América Móvil, S.A.B. de C.V. (AMXB) Earnings Call Transcript & Summary

Good morning. My name is Caleb, and I will be your conference operator today. At this time, I would like to welcome everyone to the America Movil Second Quarter 2026 Conference Call and Webcast. [Operator Instructions] I will now turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.

Hi. Good morning, everyone. Thank you for joining us today to discuss our second quarter 2026 financial and operating results. We have on the line Mr. Daniel Hajj, CEO; Mr. Carlos Jose Moreno, CFO; and Mr. Oscar Von Hauske, COO.

Thank you, Daniela. Welcome, everyone, to America Movil's second quarter of 2026 financial and operating report. And Carlos is going to give us a summary of the results.

Thank you, Daniel. Good morning, everyone. Well, we can see that throughout the second quarter with the Iran war raging, oil prices remain elevated, picking meat roughly 70% higher than prior to the war. This brought about greater concerns regarding inflation worldwide and the expectation, and in some cases, the reality of higher interest rates, including those at the long end of the year. [indiscernible] U.S. treasury notes reached their highest yield in nearly 20 years. However, in spite of the supporting dollar rates, the U.S. dollar did not grow stronger against most currencies in our region of operations is in the quarter and in fact, actually depreciated 6% versus the Colombian peso. In the second quarter, we added 3.5 million postpaid subscribers with the filing be way with 1.5 million subscribers. Colombia followed with 250,000. Peru, we had 173,000, Argentina with 154,000 and Mexico with 101,000 postpaid subscribers. In the prepaid segment, we raised 3.7 million net losses as Colombia and Argentina cleaned up their base. In the fixed line segment, we connected 531,000 new broadband accesses. Mexico was the main contributor with 170,000 accesses followed by Brazil with 83,000 and Colombia with 74,000. As regards to Pay-TV, we added a current 110,000 units, with most of them coming from Argentina, Eastern Europe and Central America. Mobile postpaid and fixed broadband accesses remain the main diverse growth of our customer base, increasing at an even faster pace, 9.1% and 6.1%, respectively, compared with the year earlier quarter. Second quarter revenue was up 3.1% year-on-year in Mexican peso terms to MXN 241 billion, and service revenue increased [ 3.4% ] and EBITDA [indiscernible]. Compared to a year earlier quarter, the Mexican peso appreciated significantly versus the dollar and the euro, 12% and 9% [indiscernible] while remaining flat basically Brazilian real and depreciating 3% versus the Colombian peso. At constant exchange rates, service revenue was up 1%, while EBITDA increased 5.3%. It would have increased 6.7% absent a one-off charge in Mexico. Mobile service revenue maintained the preset has observed over several quarters, 6.5%, while fixed line service revenue accelerated to 2.7% from 1.7% the prior quarter, with the downward trend in line growth coming to an end. On the mobile platform, postpaid revenue expanded 7.2% as in the preceding quarter, with prepaid revenue growth continuing to accelerate to 5.3%, up from 3.1% a year ago. Mexico, Colombia, Central America and Western European blocks were the best performance in terms of improved mobile service revenue growth. Regarding fixed line service revenue in the residential segment, both broadband and Pay TV revenue grew somewhat more rapidly than in the preceding quarter, 4.2% to 5.4%, up from 3.1% to 4.6%, respectively. B2B revenue growth remained stable at [ 4.0% ]. Mobile, Peru and Central America all contributed to the improvement in broadband revenue growth. As for the recovery in the pay TV segment, Brazil was the top performer, moving up from a 4.7% pace to 7.5%, okay. Operating profit totaled MXN 51.8 billion and was up 9.5% in Mexican peso terms. Our comprehensive financing cost rose to MXN 10.4 billion, reflecting lower foreign exchange gains that more than offset lower net interest costs. Our net income totaled MXN 24 billion, a 9.2% increase from the year earlier quarter. It was equivalent to MXN 0.40 per share and [indiscernible]. Throughout the first half of the year, our capital expenditures amounted to MXN 48 billion, our share buyback to MXN 4.6 billion and the service of our labor obligations to MXN 8.4 billion. These were all covered by our cash flow, which together with net dividend income of MXN 1.1 billion, allowed us to reduce our net debt and cash flow terms by MXN 30.9 billion, you can see the increase side. Excluding capitalized lease obligations, net debt totaled MXN 402 billion at the end of June, which represented 1.31x last 12 months EBITDA after leases. So with that, I will conclude this presentation and we'll pass the floor back to Daniel.

