América Móvil(AMX)2024-04-17 18:27Financial Data and Key Metrics - Revenue for Q1 2024 totaled MXN203 billion, with service revenue expanding 1.1% to MXN171 billion, while other revenue declined 71.7% to MXN2.4 billion due to the absence of tower sales compared to Q1 2023 [9] - EBITDA came in at MXN80.6 billion, a 2.6% decline year-on-year, but increased 7.5% at constant exchange rates and adjusting for tower sales [12] - Operating income reached MXN4.8 billion, a 7.6% decline year-on-year, but up 2.5% in Mexican peso terms and 13% at constant exchange rates when adjusted for tower sales [13] - Net profit was MXN13.5 billion, equivalent to 22 peso cents per share and 25 dollar cents per ADR [13] - Capital expenditures for the quarter were MXN21.8 billion, with net financing of MXN17.4 billion used to fund these expenditures [14] Business Line Performance - Wireless subscribers increased by 1.5 million, with 1.3 million being postpaid clients, led by Brazil (555,000), Austria (260,000), Colombia (126,000), and Mexico (105,000) [8] - Prepaid subscribers grew by 263,000, with Colombia (378,000), Argentina (226,000), and Brazil (146,000) leading the gains [8] - Fixed-line broadband accesses increased by 562,000, the best performance in four years, with Mexico contributing 325,000, Brazil 92,000, and Colombia 23,000 [9] - Postpaid base grew 6.4% year-on-year, while fixed broadband accesses increased by 4.8% [9] - Corporate network revenue, representing 21% of fixed-line service revenue, grew 13.5% year-on-year, followed by broadband services, which increased by 6.4% [11] Market Performance - Mexico drove fixed-line revenue growth, increasing from 5.9% in the previous quarter to 9.7%, the fastest growth rate in years [11] - Brazil reported a 1% increase in fixed-line revenue, its best performance in seven years, as broadband revenue growth offset PayTV declines [11] - Colombia returned to positive mobile revenue growth after two quarters of declines [12] - Service revenue growth exceeded inflation in most main markets, including Mexico and Brazil, with Austria and Colombia being exceptions [10] Strategic Direction and Industry Competition - The company continues to invest heavily in fiber and 5G infrastructure, with 17 million fiber home-passes in Mexico and 125 cities with 5G coverage [19][20] - Corporate services, including cybersecurity, cloud, and network management, are driving growth, particularly in the B2B market [29] - The company is focusing on bundling and improving customer experience to reduce churn and increase ARPU [19][20] - In Brazil, broadband revenue has overtaken PayTV, reducing the headwinds from PayTV declines [31] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong performance in Mexico, driven by fiber investments and 5G network expansion, which have improved customer retention and service quality [19][20] - The company expects to maintain a net debt to EBITDA ratio between 1.3x and 1.5x [17] - CapEx for 2024 is expected to be around 7.2 billion, with a focus on fiber, 5G, and corporate services [25] Other Important Information - The company faced a cybersecurity incident in Central America, leading to the disconnection of 584,000 subscribers [8] - Share buybacks in Q1 2024 were MXN4.8 billion, 2.5 times greater than the previous year [16] - The company paid nearly MXN13 billion in spectrum usage fees and telecom-related taxes in March, a recurring annual expense [15] Q&A Session Summary Question: Mexico Broadband Strategy and EBITDA Margin - The company's fiber investments in Mexico have reduced churn and improved customer retention, with 80% of customers now on fiber [19] - EBITDA margins in Mexico are supported by strong 5G performance and customer upgrades to higher ARPU plans, with a 42% margin considered sustainable [20] Question: CapEx Seasonality and Future Expectations - CapEx for 2024 is expected to be 7.2 billion, with investments focused on fiber, 5G, and corporate services [25] - The company is reviewing CapEx plans for 2025 but has not yet finalized figures [25] Question: Revenue Growth Drivers in Other Markets - Revenue growth in other markets is driven by 5G investments, improved plans, and fiber expansion, with some markets seeing price increases depending on competition [28] - Corporate services, including cybersecurity and cloud, are also contributing to revenue growth [29] Question: Brazil ARPU Growth and Mexico Fiber Capacity - Brazil's ARPU growth of 3% is attributed to postpaid migration, with customers gradually moving to higher plans [36] - Mexico's fiber capacity of 17 million home-passes still has room for further penetration [34] Question: Telmex Performance and Colombia CapEx - Telmex's strong performance is due to fiber migration, market growth, and competitive packages, including symmetrical speed offerings [42] - Colombia's CapEx for 2024 is expected to be around $1 billion, with investments in spectrum and network infrastructure [40] Question: Lease-Related Debt and Chile JV - The increase in lease-related debt is attributed to tower sales in Peru and the Dominican Republic, as well as the spin-off of European towers [50] - The Chilean JV has seen significant investments, with the company prepared for both scenarios regarding Liberty's potential matching of contributions [69] Question: Competitive Landscape in Mexico - Mexico remains highly competitive in both wireless and broadband, with new entrants like Byte offering aggressive promotions [53] - The company is focusing on network quality, customer service, and competitive pricing to maintain its position [54] Question: Brazil Fixed Business and Corporate Networks - PayTV is no longer a significant headwind in Brazil, with broadband revenue now more than double PayTV revenue [63] - Corporate networks are a high-growth area, with strong visibility on revenues and a focus on profitability [65] Question: Chilean JV Investments and Ownership - The company has invested significantly in the Chilean JV, with a focus on network quality and market share growth [68] - The future ownership structure of the JV will depend on Liberty's decision to match contributions by August 1st [69]