Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- America Movil SAB de CV (AMXOF, Financial) added 2.4 million subscribers in Q2 2024, with significant growth in postpaid subscribers.
- The company reported a 6.9% increase in EBITDA, driven by positive revenue growth and strong cost controls.
- Fixed broadband revenue grew by 7.9%, indicating strong performance in this segment.
- The company's leverage ratio improved to 1.38 times EBITDA from 1.5 times the prior quarter.
- Free cash flow was MXN10 billion greater than the first half of 2023, partly due to lower capital expenditures.
Negative Points
- America Movil SAB de CV (AMXOF) reported a net loss of MXN1.1 billion in Q2 2024 due to foreign exchange losses.
- Equipment revenue fell by 9.8%, with a notable decline in the sale of higher-priced phones.
- The Mexican peso's depreciation following the presidential elections negatively impacted financial results.
- Prepaid revenue growth decelerated, reflecting broader market trends and economic conditions.
- The company faced increased churn and collection issues in Mexico, impacting net additions in the broadband segment.
Q & A Highlights
Q: Can you break down the FX losses in this quarter and how should we forecast this line in correlation with the Mexican peso? Also, do you expect prepaid revenue to return to growth at some point?
A: On the FX side, two-thirds of our net debt is peso-based, but the impact of derivatives differs from the underlying FX movements. It's challenging to predict these movements. Regarding prepaid, some customers are moving to postpaid due to better data plans and handsets. Prepaid revenue is also influenced by the economic conditions of each country.
Q: What are your expectations for ARPU growth in Mexico, Brazil, and Colombia over 2024 and 2025?
A: ARPU growth has been sustained due to increased 5G usage and customers moving to better plans. We expect this trend to continue into 2024 and 2025, driven by higher data consumption and better plan offerings.
Q: Can you explain the decline in equipment revenue and whether this trend will reverse with new AI features in phones?
A: The decline in equipment revenue is due to customers buying cheaper phones with similar features. While AI features in new phones may initially boost high-end phone sales, we expect these features to eventually be available in mid-range phones as well.
Q: What is your share buyback strategy for the second half of the year?
A: Share buybacks are typically paced with our cash flow, which is more robust in the second half of the year. We expect to continue buybacks in line with our free cash flow, barring any major M&A or CapEx requirements.
Q: Can you provide an update on the competitive environment in Chile and your commercial approach there?
A: Chile is a competitive market. We have a three-year plan focused on synergies, cost reductions, and infrastructure improvements. We are on target and expect to see positive results by 2025-2026.
Q: Why did Mexico's mobile revenue decelerate from 5.8% in Q1 to 4% in Q2, and do you have any M&A plans in Chile?
A: The deceleration in Mexico is due to competitive promotions and economic conditions. We are open to M&A opportunities in Chile, especially given the current situation with WOM, but our focus remains on operational improvements.
Q: How is the competitive environment in Colombia affecting your business, and is there room for price hikes in Mexico's fixed business?
A: In Colombia, aggressive competition from new entrants like WOM has impacted ARPU and growth. However, we are seeing improvements with our 5G offerings. In Mexico, we are not planning to increase fixed broadband prices at this time.
Q: Are the net additions in Mexico's fixed broadband mostly migrations from copper to fiber, or are you acquiring new customers?
A: The net additions are new customers. We have been migrating many customers from copper to fiber, but these migrations are not counted as net additions.
Q: What are your thoughts on artificial intelligence and how America Movil can benefit from this megatrend?
A: AI is crucial for improving efficiency, reducing costs, and better understanding our customers. We are working on digitalizing our operations and leveraging AI to enhance productivity and customer service.
Q: Will there be disclosure on the operations and financials of the Chilean JV now that America Movil is assuming control, and what are the plans for the outstanding bonds?
A: Once we consolidate the Chilean JV, we will provide the same level of disclosure as for other countries. The bonds will remain outstanding and will be serviced as part of America Movil's debt.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
