MEXICO CITY (Reuters) - Shares in Mexican billionaire Carlos Slim’s America Movil tumbled more than 5 percent a day after it reported slightly better than expected fourth quarter profit that did not impress investors disappointed by weak results all year.
Striking an optimistic note about the year ahead, executives on Wednesday highlighted the company’s recent application for its first Mexican pay television license and forecast higher investments to grow its network.
America Movil is controlled by the family of Slim, who was once the world’s richest man but whose fortune was diminished by increased competition after Mexican telecommunications reforms.
In the last three months of 2018, Latin America’s largest telecommunications firm by number of subscribers narrowly beat the profit and revenue expectations of analysts surveyed in a Reuters poll.
Investors were unimpressed, said James Salazar, an analyst with CI Banco, and America Movil shares sank to their lowest levels in more than a month before recovering somewhat to trade down 3.4 percent at 14.55 pesos.
“The fact is that for all of 2018, revenue was flat,” he said. “It’s nothing spectacular.”
Mexico’s benchmark S&P/BMV IPC stock index sank more than 1 percent, dragged down by America Movil, one of the most heavily weighted stocks on the index.
The company on Tuesday reported a net profit of 10.7 billion pesos ($541.7 million) for the fourth quarter. In the same period a year earlier it reported a large loss, battered by currency fluctuations.
Revenue of 262.3 billion pesos was down slightly from 263.9 billion pesos in the same quarter of 2017.
Slim has been barred from offering cable television in Mexico since he created Telmex from the privatization of Mexico’s state-run telecommunications company in the early 1990s. He has wanted to overturn the ban for years.
In December, Mexico’s telecom regulator IFT said an America Movil subsidiary had applied for a license to offer pay television in the country.
America Movil Chief Executive Daniel Hajj publicly confirmed the application for the first time on a call with investors on Wednesday.
If the IFT approves the request, America Movil could soon begin offering customers phone, internet and video services in one package, Hajj said.
“We have the expertise in other countries,” he said.
In addition, capital expenditures will increase, the company said on the call.
Capital expenditures totaled $7.82 billion in 2018, according to the quarterly report, and will rise to $8.5 billion this year, focused on installing fiber, boosting wireless coverage and information technology, executives said.
Reporting by Julia Love, additional reporting by Stefanie Eschenbacher and Miguel Gutierrez; Editing by Phil Berlowitz