America Móvil B de C : Q4 2022 Transcript

FINAL

Company Name: America Movil SAB de CV

Company Ticker: AMXL MM Equity

Date: 2023-02-15

Y 2022 Earnings Call

Company Participants

Carlos Garcia Moreno Elizondo, Chief Financial Ofcer Daniel Haji Aboumrad, Chief Executive Ofcer Daniela Lecuona, Head of Investor Relations

Oscar Von Hauske Solis, Chief Fixed-line Operations Ofcer

Other Participants

Bloomberg Transcript

Alejandro Azar, Analyst

Alejandro Gallostra, Analyst

Andres Coello, Analyst

Carlos de Legarreta, Analyst

Cesar Medina, Analyst

Lucas Chaves, Analyst

Marcelo Santos, Analyst

Phani Kanumuri, Analyst

Unidentifed Participant

Walter Piecyk, Analyst

Presentation

Operator

Good morning. My name is Nadia, and I'll be your conference operator today. At this time, I would like to welcome everybody to the America Movil Fourth Quarter 2022 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there'll be a question-and-answer session.(Operator Instructions)

Thank you. Now I would like to turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.

Daniela Lecuona {BIO 15302125 }

Thank you. Good morning, everyone. Thank you for joining us today to this conference fourth quarter 2022 fnancial and operating results. We have on the line Mr. Daniel Hajj, CEO; Mr. Carlos Garcia Moreno, CFO; and Mr. Oscar Von Hauske, COO.

Daniel Haji Aboumrad

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FINAL

Bloomberg Transcript

Company Name: America Movil SAB de CV

Company Ticker: AMXL MM Equity

Date: 2023-02-15

Thank you, Daniela. Welcome everyone in the fourth quarter '22 fnancial and operating report. And Carlos is going to make a summary of the results.

Carlos Garcia Moreno Elizondo {BIO 1713687 }

Thank you, Daniel. Good morning, everyone. At the beginning of the fourth quarter, uncertainty about infation and how much bringing it down would require in terms of additional interest rate hikes by the FED, drove long-term interest rates in the US to their peak for the year in October, at 4.24%. They remained very volatile the rest of the quarter, ending the year at 3.87%. Nonetheless, the impression they had peaked ended up helping several currencies in the region, particularly the Mexican peso and Chilean peso, which appreciated sharply vis-a-vis the dollar, with the Colombian peso stopping and then reverting slightly its decline of several months. Throughout the period the Brazilian real remained quite volatile and with no apparent trend, as the country was in the midst of a disputed election.

We added 3.3 million wireless subscribers in the quarter, of which 1.5 million were postpaid clients. Brazil led the way with 600,000 subs, followed by Austria with 322,000 and Colombia with 160,000. Our net gains in prepaid totaled 1.8 million with Mexico contributing over half of that fgure with 975,000 subscribers. Colombia came next with 546,000 and then Central America with 247,000.

On the fxed-line platform, we obtained 110,000 new broadband access. Argentina and Eastern Europe generated substantially all of them 69,000 and 40,000 respectively. Central America, Dominican Republic and Brazil added close to 30,000 each one.

Pay TV reverted the losses observed over the last several years with 97,000 new clients. These included 53,000 in Argentina, 36,000 in Eastern Europe and 34,000 in Central America. Although Brazil continued to post net disconnections, they were substantially lower than they had been in prior quarters, minus 60,000 in the fourth quarter whereas in previous quarters, they have covered between 150,000 and 200,000 clients.

In terms of access[ph] growth rates and correcting for the acquisition of our clients in the second quarter, our postpaid base continued to be the more dynamic one with a steady 8% increase year-over-year with prepaid coming next at 4.9%. Including our clients, the access growth rates at the end of 2022 came in at 8.8% and 6.8%, respectively. These fgures already refect 4.1 million clean-up of our wireless subscriber base in the quarter to do with former Oi clients that were not generating trafc. Broadband accesses remained very stable with a 2.4% growth pace. As for Pay TV, there has been a noteworthy shift in the expansion of its client base, which turned positive for the frst time in several quarters.

