America Movil overturned a Q4 2016 net loss with a profit in the first quarter of 2017, in large part thanks to the Mexican Peso appreciating against the US Dollar and Euro.
The Latin American operator posted a net profit of MXN35.9 billion ($1.9 billion) in Q1 2017, a major improvement from a loss of MXN5.97 billion in the last quarter of 2016 and a big jump from the MXN4.8 billion net profit a year earlier.
“By the end of the quarter retail sales were surging and the Peso vs the Dollar had risen to its best level since the US election: it was the top performing currency in the period,” the company said in its earnings statement.
The currency appreciation also helped bring America Movil’s net debt down to MXN584 billion from MXN630 billion at end-December.
In Q4 2016, the company suffered from higher financial costs and changes in the value of the Mexican Peso. At the time it said the US election had a major impact on the value of the Peso.
While the company noted economic activity remained sluggish in Brazil during Q1, it said activity appeared to be strengthening across its other markets.
This included Mexico, which “resumed its expansion after a rocky start of the year in the wake of the US election as increased uncertainty about the North American Free Trade Agreement’s prospects impacted consumer sentiment and pummelled the Peso.”
Overall revenue grew 18.5 per cent year-on-year in Q1 to MXN264 billion.
America Movil’s wireless postpaid subscriber base increased 5.1 per cent year-on-year after the company added 632,000 subscribers in the first quarter. Its prepaid base was down 3.3 per cent after net disconnections of 1.4 million subscribers.
In March, Mexican regulator IFT ramped up the pressure on America Movil to separate part of its fixed-line infrastructure and make modifications to its mobile operation.
America Movil said IFT had now ordered a “functional separation” of its fixed-line unit, which would require the operator to create a new separate entity from its Telmex operation.