America Móvil B de C : Q2 2022 Transcript

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Bloomberg Transcript

Daniel Hajj Aboumrad, Chief Executive Officer

Carlos Garcia Moreno Elizondo, Chief Financial Officer

Daniela Lecuona, Head of Investor Relations

Alejandro Gallostra

Andres Coello

Carlos De Legarreta

David Joyce

Diego Aragao

Fred Mendes

Leonardo Olmos

Marcelo Santos

Walter P Piecyk Jr.

Alejandro

Chavelas

Phani Kanumuri

Good morning. My name is, Drew, and I will be your conference operator today. At this time, I would like to welcome everyone to the America Movil, Second 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 Ill turn the call over to Ms.Daniela Lecuona, Head of Investor Relations.

Hi. Thank you.

Good morning. Good morning to everyone. Thank you for joining us today to discuss our second quarter financial and now some of operating results. We have on the line Mr.Daniel

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Hajj, CEO and Mr.Carlos Garcia Moreno, CFO.

Thank you Daniela, good morning everyone. Carlos is going to make a summary of the second quarter of 2022 financial and operating report.

Hey. Thank you Daniel.

Bloomberg Transcript

Good morning everyone. The trend towards higher interest rates in the US dollar market that began in March continued unabated in the second quarter as inflation fears dominated sentiment, with both short and long-term interest rates rising. By the second week of June long term rates peaked and began a downward trend as markets shifted their focus towards the negative impact on economic activity that would be derived from substantially higher short term interest rates. By the end of the quarter the dollar had appreciated vis-a-vis all major currencies in our region of operations, including the Mexican peso a Colombian Peso and the -- We are busy June, we click on the 6 million -- of subscribers, after incorporating 12.9 million subscribers from the acquisition of -- in the field.

Organism, we have new editions of 3.1 million, which include 1.8 million posted subscribers, and the city led the way in terms of posted at work having added 749,000 subscriber all about Colombia with 272,000. We gain reported 1.3 million subscribers, ultimately reconnected 186,000 Mexico and Columbia accessing of which half came from Brazil. Segment we connected 6000 came from --. 38,000 from Eastern Europe, 25,000 from Central America and 20,000 --.

of fastest growth, mobile phone paid was the main driver growth at -- followed by mobile prepaid at 4.2% -- Continuous -- on year basis although -- Our revenue reached MXN217.4 billion in the quarter, 3.3% more than in the year and -- Mexican peso -- next revenues is expanding 4.5%. (inaudible) if we perform a fit between the impact from the in corporation of owner or client and revenue from May 1, including that affect service revenues were offered 4.2%, excluding that effect. Both space they have both early work with working here in the quarter, approximately 8.5%, one of your clients are taking into account. We 20% more or less every variable 13.7% without oil.

Brazil was our top performer as I would have Eastern European operations of 49.6% growth, Mexico 8.8%, Peru 7.5%, Dominican Republic 6.9% and Austria 6.2%. Those are revenue was of 3.3%. A familiar face to that of the place, we have copper Network. Well, network revenue growth increased to 28.9% from 4.8% of the value of quarter.

The declining capacity revenue moderated somewhat to 5.3%, mostly on account of improvement in Beazil. The top performers in broken revenue expansion with the Dominican Republic 3%, the Eastern Europe at 11.3%, and Puerto Rico 10.1%. This slide does not include -- because of its high inflation, number live it must be pointed out the --

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Bloomberg Transcript

60 became the fastest actual growth in the --. Second quarter EBITDA sort of 82.7 billion pesos or 4% includes -- and 4.2% is constant --, with the EBITDA margin rising 0.2 percentage pointed 3.3%.

EBITDA expanded 4.2% in our -- operation. April did pretending volumes, 8.6% in the Dominican, and 12.2% in Mexico. I will operate profitable 41 billion pesos in the quarter, resulted in net income of 13.7 billion persons subject comprehensive demanding cost of

18 billion pesos, which approximately half been making custom. Throughout the first half of the year, our operating cash flow -- working capital employment, fully covered our capital expenditures in the amount of 65.6 billion pesos We raised 43.8 billion pesos year- to-date which helped us fund 19.6 billion pesos MXN19.6 billion for the purchase of Oi and a price adjustment related to the sale of Tracfone and 11.6 billion Pesos in labor obligations.

