América Móvil Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
April 17, 2024

There are 12 speakers on the call.

Operator

Good morning. My name is Candice and I will be your conference operator today. At this time, I'd like to welcome everyone to the American Mobile First Quarter 2024 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 Thank you.

Operator

I would now like to turn the conference call over to Ms. Daniela Luquana, Head of Investor Relations.

Speaker 1

Thank you so much. Good morning, everyone. We're very excited to have you today on the line discussing our financial and operating results for the quarter. We have Mr. Daryl Haj, our CEO Mr.

Speaker 1

Carlos Garcia Moreno, CFO and Mr.

Speaker 2

Good morning. Welcome to the America Movil Q1 financial and operating report. And Carlos is going to make a summary of the report. Carlos? Thank you, Daniel.

Speaker 2

Good morning, everyone. Thanks for being seen

Speaker 3

the call. Well, the strong rally in interest rates that took place in the latter part of 2023 came to an end in the Q1 as strong employment readings and other indications of a still vibrant economy kept pushing back the timing of expected reduction by the Fed of this hand rate and calling back the expected number of such reductions to be had this year. The Mexican peso, which had depreciated slightly versus the dollar at the beginning of the year, dropped off the interest rate increases and resumed the tapestry in France, gaining ground versus the dollar and all other currencies in our region of operations. In the Q1, we added 1,500,000 wireless subscribers, of which 1,300,000 were post tech clients, including Brazil with 555,000, Austria with 260,000, Colombia with 126,000 and Mexico with 105,000. On our prepaid platform, we gained 263,000 subscribers in the period.

Speaker 3

Colombia added 378,000 followed by Argentina with 226,000 and Brazil with 146,000. On the other hand, we disconnected 584,000 subscribers in Central America, mostly on account of a cybersecurity incident that affected our ability to activate clients. On the fixed line segment, we connected 562,000 new broadband the best performance in 4 years. Mexico was the main contributor with 325,000 clients, followed by Brazil with 92,000 and Colombia with 23,000. Our postpaid base increased 6.4% year on year while fixed broadband accesses were up 4.8%.

Speaker 3

We continue to move specific lines and fixed postlines and this has been a secular trend for quite some time. Our first quarter revenue totaled MXN 203,000,000,000 with service revenue expanding 1.1 percent in pesos to MXN 271 1,000,000,000 and oil revenue declining 71.2 percent 0.7 percent to MXN2.4 billion. The latter figure reflects extraordinary revenue in the Q1 of 2023 on account of the sale of towers by Dominican Republic and Peru. This quarter, there were practically no towers. At constant exchange rates, Severed revenue increased 5%, up from 3.7% in the preceding quarter.

Speaker 3

We saw an acceleration of revenue growth on both the fixed line and the mobile platforms, as you can see in the slide, which improved sequentially from 3% to 5.1% on the fixed line side and from 4.2% to 4.9% on the mobile side. So an acceleration in revenue growth on both fixed and mobile, which means an acceleration of segment revenue growth in America Movil as a quarter. In most of our main markets, including Mexico and Brazil, service revenue growth exceeded inflation for the period, with Austria and Colombia being the principal markets where revenue did not increase in real terms. Mexico was the main driver behind the fixed line revenue expansion, which went from 5.9% in the preceding quarter to 9.7% in the current period, the fastest rate of growth in years. It was followed by Peru, where the revenue growth rate nearly doubled sequentially from 4.4% to 8%.

Speaker 3

Brazil reported a 1% increase, its best showing in 7 years, the headwinds from Pet TV over the last 5 years gateway to solid broadband revenue growth. Within the fixed line platform, corporate networks revenue, which represent 21% of fixed line service revenue, was a more dynamic business line, climbing 13.5% year on year followed by broadband services that were up 6.4%. On the mobile platform, in Mexico, Brazil and Peru where the countries revenue growth picked up the most sequentially growing from 4.5% to 5.9% in Mexico, from 7.1% to 8.4% in Brazil and from 2.6% to 4.9% in Peru. Colombia returned to positive mobile revenue growth after 2 quarters of declines. EBITDA came in at ARS80.6 billion.

