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UPDATE 3-America Movil profit falls on forex losses, costs
By Cyntia Barrera
MEXICO CITY, July 26 (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.
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.
"It was more than we expected but it is not worrying since it is not something that was related to the company's operations," said analyst Alejandro Gallostra with BBVA brokerage.
Quarterly financing costs rose to 17.2 billion pesos from 2.6 billion pesos a year earlier, 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. Mexico and Brazil continued to drive subscriber growth in the quarter.
Revenue in the second quarter rose 9.3 percent to 192 billion pesos.
However, contracting margins in Brazil may raise new concerns about America Movil's operations in Latin America's biggest economy.
The company has been investing heavily in network expansion and promotion to put up a fight against Vivo, a unit of Spain's Telefonica, pressuring its profitability margins.
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.
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