MEXICO CITY – Telecommunications company América Móvil SAB increased its net profit nearly eightfold in the first quarter on solid revenue growth and a rebound in the Mexican peso against the U.S. dollar that led to hefty foreign exchange gains.
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Latin America's biggest telecommunications company, controlled by billionaire Carlos Slim, on Tuesday reported a net profit of 35.9 billion Mexican pesos ($1.9 billion) for the January-March period, compared with a 4.8 billion-peso profit a year earlier and a 6 billion-peso net loss in the fourth quarter of last year.
Revenue rose 18.5% to 264.2 billion pesos, while earnings before interest, taxes, depreciation and amortization, or Ebitda, a measure of operating cash flow, rose 15.8% to 71.5 billion pesos.
An apparent pickup in economic activity across most of Latin America contributed to strong revenue, despite a still sluggish Brazilian economy, the company said. Mexico resumed expansion after a rocky start to the year and "by the end of the quarter retail sales were surging and the peso versus the dollar had risen to its best level since the U.S. election," it added.
Peso appreciation against the dollar and the euro led to an exchange gain of 37.1 billion pesos in the quarter, contributing to overall financial income of 30.4 billion pesos.
The company ended the quarter with about 280 million wireless subscribers, practically unchanged from the end of 2016, and fixed-line subscriptions were also stable at 82.8 million. Service revenue rose 3.1% in local currency terms.
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Service revenues in Mexico, where the company faces tough competition from AT&T Inc. and Spain's Telefónica SA, slowed their rate of decline, as did Ebitda, which was equivalent to 31.9% of revenue compared with 28% in the preceding quarter. América Móvil attributed the better margins to improving revenue and cost-reduction measures in recent months.
The results beat the median expectations of analysts polled by The Wall Street Journal, which called for net profit of 27.5 billion pesos on revenue of 261.5 billion pesos, and Ebitda of 68.1 billion pesos.
América Móvil shares closed up 1.2% on the Mexican stock exchange ahead of the report.
Write to Anthony Harrup at email@example.com
(END) Dow Jones Newswires
April 25, 2017 19:29 ET (23:29 GMT)