America Movil Still an Emerging Giant

There are some things that you don't want to bet against -- such as gravity or increasingly bizarre hairstyles on Britney Spears. Another is the stunning growth of wireless services in developing nations. With its third-quarter earnings, America Movil (NYSE: AMX  ) showed once again that the spring of near-30% growth in wireless services in Latin America is still flowing.

The company that, along with Telmex (NYSE: TMX  ) and other interests, helped vault billionaire Carlos Slim Helu to the title of richest person in the world, reported revenue growth of 29.8% to $7.2 billion for the quarter. Earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 44.6%, but net earnings of $1.03 billion were actually 2% lower than last year, so obviously there's something missing in the middle.

The big bite out of the bottom line came from a few areas -- one was increased depreciation expense and another was a bigger tax bite. The higher depreciation charges stem from removing equipment and services based on an old technical standard, called TDMA, in some countries. Other operators, such as AT&T (NYSE: T  ) in the U.S., have moved to retire these networks and move users to newer service platforms.

Chile was the only market where America Movil had a net reduction in wireless subscribers for the quarter, characterizing the loss as a "cleansing" of the base there. But the company is generally holding its own against main rival Telefonica (NYSE: TEF  ) , growing its wireless subscriber base 4.5% in the quarter by adding 6.2 million new subscribers. With a total of 143.4 million wireless subscribers across more than a dozen countries, America Movil shares the scale of global behemoths China Mobile (NYSE: CHL  ) and Vodafone (NYSE: VOD  ) .

America Movil's stock took a dip after the earnings release, but shares still sit nearly 50% higher than where they started in 2007. The lighter-than-expected earnings and continued rise in the stock will make America Movil look more expensive to investors. But compared with its peers, I still find this giant company a cheaper way to tap the booming growth of wireless services in emerging markets.

More Foolish musings:

Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 538877, ~/Articles/ArticleHandler.aspx, 10/21/2016 1:32:01 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,114.86 -47.49 -0.26%
S&P 500 2,138.03 -3.31 -0.15%
NASD 5,251.74 9.91 0.19%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 1:16 PM
AMX $11.99 Up +0.03 +0.21%
America Movil CAPS Rating: ****
CHL $59.12 Down -0.10 -0.17%
China Mobile CAPS Rating: ****
T $37.75 Down -0.90 -2.33%
AT and T CAPS Rating: ****
TEF $9.83 Down -0.11 -1.11%
Telefonica CAPS Rating: ****
TMX.DL2 $0.00 Down +0.00 +0.00%
Telefonos de Mexic… CAPS Rating: *****
VOD $27.76 Down -0.06 -0.20%
Vodafone CAPS Rating: ****