Speaker 3

It was 2.6% lower than a year before on account of the extraordinary tower sales for the Q1 mentioned before, which affected the annual comparison. But at constant exchange rates and adjusting for Itau sales, EBITDA increased 7.5% year on year, its fastest pace in 8 quarters, buoyed by strong subscriber and revenue growth on both platforms and consistent controllable cost and expense. Our operating income reached ARS4.8 billion, a 7.6% decline from the year before correcting for the cargo sales. It was up 2.5% in Mexican peso terms and 13% at constant exchange rates. Our comprehensive financing costs totaled MXN13 1,000,000,000 in the Q1.

Speaker 3

They were close to 0 a year before on the back of strong foreign exchange gains that had amounted to MXN13.7 billion then. This year, we instead booked MXN1.7 billion in foreign exchange loss. We registered a net profit in the amount of MXN13.5 billion that was equivalent to MXN0.22 per share and MXN0.25 cents per ADR. In cash flow terms, we obtained net financing in the amount of MXN 17,400,000,000, which helped us fund our capital expenditures of COP 1,800,000,000 and covered COP 4,800,000,000 in share buybacks and COP 6,500,000,000 in labor obligations. In the first part of every year, we have mentioned several times, we have we faced working capital requirements that need to be financed.

Speaker 3

And on top of it, in March, we have to pay duties on the usage of spectrum and several telecom related taxes in various countries. And these taxes, duties are paid for the most part in March. This was an important it's an important amount that we don't see every quarter, which in this particular quarter add up to nearly MXN 13,000,000,000. So every year, we have to make this payment. Every year, it's in March.

Speaker 3

And this happened this year was it amounted to nearly MXN 13,000,000. Our share buybacks in the first quarter, which were MXN4.8 billion I mentioned before, were 2.5 times greater than those of the year earlier quarter and 9% greater than those of the Q1 of 2022. In fact, this quarter, we acquired 3x more shares than the quarter of last year than the year before. And in terms of leverage, as you can see in the slide, it's been very flat. We've been for over a year practically flat at 1.5x debt to EBITDA.

Speaker 3

We expect that we will be we will remain within the range that we have mentioned between 1.3x and 1.5x net debt to EBITDA. So with that, I will pass the floor back to Daniel for Q and A. Thank you, guys.

Speaker 2

Thank you, Carlos. We can start with the Q and A.

Operator

Thank you. Our first question comes from the line of Bitor Tomita of Goldman Sachs. Your line is now open. Please go ahead.

Speaker 4

Hello all and thank you very much for taking our questions. We would have 2 questions from our side. The first one is on they both are on Mexico. The first one is on the commercial strategy for Mexico Broadband. If you could give us an update on that commercial strategy following your investments in fiber and also amid the swift improvements in volume trends there and also your policy of not raising prices in Mexico?

Speaker 4

And our second question would be on the very solid EBITDA margin performance you saw in Mexico. If you could give us some more color on the drivers supporting that margin and on whether this 42% margin level could be sustainable in coming quarters? Thank you very

Speaker 5

much. Well,

Speaker 2

talking on Mexico, first in the peak side, I think all the big investments in fiber that we have been doing for the last 3 years, I think they are working and we're having good. What we put in the report is that we have around 17,000,000 fiber households. Home passes. Home passes and 80% of our customers are already with fiber. So helps a lot to reduce the churn and the customers are in with a very good speed with service.

Speaker 2

So that helps. The second one is that we have good packages. We haven't increased prices, and we have very good packages in the market. A lot of bundling in that. We do some streaming.

Speaker 2

We do more speed. And that's working. And the operation also all around the customer experience, it's every day is doing much better in the fixed side. Oscar, I don't know if you want to

Speaker 3

add something. No, I think you already covered.

