América Móvil(AMX) - 2024 Q4 - Annual Report

Selected Financial Data The company's selected financial data for 2024 shows a significant decline in net profit, primarily due to foreign exchange losses, with financial statements prepared under IFRS in Mexican Pesos Consolidated Financial Highlights (in billions of Mexican Pesos) | Financial Metric | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | Operating Revenues | 844.5 | 816.0 | 869.2 | | Operating Income | 170.9 | 167.8 | 180.1 | | Net Profit for the year | 81.5 | 80.8 | 27.6 | | Net Profit attributable to Equity holders | 76.2 | 76.1 | 22.9 | | Basic and Diluted EPS (from continuing operations) | Ps. 1.30 | Ps. 1.21 | Ps. 0.37 | | Total Assets | 1,618.1 | 1,564.2 | 1,793.9 | | Total Equity | 437.8 | 421.7 | 432.2 | - Net profit for 2024 was Ps. 27.6 billion, a significant decrease from Ps. 80.8 billion in 2023, primarily impacted by foreign exchange losses[10][108] - On October 31, 2024, the company consolidated its Chilean operation, Claro Chile, SpA, after converting its notes into equity, increasing its ownership to 94.9% by year-end; prior to this, it was accounted for as a joint venture using the equity method[8][12] - The company's financial statements are prepared in accordance with IFRS and presented in Mexican Pesos (Ps.); U.S. dollar translations are provided for convenience at a rate of Ps. 20.2683 to U.S.$1.00 as of December 31, 2024[6][7] Part I: Information on the Company This section provides an overview of América Móvil's business, network infrastructure, competitive landscape, strategic investments, and customer engagement strategies About América Móvil América Móvil is a leading telecommunications provider across 23 countries, offering diverse services with 400.5 million RGUs in 2024, primarily under the Claro, Telcel, and Telmex brands - América Móvil is a leading telecommunications provider in 23 countries across Latin America, the Caribbean, and Europe, ranking first in the region for wireless, fixed-line, broadband, and Pay TV services based on Revenue Generating Units (RGUs)[19][20] Total Revenue Generating Units (RGUs) by Type (in millions) | RGU Type | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | Total Wireless RGUs | 305.1 | 315.2 | 322.6 | | Total Fixed RGUs | 76.6 | 76.9 | 77.9 | | Total RGUs | 381.6 | 392.1 | 400.5 | - In 2024, wireless operations generated Ps. 458.5 billion in revenue, representing 52.8% of consolidated revenues, while fixed operations generated Ps. 262.5 billion, or 30.2% of revenues[29][40] - The proportion of postpaid wireless plans increased from 39.7% in December 2023 to 40.8% as of December 31, 2024, indicating a shift towards higher-value subscribers[33] - The company offers OTT services such as ClaroVideo, an on-demand streaming service with over 32,500 titles, and ClaroMúsica, a music streaming service with access to approximately 100 million songs[48][49] Our Networks The company invested Ps. 130.8 billion in 2024 to expand its extensive network infrastructure, including 116,000 cell sites and 1.4 million km of fiber-optic network, achieving 55% 5G population coverage in Mexico and Brazil - Capital expenditures for 2024 totaled Ps. 130.8 billion, focused on increasing network capacity and upgrading to the latest technologies[57] - As of December 31, 2024, the company's infrastructure included 116,000 cell sites, over 1.4 million km of fiber-optic network reaching 118 million homes, capacity in over 200,000 km of submarine cables, five satellites, and 41 data centers[60] - The company has expanded its 5G coverage, reaching close to 55.0% of the population in Mexico and Brazil with 5G services as of December 31, 2024[58] Our Competitors The company operates in an intensely competitive telecommunications market, facing multi-national and national operators, with competition driven by pricing, brand, network quality, and technology deployment - The company faces intense competition from multi-national operators such as AT&T Inc., Telefónica, and Millicom, as well as various national-level providers[63][64] - Competition is driven by factors like pricing, brand, service offerings, network coverage, and new technology deployment, and is expected to remain intense due to market saturation and regulatory changes[65] Acquisitions, Other Investments and Divestitures The company pursues global investment opportunities for portfolio optimization and geographic diversification, recently consolidating Claro