By Anthony Harrup
MEXICO CITY -- Mexican telecommunications heavyweight America Movil SAB said its net profit rose 40% in the second quarter from a year earlier on higher operating gains and steady revenue despite pressures from shutdowns across markets because of the coronavirus pandemic.
Latin America's largest mobile company by subscribers, controlled by billionaire Carlos Slim, reported Tuesday a net profit of 20.06 billion Mexican pesos ($894 million) in the April-June quarter, up 40% from 14.36 billion pesos a year earlier. The profit was equivalent to 0.30 pesos per share, or $0.26 per American depositary receipt.
Revenue rose 0.6% to 251.58 billion pesos, with a 6.5% increase in service revenue offset by a 27% decline in equipment sales. In constant currency terms, service revenue increased 0.8%.
Operating profit in the second quarter rose 10% to 40.91 billion pesos, and earnings before interest, taxes, depreciation and amortization, a measure of cash flow, rose 5.9% to 82.65 billion pesos.
The shutdowns and stay-at-home measures across most of the region in response to the coronavirus meant that stores and customer centers were closed, reducing equipment sales, and the restricted movement of people reduced demand for mobile service, America Movil said.
The company disconnected more than 5 million wireless lines in the quarter, including 4.6 million prepaid lines, ending June with 277.5 million mobile subscribers. In the fixed-line segment, it added 450,000 new broadband subscribers, offset by the loss of voice and pay TV customers. Overall fixed-line subscriptions slipped 0.5% from the previous quarter to 81 million.
Many postpaid customers switched to cheaper plans in anticipation of economic difficulties ahead, while small businesses that were forced to close sought to discontinue their service or lower their costs, America Movil said.
The pandemic has brought about massive business closures and job losses across Latin America and the Caribbean. The International Monetary Fund forecasts that the region's gross domestic product will contract 9.4% this year, including a 10.5% drop in Mexico and a 13.9% decline in Peru.
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