Speaker 2

So I think that's and it's working and we have the best growth of broadband subscribers this quarter since I think some years that we have more than 300,000. So it's working, less churn, good service, good speed, fiber, new packages. So all around makes a good very good for our customers, a good consideration. Sorry. Offer.

Speaker 2

Offer, a very good offer for our customers. In the margin, I think in Mexico also in the wireless, our 5 gs network is working very good. I think we already have 12550 with 5 gs, good coverage, good quality. And what we're seeing is we are also not increasing prices in the wireless side. And people what we're seeing is that our people is choosing for a new plan, a higher plan, moving for a better ARPU, more data, and that is working very good too.

Speaker 2

So all the 5 gs investments that we are doing are working very good in Mexico. So those are the two things that we're seeing in Mexico.

Speaker 4

Very clear. Thank you very much.

Speaker 3

Thank you. Thank you.

Operator

Thank you. Your next question comes from the line of Alexandre Olmos of UBS. Your line is open. Please go ahead.

Speaker 2

Hello. Can you hear me well? Yes. Okay.

Speaker 4

Okay. Good morning, everyone. First of all, congrats

Speaker 6

on the revenue performance. We saw a few records in both mobile and digital. Glad to see it. But I'll central my questions on CapEx. We noticed Q1 had a low figure.

Speaker 6

Of course, there's seasonality. Can you discuss a little bit how do you expect the seasonality of CapEx throughout 2024?

Speaker 2

Can you we don't hear you very well. Can you talk a little bit slowly because we don't hear you so well?

Speaker 6

Yes. Better now?

Speaker 2

Better, better now.

Speaker 6

Okay. So, first I said congrats on the revenue performance. We saw a few records on mobile and fixed set. Very glad to see it. And now I'll center my questions on CapEx.

Speaker 6

We noticed a low figure in Q1. And the first question is how what's the seasonality you expect on the remaining 2024? Should we continue to expect the guidance to be matched? And second, going forward in 2025, do you expect the CapEx figure to go back to $8,000,000,000 per year? Thank you very much.

Speaker 3

Well, as

Speaker 2

we said last call, we have like a 3 year plan in the CapEx. And the rest what we're going to do this year is around €7,100,000,000 We are on track on that. We do a little bit more than previous years. And that is helping us, as I said, fiber in Mexico, 5 gs in other countries, the data centers, a lot on corporate services, applications and that is helping us a lot. We think that we are okay with what we have been what we're going to invest this year.

Speaker 2

And your question for the next years, we're still reviewing what we're going to do in the next 2 years. We still don't know. But this year, I can tell you that our CapEx is going to be 7.1%, 7.2%, I think is what we said last call and we're on track on that. So that's what we can say.

Speaker 6

Okay. This is good news. Thank you very much. Have a great day.

Operator

Your next question comes from the line of Walter Piecyk of Leithead. Your line is now open. Please go ahead.

Speaker 7

Yes. Hi. This is Joe for Walt. Thanks for taking the question. You discussed Mexico and the dynamics driving growth there.

Speaker 7

What's happening in the other markets that is giving you the ability to accelerate revenue growth? I know you mentioned that it succeeded inflation in most of the markets. Is it just bundling? Are there price increases available there?

Speaker 2

We have to well, what we're doing in Mexico is exactly what we're doing in other markets. We're investing in 5 gs. We are improving and giving better plans, moving ARPUs, doing fiber. In some markets, we increased prices, not in all of them. In some of them, we increase.

Speaker 2

In other ones, we don't increase depending on the competition, depending on the segment, depending on what we're selling. Maybe in broadband, we don't increase in wireless yet. In prepaid, I think we are not increasing in any market any price. So it's a mix of everything. But what we are doing in all the market is investing in 5 gs, having a good network, giving good packages, moving better ARPUs.