Chile, SpA, and securing control over Telekom Austria AG - América Móvil continues to seek global investment opportunities to optimize its portfolio, focusing on geographic diversification as a key to financial success[67][68] - In 2023, the company entered a 10-year agreement ensuring control over Telekom Austria AG (TKA) and supported the spin-off of its mobile towers into EuroTeleSites AG[74] - On October 31, 2024, AMX consolidated Claro Chile, SpA into its operations after receiving regulatory approval, holding a 94.9% interest by December 31, 2024[74] Marketing, Sales and Distribution, Customer Services The company's marketing efforts in 2024 focused on 5G and fiber optic rollouts, leveraging its top-ranked Claro and Telcel brands through an extensive network of 420,000 points of sale and 3,400 customer service centers - Marketing efforts in 2024 were focused on promoting 5G services and fiber optic rollout, leveraging network speed and quality[70] - The company's brands, Claro and Telcel, are recognized as highly valuable, ranking among the top forty strongest telecom brands worldwide according to the 2024 Brand Finance Telecom 150 report[71] - The company utilizes a vast sales and distribution network with over 420,000 points of sale and more than 3,400 customer service centers[72] Part II: Operating and Financial Review and Prospects This section reviews the company's financial performance, liquidity, and capital resources, considering discontinued operations, segment reporting, constant currency analysis, and key market trends Overview This overview details the financial review's scope, including discontinued operations, Claro Chile's consolidation, ten reportable segments, constant currency analysis (excluding Argentina), and key market trends like competition and data demand - The company's financial reporting is affected by the treatment of discontinued operations, specifically the sale of Claro Panama in 2022 and the classification of Claro Chile as a joint venture from October 2022 until its consolidation on October 31, 2024[76][77] - Financial results are presented across ten reportable segments, with Mexico being split into Mexico Wireless and Mexico Fixed[78] - To better understand performance, the company provides analysis at constant exchange rates; due to hyperinflation, Argentina is excluded from these consolidated constant currency comparisons[80][81] - Key long-term trends affecting operating results in 2024 include intense competition, growing demand for data services, declining demand for voice and traditional Pay TV, and a strategic focus on cost savings programs[90][91] Results of Operations In 2024, operating revenues grew 6.5% to Ps. 869.2 billion, and operating income rose 7.3% to Ps. 180.1 billion, but net profit declined 65.8% to Ps. 27.6 billion due to a Ps. 70.7 billion foreign exchange loss Consolidated Results of Operations (2024 vs. 2023) (in billions of Mexican Pesos) | Metric | 2023 (Ps. billion) | 2024 (Ps. billion) | % Change | | :--- | :--- | :--- | :--- | | Total Operating Revenues | 816.0 | 869.2 | +6.5% | | Operating Income | 167.8 | 180.1 | +7.3% | | Net Profit (continuing ops) | 80.8 | 27.6 | -65.8% | - The significant decrease in net profit was mainly driven by a net foreign currency exchange loss of Ps. 70.7 billion in 2024, compared to a gain of Ps. 14.7 billion in 2023, due to the appreciation of currencies like the U.S. dollar and euro against the Mexican peso[104] - Service revenues increased by 7.6% (4.0% at constant exchange rates), reflecting growth in mobile prepaid/postpaid services and broadband, partially offset by declines in fixed voice and Pay TV[94] Segment Operating Income (Loss) - 2024 (in billions of Mexican Pesos) | Segment | Operating Income (Loss) | | :--- | :--- | | Mexico Wireless | 89.4 | | Mexico Fixed | 14.7 | | Brazil | 30.9 | | Colombia | 9.6 | | Southern Cone (Argentina) | 1.6 | | Southern Cone (Paraguay, Uruguay, Chile) | (2.4) | | Andean Region | 8.1 | | Central America | 7.5 | | Caribbean | 5.9 | | Europe | 16.3 | Liquidity and Capital Resources The company maintained strong liquidity with Ps. 239.3 billion in operating cash flow in 2024, funding Ps. 130.8 billion in capital expenditures, while total consolidated debt increased to Ps. 567.6 billion, with currency risk managed through derivatives - Cash flows from operating activities were Ps. 239.3 billion in 2024; cash and cash equivalents stood at Ps. 36.7 billion at year-end[166] Primary Uses of Cash in 2024 (in billions of Mexican Pesos) | Use of Cash | Amount | | :--- | :--- | | Capital Expenditures | Ps. 130.8 | | Dividends Paid | Ps. 31.0 | | Share Repurchases | Ps. 22.7 | - Total consolidated indebtedness was Ps. 567.6 billion as of December 31, 2024, an increase from Ps. 500.7 billion at the end of 2023; net debt totaled Ps. 484.2 billion[169][171] - The company manages currency risk with derivatives; after these transactions, approximately 41.2% of net debt was denominated in Mexican Pesos as of December 31, 2024[172] - The company has two major revolving syndicated credit facilities: one for U.S.