America Movil registered a drop of almost 50% in its net profits in the third quarter, which the group attributes to economic issues in the Latin America region and particularly Mexico, as well as higher finance costs.
The operator, which is currently looking to acquire businesses beyond the Latin America region, saw its net profit fall from MXN30.5 billion during the same period last year to MXN16.4 billion ($1.26 billion) – a 46% fall. While revenue increased, the gain was just 0.7%, from MXN192.8 billion to MXN194.2 billion.
America Movil relies on Mexico for nearly half of its profits in terms of EBITDA, but the flagging economy in this market has hit the operator hard. Service revenue is down 1.4% to MXN36.29 billion, while Mexico recently ratified new competition-friendly regulation that is apparently aimed at breaking America Movil’s dominance in the market.
Higher financing costs have also plagued the operator, totalling MXN10.8 billion. Its net debt has increased by MXN68 billion to MXN440 billion since the final quarter of 2012, while it has spent MXN16.5 billion on acquisitions, including a share in KPN’s rights issue.
While America Movil withdrew its €7.2 billion bid for KPN, the operator is seeking to expand its presence in Europe via acquisitions.