America Móvil B de C : Q2 2021 Transcript

Daniel Hajj Aboumrad, Chief Executive Officer

Carlos Garcia-Moreno, Chief Financial Officer

Daniela Lecuona Torras, Head of Investor Relations

Oscar von Hauske Solis, Chief Fixed-Line Operations Officer

Marcelo Santos, JP Morgan

Leonardo Olmos, UBS

Alejandro Gallostra, BBVA

Carlos de Legarreta, GBM

Arturo Langa, ITAU

Good morning. My name is Fate, and I will be your conference operator today. At this time, I would like to welcome everyone to the America Movil Second Quarter 2021 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and- answer session. (Operator Instructions) Now, I will turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.

Thank you. Good morning, everyone. Thank you for joining us today. We're here to this call for second quarter financial and operating results. We have oon the line Mr. Daniel Hajj, CEO; Mr. Carlos Garcia Moreno, CFO; and Mr. Oscar Von Hauske,

COO

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INITIAL

Bloomberg

Thanks, Daniela. Good morning, everyone. Thank you for being in the call. Carlos is going to make a summary of the results.

Thank you. Daniel. Good morning, everyone. The US economy recovered rapidly signs of higher inflation towards the latter part of the second quarter created uncertainty and confusion and drove price corrections in some segments of the financial markets.

The yield on three year Quench's notes, for instance, rose 15 basis points, which was equivalent to 50% in growth yield of the market, brought forward we expect the path of increases in interest rate side effect, In fact, I'm not Consider (inaudible) can countries in pleasure expectations, fusion central banks, notably in the field and Mexico to begin to hike interest rates.

Foreign exchange volatility increased throughout Latin America. In this context, we added 4.4 million wireless subscribers in the second quarter compared to a loss of nearly 5 million in the second quarter of 2020 with 1 million for about 1.1 million soft.

There are few accounted for half of the postpaid net adds of the quarter followed by Austria we took on the and maybe 9,000 and Peru we took over an 74,000. Colombia was next we'll account for the 51,000 subscribers. For prepaid net adds totaled 2 million subscribers Argentina, accounting for 777,000 followed by Mexico with (inaudible) 2,000 in Brazil would click on the and 28,000. On the fixed line platform we hear an covenant and the 28,000 broadband accesses with Argentina and Colombia each compared the gaming over 50,000 clients.

Year-on-year mobile postpaid excluding the fastest start to growth the 10.7% now our prepaid follow suit the 5.6% with fixed broadband coming in third with our 3.5% annual pay. More fixed voice and PayTV declined slightly less than 3% year-on- year. Revenues both of (inaudible) billion peso likely having in nominal peso terms than a year before. At constant exchange rates. Service growing increased 5.3% year-on-year. And importantly, thought the 1.8% on a sequential basis. It is to be noted that the second quarter of 2021 -- equal to the effects of the pandemic, both in terms of commercial activity and revenue were more deeply felt so the annual comparison may be somewhat misleading.

But the third quarter of 2020 was largely free of the effects of the pandemic and happens to be able to reference in the first quarter of this year. Service revenue if that reach at 1.2% from the prior year. So, service revenues and more revenues are both greater than pre-pandemic levels.

Prepaid and postpaid mobile service revenues are both in higher levels and they cut those the pandemic with prepaid revenues Feragen on the strength of the economic expansion in Mexico, the US, Central America, Caribbean and Eastern Europe.

Prepaid revenues were up 9.5% and postpaid 4.4% year-on-year. For the digital and platform revenue, the different business lines has exceeded has mordern trend over the last several quarters led by fixed broadband net cash increased levels of the deal. (inaudible) business and corporate network. This conference COVID ground in the last two quarters.

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INITIAL

Bloomberg

PayTV and wireline voice both showing improving trend.second quarter EBITDA came in at MXN34.9 billion, up to 400 the second increase in nominal peso terms from the year-earlier quarter. At constant exchange rates. It increased 11,9% however adjusted for the carrier discounts within by platform in the second quarter of last year. Is it that even stronger performance increasing 14.6% the EBITDA margin was 3.6%, which was 0.8% percentage points more than a year before. In spite of the greater commercial activity our operating profit increased 9.8% to MXN44.7 billion.

Depreciation and amortization charges held steady at 19% of service revenues resulting need an increase in EBITDA in operating profit was up 17.9% at constant exchange rates on an annual basis and 6.2% quarter-over-quarter. Correcting for the carrier discounts the before the annual increase in our operating profit would have been 23.7% we registered a net comprehensive income in the amount of MXN17.2 billion as foreign exchange gain 21.1% -- MXN21.1 billion and gains in our financial expenses, which were MXN4.4 billion more than offset our net interest expense of MXN8.4 billion.

Our network traffic total for MXN2.5 billion in the second quarter, more than doubling that of the year ended quarter on the back of strong EBITDA growth and our net comprehensive financing income was equivalent to 55% per share for the reference (inaudible) in the six months to June our operating cash flow allowed us to fund capital expenditures in the amount of MXN57.4 billion with these net debt, the amount of MXN36.9 billion, which were quite substantial, certainly for the first half of the year.

