April 18, 2013 / 10:37 PM / 5 years ago

UPDATE 2-America Movil posts weaker first-quarter profit

* Q1 profit of 26.87 bln pesos vs yr ago 32.53 bln pesos
    * Revenue up less than 1 pct

    By Elinor Comlay
    MEXICO CITY, April 18 (Reuters) - America Movil, Latin
America's biggest phone company, on Thursday reported a 17
percent drop in first-quarter profit as it spent more on
Internet-enabled handsets to attract new customers.
    The company, owned by the world's richest man
Carlos Slim, said first-quarter profit slipped to 26.87 billion
pesos ($2.18 billion) from 32.53 billion pesos a year ago.
    The results showed the company increased subsidies for
expensive new handsets in order to attract customers from
competitors and transfer existing customers to more lucrative
mobile data packages.
    Still, America Movil's profit was slightly better than
analysts' expectations of 24.46 billion pesos, although its core
profit and revenue missed those expectations.
    Core profit, or earnings before interest, taxes,
depreciation and amortization (EBITDA), fell 7 percent to 63.8
billion pesos.
    Revenue rose less than 1 percent to 192.96 billion pesos,
hurt by the stronger peso in the quarter.TELECOM REFORM
    Shares in America Movil closed up 2.04 percent at 12.49
pesos on Thursday ahead of the report. The shares have slid 16
percent this year on worries about an effort by Mexico's
government to reform the country's telecom sector to increase
    Speaking before the results were announced, analysts said
concerns about the regulatory reform will likely continue to
drag on America Movil's shares.
    "That's definitely a bigger deal than whatever the quarterly
results are going to show," said Imari Love, analyst at
Morningstar in Chicago.
    Lawmakers in Mexico's upper house are currently discussing
the bill that seeks to dilute the dominance of billionaire
Slim's America Movil in the mobile and fixed-line markets.
    An additional drag on the company is its investments in
European phone companies Telekom Austria and KPN
, analysts said.
    America Movil last year spent 84.9 billion pesos
accumulating shares in the firms.
    The company holds nearly 30 percent of KPN and Telekom
Austria, which are down 26 percent and 13 percent this year.
    "They spent a lot of money in Europe with these minority
investments that I don't think they've done a good job of
explaining," said Stifel analyst Christopher King, also speaking
before the company reported the results.
    "I think there's a general sense they would have been far
better off using that cash to buy back stock as well."
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