Speaker 2

And in Oscar can talk a little bit what we're doing in the corporate side that is giving us a very good increase in revenue. So

Speaker 3

No, as we mentioned before, we are pushing in the market what we call digital services. So within these digital services, we include all there is a cybersecurity, cloud, network management. And in cloud, we are reselling software as a services, infrastructure as services and has been very well resilient in the market. And as well, we are doing a lot of network management moving from MPLS networks to SD WAN and has been working pretty good on the B2B market.

Speaker 2

Yes, we just launched a new data center in Peru. We haven't had one there. So we are launched and we finished in January. So we're going to put also more corporate focus on this market. I think we are in all the markets we're having already corporate services.

Speaker 2

I think best networks and best customer service gain better cost, better clients. So and that's what's happening in Mexico, in Brazil, in Colombia, in Peru, in Dominican Republic, in Central America, all around Austria. Austria, Austria is doing very good also.

Speaker 3

And I think what's also important to not underestimate the change in Brazil. Brazil was the main headwind that we were facing on the fixed line platform because ATV used to be the largest revenue line the largest revenue line. And but over the years, broadband has really more than overtaken PayTV. So the headwinds from PayTV are now being felt less. They are less important.

Speaker 3

So we are confident that we can continue to grow revenues on the Fiseline platform in Brazil going forward. Brazil and all

Speaker 2

last year we do around in fiber, I think we do 14,000,000 house home passes. So that helps to sell and to do more customers in broadband.

Speaker 7

Great. Thanks.

Operator

Thanks. Your next question comes from the line of Bralorne Mendez of JPMorgan. Your line is now open. Please go ahead.

Speaker 5

Hello. Good morning. Can you hear me?

Speaker 2

Yes. Yes.

Speaker 5

Perfect. Thank you so much. Two questions, please. The first one on Brazil. We saw that ARPU grew around 3%.

Speaker 5

However, we did see a lot of the base migrating to a postpaid plan within the Brazilian base. We were wondering why didn't the ARPU grew a little bit better or faster? What's the explanation behind that? And secondly, in Mexico Broadband, you mentioned 17,000,000 home passed. How far can that number go?

Speaker 5

Or are we reaching like a trough level? Is that the maximum capacity in fiber that you can handle?

Speaker 3

Well, in Mexico,

Speaker 2

we do already $17,000,000 from fiber home passes. We're reviewing what and we are seeing where it makes sense for us to still go and do home passes. There is still a lot of capacity in this $17,000,000 home passes. So we can penetrate more also these houses, and it's what we're doing all around. In Brazil,

Speaker 3

the ARPU

Speaker 2

let me see the ARPU what your question is that the ARPU is growing in Brazil?

Speaker 5

It was 3%. We found that number a little bit low given the postpaid migration that we saw. We have expected like a faster acceleration in ARPU. But just want to know if something changed or what could be the explanation of that low

Speaker 2

I don't know exactly, but I can tell you that in Brazil, we're doing very good in postpaid. We're growing around 8% the base of postpaid, the subscribers in postpaid is good. Maybe some of these postpaid are in the higher plants, other ones are in the lower plants. But all overall, Brazil is doing good, and we are moving a lot of our postpaid also to a lot of our prepaid also to postpaid new customers plus upgrades from prepaid. And these upgrades from prepaid are moving slowly.

Speaker 2

So they are not moving to the high end plan. So they are just jumping to postpaid. And then in the next years, I'm sure that with 5 gs and better handsets and more usage, these can improve the ARPU. So that's more or less what is happening in Brazil.

Speaker 5

Thank you so much.

Operator

Your next question comes from the line of Brett Mendez of Bank of America. Your line is now open. Please go ahead.

Speaker 8

Hello. Good morning, everyone, and thanks for the call. I have two questions here. The first one on TLMEX and especially on net adds, results are very, very strong. Just trying to understand this dynamic, obviously, as you pass through your fiber 80% of the natural growth rate on fiber, I think that explains a lot.

