America Movil profit drops on higher tax and forex loss

[October 24, 2014]  By Christine Murray

MEXICO CITY (Reuters) - Mexico's America Movil said on Thursday its third-quarter net profit fell 38 percent compared with a year earlier, missing expectations as taxes and exchange rate losses rose.

The company, which is controlled by the family of billionaire Carlos Slim, said net profit in the July-September period fell to 10.12 billion pesos ($754 million) from 16.38 billion pesos a year earlier.

America Movil's tax burden rose by 4.43 billion pesos versus the same quarter last year, while it posted an exchange rate loss of 8.97 billion pesos.

Analysts had expected the company to report a net profit of 16.47 billion pesos, according to a Reuters poll. Earnings before interest, tax, depreciation and amortization were slightly above expectations.

Revenue rose 14 percent to 220.884 billion pesos, principally due to the consolidation of Telekom Austria, of which it now owns almost 60 percent, into the results for the first time.

America Movil is in the midst of a regulatory crackdown in its home market, which began to drag down its results last quarter, particularly in wireless voice revenues.

The new zero interconnection rate for traffic from other operators drove a 5.5 percent drop in Mexico wireless service revenues in the third quarter, the company said.

In response to the new rules, the company said in July it would sell assets to reach a market share below the 50 percent threshold set by the regulator.

America Movil's share price has risen around 20 percent since the announcement, compared with a less than 1 percent rise in Mexico's IPC index. That increase temporarily made Carlos Slim the world's richest man again, according to Forbes.

Slim has said little about the sale since the week of the announcement and the company has not presented a break up plan, but a senior AT&T Inc executive said in September the company is "intrigued" by opportunities in Mexico.

"What has been said so far is just speculation," AT&T Chief Financial Officer John Stephens told Reuters after the company published its results on Wednesday.

Growth in pay TV in Brazil, where America Movil is the market leader, drove a 6.5 percent rise in revenues there.

Slowing economic growth, the rising cost of new technology and the absence of one of the largest players, Oi, from a recent spectrum auction has fueled a wave of takeover talk in Brazil's hotly contested telecommunications market.

America Movil has said it will hold talks with Oi SA over joining its bid to buy wireless operator Tim Participacoes SA.

America Movil shares closed down 0.06 percent at 16.12 pesos on Thursday before it published its results.

(Reporting by Christine Murray; Additional reporting by Marina Lopes in Washington; Editing by Simon Gardner, David Gregorio and Andre Grenon)

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