America Movil (AMX) Q3 Earnings Miss, Revenues Down Y/Y

America Movil S.A.B. AMX reported mixed financial results in the third quarter of 2017. While revenues grew year over year, the bottom line missed the Zacks Consensus Estimate.

The Mexican telecom behemoth’s net loss was $540.36 million as against net income of $120.16 million in the year-ago quarter. However, the quarter's loss per ADR (American Depository Receipt) was 16 cents, which was below the Zacks Consensus Estimate of earnings of 33 cents.

Total revenues of approximately $13,821 million were down 2.2% on a year-over-year basis and were also below the Zacks Consensus Estimate of $13,971 million. Segment-wise, Services revenues were around $11,902 million, down 1.9% year over year. Equipment revenues totaled $1,919 million, down 4.4% year over year.

Total cost and expenses in the third quarter declined 2.2% year over year to $10,069.42 million. Quarterly EBITDA (earnings before interest, tax, depreciation and amortization) declined 2.1% year over year to $3,751.7 million. EBITDA margin was 27.1%, flat year over year.

Liquidity

At the end of the third quarter of 2017, America Movil had around $4,444.85 million of cash and marketable securities compared with $4,419.1 million at the end of 2016. At the end of the reported quarter, total debt was around $41,949.8 million compared with $43,809.2 million at the end of 2016.

Subscriber Statistics

The company ended September with 363 million access lines, with fixed-RGUs increasing 0.5% and wireless base declining 1.3%. Net subscriber additions for the third quarter were 330,000. Total postpaid additions were 1.4 million subscribers (up 6.0% year over year), including 699,000 in Brazil and 202,000 in Mexico. However, the company lost more than 1 million prepaid subscribers.

On the fixed-line platform, broadband accesses were up 5% year on year after 345,000 new accesses in the quarter in Brazil, the United States and Colombia. Pay-TV subscriber base was down 1.4% annually, with 50,000 disconnections in the quarter.

Prime Regional Segments Results

Quarterly revenues from Mexico, America Movil's home ground, decreased 0.3% year over year to $3,749.9 million. EBITDA inclined 0.9% to $1,181.6 million. Mexican ARPU (average revenue per user) increased 8.2% year over year to $7.867 while the churn rate was 4.2% compared with 4.5% in the prior-year quarter.

Revenues from Brazilian operation declined 2.5% year over year to $2,693.58 million. EBITDA increased 5.9% to $777 million. Meanwhile, Brazilian ARPU was $4.57, up 9.7% year over year while the churn rate was 3.6% compared with 3.8% in the year-ago quarter.

Revenues from America Movil's U.S. operation (Tracfone) increased 5.3% year over year to $1,988 million. EBITDA declined 5% to $141 million. ARPU rose 7.3% year over year to $23, while the churn rate was 4.2% compared with 4.3% in the year-ago quarter.

America Movil is systematically enriching spectrum portfolio with the acquisition of wireless spectrums. The company continues to witness intense competition from big telecom operators like AT&T Inc T in the Mexican market and from Telefonica Brazil SA VIV in Brazil. The company’s Brazilian operation, Claro, competes with Vivo, owned by Telefonica Brazil. Further, Mexico’s telecom regulatory authority granted permission to cable TV and media giant, Grupo Televisa SA TV, to initiate wireless operations in the region. However, the company is yet to take any decision in this regard. Such mixed prospects justify America Movil's current Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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