By Anthony Harrup
MEXICO CITY--Mexican telecomunications company America Movil SAB's net profit rose sharply in the third quarter on higher sales as countries lifted restrictions that had been imposed to slow the spread of the coronavirus.
Latin America's largest mobile company by subscribers, controlled by billionaire Carlos Slim, reported net profit of 18.9 billion Mexican pesos, ($892 million), for the July-September period, a 45% increase from the year-earlier quarter.
The profit was equivalent to 0.28 peso a share, or $0.26 an American depositary receipt.
"As confinement measures began to be lifted, our commercial activity saw a rebound in most countries in our region of operations," America Movil said Tuesday. That led to a 3.2 million increase in net wireless subscribers in the quarter to 281 million at the end of September.
The additions included 1.8 million postpaid subscribers, led by Brazil, Austria and Colombia, and 1.4 million prepaid subscribers including 1.2 million in Mexico.
In the fixed-line business, the gain of 446,000 broadband subscribers was offset by a decline in pay TV subscriptions and fixed-voice lines.
Revenue rose 4.7% to 260.2 billion pesos, equal to $12.3 billion, on solid broadband demand and a recovery in prepaid mobile revenues which had been the most affected by lockdowns in the second quarter. Service revenues increased 1.5% from a year earlier at constant exchange rates, and were up 5.4% in Mexican peso terms.
Operating cash flow measured by earnings before interest, taxes, depreciation and amortization rose 10% from a year before to 86.5 billion pesos.
In September, America Movil agreed to sell its U.S. unit TracFone Wireless, Inc. to Verizon Communications Inc. for $6.25 billion--half in cash and half in Verizon shares--and could receive up to $650 million more over the next two years depending on TracFone's performance.
TracFone, a mobile virtual operator which leases capacity on other networks, including that of Verizon, ended the third quarter with 20.9 million subscribers, down 42,000 from the previous quarter. Revenue rose 0.7% to just over $2 billion, with service revenue up 3.5%.
"The prepaid segment we serve has become, under current economic conditions, more appealing to clients that seek flexibility and better control over their expenditures," America Movil said.
TracFone's Ebitda rose 69% to $269 million, largely as a result of reductions reached in the second quarter with certain carriers in the cost of air time. Without those reductions, Ebitda would have risen 20%, the company said.
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(END) Dow Jones Newswires