Shares of Slim's America Movil sink on weak earnings
MEXICO CITY (Reuters) - America Movil (AMXL.MX) shares suffered their biggest one-day drop in more than four years after the phone company, Latin America's biggest, reported disappointing earnings, hit by weak revenue and higher costs.
Shares of America Movil, which is owned by the world's richest man, Carlos Slim, fell as much as 9.9 percent to 14.27 pesos in morning trading, their biggest one-day drop since October 2008.
The company late on Tuesday reported a fourth-quarter profit of 14.962 billion pesos, far below analysts' expectations of 24.131 billion pesos.
"They were terrible results," said Gerardo Roman, head of stock trading at Actinver brokerage in Mexico. "The market was very inflated, and this is a reality check."
Like other phone companies, America Movil is subsidizing costly smartphones to transfer customers to more lucrative data plans. It is also facing pressure on income due to lower interconnection fees.
Although America Movil enjoys dominant positions in Mexico's cellphone and fixed-line markets, it is under increasing scrutiny from regulators and is facing stiff competition in other Latin American markets.
Chief Executive Officer Daniel Hajj said the company is fighting to keep subsidies for smartphones down, but it has to keep up with competitors' prices for the Internet-enabled equipment.
The company started rolling out 4G services in Mexico at the end of last year, using long-term evolution (LTE) technology that boosts average speeds on wireless devices to 20 megabytes from a current range of 3 megabytes to 5 megabytes.
America Movil also went on a spending spree, building up stakes in two European phone companies. It accumulated a 26 percent holding in Telekom Austria (TELA.VI) and a nearly 28 percent stake in Dutch company KPN (KPN.AS).
Shares of both companies have fallen this year.
In spite of the poor results, Hajj was optimistic about 2013. "I think we are on track; we're growing," Hajj said. "That's going to give us better revenue in the future."
(Reporting by Elinor Comlay and Gabriel Stargardter; Editing by Lisa Von Ahn)
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