AMX America Movil SAB de CV

By Anthony Harrup 

MEXICO CITY -- Telecommunications company América Móvil SAB said it made a net loss in the fourth quarter despite higher sales, as a weaker Mexican peso boosted revenue but also pushed up financial costs.

Latin America's biggest telecommunications company, controlled by billionaire Carlos Slim, swung to a net loss of 6.0 billion pesos ($292 million) in the October-December period from a 15.7 billion-peso profit a year earlier.

Revenue rose 17% to 269.3 billion pesos, a combination of modest gains in service revenues in local currency terms and the weakening of the Mexican peso against the U.S. dollar and other Latin American currencies.

Earnings before interest, taxes, depreciation and amortization, or Ebitda, a measure of operating cash flow, rose 2.9% to 65.7 billion pesos.

Financial costs in the quarter, including the impact of the weaker peso, nearly tripled from a year earlier to 28.2 billion pesos.

The company had been expected to report a net profit of 4 billion pesos on revenue of 261.6 billion pesos, with Ebitda of 68.6 billion pesos, according to the median estimate of analysts polled by The Wall Street Journal.

América Móvil said it reduced net debt last year by the equivalent of $3.4 billion, although the 17% depreciation of the Mexican currency meant that total debt in pesos rose to 630 billion from 582 billion at the end of 2015.

The company ended last year with 281 million mobile subscribers, down from 286 million at the end of 2015. Net disconnections in the fourth quarter were 3.3 million, although the company added 1.3 million postpaid subscribers.

Fixed-line subscriptions rose 2.8% on the year to about 83 million.

The company added 213,000 mobile subscribers to end the year with 73 million in Mexico, where for the past two years it has faced competition from U.S. heavyweight AT&T Inc.

AT&T added 3.3 million wireless subscribers in Mexico in 2016, including more than 1.3 million in the fourth quarter, bringing its total to 12 million.

The U.S. company's fourth-quarter wireless revenue in Mexico grew 0.8% to $648 million, with gains from subscriber growth partly offset by the weaker peso and strong competition. It continued to make operating losses, however, as it invests in expanding its high-speed mobile broadband network.

Competition among América Móvil, AT&T and Spain's Telefónica SA have pushed Mexican telecommunications prices down sharply. Asymmetric regulations on América Móvil, under which the dominant carrier has to complete incoming calls from rivals without charge but pay to connect outgoing calls, have cut into mobile unit Telcel's profit margins.

Revenue in Mexico rose for the first time in more than a year, although Ebitda fell 24% and was equivalent to 28% of revenue, down from 36.7% in the fourth quarter of 2015.

América Móvil shares rose 1.6% Thursday on the Mexican stock exchange to 13.22 pesos ahead of the earnings report.

The decline in the company's margins comes as Mexican regulators are expected to rule this month on whether the dominance regulations should be maintained, tightened or eased.

"Given material pricing reductions industrywide and the recent rise in competition, we believe incremental asymmetric regulations in the wireless arena seem less likely," Barclays said in a recent report, adding that the regulatory burden could increase in last-mile infrastructure sharing known as local loop unbundling.

Mr. Slim criticized the regulations as "irrational" at a press conference last week in Mexico City.

"I think it's the only country in the world where we compete with the world's biggest player and the biggest player in Iberoamerica, and being national leaders we have to subsidize them with more than 300 million pesos a month," he said referring to AT&T and Telefónica.

He also lamented the fact that América Móvil is still barred from offering television service in Mexico.

That "puts the brakes on investment and puts the brakes on competition," Mr. Slim said.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

February 02, 2017 21:27 ET (02:27 GMT)

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