Mexican telecoms giant America Movil swings to profit in Q2

Mexican telecoms giant America Movil reported a significant Q2 swing to a net profit of 22.28 billion pesos ($1.19 billion), exceeding analyst forecasts and rebounding from a prior-year loss, driven by robust operational performance. Revenues rose 14% to 233.79 billion pesos ($12.46 billion), also above estimates, supported by an 11% EBITDA increase and the addition of 2.9 million post-paid customers, particularly 1.4 million in Brazil. These results underscore the company's strong market position and growth trajectory in key Latin American markets.

Analysis

America Movil (AMX) reported a significant financial turnaround in the second quarter, posting a net profit of 22.28 billion pesos ($1.19 billion) which reversed a 1.09 billion peso loss from the prior year and exceeded LSEG analyst estimates of $1.13 billion. The company's top-line performance was equally robust, with revenues climbing 14% year-over-year to 233.79 billion pesos ($12.46 billion), also surpassing the consensus forecast of $12.00 billion. This outperformance was fundamentally driven by strong operational execution, evidenced by an 11% increase in EBITDA and strategic subscriber growth. The addition of 2.9 million high-value post-paid customers, with 1.4 million originating from the key Brazilian market, more than compensated for the 1.1 million net disconnections in the pre-paid segment, indicating a successful shift toward a more profitable customer mix. Furthermore, the company demonstrated continued strength in its fixed-line business by adding 462,000 new broadband subscribers, half of whom were in its domestic Mexican market.

Key Decisions for Investors

• Given the strong beat on both revenue and earnings driven by high-value subscriber growth, investors could interpret these results as a positive catalyst, suggesting consensus estimates may be revised upward.
• The outperformance in Brazil, which accounted for nearly half of new post-paid customers, should be monitored closely as a key indicator of the company's international growth momentum and margin expansion.
• Investors should weigh the strategic shift from pre-paid to post-paid subscribers, assessing whether the resulting increase in revenue and EBITDA quality justifies the reduction in the overall pre-paid customer base.