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America Movil SAB de CV ADR AMX

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America Movil Rebounds During Third Quarter; Shares Remain Attractive

Analyst Note

| Michael Hodel, CFA |

America Movil posted solid third-quarter results as demand for prepaid wireless services bounced back across Latin America and currencies generally held stable during the period. Total reported revenue increased 4.7% year over year, or 1.5% on a constant-currency basis, to MXN 260 billion. When translated into U.S. dollars at average exchange rates, revenue declined 8% year over year to $11.8 billion, a big improvement from the 18% decline last quarter, reflecting business growth and a modest recovery in the value of the Mexican peso during the quarter. Profitability has also improved nicely, with the operating margin increasing 2 percentage points year over to 17% during the quarter. The firm now expects capital spending will total only $6 billion in 2020, down from expectations of $8.5 billion coming into the year. Currency weakness has likely pulled this number lower, affecting the labor costs needed to put equipment into service, but management also indicated that equipment prices are falling and that it has been able to delay nonessential projects. Free cash flow has improved sharply as a result, which the firm has primarily used to repay debt.

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Company Profile

Business Description

America Movil is the largest telecom carrier in Latin America, serving about 280 million wireless customers across the region. It also provides fixed-line phone, Internet access, and television services in most of the countries it serves. Mexico is the firm’s largest market, providing about 30% of revenue. Movil dominates the Mexican wireless market with about 63% customer share and also serves about half of fixed-line Internet access customers in the country. Brazil, its second most important market, provides about 20% of revenue. Movil operates a low-margin wireless resale business in the U.S. under the Tracfone and Straight Talk brands, accounting for 15% of revenue. The firm holds a 51% stake Telekom Austria and a 16% stake in Dutch carrier KPN.

Contact
Lago Zurich 245, Plaza Carso / Edificio Telcel, Colonia Ampliacion Granada
Mexico, DF, 11529, Mexico
T +52 5525813700
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 191,523

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