Speaker 8

But trying to understand the profile of these clients for basically getting new clients or if you're able to get from other operators, basically trying to understand the dynamics behind such strong results. That would be my first one. And then the second one on Colombia, there were some news, I guess, you mentioned that you expect to do $1,000,000,000 investment CapEx this year, correct me if I'm wrong. So just trying to understand your expectation there. It seems it's still a competitive market, but one of the players is facing some challenge.

Speaker 8

So just trying to understand the rationale if this is true and the strategy for Colombia for 2024? Thank you.

Speaker 2

Well, first in Colombia, I don't have exactly the disclosure of what's going to be the CapEx in each country. But if you can talk to Daniela, we can review and see what we're going to do. In this CapEx, I don't know if they are accounting for the frequencies that we already get and renew, the frequencies that we renew in February. So I still don't know very good on that, but we can show you exactly what we're doing. But all overall, in CapEx, we're going to do the CapEx that we commit and we're on target and it's what the plan is.

Speaker 2

It's $7,100,000,000 $7,200,000,000 on CapEx for

Speaker 8

this year.

Speaker 2

In Telmex, I don't know Oscar if you want to give your view. Yes.

Speaker 3

One is what you mentioned. I mean, we did a lot of migration to fiber Life helped us to reduce the churn.

Speaker 4

So

Speaker 3

that bring us net adds. Secondly, the market is still growing. So we are taking share of the role of the market. And the rest, I suppose, is coming from competition, right? So what has been working is what you mentioned, the new packages that we send to the market that include streaming video and very good speed.

Speaker 3

And another one that is important is that when we get into the fiber, we offer symmetrical speed and that has been very well received in the market. So that's why we see this growth.

Speaker 8

Perfect. Perfect. Very, very clear. Thanks, Daniel. Thanks, Oscar.

Speaker 3

Thank you, Fred.

Operator

Our next question comes from the line of Ernesto Gonzalez of Morgan Stanley. Your line is now open. Please go ahead.

Speaker 7

Hi. Thank you for taking our question. It's 2. The first one is, this quarter we saw a large increase in lease related debt. Just wondering if you could give us some color on the drivers.

Speaker 7

And then the second one is on the outlook for Chile. The JV ownership is up for review soon and you also had a deal with OnNet. On the latter, we were wondering if it's only for expansion to replace existing network and if you have any volume commitments with KKR. Thank you.

Speaker 2

Well, what we do is we do an agreement with Onnet to use the fiber. Yes, it's a complex contract. We have a volume and they give us some prices. So it's a contract that we think it's good for us. We in one side, we have fiber in Chile, and we're going to use our fiber network.

Speaker 2

In the other side, where we don't have fiber, we're going to use on net fiber. So that's what we do. And I think it makes sense to do that. What else in Chile?

Speaker 7

Yes. On the JV ownership review?

Speaker 2

Yes. The JV ownership, as we said, we've had some commitments. It's what we just what we announced. We have some commitments to put some money, and they can much catch up. And I think it's end of July.

Speaker 2

We don't know what they are going to do. So let's see. We still don't know. We I think the company is going in good shape. We are moving and doing a lot of more coverage in wireless, 5 gs, 4 gs, better network.

Speaker 2

Did we do an agreement to do a big and state of the art network in Chile? So we are in terms of the infrastructure, I think we are okay. We're moving in the commercial side. We are being more aggressive. We're being gaining a little bit in mobile and starting not to lose in fixed.

Speaker 2

So I we are happy the way the company is developing and we still have a lot of things to do to all the synergies that we do with the 2 companies, and we're in that process. It's not only 1 year. I think it's 2 years, 3 years to finalize all the synergies that we have, but we are in process and we are okay on that. And we put good management there also. We the management is, I think, very good and we're happy the way they are working.

Speaker 3

And the question on lease related debt, what was the question again?

