America Movil SAB de CV Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Economic Context: Markets were concerned about inflation and economic growth; 10-year treasury yields fell. Mexican economy slowed, with private consumption declining 1% year-on-year due to election uncertainty and fiscal tightening.
• Subscriber Trends: Postpaid added 2.4 million subs; prepaid had 1 million net losses in Mexico and Brazil. Fixed line added 446,000 broadband accesses.
• Financials: Revenue, EBITDA, and net income showed growth. CapEx for 2025 was reduced to MXN6.7 billion due to economic slowdown and completed major investments in prior years.

Segment Performance

• Wireless: Added 2.4 million postpaid subscribers in Q1. Brazil led with 987,000, followed by Colombia (163,000) and Mexico (133,000). Prepaid segment had 1 million net losses in Mexico and Brazil, but Argentina added 230,000 subs and Colombia 434,000 subs. Mobile postpaid service revenue grew 8.8% when including Chilean operations.
• Fixed Line: Connected 446,000 new broadband accesses. Mexico contributed 165,000, Brazil 98,000, and Central America 52,000. Fixed line and PayTV units fell by 130,000 and 32,000 respectively.
• Revenue: First quarter revenue rose 14.1% year-on-year in Mexican peso terms to MXN232 billion. Service revenue expanded 15.8%, and adjusted EBITDA was 13.3%. At constant exchange rates, service revenue increased 6.1% and adjusted EBITDA 4.0%.
• Profitability: Operating profit totaled MXN44.8 billion, a 10% year-on-year increase. Net income was up 38% to MXN18.7 billion. Net debt at end of March stood at MXN500 billion, equivalent to 1.5x last 12 months EBITDA.

Guidance

• CapEx for 2025 is expected to be MXN6.7 billion, lower than the previous year, driven by economic slowdown and completed investments in 5G, fiber, and IT systems in prior years.

Risks

• Economic slowdown in Mexico impacting consumer spending.
• Uncertainty around potential U.S. tariffs affecting the Mexican peso.
• Aggressive competition from MVNOs in Mexican prepaid.
• Slowdown in corporate network revenue growth due to prior-year strong performance.

Question and Answer

• Q: Regarding regulation and laws in Mexico, positioning on spectrum distribution and impact of Trump admin proposals. A: Monitoring telecom law proposals in Congress, providing views, and laws are currently being discussed.
• Q: Impact of tariffs on handsets. A: No current changes on tariffs, and exchange rate improvement has helped handset prices.
• Q: Consumer demand in Mexico, timeline for recovery. A: Slowdown due to elections, U.S. elections, and high real interest rates; recovery expected in the second half of 2025 as real rates drop and fiscal situation improves.
• Q: Competitive angle in Mexican prepaid, M&A appetite. A: Prepaid affected by economic slowdown and MVNO promotions; CapEx for 2025 reduced, and the company is open to M&A but CapEx guidance has changed.
• Q: Corporate network revenue pressure, margin decline in Colombia. A: Corporate segment strong with a large pipeline; Colombia is growing, with EBITDA growing despite margin dip due to investments and cost control.
• Q: Prepaid customer spend reduction visibility, broadband competition in Mexico. A: Prepaid ARPU decline due to delayed recharges; broadband is aggressive with fiber expansion.
• Q: M&A impact on competition, strategy for Chile after incorporation. A: M&A leads to consolidation, improving market conditions; Chile strategy focuses on profitability and market share growth in wireless and broadband with 5G and fiber investments.
• Q: EBITDA margin increase in Chile, Paraguay, Uruguay. A: Central America and Chile growing due to investments and cost control; synergies in Chile improving EBITDA despite margin dip.