Maxcom Telecomunicaciones de CV : 3Q16 Earnings Report

Third Quarter 2016 Results

MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V.

1

MAXCOM REPORTS RESULTS FOR THE THIRD QUARTER OF 2016

Mexico City, October 19, 2016. - Maxcom Telecomunicaciones, S.A.B. de C.V. (OTCQX: MXMTY, BMV: MAXCOM CPO) ("Maxcom" or "the Company"), an integrated telecommunications company in Mexico, announced today its unaudited financial and operating results for the third quarter ended on September 30, 2016.

NOTE: The monetary amounts in this report have been presented in accordance with International Financial Reporting Standards (IFRS). Unless otherwise specified, the amounts are expressed in millions of current Mexican Pesos.

MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. AND SUBSIDIARIES FINANCIAL AND OPERATING HIGHLIGHTS

Figures in millions of pesos, except operating data

Item	3Q16	2Q16	% var
Total Revenues	712	584	22%
EBITDA	97	91	7%
EBITDA margin (%)	14%	15%
Net income (loss)	(461)	(197)	(134%)
Net margin (%)	(65%)	(34%)
Cash and financial instruments 1	686	678	1%
CAPEX	(245)	129	(290%)
Debt 2	2,609	2,457	6%
Net debt / LTM EBITDA (X)	5.1	4.9	4%
Customers	118,798	191,806	(38%)
RGUs 3	380,832	517,439	(26%)

1 Includes long- term restric ted cash. 3Q16; does not include proceeds from Megacable's transac tion

2 Debt is considered at face value and includes interest payable as of the end of the period

3 Revenue generating units

Relevant Events

At the end of the 3Q16, in accordance with our strategic plan, Maxcom decided no longer to provide voice, data and video services to its residential customers it the cities of Queretaro, Qro, Tehuacan, Puebla and Puebla, Pue. At the same time, our company signed an agreement with Megacable to ensure the continuity of telecommunications services to its residential customers in the aforementioned cities. As compensation for this operation, Megacable agreed to pay Maxcom the amount of USD$12.9 million. According to the contract, the first payment was received starting October 2016. In addition, Maxcom and Megacable signed a service agreement for the continuity of the service to customers in those cities until the migration is completed; cost and expenses involved will be refunded by Megacable. The resources obtained in this operation strengthen the financial position of the Company, enabling it to continue making investments that contribute to the development of its strategic plan. We remain open to analyze any potential offers for strategic transactions that allow us to be more efficient, profitable and cash flow generators in this business unit. In any case, we will look to maximize cash flow generation of this business unit.

On August 22, 2016, Maxcom did the "reverse split shares" through the cancellation of all of the titles representative of the CPOs; and carried out in the BMV the exchange of the titles representative of the outstanding shares of Maxcom to the date, for the titles representative of Maxcom consolidated shares, at a ratio of 1 (one) common share, nominative, without par value Series "A" consolidated per 42 (forty two) common shares, nominative, without par value, Series "A" outstanding on august 22. Viewed by CPO, the exchange ratio was 14 (fourteen) CPOs per 1 (one) new share.

Business Management: Operating Highlights

• Total Revenue Generating Units or RGUs, decreased 35% to reach 380,832 in 3Q16 compared to the same period of last year. The Company registered negative RGU net additions of 208,453 during the period. The total Company customer base decreased by 46% to reach 118,798 customers.

  The main factors that explain these movements are:

  • The sale of customers to Megacable

  • The divestiture of the public telephony business

  • The cancellation of prepaid cell phone contracts that were inactive

  • The cancelation of low-margin accounts from the residential segment

• When compared to the same period of last year, voice RGUs decreased 27% reaching 246,610. Voice RGUs include residential voice, commercial voice, public telephone lines and wholesale lines.

• Data residential RGUs decreased 41% to reach 96,645 compared to 164,756 in 3Q15, while data RGUs in the commercial segment increased 19% to 3,439.

• Total mobile RGUs reached 3,175 units which is 87% lower than the number registered in 3Q15.

• Pay TV RGUs reached 30,699 units which represents a decrease of 48% with respect to the figure recorded in 3Q15.

• The RGUs per residential customer rate remains on 2.0, the same reported in 3Q15.

• The RGUs per commercial customer rate went from 44.6 in 3Q15 to 57.7 at the end of 3Q16.

3Q16	Item	3Q15
116,557	Residential Customers	219,166
98,895	Voice	178,467
96,048	Data	163,355
2,660	Mobile	19,132
30,610	TV	58,695
231,832	Residential RGUs	431,139
101,339	Voice	182,557
96,645	Data	164,756
3,149	Mobile	25,003
30,699	TV	58,823
2.0	RGUs per Residential Customer	2.0
2,241	Commercial Customers	2,518
1,918	Voice	2,218
1,155	Data	1,236
8	Mobile	8
163	Other	165
129,405	Commercial RGUs	112,293
125,676	Voice	109,101
3,439	Data	2,898
26	Mobile	30
264	Other	264
57.7	RGUs per Commercial Customer	44.6
-	Public Telephony RGUs	25,271
19,595	Wholesale RGUs	20,582
380,832	Total RGUs	589,285
246,610	Voice RGUs (lines in service)	337,511
118,798	Total Number of Customers	221,684

Business Management: Revenues and Expenses

Revenues

Revenues reported in 3Q16 amounted to Ps.712 million, it presents an increase of 23% against 3Q15. Total revenues for the nine months ended on September 30, 2016 reached Ps.1,840 million, which represents an increase of 2% with respect to revenues of Ps.1,803 million recorded in the same period of 2015. Higher revenues in wholesale segment during the quarter explains this significant increase. Sequentially, revenues registered an increase of 22%, with a recovery in the wholesale and commercial business units with growths of 56% and 4%, respectively.

3Q16	2Q16	QoQ %	3Q15	YoY %
Residential	Ps.	171 Ps.	182	(6%) Ps.	188	(10%)
Commercial	173	166	4%	142	21%
Public Telephony	-	-	(100%)	15	(100%)
Wholesale	368	236	56%	233	58%
Total	Ps.	712 Ps.	584	22% Ps.	578	23%

WEIGHT (%) 3Q16

Wholesale

52%

Commercial 24%

Residential 24%

9M16	%	9M15	%
Residential	Ps.	540	29%	Ps.	585	32%
Commercial	501	27%	437	24%
Public Telephony	-	-	54	3%
Wholesale	799	43%	727	40%
Total	Ps.	1,840	100%	Ps.	1,803	100%

Residential

This segment represents 24% of total revenues generated during the 3Q16, a lower figure than the percentage reported in the 3Q15 and below the 2Q16. When compared to 3Q15, revenues in this business unit had a decrease of 10% or Ps.17 million. For the nine months ended September 30, 2016, revenues from the residential business totaled Ps.540 million, a decrease of 8% compared to Ps.585 million in 2015. This decrease in revenues is the result of the reduction in the customer base experienced during the year. Sequentially, revenues for this business unit decreased Ps.11 million.