Speaker 7

Yes. We saw a large increase in lease related debt from the end of 2023 to now. Non current liabilities, for example, lease related debt increased from MXN 100,000,000,000 to MXN 160,000,000. So just wondering what was the driver?

Speaker 3

I don't know. Maybe it might be ASX developments. Obviously, we don't have anything else on powers that has happened this year. But obviously, EPS, but he said that from the end of last year.

Speaker 2

We can review that and get

Speaker 3

Yes. Let's review it, Keith. Okay. Yes, we already have more debt since the spin off of the European towers, your telesites. But that shop

Speaker 2

is now picked up by the end of last year. And also Peru and Dominican Republic that we sell it also last year. So that will be more

Speaker 3

Review that. Review that. Review it. Not review that. No new transactions.

Speaker 7

Thank you so much.

Speaker 3

Thank you.

Operator

Your next question comes from the line of Alexandre Azar of KBM. Your line is now open. Please go ahead.

Speaker 9

Hi, everyone. Thank you for taking my questions. Just a quick one. What can you tell us on in terms of the competitive landscape in Mexico in both markets in wireless and broadband? I mean, in wireless with BYTE having 2,000,000 active users, How should we think about this new entry player?

Speaker 9

Are these guys unlocking new clients that because we're not seeing churn in AMX? And on the other side, on the broadband, what are you seeing in terms of competition? You mean you're not increasing prices, but what are you seeing in regards to your competitors? Thank you.

Speaker 2

Well, I think Mexico is a very competitive market, very competitive in both in fixed and in wireless. And talking a little bit about Zai, Altan, they have been very aggressive, very big promotions. I don't know how profitable they are going to be these promotions, but they are doing big, big promotions. And maybe as you are saying, they are unlocking some new subscribers or but we don't know still how long they take out these promotions they are going to stay with them because we have it 10 years ago in a lot of markets when you give a lot of things, big promotions, when you stop those promotions, they stop buying things. So we don't know, but it's a very competitive market.

Speaker 2

And what we have and what we have been doing very good is we have a very good customer service. We have very good capacity, 5 gs, a very good 4 gs and 3 gs network

Speaker 8

coverage.

Speaker 2

So a good naming, a good distribution. So all overall, we are in good trade. And what we said, if you have a good network, a good coverage, good quality you are competitive then good clients, good customers are going to end in your network. So that's what it's not only by today. The other ones are also being very aggressive AT and T, Telefonica, all the other MVNOs that are there.

Speaker 2

So Mexico has been very competitive for the last 2, 3 years. And I think it's going to still be very competitive for the next years in the mobile side. And in the broadband, well, in the broadband, we delay a little bit years ago the develop of fiber, but we catch up. We are with a lot of fiber and we want to get back part of our market share and that's what we're going to do. So we're being aggressive.

Speaker 2

We have good infrastructure, good a lot of fiber, a good service, very good service, and that is giving us less churn, as Oscar is saying, and less churn and a very good offer that is packages, bundles and everything. So we are doing good. But also the broadband market is also very competitive. So well, that's and I think not only in Mexico, you can see in all Latin America, there is a lot of competition, a lot of competitors. And what we have been focused for the last 5 to 8 years is to put a very good network infrastructure.

Speaker 2

In the corporate side, we have been putting a lot of cloud data centers, applications, training people and do all the job to sell and to do every year more and more things on the cloud for all the corporate mid and high corporate segments, small and medium businesses also for the big businesses. But not only the big businesses, we have been doing a lot also in the small and medium businesses.

Speaker 9

Thank you. Thank you, Daniel. That was very clear. And one more if I may. On the KPN convertible bond, did you have to spend money to cover the full position or was it enough with the shares that AMX had on their balance sheet?

Speaker 3

We basically delivered the shares we had in the exchange for the bonds. That was it.

Speaker 8

People in the time to take the shares

Speaker 2

and we deliver the bonds.