$2.5 billion expiring in 2029 and one for the Euro equivalent of U.S.$1.5 billion expiring in 2026; as of year-end 2024, U.S.$600 million was drawn from the U.S. facility[182] Part III: Risk Factors This section details the company's operational, industry, and country-specific risks, including competition, regulatory challenges, technological changes, and macroeconomic volatility Risks Relating to Our Operations The company faces operational risks from intense competition, adverse asymmetric regulations in Mexico, spectrum acquisition challenges, significant tax assessments, cybersecurity threats, and identified material weaknesses in internal control over financial reporting - Intense competition in the telecommunications industry could lead to increased spending, price reductions, and lower operating margins[194][195] - Operations are subject to extensive government regulation; in Mexico, asymmetric regulations imposed on the company as a "preponderant economic agent" have adversely affected results[198][199] - The business relies on licensed radio spectrum, which is essential for growth and service quality; an inability to acquire additional spectrum could hinder competitiveness[205] - The company is contesting significant tax assessments in Brazil, Mexico, and Colombia, which, if determined adversely, could have a material effect on financial condition[211] - Cybersecurity incidents, system failures, and other network disruptions could cause service interruptions, leading to increased expenses, loss of subscribers, and reputational harm[213][225] - Management identified material weaknesses in internal control over financial reporting for both 2023 and 2024, related to IT general controls, revenue processes, and data accuracy in its Colombia, Mexico Fixed, and Mexico Wireless segments[238] Risks Relating to the Telecommunications Industry Generally The telecommunications industry faces risks from rapid technological change requiring substantial capital expenditure, potential intellectual property infringement claims, and alleged health concerns related to wireless devices - The industry experiences significant changes from new technologies, evolving standards, and changing consumer preferences, requiring substantial capital expenditure to maintain and upgrade networks[241] - The company faces risks of intellectual property infringement claims from third parties regarding content, products, or software, which could lead to costly litigation or require cessation of certain services[242] - Alleged health risks related to radio frequency emissions from wireless devices could lead to lawsuits and increased regulation, potentially affecting the use of wireless technology[244][245] Risks Relating to Controlling Shareholders, Capital Structure and Transactions with Affiliates The company faces risks from the Slim Family's controlling interest, potential conflicts of interest from significant affiliate transactions, and differing minority shareholder protections under Mexican law compared to U.S. standards - The Slim Family may be deemed to control the company, enabling them to elect a majority of the Board and determine the outcome of shareholder votes[248] - The company engages in significant transactions with related parties, including Telesites, Sitios Latam, Grupo Carso, and Grupo Financiero Inbursa, which may create potential conflicts of interest[249][250] - Protections for minority shareholders under Mexican law differ from those in the U.S., and it may be difficult for non-Mexican shareholders to enforce their rights[253][255] Risks Relating to Developments in Mexico and Other Countries Financial performance is highly sensitive to economic, political, and social conditions in operating markets, including inflation, currency fluctuations (resulting in a Ps. 70.7 billion FX loss in 2024), and changes in government