America Movil surprises with 80% profit jump

MEXICO CITY (Reuters) - Mexican telecommunications firm America Movil on Tuesday reported a surprise net profit of $1.87 billion in the fourth quarter, driven up nearly 80% by a favorable exchange rate.

The company, which is controlled by the family of Mexican billionaire Carlos Slim, reported the bonanza despite sales falling by 3.1% from the same quarter last year to 255 billion pesos.

Net profit rose to 37.3 billion pesos ($1.87 billion) from 20.8 billion pesos for the same period a year earlier, an increase of 79.6%.

The company cited exchange gains due to the strengthening of the Mexican peso against the U.S. dollar and the euro.

Mexican financial group Grupo Financiero Banorte had forecast net profit falling to 17.7 billion pesos. America Movil’s sales slightly underperformed Banorte’s forecast of 258.7 billion pesos for the quarter.

Local brokerage Monex noted a significant increase in postpaid mobile subscribers underpinning America Movil’s earnings.

“We added 6.8 million wireless subscribers in the quarter, double the number in the previous quarter... including 2.7 million mobile postpaid subscribers,” the company said.

Earnings before interest, tax, depreciation and amortization (EBITDA) grew 1.3% in peso terms during the October to December period.

“These figures validate an important recovery in the services segment,” Monex said in a client note.

However, with exchange rate fluctuations driving the profit, it said the report was “neutral.”

In the core market of Mexico, America Movil’s base of postpaid customers grew 1.3% year-over-year and its prepaid base increased 1.1%. The company added 1.2 million subscribers, nearly all prepaid, to end the year with 77.8 million subscribers.

America Movil’s board of directors also approved an asset reorganization plan on Tuesday for its Latin American towers, creating a spin-off entity focused on the development, construction and locations of the towers for mobile services, the company said.

It expects to complete the reorganization in 2021.

($1= 19.9500 pesos at end-December)

Reporting by Noe Torres, Abraham Gonzalez and Cassandra Garrison; Editing by Drazen Jorgic and Rosalba O’Brien