And buy back shares in the amount of MXN11 billion and also that substantial in addition we reduced by MXN5.6 billion. Our labor obligations in fact, I will share buybacks through June, which amount 755.1 million shares. Those one of each of the last 60 years for the 70 years our free cash loan cost attributed a trend of strong loan (inaudible) and check for the last six years, we have been very

Very consistent increasing free cash flow year after year probably less of years including over 80% in the last period. And finally, our net debt to the directional tranche in this quarter and stood at 1.64 times last 12 month EBITDA down from the

1.9 times a year before. So we have got the largest collection in the net debt to EBITDA ratio that we have seen through the fall in many as 10 years. So with that we would like to open this for Q&A and pass floor back to (inaudible). Thank you.

Daniel Hajj Aboumrad

Thank you, Carlos.

(Operator Instructions)

Your first question is from Marcelo Santos from JPMorgan. Your line is open.

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INITIAL

Hi, good morning. Thanks for taking my questions. I wanted to ask about broadband into review any Mexico. So the first question related to Brazil. If you have been losing subscribers in broadband, at least when we look at Anatel data to be and we have seen many players in Brazil going to fiber for new ISVs trying to least we are seeing the large like (inaudible) creating this [ph]variables to invest in fiber. What are your plans in Brazil. How do you see this going to plan to best yourself more in fiber migrate maybe your cable networks fiber and what would be the impact on CapEx.

And on Mexico. I just want to due to comment a bit on the competitive environment because you also saw some broadband losses in the quarter. So if you could comment on that would be great. Thank you.

Thank you, Marcelo, Yes, hi, Marcelo. Well first talking about Brazil, as you know, we have Cable network in Brazil. So while doing is operating the network, so we got a very strong brand to break down the (inaudible) in order to deliver more speed to our customers.When you look at the new sales, 60% of new sales in (inaudible) product that is 240 megabits. So we are ready fit with the network through that.

So we believe that we will protect all the HFC network by the end of the year we will operate 70% of the network to really deliver the speed that the market is submitted. I'm secondly talking about at fiber to the home, we already have 3 million [ph]comparisons with prior to the one we opened 110 new series with (inaudible) technology

Bloomberg

A - Oscar von Hauske Solis

It would be with (inaudible) and we do look at those series the 110 cities the presentation that we are getting those series is quite we have program to finish the year with around 5 million our campuses with with DuPont. And when you look at the figures we are the leaders on ultra broadband in the marketplace and now we are not only focused on the speed that we need to the to speed the market is needed and the competition is offering.

But as you know, we are focused on the combo play that we have glad to mobile and that property has been working pretty good and as you know, there you speeds are growing fairly rapidly. But in the regions that we don't have a network. When you look at the market share and where we have network we even increased a little bit the market shift.

So that's not the plan in former and Mexico. When you look at the cost of our base 43% of the Internet based is already GEPON and the rest is with VDSL. Just to give you a flavor on the first half of the year will be one million home passes with fiber and we migrate 500,000 customers from copper to fiber.

We want, to increase that part of construction migration in Mexico and as well in Mexico, the market has been proceeding well accepted the bundles that we are doing with the stream providers. As you know, we have bundled with Netflix with the Disney plus and we launched with HBO Max. So, we are moving the customers to it of in Mexico.

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INITIAL

Q-Marcelo Santos

Thank you very much.

Thank you.

Your next question comes from the line of Leonardo Olmos from UBS. Your line is open.

Q- Leonardo Olmos

Hi, good morning everyone let me discuss a bit prepaid and postpaid division between mobile clients notice a lot of prepaid net additions in Brazil off course that I want to postpaid but it's just how they see the large thousands right the prepaid and postpaid it makes, how do you see that may now installed been well seeing that in a human, the market had a lot of disconnections prepaid like the pandemic how do you see the prepaid line out in the second half of 2021.

Thank you. Well, we don't hear you. So, well, we don't know if you are talking about Mexico, Brazil, but I can tell you that in my view has the pandemic

Bloomberg

A - Daniel Hajj Aboumrad

Since the pandemic, despite a lot of people are using more and more and becoming more digital and of course, we have some disconnections last year in prepaid. What I can tell you that this year. Today we have more prepaid subscribers done what we have in last year before the disconnections so people has start to reconnect again and start to use more our IP Mexico. I'm talking about Mexico. The IP Mexico means, higher than the first quarter of last year so people will using more people disconnecting and using more data.

So that's more or less what to what I think in the postpaid people will still a little bit worried about the pandemic they don't want to get like something like to being less three months. So that's why also some people even moving from postpaid to prepaid. But as we are seeing they are using a lot also data. So in prepaid and postpaid all around Latin America, we're seeing the same.

Anything else?

Q - Leonardo Olmos

Yes. Well, first of all, thank you for hearing, there was my question. Exactly, just a quick follow-up besides Brazil and that's (inaudible) discussed specifically which are the regions still I think there is more potential for prepaid growth specifically prepaid growth.

Thank you.

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