policies - Financial performance is highly sensitive to economic, political, and social conditions in Latin America, the Caribbean, and Europe, including inflation, currency fluctuations, and changes in government policy[261][262] - Argentina's hyperinflationary economy poses a significant risk, and political developments in Mexico, including constitutional reforms affecting regulatory bodies, create uncertainty[264][266] - Fluctuations in exchange rates significantly affect financial results, leading to a net foreign exchange loss of Ps. 70.7 billion in 2024[271] - Adverse changes in global financial markets could increase the cost of capital, and major currency depreciations could lead to exchange controls, limiting the ability to transfer funds[269][273] Part IV: Share Ownership and Major Shareholders Trading This section details the company's share ownership structure, major shareholders, related party transactions, dividend policy, and share repurchase programs Major Shareholders As of March 31, 2025, the Slim Family controls the company with significant holdings, including a 29.2% stake through a family trust, out of 60.74 billion outstanding B Shares Major Share Ownership (as of March 31, 2025) (in millions of shares) | Shareholder | Shares Owned (millions) | Percent of Class | | :--- | :--- | :--- | | Family Trust | 17,743 | 29.2% | | Control Empresarial de Capitales | 10,896 | 17.9% | | Carlos Slim Helú | 5,200 | 8.6% | - As of March 31, 2025, 8.5% of the outstanding B Shares were represented by B Share ADSs, with each ADS representing 20 B Shares[284] Related Party Transactions The company conducts ordinary course business with related parties like Telesites, Sitios Latam, Grupo Carso, and Grupo Financiero Inbursa, ensuring terms are no less favorable than with unaffiliated parties - The company purchases materials and services from related parties under common control, including Telesites, Sitios Latam, Grupo Carso, and Grupo Financiero Inbursa[285] - Transactions include site usage agreements with Telesites and Sitios Latam, insurance and banking with Grupo Financiero Inbursa, and network construction with Grupo Carso[286][287][288] Dividends The company regularly pays cash dividends, with Ps. 0.48 per share paid in 2024 and Ps. 0.52 per share approved for 2025, both in two installments Dividend Payments per Share | Payment Date | Pesos per Share | U.S. Dollars per Share | | :--- | :--- | :--- | | November 11, 2024 | Ps. 0.24 | U.S.$0.0135 | | July 15, 2024 | Ps. 0.24 | U.S.$0.0121 | | November 13, 2023 | Ps. 0.23 | U.S.$0.0131 | | July 17, 2023 | Ps. 0.23 | U.S.$0.0136 | | August 29, 2022 | Ps. 0.44 | U.S.$0.0221 | - On May 14, 2025, shareholders approved a cash dividend of Ps. 0.52 per share, payable in two installments in July and November 2025[293] Purchases of Equity Securities by the Issuer and Affiliate Purchasers The company actively manages share buyback programs, repurchasing 1.45 billion shares in 2024 under a Ps. 30 billion authorized fund, with a new Ps. 10 billion program approved for 2025-2026 Share Repurchases in 2024 (in millions of shares) | Period | Total Shares Purchased (millions) | Average Price per Share (Ps.) | | :--- | :--- | :--- | | January 2024 | 112 | 15.65 | | February 2024 | 125 | 15.63 | | March 2024 | 69 | 15.97 | | April 2024 | 184 | 15.65 | | May 2024 | 118 | 16.53 | | June 2024 | 190 | 15.61 | | July 2024 | 140 | 15.96 | | August 2024 | 34 | 16.11 | | September 2024 | 68 | 16.07 | | October 2024 | 127 | 16.14 | | November 2024 | 143 | 15.65 | | December 2024 | 140 | 15.03 | | Total | 1,450 | | - For the April 2025 to April 2026 period, shareholders authorized a new buyback program of up to Ps. 10 billion[302] Taxation of Shares and ADSs This section summarizes Mexican and U.S. federal income tax implications for non-resident holders of B Shares or ADSs, including 10% withholding tax on Mexican dividends and capital gains treatment for U.S. holders - Under Mexican tax law, dividends paid to non-resident holders are generally subject to a 10% withholding tax[316] - Gains from the disposition of shares through the Mexican Stock Exchange by a non-resident holder are generally taxed at a 10% rate on the net gain[317] - For U.S. holders, distributions are generally treated as dividend income; dividends may be considered "qualified dividends" subject to reduced tax rates, provided certain conditions are met[329][331] - U.S. holders will generally recognize capital gain or loss on the sale