America Movil S.a.b. De C.v. ((AMX)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for América Móvil S.A.B. de C.V. revealed a mixed sentiment, highlighting robust revenue growth in postpaid and fixed line segments, while also acknowledging challenges such as an economic slowdown in Mexico and losses in prepaid subscribers. The company demonstrated strong financial performance, yet the significant hurdles in the Mexican market and regulatory uncertainties suggest a need for cautious optimism moving forward.
Strong Revenue Growth
América Móvil reported a substantial increase in revenue for the first quarter, with a 14.1% year-on-year rise in Mexican peso terms, reaching MXN232 billion. Service revenue saw an impressive expansion of 15.8%, and the adjusted EBITDA grew by 13.3%, underscoring the company’s solid financial footing.
Increase in Postpaid Subscribers
The company successfully added 2.4 million postpaid subscribers, with Brazil leading the charge by contributing 987,000 new clients. Colombia and Mexico also showed positive growth, adding 163,000 and 133,000 new subscribers, respectively.
Growth in Fixed Line Segment
América Móvil experienced growth in its fixed line segment, connecting 446,000 new broadband accesses. Mexico played a significant role, contributing 165,000 new clients. The mobile postpaid and fixed broadband segments increased by 6.1% and 4.3%, respectively.
Net Income Growth
The company’s net income surged by 38%, reaching MXN18.7 billion, which translates to MXN0.31 per share. This growth reflects the company’s ability to capitalize on its operational strengths.
Successful Currency Performance
Most currencies appreciated against the Mexican peso, enhancing the value of international revenue and providing a favorable exchange rate environment for América Móvil.
Decline in Mexican Economy
The Mexican economy showed signs of slowing down, with the index of economic activity stagnating at 0% in February. Additionally, private consumption fell by 1% year-on-year, impacting consumer demand and revenue growth.
Prepaid Subscriber Losses
América Móvil faced challenges in its prepaid segment, posting a net loss of 1 million prepaid subscribers. Significant disconnections were noted in Mexico, with 831,000 losses, and in Brazil, with 545,000 losses.
Challenges in Mexican Prepaid Market
The prepaid market in Mexico faced difficulties due to the economic slowdown and aggressive competition from MVNOs offering low-cost promotions, leading to a decline in ARPU.
Impact of Economic Slowdown
The overall economic slowdown in Mexico affected consumer demand, posing challenges to revenue growth and necessitating strategic adjustments.
Regulatory Uncertainty
Ongoing discussions regarding new telecommunications law and spectrum distribution in Mexico present potential challenges, adding a layer of uncertainty to the company’s operations.
Forward-Looking Guidance
Looking ahead, América Móvil provided key financial and operational metrics, indicating a 14.1% year-on-year revenue increase to MXN232 billion. The company plans to manage its net debt, which stands at MXN500 billion, and has announced a reduced CapEx budget of MXN6.7 billion for the year, reflecting the economic slowdown and prior investments.
In summary, América Móvil’s earnings call painted a picture of strong financial performance tempered by challenges in the Mexican market. The company showcased robust growth in revenue and postpaid subscribers, yet faces hurdles due to economic and regulatory uncertainties. Investors are advised to maintain a balanced perspective, considering both the opportunities and challenges ahead.