Back

Latin American Economy & Business - February 2016 (ISSN 1741-7430)

Region: Corporate Radar

América Móvil profitability facing a squeeze.

Mexico-based telecoms giant América Móvil reported a six-fold increase in profits to MXN15.7bn (US$835mn) in the fourth quarter of 2015. The improvement was largely due to a sharp reduction in exchange rate losses, which reduced financial costs. Profits represented MXN0.24 per share or US$0.28 per ADR. In contrast Ebitda, which many analysts see as a better indication of underlying profitability, was MXN63.9bn or US$3.39bn in the quarter, down 2.9% on the same year-earlier period. Fourth quarter revenues grew by 0.6%. Mobile data revenue grew by 10%, fixed line data was up by 7.9%, and pay-TV revenues grew by 6.6%, the company said. For 2015 as a whole profits were down by 24% to MXN35.05bn. In Mexico, the company’s home market, which accounts for around 30% of total income, it is facing increased competition from AT&T and Telefónica, and a tighter regulatory regime. América Móvil said that at a global level it was a smaller company than its two main competitors, but that in spite of that they were effectively being subsidised by it on the local market, due to the nature of Mexico’s “asymmetric regulation” which gave them an extra advantage over the incumbent. Separately América Móvil said it is likely to reduce its capital investment programme by around 25% in 2016 to MXN7.5bn-MXN8bn, given that it has completed most of the modernisation of its network. “Much of what needed to be done has been done, and that’s why we are reducing the intensity of out investment programme over the next five years” said finance director Carlos García Moreno.

 

HSBC faces new drug money case.

Global bank HSBC faces a new and unprecedented legal challenge filed by US victims of Mexican drug violence in a Texas court. The bank in 2012 agreed to pay the US authorities a US$1.9bn fine, after admitting that it failed to adequately supervise its Mexican subsidiary, which laundered US$881m of drug trafficking money for the Sinaloa drug-trafficking cartel. There the matter seemed to rest. But now a group of US victims of drug violence are suing HSBC saying that it can be held liable under the terms of the US anti-terrorism act, which says survivors of those killed in terrorist incidents may sue for damages. The plaintiffs include relatives of Jaime Zapata, a US Immigration and Customs Enforcement (ICE) special agent murdered in northern Mexico in 2011, and of Lesley Enrique Redelfs, a US consulate employee who was shot dead in Ciudad Juárez in 2010. They argue that by laundering drug cartel money “HSBC materially supported the terrorist acts of cartels”. Whether the case prospers is likely to depend on a number of key legal points. One is whether drug gangs can be considered terrorist organisations under US law – to date they have not. A second is the extent of liability: Redelfs for example was reportedly killed by the Juárez cartel, to which HSBC was not connected, as the bank was only known to be laundering money for the entirely separate Sinaloa organisation. If successful, however, the case could have far-reaching consequences as it would mean that many US organisations that have handled drug money, even indirectly, could be held liable for drug-gang violence. The list could include brokers, real estate agents, car dealers, and even drug users. HSBC has said it will “vigorously” defend itself and that it remains “committed to combating financial crime”.

End of preview - This article contains approximately 588 words.

Subscribers: Log in now to read the full article

Not a Subscriber?

Choose from one of the following options

LatinNews
Intelligence Research Ltd.
167-169 Great Portland Street,
5th floor,
London, W1W 5PF - UK
Phone : +44 (0) 203 695 2790
Contact
You may contact us via our online contact form
Copyright © 2022 Intelligence Research Ltd. All rights reserved.