of shares or ADSs; the ability to credit Mexican taxes against U.S. tax liability is subject to limitations[336][337] Part V: Corporate Governance This section outlines the company's management structure, corporate governance practices, and cybersecurity framework, including identified material weaknesses in internal controls Management The Board of Directors comprises 15 members, with 10 (67%) independent, supported by an Audit and Corporate Practices Committee, with 2024 aggregate compensation of Ps. 6.5 million for directors and Ps. 103.9 million for senior management - The Board of Directors is composed of 15 members, with 10 (approximately 67%) determined to be independent; Carlos Slim Domit serves as Chairman[347][349][353] - The Audit and Corporate Practices Committee is comprised of four independent members, with Ernesto Vega Velasco serving as Chairman and qualifying as an "audit committee financial expert"[357][361] - Aggregate compensation in 2024 was approximately Ps. 6.5 million for directors and Ps. 103.9 million for senior management[362] Corporate Governance The company's corporate governance adheres to Mexican law, differing from NYSE standards, and management identified material weaknesses in internal control over financial reporting for 2024, particularly in IT and revenue processes in Colombia and Mexico segments - Corporate governance practices are governed by Mexican law, which differs from NYSE standards; for example, while a majority of the board is currently independent, Mexican law only requires 25% independence[365][369] - Management concluded that due to material weaknesses, disclosure controls and procedures were not effective as of December 31, 2024[398] - Material weaknesses were identified in: (i) IT general controls (user access, change management) at the Colombia and Mexico Fixed segments; (ii) controls over prepaid/postpaid revenue processes at the Mexico Wireless segment; and (iii) controls to ensure completeness and accuracy of information at all three segments[403][408] - Management is implementing a remediation plan to address the control deficiencies, including enhancing user access controls, redesigning controls, and improving documentation[416][417] Cybersecurity The company maintains a robust cybersecurity risk management program, overseen by the CISO and Audit Committee, leveraging ISO 27001 and NIST frameworks, and has not experienced any material information security breaches - The company has a cybersecurity risk management process for assessing, identifying, and managing threats, overseen by the CISO and the Audit and Corporate Practices Committee[426][430][432] - The cybersecurity framework leverages international standards like ISO 27001/27002 and the NIST Cyber Security Framework, and includes mandatory employee training and third-party assessments[433] - As of the date of the annual report, the company has not been materially affected by cybersecurity threats and has not experienced any material information security breaches[429] Part VI: Regulation This section details the regulatory environments in key operating regions, including Mexico, Brazil, Colombia, and other areas, highlighting asymmetric regulations, spectrum auctions, and concession renewals Mexico In Mexico, the company is subject to extensive asymmetric regulations by the IFT as a "preponderant economic agent," including infrastructure sharing and functional separation of fixed-line services, with Telmex's primary concession extended to 2056 - The company and its Mexican subsidiaries are deemed a "preponderant economic agent" and are subject to extensive asymmetric regulations by the IFT, which impact its fixed-line and wireless businesses[439][440] - Asymmetric regulations require the company to share passive infrastructure (towers, ducts), offer domestic roaming, and allow MVNOs to resell its services, with rates often determined by the IFT[447][448] - In November 2024, the IFT concluded its third biennial review, imposing new and modified asymmetric regulations for mobile and fixed services, which the company has challenged[449] - The company is implementing a mandatory functional separation of wholesale fixed services provided by Telmex and Telnor into new subsidiaries, Red Nacional[450] Brazil In Brazil, Anatel regulates the company's operations, which are transitioning to an authorization-based model, with Claro Brasil holding 5G spectrum licenses and subject to asymmetric measures due to significant