America Movil upgraded

Zacks Investment Research late last week upgraded its long-term recommendation on Latin American mobile operator America Movil S.A.B. de C.V. (AMX) from “underperform” to “neutral” citing the “growing Brazilian economy and improving macro conditions in Mexico and Argentina.”
America Movil operates in 18 countries and owns domestic prepaid operator Tracfone Wireless Inc.
While America Movil’s third quarter earnings per share fell 4 cents short of Zacks “consensus estimate,” they did increase 7% year-over-year. In addition, Zacks noted that the carrier’s total revenues increased year-over-year, with data revenues surging 27% year-over-year, and came in ahead of Zacks estimates. America Movil ended the third quarter with more than 211 million customers across its wireless operations.
“We believe America Movil continues to register strong data growth fostered by higher market penetration of 3G data services and smart phones, increased usage of 3G wireless services in Latin America as well as the expected launch of 4G services” Zacks noted in a report. “America Movil has also expanded its presence outside Mexico and Latin America, with business acquisitions in the Caribbean and Central American markets such as Puerto Rico, Jamaica and Nicaragua.”
Zacks added that the carrier is planning on spending $8 billion over the next four years to expand mobile data services, including a mobile backhaul solution from Alcatel-Lucent. In addition, the carrier has managed to reduce its debt from $17.6 billion at the beginning of the year to $14.9 billion at the end of the third quarter.
Zacks did warn that America Movil continues to suffer higher churn rate than its competitors in Brazil and Mexico, singling out the increasing nature of the Brazilian market where its Claro operations are being challenged by larger rival Vivo Participicacoes S.A. Competition is also expected to increase in Mexico with new entrants set to enter the space, including media conglomerate Grupo Televisa S.A.
“Although we are encouraged by America Movil’s operating performance and future business prospects, we remain concerned about the competitive and regulatory issues across the company’s major markets, which may affect subscriber retention initiatives,” Zacks added. “Hence, we hold our neutral stance on the stock.”
America Movil’s stock was trading up 37 cents per share early Monday on the New York Stock Exchange at $57.07.