América Móvil, the telecoms empire of Mexican mogul Carlos Slim, is feeling the pain of new regulations, with second-quarter earnings showing a 9 per cent year-on-year drop in mobile revenues in the group’s home market.
The company beat market estimates with a 2.4 per cent rise in second-quarter earnings before interest, tax, depreciation and amortisation to 66.6bn pesos ($5.1bn), and subscriber levels rose 3 per cent.
Yet company officials said new regulatory measures in Mexico were mostly to blame for a 1.8 per cent fall in ebitda at home. Its profit margin, at 43.6 per cent, was 0.9 per cent lower than in the second quarter of last year.
Earlier this month América Móvil announced it would shrink its Mexican operations by a fifth to avoid the asymmetrical regulations that would come with having been branded the predominant player in the market.
“Mobile-voice revenues were down, 8.7 per cent year-on-year, on account of the new regulatory measures implemented in the second quarter, with Mexican mobile operator Telcel cancelling from April 6 national roaming charges and reducing the termination rate charged to its competitors by 34 per cent,” América Móvil said.
It added that the total number of fixed-line, broadband and cable TV accesses fell 0.2 per cent in the quarter and 0.8 per cent year-on-year in Mexico, while the number of Mexican wireless subscribers fell 0.9 per cent compared with the second quarter in 2013.
On a consolidated basis, however, second-quarter revenues rose 4 per cent and América Móvil said it had boosted mobile data and pay TV revenues by nearly 19 per cent. Higher margins in markets including Brazil and Chile helped offset the pain in Mexico.
But América Móvil acknowledged that overall, “mobile voice revenues deteriorated as they went from an annual growth rate of minus 0.8 per cent in the first quarter to minus 3.3 per cent in the second one. This deterioration had mostly to do with the implementation of new regulatory measures in Mexico, the introduction of new competitive plans in Colombia and the reduction of termination rates in Brazil and Chile.”
Pay TV is América Móvil’s fastest-growing client base, and the company noted that 68.1 per cent of new accesses in Brazil were “triple-play” packages that bundle pay TV, telephony and internet services.
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