Coming off a smashing, revenue-generating fourth quarter, American Movil
"We are really focused on growth, and are going to try to capture new subscribers in Latin America," Hajj said.
American Movil revenues jumped 12.3% in the fourth quarter, beating analysts' expectations by 6%. In spite of that revenue growth, however, net profit fell 36% because of weakening of the peso. Quarterly postpaid subscribers increased by 1.6 million, raising the postpaid subscriber base by 20.5%, or 6.1 million for the year. The company also has 58 million wireline phone, Internet, and video subscribers.
Those postpaid subscribers are desirable, but they can result in a hit to profits because those long-term contracts come with the cost to the carrier of subsidizing expensive smartphones. That is the same paradox that affected U.S. carriers Verizon
I think Amercia Movil is a company worth watching. It is the dominant telecom in Mexico with a 70% market share, and is farsighted with its expansion plans. The company has managed to provide an excellent return on invested capital of over 20% from 2005 through 2010, and 14.5% for the trailing twelve months. Compare that to Verizon's average ROIC of 6.4%, AT&T's average of 7.2%, and Sprint's average of negative 10.6% during the same period.
As you can see from the chart below, the stock price has been on a down swing over the last year. Is it time to buy? I don't know but I am going to add it to your Watchlist. I am also going to give it a thumbs-up in CAPS.
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Fool contributor Dan Radovsky owns shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.