Business Context and Reporting Period
Company: America Movil S.A. de C.V.
Filing Type: 6-K (Current Report)
Reporting Period: Fourth Quarter and Full Year ended December 31, 2002
Announcement Date: January 29, 2003
America Movil is a leading Latin American telecommunications provider. The reporting period highlights significant subscriber growth across its portfolio, surpassing 30 million subscribers for the first time. The company operates major subsidiaries including Telcel (Mexico), Telgua (Guatemala), Conecel (Ecuador), Comcel (Colombia), Telecom Americas (Brazil), and Tracfone (USA).
Key Financial Metrics
| Metric | 4Q 2002 | Full Year 2002 | Full Year 2001 |
|---|---|---|---|
| Total Revenues (MXN Billions) | 16.3 | 57.5 | 43.7 |
| EBITDA (MXN Billions) | 5.8 | 20.8 | 13.2 |
| EBITDA Margin | 35.8% | 36.2% | 30.2% |
| Operating Profit (EBIT) (MXN Billions) | 3.6 | 12.5 | 8.5 |
| Net Income (MXN Billions) | 2.6 | 4.6 | (0.9) Loss |
| Net Income (Pre-Exceptional) (MXN Billions) | 4.7 | 6.7 | 2.4 |
| Subscribers (Total) (Millions) | 31.6 | 31.6 | 26.0 |
| Cash & Securities (MXN Billions) | 10.6 | 10.6 | 13.1 |
| Short-Term Debt (MXN Billions) | 11.0 | 11.0 | 6.7 |
| Long-Term Debt (MXN Billions) | 36.1 | 36.1 | 16.0 |
Liquidity: Cash and securities (10.6 billion pesos) are roughly equal to short-term debt (10.9 billion pesos). Net debt to EBITDA (LTM) ratio is 1.75x.
Material Changes vs. Prior Period
- Revenue Growth: Full-year revenues increased 31.4% year-over-year (YoY), driven by a 40.9% increase in the fourth quarter.
- Profitability Expansion: EBITDA grew 57.6% YoY for the full year, with margins expanding from 30.2% to 36.2% due to cost containment and revenue outpacing costs.
- Subscriber Base: Total subscribers grew 21.5% YoY to 31.6 million. Telcel (Mexico) added 3.1 million subscribers (18.3% growth), while Telecom Americas (Brazil) added 371,000 in the quarter alone.
- Turnaround in Net Income: The company reported a net profit of 4.6 billion pesos for 2002, reversing a net loss of 875 million pesos in 2001. This turnaround is primarily due to operational improvements and foreign exchange gains, partially offset by an impairment charge.
- Debt Profile: Long-term debt increased significantly (125.3% YoY) to 36.1 billion pesos, reflecting strategic acquisitions and license purchases, though net debt decreased by 2.7 billion pesos in the quarter.
Guidance, Outlook, Risks, and Unusual Items
Unusual Items
An impairment charge of 2.1 billion pesos was recorded in the fourth quarter, almost exclusively associated with a goodwill write-off by CompUSA (an affiliate). Before this charge, net profit for the quarter was 4.7 billion pesos.
Outlook and Strategic Moves
- Acquisitions: Agreements reached to acquire Celcaribe (Colombia) to complete nationwide coverage; transaction expected to close in February 2003. Acquired wireless licenses in Brazil (Sao Paulo, Santa Catarina, Parana, Bahia, Sergipe) for approx. 1.2 billion pesos.
- Expansion: Launched wireless services in Nicaragua (Managua) with plans for nationwide coverage in H1 2003. GSM network rollout in Mexico covers 70 cities; agreements reached for GSM deployment in Colombia and Ecuador.
- Financing: Completed two financing transactions totaling nearly $500 million (a $400 million syndicated loan and a 1 billion peso floating-rate note) to improve debt maturity profiles and liquidity.
- Operational Outlook: Telcel churn is expected to decrease in 2003. Tracfone implemented a new revenue-deferment policy to better match revenue recognition with consumption, which temporarily reduced reported revenues but improved cash flow visibility.
Risks
Forward-looking statements are subject to risks including regulatory changes, competition, foreign exchange fluctuations, and the successful integration of acquisitions. The filing includes a standard legal disclaimer regarding these uncertainties.
Investor Verification Checklist
- Impairment Impact: Verify the specific accounting treatment of the 2.1 billion peso CompUSA goodwill write-off and its impact on future affiliate earnings.
- Debt Maturity: Review the specific terms and maturity dates of the new $400 million syndicated loan and the 1 billion peso note to assess near-term refinancing needs.
- Tracfone Policy Change: Confirm the long-term impact of the new revenue-deferment policy on Tracfone's reported revenue stability and comparability.
- Celcaribe Closing: Monitor the closing of the Celcaribe acquisition in February 2003 and any associated financing requirements.
- Foreign Exchange Exposure: Assess the sensitivity of consolidated results to peso/dollar and peso/real exchange rate fluctuations, given the significant international operations.