América Móvil’s Earnings Call Highlights Growth Amid Challenges

America Movil S.a.b. De C.v. ((AMX)) has held its Q4 earnings call. Read on for the main highlights of the call.

América Móvil’s recent earnings call painted a mixed picture, with notable successes in revenue growth and strategic expansions counterbalanced by significant challenges. The company reported strong performance in regions like Chile and Brazil, but faced difficulties such as a sharp decline in net income, impacts from currency depreciation, and an economic slowdown affecting prepaid recharges. Growth in postpaid and corporate networks provided some positive momentum, albeit tempered by these challenges.

Fourth Quarter Revenue Growth

América Móvil reported an 18% increase in revenue in Mexican peso terms, reaching MXN237 billion. Service revenue rose by 19.1%, and EBITDA climbed 16.4% to MXN91 billion. This robust growth underscores the company’s strong financial performance in the fourth quarter.

Postpaid and Broadband Growth

The company saw its postpaid subscriber base grow by 5.3% year-on-year, with fixed broadband accesses increasing by 4.7%. Broadband revenue growth accelerated from 7.4% in the previous quarter to 9.8%, highlighting a significant uptick in consumer demand for these services.

Expansion in Chile

The consolidation of América Móvil’s Chilean operations contributed MXN3.3 billion to its consolidated revenue over the last two months of the year, illustrating successful strategic expansion in the region.

Corporate Networks Revenue Increase

Revenue from corporate networks grew by 12.3%, up from 10.1%, indicating a notable acceleration and reflecting strong demand in this segment.

Positive Outlook for Brazil

América Móvil maintains a dominant market position in Brazil, holding a 38% to 40% market share in 5G. The company anticipates continued growth and strong performance in this key market.

Net Income Decline

Despite revenue growth, América Móvil’s net income fell by 47.5% year-on-year to MXN9.5 billion. This decline was primarily due to higher comprehensive financing costs, including significant foreign exchange losses.

Prepaid Subscriber Net Loss

The company experienced a net loss of 1.3 million prepaid subscribers, with Brazil undergoing a substantial cleanup resulting in a decrease of 1.8 million subscribers.

Negative Impact of Currency Depreciation

Currency depreciation had a pronounced effect, with the Brazilian real depreciating by 13.7% and the Chilean peso by 11% against the dollar, impacting the company’s financial results.

Reduced Equipment Sales Revenue

Revenue from equipment sales saw a decline, attributed partly to economic slowdown and exchange rate fluctuations, affecting overall revenue performance.

Challenges in Mexico’s Economy

The economic slowdown in Mexico has adversely affected prepaid subscriber recharges, mirroring broader economic challenges in the region.

Forward-Looking Guidance

Looking ahead, América Móvil is navigating an environment of rising 10-year treasury yields, which increased by approximately 80 basis points. Despite challenges such as currency depreciation, the company added 2.1 million postpaid subscribers across key markets. Revenue for the quarter rose significantly, demonstrating resilience in a challenging economic landscape. The company ended the year with a net debt of MXN488 billion, maintaining a leverage ratio of 1.44 times the last 12 months’ EBITDA.

In summary, América Móvil’s earnings call revealed a landscape of strong revenue growth juxtaposed against challenging economic and currency conditions. The company’s strategic expansions and success in postpaid and corporate networks provide a positive outlook, though tempered by declines in net income and economic headwinds. Investors will be keenly watching how América Móvil navigates these challenges while capitalizing on growth opportunities in the coming year.