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

[Operator Instructions] Your first question comes from the line of Leonardo Olmos, UBS.

Congrats on the numbers. We love the deleveraging we saw. My question would be regarding competition in Brazil, you mentioned a more competitive and promotional environment in Brazil. Which segments are most concerned? And how does this entry-level hybrid plants such as Claro [ Flex ] fit in these scenarios? So I'm asking specifically about the new around BRL 30 per month low-end hybrid plants that all the 3 mobile carriers launch.

Thank you, Leonardo. We're talking a little bit about Brazil. I think in Brazil, we have a lot of things. So the first is, well, if you see 1 year ago, second quarter, the growth was very size. So the comparative between second quarter last year and second quarter this year is a little bit difficult because second quarter of last year, the growth was higher than it used to be in the other quarter. So it's difficult comparison between quarters, okay? That's one of the things. The second, no doubt that the market has been more promotional where we have seen -- where we are seeing more promotions are in prepaid and in postpaid. What you see -- what you talk about the Claro Flex, I don't think there's any change on the trends on Claro Flex, postpaid, prepaid. I think everybody is more or less seeing the same trend. So we are not selling more cheap postpaid or more cheap prepaid. So we are seeing the same trend. The only thing is that promotions are becoming a little bit more strong. I still think that we're going to have a recovery in second, but better in third, but more in the fourth quarter, i.e., we're going to see again a little bit more growth in mobile. But well, if promotions and our competitors are more aggressive, then we need to be a little bit more aggressive. So I'm not sure what is going to happen in the next months, maybe the promotions are not so aggressive. But we don't know. So it depends a lot. We are following them since May. TIM and [ Vivo ] has becoming more aggressive. So we have to follow and we're going to follow that. So that is what is happening. In the other side, in the fixed side, we are being and growing revenues. We are growing revenues from, let's say, we have -- in Brazil, I can tell you, we start with 1 year ago, 1.5% growth, then 1.8%, then 2.6% and today, 4.1%. So in the things are going better and things looking stronger. So we -- at the end of the day, we have a very strong network. We are doing very good in [ Pachi ]. We are investing in customer care. We have a very good NPS. We are doing convergence. So if the market is aggressive for this moment, then we're going to be a little bit more aggressive. And in the future, it things are going the other way and less promotions, then we're going to see better revenue. So we are still gaining in mobile portability. We are the gainers in postpaid in mobile portability. So all overall, we are looking Brazil good. And the other thing important that you can see is that we think and we're feeling a little bit a slowdown in the economy. That's also one of the things that we're looking how -- why revenues are decreasing a little bit because the economy, we see a little bit of a slowdown, but it's too early to see. Let's see what's happening in the next months. And then we can find -- if the economies -- the trend is going slow or it's going to stay the way it is. So that's more or less what we have in Brazil, Leonardo.

Your next call comes from the line of Marcelo Santos, JPMorgan.

Thank you for the opportunity to ask questions. I wanted to ask about the Mexican prepaid performance. The revenue growth we are seeing there has been accelerating every quarter for many quarters already. Usually, you discussed this in the light of improving Mexican economy. But what we hear from consumer companies, it's kind of not such a great story in the consumption side, yet your performance is good. What kind of initiatives have you been pulling forward? What is happening in the competitive environment from inside or outside of America Movil that's helping you to deliver these results?

Well, as you said, we think that the economy, at the beginning when we were almost flat in prepaid, and we're growing maybe 1% in prepaid was maybe 2 years ago, when we think that the economy was in a slowdown period. But right now, I think the economy is going back. And our prepaid customers are consuming, are recharging more and are charging higher cards, higher prepaid types, okay? So instead of charging MXN 50, they are charging MXN 80 or MXN 100. So people is starting to use more and more 5G. In Mexico, really, we're the only one that has a very good 5G network, and that's also helping us a lot. And on the other side, we have a little bit more coverage. So we're gaining some good subscribers that we don't have. We're starting to do a little bit more coverage in some places. But all overall, is we have a very good base on prepaid. We -- difficult to say, but we have a lot of our prepaid customers are consuming. So we don't have a base that some of them are consuming or they are maybe 1 month consuming and 2 months not. So all these customers are -- every month are charging and using more data. So those are the things that are helping a lot on the prepaid side. So our base of people with recharging is growing, and that's very good for us.

