(Adds analyst comments, background on European investments,
By Elinor Comlay
MEXICO CITY Feb 11 America Movil,
Latin America's biggest phone company controlled by billionaire
businessman Carlos Slim, on Tuesday reported a
better-than-expected quarterly profit, helped by a drop in taxes
and a slight pick-up in revenue.
The company, facing increased regulation and competition in
most of Latin America, has been looking to bolster its financial
position by investing outside of the region and also by moving
customers from cheap pre-paid contracts to more lucrative mobile
Transferring customers is a slow process, however, and
America Movil said revenue from services increased just 0.8
percent from the year-ago period.
Most of the company's 3 percent revenue gain came from
equipment sales and that helped drive a slight pickup in core
profit, or earnings before interest, taxes, depreciation and
amortization, to 63.5 billion pesos, also beating analysts'
"This report was as expected," said Julio Zetina, analyst at
Vector Casa de Bolsa in Mexico City. "It's nothing spectacular
... but there are not any surprises, negative or positive."
Before taxes, the company reported hefty charges related to
foreign currency volatility in the quarter, but a sharply lower
tax bill helped America Movil to a fourth-quarter profit of 17.2
billion pesos ($1.31 billion), up from 14.9 billion pesos a year
It was not immediately clear why the company's tax bill was
more than 70 percent lower than the year-ago period. Company
executives will hold a conference call for analysts at 1500 GMT
Vector's Zetina said the drop in taxes may be related to a
year-end adjustment after the company had put more money away
for taxes earlier in 2013.
Analysts on average had expected a profit of 16.86 billion
pesos, according to a Reuters survey.
Increased competition has been dampening the rate at which
America Movil adds new subscribers, but it ended December with
an estimated 270 million mobile phone customers across Latin
America and the Caribbean, up 3.2 percent from a year earlier.
At the same time, as competition has increased, regulators
in the region are increasing penalties and seeking to curb
America Movil's market share in countries where it dominates
Mexico's telecoms regulator, the Federal Telecommunications
Institute (IFT), notified Slim's company in December that it had
begun an investigation to determine whether America Movil is
dominant, allowing the regulator to apply harsher penalties to
The fine print of the country's sweeping telecom reform
legislation passed last year is still being worked out, but any
successful attempt to trim Slim's market share will have an
impact on the company's results.
Mexico accounts for almost half of America Movil's core
In Ecuador, the telecom regulator on Sunday fined America
Movil's local subsidiary $138.4 million, equivalent to 10
percent of its business in 2012, for anti-competitive practices.
Slim's company, seeking to diversify away from Latin America
as regulation has increased, acquired stakes in Dutch telecom
KPN as well as Telekom Austria in 2012.
Daniel Hajj, America Movil's Chief Executive and Slim's
son-in-law, said in November that the company likes Telekom
Austria's Eastern European operations and plans to be
a long-term investor in the company.
The Mexican company is KPN's top shareholder, but
the future of America Movil's almost 30 percent stake in KPN is
less clear after a takeover attempt last year was thwarted by a
KPN foundation that has the power to block acquisitions.
KPN is also facing stiff competition and a difficult
economic environment. Last week the company said its mobile
revenues and core profit fell from the same quarter a year
Shares in America Movil closed up 2.51 percent at 14.32
pesos ahead of the results.