Claro Brasil, the Brazilian wireless subsidiary of Mexican conglomerate América Móvil, reported an 11.9% decline in second-quarter net profit, driven by rising financing costs that eroded gains from top-line growth.
The carrier posted revenue of R$ 13.48 billion (US$ 2.66 billion) for the quarter, an increase compared to the same period last year.
Despite the revenue expansion, the bottom line contracted as higher interest expenses weighed on profitability, a recurring challenge for capital-intensive telecom operators in Brazil amid elevated borrowing costs.
The results underscore the ongoing margin pressure facing Latin American telecoms, where high leverage and expensive debt servicing can quickly offset operational improvements.
This follows a broader trend of earnings volatility in the region, with other Brazilian corporates recently reporting profit declines due to cost inflation and macroeconomic headwinds.
Investors will be watching whether Claro Brasil can improve its cost structure in the second half of the year or if financing costs will continue to cap earnings growth.