Our fourth quarter revenue totaled MXN216 billion, down 2.4% year-on-year in Mexican peso terms with service revenue, declining 1.4%. The yearly reduction in revenue in Mexican peso terms stems from the appreciation of the Mexican peso vis-a-vis practically all our main operating currencies except the Brazilian real. At constant exchange rates, correcting for the currency movements mentioned above, service revenue actually increased 6% year-on-year, which represent pace seen in the preceding quarter.

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FINAL

Bloomberg Transcript

Company Name: America Movil SAB de CV

Company Ticker: AMXL MM Equity

Date: 2023-02-15

EBITDA declined 4.4% year-on-year to MXN84.8 billion in the fourth quarter or MXN79.6 billion adjusting for extraordinary items. At constant exchange rates, adjusted EBITDA rose 5% as compared to 5.7% in preceding quarter, 4.6% in the second quarter and 4.8% in the frst quarter. The adjusted EBITDA margin remained almost fat at 37.8% year-on- year, 34 basis points reduction in relation to the year earlier quarter. The adjustments include: extraordinary revenue from the sale of towers by Telmex both in the fourth quarter of 2021 and 2022, and by Peru in the current quarter; the reduction in medical costs and property taxes levied on telecom infrastructure in Puerto Rico; and the elimination of a provision in Ecuador associated with the -- also with the payment obligations regarding telecom infrastructure. You can see the numbers here in this slide.

On the -- both mobile and fxed-line service revenue expanded at similar pace than in the prior quarter. Mobile revenue growth was robust at 9.8%, whereas fxed-line service revenue was slightly positive at 0.2%, very similar to that of the third quarter.

On the mobile platform, postpaid service revenue growth, 10.5%, stayed strong, but that from prepaid declined slightly from 9.5% in the third quarter to 8.6% in the fourth. Brazil posted 22.7% mobile service revenue growth, partly refecting the incorporation of former Oi subscribers. Mexico came in next at 9.1%, and then Eastern Europe at 7.2% and these are all in the mobile platform.

As for the fxed-line platform, revenue from both corporate networks and broadband services decelerated from the third quarter from 12.4% to 10.5% in corporate networks and from 3.6% to 2.9% in broadband services. However, Pay TV revenue continued its recovery, declining only 3.5% in the fourth quarter, its smallest decline in several quarters.

Broadband revenue increased faster in Eastern Europe, the Dominican Republic and Puerto Rico, all of them close to 13% pace with Colombia ofsetting a decline of the same magnitude on account of severe[ph] competition.

Corporate networks revenue climbed 10.5%. Together with postpaid, it was the fastest growing business line. Eastern Europe, Brazil and Ecuador stand out as the more dynamic ones in this segment.

EBITDA growth accelerated in Eastern Europe to 10.7% from 8.6% the prior quarter, in Mexico to 9.4% from 4.3%, more than double, and in Peru 5.3% from minus 0.9%. It remains fat in Austria and decelerated to 8.5% from 10.8% in Brazil and to minus 3.7% from minus 0.3% in Colombia.

Our operating proft totaled MXN44.7 billion in the quarter, down 10% in Mexican peso terms as depreciation and amortization charges locked at 1.2%. This incorporates the reduction in tower related depreciation charges pursuant to the tower spinof and the increased rights-of-use depreciation charges arising from the new tower lease obligations. After a comprehensive fnancing cost of MXN8.3 billion in the quarter, which was 57% smaller than the one observed a year before, we ended up with a net proft of MXN23.1 billion from our continuing operations, 5.3% greater than that observed a year before and of MXN13.7 billion pesos once the efect of the deconsolidation of Claro Chile

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Bloomberg Transcript

Company Name: America Movil SAB de CV

Company Ticker: AMXL MM Equity

Date: 2023-02-15

is taken into account. So again, the net proft of MXN23 billion from continued operations, which was 5% higher than the prior year.

Our cash fow and net borrowings of MXN7 billion, allowed us to cover capital expenditures in the amount of MXN160 billion, net shareholder distributions of MXN50 billion and labor obligations totaling MXN24 billion. The tower spin-of and net acquisition of ownership interest in diferent assets, including a portion of Oi mobile clients resulted in a net receipt of MXN35 billion, which you can see in the slide.