Speaker 7

Thank you, Carlos.

Speaker 5

Welcome.

Operator

Your next question comes from the line of Gabriela Shapiro of BCP Securities. Your line is open. Please go ahead. Hi. Thank you for taking my question.

Operator

Part of my question has been already answered. But I was wondering if you can give us more color on your plans in Chile for mobile, given the highly competitive market and following that warm mobile file for Chapter 11? Thank you.

Speaker 2

Well, this is the 1 pile, as you said, for Chapter 11. We don't know what they are going to do. But we are being investing in a much better network, quality 5 gs. And we hope we can compete and we can gain more market share there. Maybe the market will be consolidated in the future.

Speaker 2

We don't know. We don't know what's going happen with the 1, where they filed for Chapter 11. I don't know what's going to be the future, but hope that the market can consolidate in Chile.

Operator

Our next question comes from the line of Samit Datta of New Street. Your line is open. Please go ahead. Yes.

Speaker 10

Hi. Thanks very much for giving me the opportunity. A couple of questions, please. 1, on Brazil, on the fixed business. Just to check, please, we saw a nice growth in the quarter.

Speaker 10

I don't think you called out the pay TV component. But is it fair to say we are now at the stage where the pay TV business is small enough that it's no longer a headwind for the overall Brazilian fixed business? And therefore, should we expect to see growth on an ongoing basis coming through from broadband? Any color around that would be helpful, please. And then secondly, on the corporate networks business that's performed super well this quarter.

Speaker 10

I wonder firstly what visibility do you have on the revenues for the corporate networks business? And secondly, what kind of implications does it have for the margin profile of the business? I would perhaps imagine it's a lower margin business than the core telephony, but would be interesting as that business kind of scales and becomes more significant, how much of an impact will that have on margins? Thank you.

Speaker 3

Hi, Sumit. Well, I was mentioning it in a previous I said to a previous question that indeed, I think the headwinds that we were seeing in Brazil seem to they are being felt less and less. I think some years back, maybe 5 years back, the revenue from pay TV was twice as high as that from broadband, and the situation has changed. So now it is more or less the opposite. I think now the revenue from broadband is more than twice that of pay TV, and the difference keeps on growing.

Speaker 3

So yes, I think that we feel confident that going forward, this headwind from pay TV to the extent that it remains not be determined in the in us maintaining revenue growth, positive revenue growth. So we expect that we will continue to grow in fixed. And as we have mentioned in previous calls, being able to grow both on mobile and in fixed is very, very significant for margins. In Mexico and Brazil, we have moved from only growing mobile and not growing in fixed to growing in both fixed and mobile. I think that is a key element of the change that we have seen over the last few couple of years.

Speaker 3

And the corporate? Yes. In corporate, you mentioned we are tracking following revenues. And what we did is that in the major quarters, we have a dedicated team just focused on this market. So we bring expertise in the different fields, cybersecurity, verticals, AI.

Speaker 3

So yes, we are tracking those revenues, and we have our goals and budget already defined. And about the profitability of the business, we don't get any business that we don't see that we have the right payback in the corporate. And there is some part of the revenues coming from corporate that is more software as a service. So it's a lot of alliance that we do. There is a revenue share with them.

Speaker 3

So we don't invest in CapEx even. It's more a resale operation for our services. So it's a very good free cash flow because it's a totally revenue share with some of these alliance that we have in the market.

Operator

Your next question comes from the line of Juan Cruz of Morgan Stanley. Your line is now open. Please go ahead.

Speaker 11

Hi, good morning. Can you hear me okay?

Speaker 3

Yes.

Speaker 11

Excellent. Going back to the Chilean JV, if I may. In December, you issued a press release saying that you had agreed to invest the equivalent of about MXN 972,000,000 in the JV through June of this year or roughly about a $1,000,000,000 little over a $1,000,000,000 through that date. And as of then, about 74% had been invested already. Can you give us an update as to how much has been invested up to today in the JV in Chile?

