With nearly everyone in the United States driving around with one hand on the wheel and the other on a cellphone, it's hard to believe there are people in this world who have yet to even make a call on a mobile device. But if the numbers reported from mobile service provider America Movil
The Mexico City-based carrier turned in another strong quarter of growth in its second quarter. America Movil reported net income of $1.4 billion on revenue of $7 billion, up 30.6% and 29.3% respectively year over year. The strong growth in revenue and profits came from the addition of 6 million subscribers across the company's subsidiaries in the U.S., Central America, and South America. These newly minted wireless callers brought the company's total subscriber base up to a massive 137.2 million.
America Movil added significant numbers of subscribers across all its markets, showing particular strength in Brazil and Mexico, where it reported 1.6 million and 1.2 million net adds respectively. The company also signed up a net 768,000 subscribers in highly saturated Argentina, growing its base there by 7% in the quarter to end at 11.7 million. The numbers were impressive, given the saturated nature of some of these markets and stiff competition from Spain's Telefonica
The tough competitive environment in many regions is evident in the company's increasing rate of customer churn. America Movil reported increases in churn rates across all of its markets (except Ecuador) and the United States, where it operates the TracFone subsidiary. The increased churn contrasts with the declines reported by U.S. operators AT&T
Valuation probably explains why the stock retreated slightly after the report -- even with numbers that any wireless operator would envy. Though the recent earnings have lowered America Movil's P/E to around 22, shares are not exactly in the "screaming buy" category. Nonetheless, a long-term growth rate of 27.7% still makes the company a worthy consideration.
More Foolish mobile musings:
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- Foolish Forecast: America Movil's Moving Experience
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Fool contributor Dave Mock once attempted to graft dollar bills into a tree. Undaunted, he'll try $20 bills next. He owns no shares of companies mentioned in this article. Dave is the author of The Qualcomm Equation. Vodafone is anInside Value recommendation. It's bigger, it's badder, it's ... the Fool's disclosure policy.