February 13, 2018 / 10:57 PM / 2 months ago

UPDATE 2-Mexico's America Movil reports steepest loss in 16 years

(Adds details on company’s performance, comments from analysts, context)

By Julia Love and Noe Torres

MEXICO CITY, Feb 13 (Reuters) - America Movil, the crown jewel of Mexican billionaire Carlos Slim’s empire, reported its largest loss in 16 years in the fourth quarter, hampered by the peso’s depreciation against the dollar and euro.

The telecommunications company, which is controlled by the family of Slim and has operations throughout the Americas and in eastern Europe, posted a net loss of 11.295 billion pesos ($575 million) for the fourth quarter to December, far wider than the loss of 5.972 billion pesos in the same quarter a year earlier.

Analysts in a Reuters poll had expected the company to report net profit of 4.231 billion pesos.

The company attributed the result to foreign exchange headwinds in the quarter, as Mexico’s peso depreciated almost 8 percent against the dollar.

That hurt America Movil because its debt is primarily in denominated in the U.S. dollar, the British pound and the euro, said analyst Gregorio Tomassi of Itau BBA.

The peso has been impacted in recent months by uncertainty over the future of the North American Free Trade Agreement (NAFTA), a key pillar of the Mexican economy, and jitters ahead of the Mexican presidential election in July.

Other Mexican firms have been hurt by the currency’s depreciation, including industrial conglomerate Alfa, which also reported a net loss in the fourth quarter on Monday, citing exchange rate losses.

But the market was optimistic that America Movil’s profits will rise now that the company can charge rivals for calls to its network in Mexico, said Intercam analyst Alik Garcia. Improving economic conditions in Brazil are also boosting its shares, said Garcia.

America Movil, which holds more than half of Mexico’s mobile phone subscriptions, saw its profitability fall sharply after a 2014 telecommunications overhaul by the government, aimed at lessening the firm’s dominance. Attracted by the changes, AT&T entered Mexico in 2014, touching off a price war.

America Movil has waged an aggressive campaign to shift its business toward mobile data. Broadband subscriptions rose more than 4 percent over the previous year in the fourth quarter, and the company’s average revenue per user jumped nearly across the board, driven by strong data consumption.

Overall revenues and earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter were in line with analysts’ expectations.

Revenue was 263.9 billion pesos, down slightly from 269.3 billion a year ago.

Shares of America Movil rose 26 percent over the past year, while Mexico’s IPC index was essentially flat. The results were released after the market closed. (Reporting by Julia Love, Noe Torres and Christine Murray, Editing by Rosalba O’Brien)

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