UPDATE 1-America Movil’s Q2 net plunges on forex losses, costs

by on July 26, 2012 10:14 pm BST

Thu Jul 26, 2012 7:41pm EDT

(Reuters) – America Movil
, the biggest cell phone company in Latin America, on
Thursday posted a sharp decline in quarterly profit as it took a
big hit from foreign exchange losses and rising costs.

The company, owned by Mexican tycoon Carlos Slim, earned
13.25 billion pesos ($993 million) in the April-June period,
down 45.5 percent from the same period last year.

Analysts in a Reuters poll were expecting a net profit of
24.6 billion pesos in the period.

“The renewed turmoil in the markets and depreciation of
various Latin American currencies in the second quarter resulted
in a foreign-exchange loss of 16.1 billion pesos,” America
Movil, which has operations from the United States to Argentina,
said in a statement.

Quarterly financing costs rose to 17.2 billion pesos during
the quarter, further hitting the bottom line. The company also
recently embarked on a European expansion by buying, in euros,
stakes in Dutch and Austrian telecoms.

On the upside, the company added 5.9 million wireless
subscribers between April and June, more than analysts were
expecting. That brought the company’s total cellular client base
to 251.8 million.

Revenue in the quarter rose 9.3 percent to 192 billion pesos
as Mexico and Brazil, two of the company’s most important
markets, continued to drive results.

Quarterly earnings before interest, tax, depreciation and
amortization (EBITDA) rose 3.1 percent to 65.5 billion pesos.

The company’s net debt ended June at 361 billion pesos, an
increase of 29.7 billion pesos since the beginning of 2012 as a
result of the new investments in KPN and Telekom Austria,
America Movil said.

“Altogether, we paid for acquisitions 67 billion pesos in
the six months to June while our capital expenditures totaled
53.2 billion pesos,” the company said.

The company has emphasized it will focus on the two European
purchases before setting its sights on any other assets.

Earlier on Thursday, the company’s head Daniel Hajj told
Reuters that the company is not interested in TeliaSonera’s
Spanish unit Yoigo for now.

Earlier this month, Reuters reported that TeliaSonera
was selling Spanish mobile operator Yoigo, according
to people familiar with the matter. Slim, Vodafone and
France Telecom were seen as bidders in the potentially
1 billion euro ($1.2 billion) plus deal.

America Movil’s Chief Financial Officer Carlos Garcia Moreno
has stressed the company wants to keep its net debt to EBITDA
ratio at 1.4 times. Exceeding that level could open the door for
agencies to downgrade America Movil’s debt ratings.

America Movil shares rose 2.1 percent to close at 18.03
pesos on Thursday, before results were disclosed.