Marcelo, just a small net on the economy. As Daniel points out, I think that the economies on the recovery path, it is coming back. I think at this stage, it's very uneven, so it's not affecting all the sectors same way. But I'll give you the 2 reference points. As of June, we have registered the highest ever volume of sales of automotives, highest ever. And the growth of the automobile sales are almost identical to our prepaid revenues, the growth of the prepaid revenues. You just put it in perspective. Another reference point is if you look at other services like restaurants, they are booming. All sorts of rest of Europe, high end, low end, all of them are booming. So it's a little bit uneven. You have some sectors that are doing particularly well, some other sectors that are still not growing.

Your next question comes from the line of Phani Kanumuri, HSBC.

My first question is on Mexico mobile revenue growth. It has registered a very strong growth. But I'm wondering if it had any positive impact from the World Cup that is happening in Mexico, are you seeing higher roaming revenues? Have you seen higher growth in June compared to other months? The second question is also on Mexico. How is the progress happening on the mobile registration? And how many -- what percentage of customers have already been registered on this front?

The first one, I think the World Cup impacts a little bit. So I don't think it's too much. There's not -- the World Cup was not only in Mexico, not only -- we have only like 7 games, something like that. So there's people coming. We see more roaming here in Mexico, more people using. It's not only the roaming people is using more, it's looking -- we have a very good 5G network. So they are looking at the games in the iPad, in the phone. So that will have a little bit more consumed, but that will be only 2 weeks in June. So it's not too much. But what we are seeing is that a lot of our customers who are coming back to our store and wants to renovate, they are renovating. Maybe I can tell you that maybe half of our subscribers are upgrading their plan. So that's very, very important. So they want to use -- they want to have a better plan. They want to use more, they want -- they are using more of the handsets. So that is what is giving us on postpaid, a very good growth. So a lot of our customers are moving to a higher plan. So that's what you could see. The market is very competitive as we have a lot of competition in the market. But as I said, we are the only really 5G network, very good network all around Latin America. We're working a lot on quality, where we're working a lot on speed, customer care. So we're trying to give our customers the best service, and that is making us to grow that. So -- and in the registration, well, for now on, there's the -- what we said in our -- is that there's going to be new date for the registration. The dates are going to be depending on the end of your number is where you need to be registered. It's going to be only prepaid subscribers. The postpaid are already in. So they are not -- they don't need to register the postpaid subscribers. And I don't know exactly the number on the industry, but there's still a lot to do on that. So every month, every 15 days, every month, there's going to be a new number, and then you have to register your prepaid numbers. So that's what it is, starting 15 of Augus and ends on, I think, end of November or beginning of December. And well, that's what the authorities are saying, and that's what the people needs to do in prepaid, they need to register. Since January, all the people, all the new customers that all of the company has to be registered. So since that, all of them has to be registered. And this is only for the actual customers that need to register their numbers. So that's where we are. And we hope that all of them will register.

Your next question comes from the line of Rogerio Araujo, Bank of America.

I have a couple of questions. The first one on the line other financial expenses, it rose to roughly MXN 6.9 billion in the quarter. This was a 40% increase year-over-year. Could you please break down what drove that increase? But specifically, how much of this relates to cash outflows tied to your labor obligations and pension funds? We saw this was nearly MXN 6.9 billion in the quarter as well. Also looking forward, what level of annual pension-related cash outflow should we model given the maturity of the Telmex plan? This is the first one. And the second on [ Nucell ]. Could you gently walk us through how it's reflected in our accounting and KPIs? Specifically, are new sales users counted within your reported subscriber base and net adds, we think so. But if you could confirm? But also how is the economics recognized, full revenue or only Claro's revenue share? So we can have an idea on how this impacts ARPU. And finally, how should we think about the associated network commercial costs and margin profile of [ Nucell ] in your results?