Speaker 11

And second, with regards to the ownership agreement with Liberty, I know they have up until August 1 to match your 50% of the contribution. But what should we expect after August 1? Should we expect some sort of announcement as to whether or not they did and how the ownership structure is going to look going forward? That will be helpful.

Speaker 3

Thank you. Well, first, this

Speaker 2

in this announcement, this the money that you are saying, EUR 900,000,000, is that includes the debt that we put that was guaranteed for with of has the guarantee of America Movil and we put it when we do the merge. So that includes exactly this amount of debt that we contribute to the JV and it was guaranteed for us. So we guarantee that and that's why we put that amount in this press release. The other thing was to operate. The rest was to operate, to invest, to put CapEx.

Speaker 2

So that's what we decide to put. What you're asking me is what they are going to do, if they are going to catch up or not. I don't know if we need to ask them, not us. So they have to the right to catch up. And we don't know what they are going to do.

Speaker 2

But either way, if they catch up or not, we are prepared to go with them and manage the company with them. They are good partners and we're happy if they stay. And in the other side, if they don't stay, we are also doing what we need to do to be make successful this company and do the investments that we need to do. So we are prepared for both scenarios and we really don't know what they are going to do. So let's wait until that date and see what they are going to do.

Speaker 11

Okay. So to clarify, in the press release, the amount of invested inclusive of the debt contributed to the JV was MXN 972,400,000,000. Presumably the debt that was at the collateral level, right, was about $300,000,000 equivalent, is that right?

Speaker 2

I think a little bit more. Okay. But we don't know exactly the numbers, but we can If

Speaker 3

we want to have a working session maybe with Anila, we can go through all the numbers.

Speaker 2

Because we don't have exactly the numbers here, but we can open and tell you exactly what it is. No problem.

Speaker 11

Okay. Since December, have American Mobile invested more in the Chilean JV? Have there been more investments since that announcement?

Speaker 2

I don't we don't know, but I don't know exactly how much. We have a limit to put and we are not exceeding that limit of what we said. But talk to Daniela, you can have the numbers clear there.

Speaker 3

Okay. Okay. Thank you. Thank you.

Operator

As there are no additional questions at this time, I'd like to hand the conference back over to Daniela Luana for closing remarks.

Speaker 1

Thank you so much everyone for joining us in this call. I want you to remind I want to remind you that we're hosting an Investor Day, May 7. The event will be held at the New York Stock Exchange. Most of you have probably received an invitation. For those of you who have not, please e mail us.

Speaker 1

We'll be very, very happy to see you there. And yes, if you have any questions on the event, please contact Stephanie, Anna or myself.

Speaker 2

Okay. Thank you. Thank you.

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Key Takeaways

  • American Movil added 1.5 million wireless subscribers (1.3 million postpaid) and connected 562,000 new fixed broadband clients—its best quarterly broadband performance in four years.
  • Service revenue rose 5% at constant exchange rates, with fixed-line revenue up 5.1% and mobile revenue up 4.9%, outpacing inflation in most major markets; Mexico fixed revenue grew 9.7% and Brazil mobile revenue grew 8.4%.
  • EBITDA increased 7.5% year-on-year at constant currency—its fastest pace in eight quarters—despite a tough comparison to Q1 2023’s tower sales.
  • The company remains on track for MXN 7.1–7.2 billion in 2024 CapEx, maintained a stable 1.5× net debt/EBITDA leverage, and repurchased MXN 4.8 billion of shares in Q1 (2.5× the prior year).
  • Network investments continue to drive growth: Mexico now has 17 million fiber homepasses (80% take-up), reducing churn and delivering its strongest broadband net adds in years, while 5G rollouts have spurred mobile plan upgrades and higher ARPU.
A.I. generated. May contain errors.
Earnings Conference Call
América Móvil Q1 2024
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