April 24, 2015 / 12:21 AM / 4 years ago

UPDATE 2-America Movil profit hammered by weak Brazilian currency

(Adds reform details)

MEXICO CITY, April 23 (Reuters) - Mexico’s America Movil on Thursday reported a 41 percent slump in first-quarter net profit, missing expectations due to a foreign exchange loss for the second consecutive quarter, mostly on the depreciation of the Brazilian real against the dollar.

The telecoms company, which is controlled by the family of billionaire Carlos Slim, said net profit in the January-March period was 8.23 billion pesos ($539 million), compared with 13.89 billion pesos a year earlier.

It was hit by a 17.883 billion peso foreign exchange loss, which it said was mostly due to the 21 percent depreciation of the Brazilian currency against the dollar during the quarter.

The drop in profit comes despite a 13 percent jump in revenue, roughly in line with expectations, driven principally by the inclusion of Telekom Austria’s results.

Analysts had been expecting a higher net profit of 13.46 billion pesos, according to a Reuters poll.

Slim’s company is subject to a sweeping sector reform in Mexico, finalized last year, which forced it to share infrastructure and let rivals interconnect calls to its network for free.

The new laws meant Mexican revenue and earnings before interest, tax, depreciation and amortization (EBITDA) fell in the quarter, but increased data and pay TV use across Latin America and growth in its Brazil unit has blunted the effect of the reform on results.

The company said it would sell a chunk of assets to avoid the rules, but many analysts’ base scenario is now that there will be no sale, partly because U.S. carrier AT&T’s purchase of Mexico’s No.3 and No.4 wireless operators will increase competition anyway.

The telecoms regulator IFT has said that it would not necessarily punish America Movil for maintaining its market share of around 70 percent in mobile, and that it would only concerned if market power is abused.

One of the new rules made it easier for clients to switch between mobile providers with the aim of promoting competition. America Movil said in the quarter it gained more clients through this rule than it lost.

Shares in America Movil have risen around 4 percent since the beginning of the year, a little less than the 5 percent rise in Mexico blue chip IPC index. The shares are well above lows reached in 2013 and 2014 as the Mexico reforms were being passed.

$1 = 15.2610 pesos at end March Reporting by Christine Murray; Editing by Diane Craft

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