.7% in the year-ago quarter.

Revenues from America Movil's U.S. operation (Tracfone) increased 8.8% year over year to $1,931 million. EBITDA improved a whopping 174.5% to $211 million. ARPU rose 10.6% year over year to $23, while the churn rate was 4.4% compared with 4.3% in the year-ago quarter.

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 has a Zacks Rank #5 (Strong Sell). The company is 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. Further, Mexico’s telecom regulatory authority granted permission to cable TV and media giant, Grupo Televisa SA TV to start wireless operations in the region. However, the company is yet to take any decision in this regard. Televisa 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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