Mexican telecoms giant America Movil swings to profit in Q2

Mexican telecommunications giant America Movil reported a robust second-quarter performance, swinging to a net profit of 22.28 billion pesos ($1.19 billion) from a year-ago loss and significantly surpassing the $1.13 billion analyst consensus. Revenues also exceeded forecasts, rising 14% to 233.79 billion pesos ($12.46 billion), with EBITDA up 11%. This strong financial beat was largely driven by the addition of 2.9 million post-paid customers, including 1.4 million in Brazil, and 462,000 new broadband accesses, underscoring solid operational growth across its Latin American and European markets.

Analysis

America Movil (AMX) reported a robust second quarter, significantly outperforming analyst expectations and demonstrating strong operational momentum. The company posted a net profit of 22.28 billion pesos ($1.19 billion), a notable swing from a 1.09 billion peso loss in the prior-year period and comfortably ahead of the $1.13 billion consensus estimate. Revenue grew 14% year-over-year to 233.79 billion pesos ($12.46 billion), also surpassing the $12.00 billion forecast, while EBITDA increased by 11%. This financial outperformance was driven by solid subscriber growth in high-value segments. AMX added 2.9 million post-paid customers, with Brazil accounting for 1.4 million of those additions, alongside 462,000 new broadband accesses. While these gains were partially offset by a net loss of 1.1 million pre-paid customers, the overall trend indicates a successful strategic shift toward more profitable and stable revenue streams across its Latin American and European operations.

Key Decisions for Investors

• The significant beat on both earnings and revenue, driven by strong post-paid subscriber growth, validates the company's operational strategy and supports a bullish outlook on the stock.
• Investors should monitor the dynamic between post-paid additions and pre-paid disconnections to gauge the net impact on average revenue per user (ARPU) and overall profitability in coming quarters.
• Given the strong performance in Brazil and Mexico, AMX presents a compelling vehicle for gaining exposure to consumer and telecommunications growth within key Latin American emerging markets.
• Following these strong results, it is prudent to re-evaluate the stock's valuation, as the positive fundamentals are now reflected in market sentiment and may impact near-term entry points.