America Móvil B de C : Q1 2022 Transcript

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Daniel Hajj, Chief Executive Officer

Carlos Garcia Moreno, Chief Financial OfficerDaniela Lecuona,Head of Investor RelationsOscar Von Hauske,Chief Operating Officer

Alejandro Chavelas, Analyst

Carlos Legarreta,AnalystDavid Joyce,AnalystLeonardo Olmos,Analyst Marcelo Santos, AnalystWalter Piecyk,Analyst

Presentation

BloombergTranscript

Good morning, my name is Lauren. I will be your conference operator today. At this time, I would like to welcome everyone to the America Movil, first quarter 2022 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. Now I'll turn the call over to Ms. Daniela Lecuona, Head of Investor Relations Daniela. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today to discuss our first quarter financial and operating report we have on the line. Daniel Hajj, our CEO, Carlos Garcia Moreno, CFO and Oscar Von Hauske, COO.

Thank you Daniela. Good morning, everyone, [ph] to 14 in the call. Carlos is going to make a summary of the first quarter financial results.

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Thank you, Daniel. Good morning, everyone. Well, the first quarter of 2022 was marked by sharp increases in interest rates very much across the board with five-year U.S. pressure

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[ph], nearly doubling and 10 year rates rising from 151 to nearly 250 as concerns of our growth inflation rates net investors to revise or projections regarding future monetary policy moves by the Fed and other Central banks.

These moves happened even in the face of the Russia invasion of the Ukraine, which initially causing refers to come down as investors look for us. [ph] notwithstanding these increases in rates. The main Latin American currencies actually appreciate it be sort of the U.S. dollar in the period, partly as a result of interest rates going up even more rapidly in

Gulf countries, we added 2.2 One million wireless subscribers in the quarter, of which 1.9 million were posted subscribers we over half of them coming from Brazil has nearly 300,000 from Colombia and to congratulate 15,000 from Austria as regards to prepaid subscribers, we added 1.3 million with Mexico contributing 485,000, Colombia 349,000 and [ph] America approximately 200,000 each.

Our wireless subscriber base ended March with 219 million clients on the fixed line

segment, we ended up with 7,400 million, are using March practically flat from a year before. We connected 232,000 broadband accesses, including 68,000 in Argentina, 63,000 in Mexico, bringing the total to 30.7 million accesses 2.3% more than a year before. Our postpaid subscriber base exhibited the fastest rate of growth over the last 12 months at 8.4%, followed by prepaid with 5% fixed broadband accesses came in next of 2.3% both fixed balls and pay-TV continue to register declines, the Formula one has leveled off. We're the [ph] one has remained stable. Our First quarter revenues reached

BloombergTranscript

MXN211 billion, up 2.4% with service revenues rising 3.3% there were no major differences there into growth of the denominal peso revenues and those at constant exchange rates the clutter excluding Argentina, given the very high inflation rate in the country. The Mexican peso appreciated versus the U.S. dollar and the Euro. But depreciated. This was all other major Latin American currencies with the exception of the Argentinean peso and most notably against the Brazilian real 12.1% mobile service revenues expanded 6.3% year-on-year very much the same pace. I think the preceding quarter and substantially higher than that. Seen a year before, 1.2% on the fixed line platform sales revenue declined 1.1% in the first quarter after increasing 0.5% the prior

one, mostly on account of faster declines in both revenue growth, down 5.8% annually compared to minus 3.6% in the preceding quarter.

A Year before fixed line service revenues had been practically [ph] year-on-year at 0.1%.

Colombia, and Peru experienced the chartered deceleration relative to be pay. We had

The year-earlier quarter. Both prepaid and postpaid revenues maintained the Postpaid 88% and 5.2% respectively. On a sequential basis. Much higher than the 1.4% and 1.0% rate posted the year-earlier quarter. Lastly, let me weigh in terms of mobile service revenue growth with 10.3%, followed by Peru and Mexico were 9.7% and 9.5% respectively. Colombia and Chile, saw decline in the rest of growth with Colombia has been nearly flat. And Chile is extending the decline to minus 8% corporate networks was the fastest growing business line in the fixed line platform with 4.9% in the quarter with broadband revenues coming next at 3.4% a year before they had posted 2.4% and 13.8% [ph], respectively.

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PayTV revenues continued to decline at a rate of 6%. For the fixed voice revenues were down 5.8%, both of them in line with the reaching a year before. Broadband service revenue expanded faster in the Dominican Republic 15%, Peru 11% and Eastern Europe

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8%, I'll cover network revenues rose more rapidly in Eastern Europe 23%, Brazil 16% and Colombia and the Dominican Republic 12% each. Corporate network revenues both more rapidly in Eastern Europe. 23% and our EBITDA rose 4.2% year-on-year to MXN81.1 billion they were 4.3% of constant exchange rates with EBITDA margin expanding to 38.4% from 37.8% a year before. That's 0.6 percentage points margin expansion year-on-year.

Dominican Republic, Eastern Europe, Central America attributed, the highest annual EBITDA increases at 10%, 8.9% and 10.6% all countries except for Chile and Peru posted EBITDA increases in the quarter from a year before. Most concrete with Peru and Chile.

The main exceptions increased actually the EBITDA margins. The expansion in EBITDA recovering about at this point one percent increase in our operating profit, which totaled

MXN39.8 billion. Our operating profit and our net comprehensive financing income in the amount of MXN7.3 billion help bring about our net profit of MXN30.8 billion in the quarter, which compares to a net profit of MXN1.8 billion in the year-earlier quarter. The comprehensive In conventional [ph] came about as a result, the foreign exchange gains in the amount of MXN22.6 billion extending from the appreciation of the Mexican peso versus the U.S. dollar and the Euro in particular during the period.