Thank you, Rogerio. On the first question, on other expense -- other financial expenses. Basically, what we are reflecting is partly a little bit of the elements of the fine that was mentioned a while ago. Because as the first ruling was some years ago, part of the finance of being financial expenses, what was -- financial penalties that were accrued since the initial ruling, okay? The other part that is imported in other expenses, generally -- and this is -- you will see it all the time, is that that's where we have the hedging -- the currency hedging transactions and a lot of things. So typically, when you are gaining on FX, to the extent that those gains have already been -- or those gains are already been hedged, you are giving back part on the expenses. It works no positive directions, both cases, okay? So that's part of it. So it's part the fine and partly expenses.nothing to do with the pension, the pension are accrued and accounting business, what we are showing here is an accrual basis. It's not on a cash flow basis, okay? And the accrual basis, there's no change.

And on new cell, there's 2 types of MVNOs in Brazil. The one, we call them [ a Creditagos ], and the other ones authorized MVNOs. [ Nucell ] is the ones that are like [ Creditas ] that they work like a agent, commercial agent, and those customers count as our base. We count them as in our base in Claro. So that's the way we count. So all the [ Nucell ] subscribers are inside Claro customers.

Okay. Perfect. And the revenue is the full revenue charged by [ Ncell ] that answers your...

The revenue is the part that is including in that our revenue and the rest is new sale revenue. So we divide that. So that's where we have. But [ Newell ] has been working maybe for 1 year or more, so more.

Your next question comes from the line of Emilio Fuentes.

My question is regarding capital allocation. I was wondering, given the current weakness we've seen in the U.S. dollar and how this could benefit your investment needs, do you see any downside risk to your full year CapEx guidance? And if so, and given you're currently standing the lower end of your leverage ratio, do you see incremental free cash flow as being destined for share buybacks?

The weak dollar, it's difficult for us in CapEx because then for the same things that you do, then it's going to be more dollars. So we need -- on dollars, it's more dollars for the same budget that we have. So it's -- in terms of the CapEx, it's not helping. Well, in terms of revenues, it's helping. So that's where we are and we're deciding what to do. But in CapEx, it's a little bit more but we are in the target that we have, MXN 7 billion, and it's at MXN 7 billion, a little bit more, a little bit less, what we are in that target, and we're not going to move on that.

And the second question, can you repeat it, please? On the leverage -- the leverage you...

Do you go... I think incremental free cash flow. If you see an incremental cash flow going for buybacks?

No. No, I think what we have consistently. At least we first determined what our leverage ratio is meant to be, okay? So we need to look at our leverage rate, considering the expenses that we are already committed to bake, which will include the purchase of Desktop, which likely is going to close this year, okay? That's our expectation in any case, okay? So we basically manage to stay within the range that we have said. So it's not more than 1.5x net debt to EBITDA, not less than 1.2x. That, you can see that we have some limits in terms of how much we can reduce our ratio at this point.

And what we -- and also adding another thing that we just announced yesterday, the WOW acquisition that we have, I think, makes a lot of sense for us in Peru. It's some -- more fiber, like 3 -- more than 3 million houses passes with fiber. 0.5 million customers and make a lot of synergy with us. So -- and we're open to see more of those acquisitions. So they are good for us. We're going to -- they are broadband customers that we can sell prepaid, postpaid or TV also. This network is outside of Lima. And it's a good complement for us, help us also the fiber to do corporate customers that were growing and doing very good there, a small business as a scary saying. So we are also looking for other good acquisitions that we can have.

[Operator Instructions] Our next question comes from the line of Ernesto Gonzalez, Morgan Stanley. Excuse me, our next question comes from the line of Carlos Sequeira, BTG Pactual.

So I have one question, please, and it's related to M&A strategy in Europe, if you can let us know what you were looking at, what makes sense for AMX at this point, remind to you were, please?

Well we are open to see everything. But what we're really looking is this type of companies like Desktop, like WOW that add fiber customers, that are -- the fiber complement to our fiber network that we can sell more things to those customers like prepaid, postpaid. And as I said also, the fiber will be in the small and medium companies have a lot of synergies. I think we can have a lot of synergies with this company. So those are the companies that we're looking. So we are not looking to go outside right now to other countries, but we are looking things inside our countries that will make us grow a little bit faster and consolidate the market. Consolidation of the market will be important.

Your next question comes from the line of Ernesto Gonzalez, Morgan Stanley.