market power - The primary regulator in Brazil is Anatel; new legislation is modernizing the regulatory model from concessions to authorizations, which the company is currently evaluating[476][477] - In the 2021 5G auction, Claro Brasil acquired 100 MHz in the 3.5 GHz band, as well as spectrum in the 2.3 GHz and 26 GHz bands, with licenses valid until 2041[485] - Anatel has determined that Claro Brasil has significant market power in eight wholesale markets, imposing asymmetric measures such as regulated mobile termination rates and mandatory wholesale reference offers[492][494] Colombia In Colombia, Comcel operates under ICT Ministry and CRC regulation, holding 80 MHz of 3.5 GHz spectrum for 5G, and is subject to asymmetric regulations as a dominant provider, including national roaming and infrastructure sharing obligations - The main regulators are the ICT Ministry and the Communications Regulatory Commission (CRC)[502] - In the December 2023 spectrum auction, Comcel acquired 80 MHz in the 3.5 GHz frequency for 5G services and 10 MHz in the 2500 MHz frequency[506] - In January 2024, the CRC imposed asymmetric measures exclusively on Comcel as a dominant provider, including specific charges for national roaming and an obligation to publish a reference offer for passive infrastructure sharing[509][510] Other Regions (Southern Cone, Andean, Europe, etc.) Regulatory environments in other regions include Claro Chile's consolidation, Argentina's repeal of price controls, ongoing concession renewal in Ecuador, and European operations governed by the EECC and local regulators - Chile: The company consolidated its Claro Chile, SpA joint venture on October 31, 2024, after receiving approval from the FNE[513] - Argentina: In April 2024, the government repealed Decree 690/20, which had declared ICT services as essential public services and imposed price controls[521] - Ecuador: The renewal process for Conecel's main PCS concession, which was due to expire in August 2023, is ongoing, with an extension granted while negotiations continue[535] - Europe: Operations in EU member states (Austria, Bulgaria, Croatia, Slovenia) are regulated under the European Electronic Communications Code (EECC) and domestic frameworks[548] Part VII: Additional Information This section provides additional information on the company's employee base and principal accountant fees, including a change in independent auditors Employees As of December 31, 2024, the company employed 178,468 individuals, a slight decrease from the prior year, with the majority located in Mexico and South America Employee Breakdown by Geographic Location | Geographic Location | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | | Mexico | 85,820 | 86,999 | 85,748 | | South America | 56,464 | 55,592 | 55,471 | | Central America | 9,602 | 9,645 | 9,967 | | Caribbean | 10,193 | 10,048 | 9,982 | | Europe | 17,907 | 17,508 | 17,300 | | Total Employees | 179,986 | 179,792 | 178,468 | Principal Accountant Fees and Services Total fees from Mancera (EY) were Ps. 253 million in 2024, with the company electing Deloitte as its new independent auditor for fiscal years 2025-2027 Accountant Fees (in millions of Mexican Pesos) | Fee Type | 2023 | 2024 | | :--- | :--- | :--- | | Audit fees | Ps. 202 | Ps. 225 | | Audit-related fees | Ps. 13 | Ps. 6 | | Tax fees | Ps. 11 | Ps. 22 | | Total fees | Ps. 226 | Ps. 253 | - On March 19, 2024, the Board of Directors elected Deloitte as the independent external auditor for fiscal years 2025, 2026, and 2027, replacing Mancera, S.C. (EY)[564] Part VIII: Consolidated Financial Statements This section presents the company's audited consolidated financial statements for 2022-2024, prepared under IFRS, with an unqualified opinion on financials but an adverse opinion on internal controls due to material weaknesses - This part contains the company's audited consolidated financial statements for the years ended December 31, 2022, 2023, and 2024, prepared in accordance with IFRS[583] - The independent registered public accounting firm, Mancera, S.C. (a member of Ernst & Young), issued an unqualified opinion on the financial statements but an adverse opinion on the company's internal control over financial reporting as of December 31, 2024, due to identified material weaknesses[587][588] - The financial statements include the Consolidated Statements of Financial Position, Comprehensive Income, Changes in Shareholders' Equity, and Cash Flows, along with detailed notes[585]