We raised 28.9 billion units announcing the quarter, which helped us covering MXN28.6 billion in Capital expenditures, MXN9.2 billion in share buybacks. Drive as much as a year before. MXN6 Billion in labor obligations you should note that the first quarter of this year cost for a seasonal increase in working capital as accounts payable on past purchases of network equipment and franchise, from new as well as income taxes for the prior fiscal year and telecom duties in some countries, including Mexico and Brazil.

BloombergTranscript

These seasonal requirements for working capital is reversed in later quarters it did not manifest itself in the first quarter 2021 because of the significant reduction in capital expenditures and [ph] purchases implemented in 2020. But the second half on account of the pandemic, you can see in the chart. I think it's a very telling how stable and how well defined our working capital requirement side. I will net debt excluding leases in that March of MXN425 billion increased by MXN17.4 billion relative to December. It was equivalent to 1.83 times last 12 month EBITDA. we disposed of TracFone in November 2021 and the impact of the consolidated EBITDA is already reflecting in platform. Please note that follows two major financings are rest in March. One, our five-year, $1 billion equivalent seem to get it loan denominated in Mexican pesos and a 10-year bond issue in the amount of $1 billion so that's 2 billion in all [ph] both were arranged by America Movil, they will become obligations of future Latin America upon. It's been a from America Movil. Expected to take place in the third quarter the proceeds will be fully applied to the reduction of America Movil that. So with that, I would like to I pass the floor back to Daniela for the Q&A session. Thank you all.

Thank you, Carlos. We can start. Please.

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(Operator Instructions) our first question comes from Leonardo Olmos from UBS. Leonardo. Please go ahead.

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Hi, good morning everyone. So my first question is related to Colombia, can you discuss a bit both the mobile and the secret segment, we noticed that churn with those, but still it is ARPU is going down. Net adds we celebrated by [ph]. Can you discuss this competition has changed, so should we expect the same dynamic for the rest of 2022.

A - Daniel Hajj

Yes. what we have been seen in Colombia is as we know, and as we have been talking for the last year, the new competitor on the market with more promotions more new plans with more mega and more data, but all. Overall, this quarter we grow around 300,000 new net adds in postpaid and it was a very good growth.

What is happening. And it's true and you can see that is that our ARPU is declining. And the reason why is declining is because as you give more data in your plans then people decide to read those to amount that they pay. So that's really what happens and when you give those promotions. But the trend piece is still we are growing.

And it's very important that I want to mention and we have been seeing that for all this year as that we have a very good network a strong network and it's very good. Our brand people is preferring our brand. We have a very good NPS and I'm glad all is very strong. There we have excellent customer care and very good distribution.

BloombergTranscript

So all overall people is still preferring our network. Even though that the competitors are doing more and higher promotions that what we have been doing. That's all we are the market. No doubt. The market is very competitive, both I think what we have been doing is that these last quarter.

I think it's good, it's still growing in postpaid and postpaid very good growth, 300,000 also growing in prepaid and it's been good on beyond the skype I'm talking about peak I think on the peaks on the Peak side, we grow 20,000 in broadband one-off, and it's very important. We're giving quadruple play as the convergence. And that's all

So helping us. We are the company that giving full foreplay and to our customers and I can tell you, may be 60% of our customers, they already have the our combo our convergent plan and it's doing very good. So that's where we are and I don't know what's everyone want to talk a little bit about the peaks in Colombia.

A - Oscar Von Hauske

All mentioned we have here [ph] fiber as well this year. That complementary offering market.

A - Daniel Hajj

And we do 37,000 in TV that it's also a good growth in TV saw all over all I think. 67,000 and 70,000 in big slide, so all overall I think we are doing. Okay. There is not only new.

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There is also a lot of fiber competition there. We're putting also fiber and your [ph[ good speeds to our customers.

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Colombia is in a very high competitive environment, but we are doing good in the other side and something that we're doing also good is in the corporate customers. Please Oscar.

A - Oscar Von Hauske

Now in the corporate market offering new value-added services. Now we have got a very peace inauguring cloud broker relating data sequence there as well as growing pretty nicely. where we focus on small business not only with to be highlighted. Second, the market I think all.

I think all Overall, we are doing. Okay. In Colombia, of course it's under a very highly competitive with a lot of competition both there. We feel that brand distribution network combos the comparasion the corporate market. Everything I think we have been over there and we're doing okay.

A - Carlos Garcia Moreno

And you are the just one comment on the reduction the ARPU Daniel mentioned. Yeah, it is almost identical. On a year-on-year basis. So what we saw in the prior quarter and quarter before that. So the effect of our natural reduction really happened a more or less a year ago, and it has been remained stable since then.

Q - Leonardo Olmos

BloombergTranscript

Okay. Great. Okay, thank you. Thank you very much for the to comment me on what my question, good thing that you mentioned corporate. In the end, Oscar. Can you please comment on you Daniel on what you expected for B2B for corporate in the remaining 2022 for example the performance was incredible in first quarter, was there any type of seasonality, or should we expect this type of growth for the remaining year.

A - Oscar Von Hauske

No, I think I'm going to talk, not only in Colombia. I think in the corporate side, we are focusing a lot in America mobile. We have a good people. Now let's training people and we have good products all. Overall, we are focusing there and we have very good results specifically in Colombia. Oscar.

In Colombia, we have a very large data center tier-311 [ph] of the best in class. We have it makes us [ph]. Not only that we are complementing that connectivity we expanded our

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