Shareholder distributions of MXN16.3 billion in share buybacks were partially funded by MXN3.2 billion in dividend income from our KPN and Verizon stakes. Given the high seasonality of our working capital requirements we foresee a reduction in the second half of the year. Our net debt excluding leases stood at MXN414.7 billion at the end of June, up MXN7.1 billion increase relative to December. It was equivalent to 1.36 times net debt to LTM EBITDA Approximately MXN55 billion in debt obligations will be transferred to Sitios Latinoamerica upon its spin-off from America Movil pretty much expecting to take place in

• With that I would like to pass the floor -- Daniela for Q&A.
  Thank you, Carlos.

So our first question is from Alejandro Gallostra. Your line is going to be open shortly. Your line is now open Alejandro. Go ahead.

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Bloomberg Transcript

Thank you. Good morning everyone. And morning Carlos and Daniel. As of couple of questions about Brazil.

We have seen company reporting stable -- in a sequential basis following the integration of voice more subscribers. Only expect their purse to decline slightly and the new subscribers mix. So could you please explain what is behind it -- in our facilities quarter ? This is my first question. Thank you.

We don't hear you very well Gallostra -- can you repeat it, please because we don't hear you very well.

Sure. -- question -- business in Brazil. Since we have seen the company reporting stable outputs in the country on a sequential basis.

Only integration of always mobile subscribers, although I expected outputs to decline slightly on the new subscriber mix. So I was wondering if you could explain what is behind the -- opposition in Brazil this quarter?

Nothing new. I think what -- we have this quarter in Brazil. In Brazil we grow part, because we get the subscribers from oil around 12 million subscribers for and something on both state and the resting the prepaid, the organic growth besides oil was very good around 14% is what we have.

And we have very good subscriber base, we still are doing our combos, we are also having a very good network. Number portability is, we're gaining subscribers in number portability to all overall. I think, we are doing a very good job in the prepaid and postpaid subscribers in Brazil. And that's why the ARPU is stable this quarter.

As you point out Alejandro, I think, that we had already had a slight decreasing in the first quarter, numbers even after the operation of the other side. Yes, we're having a 2.1 % increase in -- to '22.

Okay, great, thank you. And my second question is related to the -- business in Brazil.

Since a few days ago, the CEO of Claro Brazil discard a difficult competitive environment in the fixed broadband market in the country, mentioning a high household penetration market prices that do not provide an adequate financial returns a business segment in his view. Obviously, nevertheless, you and your another firm's to Brazil continue You're going over and 50th in the country. So pretty please share with us your views on the competitive

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Bloomberg Transcript

environment in broadband and what are the opportunities and financial returns that you see in the fixed Tracfone business in Brazil that justify upgrading your cable infrastructure TV, DTH in the country. Thank you.

Well, I think the -- it's, I don't know what's exactly what those bellick's says, but it's true the big broadband market in the country is a it's a difficult market to the which we have been having other competitors and a lot of companies putting fiber to the home for the last three years. So there's the other competitors let's call them the other competitors has being growing, they are -- The ISPs a lot of ISPs are over there and putting fiber but I think in our case we have the all the telecom business. Also we have Broadband, we have TV, we have --, then we have corporate, and we have all the corporate applications and new services that we're doing so for us, it's I think good business to do fiber, to make the combos and to grow in the Brazil market. We still have some areas where we haven't have some fiber and we're putting, I think this quarter we entered in 24 cities, new cities in Brazil, and we're going to do it in fiber or in the other side either we're going to do also five -- so we have two different ways of giving as the broadband, and we're going to start maybe this third quarter to do more 5G's in Brazil.

So with the fiber plus the 5G, I think we have a good telecom service for all the customers, and I think it's been a good business for us. Although what well exceed saying, that the broadband market is very competitive, it's true. It's a lot of competition, a lot of ISTs, a lot of regional competitors, but we're doing okay. I think we have a good penetration in our network, were penetrating very good all these new homes that were having good artists.

So all overall we're okay. what was doing in Brazil?

Great. Thank you, Daniel. Thank you, Carlos.

Thank you. I think the conditions for a company like Claro are deepening than the conditions for the ISPs in Brazil. I think it's totally, we have all the services we have access to financing, I think it's going to be different what the rollout, what they are starting to do three or four years ago than what they are going to do the next three years. The financing is going to be differential.

Let's see how it's going to behave in the next year's the broadband market in brazil.

Okay. Thank you for your comments.

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