Excluding leases, our net debt totaled MXN389 billion year-over-year, it was down MXN19 billion relative to year-end fgure in 2021. Our net debt to EBITDA ratio came down to 1.3 times at the end of the year.

So with that, I will pass the foor back to Daniel. Thank you.

Daniel Haji Aboumrad

Thank you, Carlos. We're going to start with the Q&A.

Questions And Answers

Operator

Thank you. (Operator Instructions) Our frst question goes to Lucas Chaves of UBS. Lucas, please go ahead. Your line is open.

Q - Lucas Chaves {BIO 20825563 }

Hey guys, thanks for having my question. I would like to understand what you have in mind in CapEx for the near future, especially considering 5G and how that would afect shareholder distribution? And if I may ask a second question, on Mexico, if you could give us more, let's say, around the mobile strategy adopted during the quarter, mostly to understand this strategy going forward in prepaid plans and if the space occupation is going to continue going forward? Thank you very much.

A - Daniel Haji Aboumrad

Thank you. First question on the CapEx, what we said last year is that we're going to have $24 billion CapEx for the next three years. And I think it's the target that we have that includes frequencies. And last year, I think we do 7.9, so this year our target is around 8,

8.2 to -- because we have something last year that we're going to book this year. But 5G, and what I said one or two years ago is that the 5G will not increase a lot of CapEx because what we have been doing is investing in 5G, so we have putting the bases, fber to the node, a lot of the things that 5G need. So the only thing that we need to put to increase and to do 5G is more the radio. Okay. A little bit on NFB[ph] and some of the other things that we need a little on electronics, but it's not at the investments to do 5G in our network. We have been investing in our networks and modernizing it. So it's not something that -- what we're targeting for this year is to increase our fber in some

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FINAL

Bloomberg Transcript

Company Name: America Movil SAB de CV

Company Ticker: AMXL MM Equity

Date: 2023-02-15

places, we're seeing some opportunities in some countries doing more fber and increasing our fxed broadband and that's more or less where we're going to focus, we're going to focus on the digitalization of all the company to save cost. We have been doing that for the last fve years and that's something that we are doing. So more digital, more -

• everything more new and cutting costs. You have to invest to do better systems, IT, so that's more or less where we're investing. Our target is MXN24 billion in three years and we are are on that.

On Mexico, what's your question specifcally on Mexico?

Q - Lucas Chaves {BIO 20825563 }

It's more to understand the strategy regarding mobile strategy, especially seeing the net additions in prepaid, if this state is going to continue going forward. And thanks for the frst question.

A - Daniel Haji Aboumrad

On Mexico, I think we're doing good. We have around 100 cities in 5G. We are in a very good position in 5G. I think our competitors really, they are not competing in 5G. We have good quality, good name, good distribution, good top of mind in Mexico. So we are doing good. We're growing. We are growing in prepaid as well. Since 2020 with the pandemic, I think the postpaid subscribers decreased a little bit, but this year -- last year 2022, it started to grow again. And this quarter we have 60,000, but we feel we're doing also very good in postpaid. So we are -- we have a good strategy. We are with a very good name in the market and that's good.

What is happening a little bit is in 2020, the wireless -- fxed wireless, we grew a lot in the fxed wireless because people stay at home and needs Internet and that is becoming -- is reducing, we're having these connections on that because a lot of companies and Telmex is putting fber, so they're disconnecting a little bit the fxed wireless. But in the normal form, we're growing also good. So that's more or less what we have been seeing. So that people is starting to move, they need a phone, they need IT and they are not staying at home, so they are, let's say, moving from the wireless in fxed for -- from the wireless Internet to mobile Internet. So that's what we have been seeing in the last six months.

Q - Lucas Chaves {BIO 20825563 }

Okay. That was very clear. Thank you very much.

A - Carlos Garcia Moreno Elizondo {BIO 1713687 }

Thank you.

A - Daniel Haji Aboumrad

Thank you.

Operator

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