America Movil is the first to bring Apple's iPhone to Latin American markets. The company, through MiPhone, will distribute the 3G mobile phone exclusively in Jamaica. - AP

Shares of heavyweight America Movil fell on Tuesday, dragging down the Mexican stock market, as billionaire Carlos Slim's company failed to meet high profit expectations in the second quarter.

By midmorning Tuesday, shares for Latin America's largest mobile phone service provider were down 7.5 per cent to 24.44 pesos.

The Mexican market index was down 1.6 per cent.

America Movil operates in Jamaica through subsidiary MiPhone, a company it acquired last year. The drop in Movil's shares comes despite a 25 per cent jump on the mobile giant's profits for the second quarter, when it added 6.1 million new wireless subscribers.

Traders said investors expected even faster growth for the company, which became the first to sell the iPhone in Latin America this month.

Sales plans

America Movil has been relying on third-generation services such as wireless broadband in new markets to help it recover from a 5.5. per cent slump in profits in the first quarter, in part because of the increased costs linked to 3G wireless networks.

CEO Daniel Hajj said he is confidant the company will continue to boost sales in Latin America, especially in Brazil.

"We never planned to have all our prospective customers in 3G," he told investors in a Tuesday conference call.

Hajj said America Movil was forced to drop prices in Brazil around Mother's Day to compete with other cell providers' promotions.

"I'm confident that the recovery is going to be there, the prices are there, the elasticity is going to be there," he said.

America Movil launched the new iPhone 3G in Mexico on July 11 to "outstanding" sales. The company plans to sell it in 15 other countries later this year.

Rival Telefonica also plans to sell the device in 12 Latin American countries, along with Spain, the Czech Republic, Ireland and Britain. America Movil SA said the new subscribers bring its total to 165.3 million clients, two per cent more than it had in the same period last year. Brazil led the way in new additions with 1.9 new clients, followed by the company's home market of Mexico with 1.3 million and Colombia with 1.1. million.

Increaed earnings

Second-quarter net profits rose to 17.7 billion pesos (US$1.67 billion) from 14 billion pesos (US$1.36 billion) in the same period last year.

Earnings before interest, taxes, depreciation and amortisation, or EBITDA, increased 13.7 per cent for the quarter, to 34.7 billion pesos (US$3.4 billion). Second-quarter revenues rose 13.6 per cent to 84.6 billion pesos (US$8.3 billion) due to additional subscribers, the company said.

America Movil's net debt stood at 85 billion pesos (US$8.36 billion) as of June, down from 92.7 billion pesos (US$9.1 billion) in December. The company's cash flow allowed it to make 26.7 billion pesos (US$2.6 billion) in capital expenditures and buy back 13.9 billion pesos (US$1.3 billion) in shares.