MEXICO CITY (Reuters) - America Movil, Mexico’s largest telecommunications firm, said it would boost its capital expenditure this year, as investors cheered indications that rising mobile data use in Latin America would continue to drive strong growth.
Shares in the company rose as much as 4.56 percent on Wednesday, to 17.43 pesos per share in afternoon trading.
America Movil (AMXL.MX), which is controlled by the family of billionaire Carlos Slim, will spend around $8 billion on capital expenditure this year, up from $6.95 billion in 2017, Chief Executive Officer Daniel Hajj said during a call with analysts on Wednesday.
Detailing the firm’s fourth quarter results, Hajj said America Movil would continue to invest heavily in Brazil and Mexico, its principal markets.
“We are thinking long-term and investing to have the best network and good customer service,” Hajj said.
On Tuesday, America Movil reported a net loss of 11.295 billion pesos ($609 million) for the fourth quarter, its biggest in 16 years, hurt by the depreciation of the Mexican peso.
But earnings before interest, tax, depreciation and amortization (EBITDA) rose more than 13 percent in Mexico and more than 11 percent in Brazil over the previous year.
That increase, coupled with healthy gains in average revenue per user, suggested that the fundamentals of the business were strong, said Carlos de Legarreta, an analyst at GBM.
“That means the core business of the company is improving at a fast rate, and behind it is a trend that we are seeing all across Latin America, which is that people are using more data,” he said.
Chief Financial Officer Carlos García Moreno said on the investor call that cost-cutting could further improve EBITDA in Mexico in 2018.
The company has also been boosted by November’s ruling from Mexico’s telecommunications regulator, which said that America Movil could resume charging rivals such as AT&T Inc (T.N) and Telefonica SA (TEF.MC) for calls to its network. A 2014 sector reform aimed at lessening Slim’s dominance had previously barred America Movil from charging the fees.
America Movil said it was also expecting to perform better this year in Brazil, its biggest market, helped by a recovery in the nation’s economy.
Reporting by Sheky Espejo and Julia Love; additional reporting by Noe Torres; writing by Julia Love; editing by Tom Brown and Rosalba O'Brien