Mexico's América Móvil, the world's fourth largest mobile network operator, saw its second-quarter profits more than double from a year earlier, to 42.8 billion pesos ($2.2 billion). This was also nearly double the financial data provider Refinitiv's forecast of 25.15 billion pesos ($1.3 billion).

Helping the bottom line, Mexico's peso saw an extended rally in the second half of next year: buoyed by high Banco de México interest rates (as inflation surged regionally), depreciation in the dollar next door, and a rebound in manufacturing activity. It is particularly good news for Carlos Slim, from 2010 to 2013 the world's richest person and whose family control the company's shares. The company's subsidiary Telcel is Mexico's largest mobile operator, with a market share above 70%. And if you take exchange rates out of it, its 44.7 billion peso ($2.3 billion) operating profit is still up a healthy 9.3% from a year before in nominal peso terms.

This also follows a strong first quarter for the operator, which swung from a loss of 28.9 billion pesos ($1.5 billion) in the year-earlier quarter to a profit of 1.81 billion pesos ($91 million). A 55% decline in financing costs lay behind the improvement.

Fitch, in a 21 May ratings report, called the company the leading operator among Latin American telcos, with strong market positions in both fixed and mobile telephony. But on the flip side, the second quarter of 2020 was hit hard by coronavirus. And its revenue, at 253 billion pesos ($12.7 billion), was broadly flat year-on-year.

Neither a borrower nor a lender be

Still, hanging over the company is a substantial net debt, standing at 591 billion ($29.7 billion) pesos at the end of June. It is a large, although not unmanageable, debt, and it has also weighed on the company's share price.

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Since its debt is dollar-denominated, an appreciating peso effectively shrinks it. On the other hand, a weakening peso massively increases its debt-servicing costs – a risky position to be in. But the Mexican giant has also joined a growing number of telcos in February by announcing it would spin off more than 37,000 towers across its regional operations this year, following a move it made in its Mexican heartland in 2015. It's assumed this new towering entity will assume a big proportion of its debt.

Look overseas…

Mexico is increasingly a mature, read flat, market for the operator. So it's América Móvil's other markets that look increasingly exciting. And it just happens to own five of the ten most valuable telecom brands in Latin America, including the most valuable (Telcel) and the second-most (Claro).

Brazil is an increasingly important market for the company, accounting for 1.1 million of its 2 million postpaid wireless net new subscribers, and 1.4 million of its 4.2 million new wireless subscribers in the second quarter. Peru is increasingly a sweet spot too, as, with higher earnings from both services and equipment, the company's revenue soared 43.8%, to 1.493 billion soles ($392 million).

So perhaps Slim's company shouldn't cry too much for Argentina, where revenues plunged 7.2%, to 35.8 billion Argentine pesos ($381 million). Colombia also proved a "more complicated commercial environment," as the company put it, with a rival operator Wom launching operations in the quarter. Even so, it saw mobile revenues increase by a yearly 6.9%, and fixed-line ones by 12%.

America was a bit trickier too for its subsidiary TracFone Wireless, with 549,000 net wireless disconnections as subscribers switched instead to postpaid plans. Verizon plans to acquire it, in a deal worth up to $6.9 billion, but the sale has yet to be approved by the FCC, which said in February the transaction "raises issues of extraordinary complexity."

But for a company minding its debts, though, an extra $7 billion on its balance sheet would be no bad thing.

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— Padraig Belton, contributing editor, special to Light Reading