America Movil SAB de CV
BMV:AMXB
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
14.1318
17.05
|
| Price Target |
|
We'll email you a reminder when the closing price reaches MXN.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
America Movil SAB de CV
You don't have any saved screeners yet
Good morning. My name is Sade, 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. [Operator Instructions] Now I will turn the call over to Miss Daniela Lecuona, the Head of Investor Relations.
Thank you. Good morning, everyone. Thank you for joining us today. We're here to discuss for second quarter financial and operating results. We have on the line, Mr. Daniel Hajj, CEO; Mr. Carlos Garcia Moreno, CFO; and Mr. Oscar Von Hauske, COO.
Thanks, Daniela. Good morning, everyone. Thank you for being in the call. Carlos is going to make a summary of the results.
Thank you, Daniela. Good morning, everyone.
Well, the U.S. economy recovered rapidly, signs of higher inflation towards the latter part of the second quarter created uncertainty and confusion and low-price corrections in some segments of the financial markets. The year-on-year credit notes, for instance, rose 15 basis points, which was equivalent to a 50% increase in yield as the market brought forward the expected path of increases in interest rates by this debt. In several Latin American countries, inflation exceeded expectations and push on central banks, notably in Brazil and Mexico, to begin to high interest rates. Foreign exchange volatility increased throughout Latin America.
In this context, we added 4.2 million wireless subscribers in the second quarter compared to a loss of nearly 5 million in the second quarter of 2020. With 1.1 million post, Brazil accounted for half of the postpaid net adds of the quarter followed by Austria, 289,000, and Peru, 234,000. Colombia was next, which accounts for 159,000 subscribers.
As for prepaid, net adds totaled 2 million subscribers with Argentina accounting for 777,000 followed by Mexico with 432,000 and Brazil with 328,000. On the fixed-line platform, we gained 128,000 broadband accesses with Argentina and Colombia each contributing over 50,000 clients.
Year-on-year, mobile postpaid exhibited the fastest tax rate growth with 10.7%. Mobile prepaid followed suit with 5.6% with fixed broadband coming in there with a 3.5% annual pace. Both fixed and PayTV declined slightly less than 3% year-on-year.
Revenues topped at MXN 253 billion, a slightly higher in nominal pesos terms than a year before. At constant exchange rates, service revenue increased 5.3% year-on-year and importantly, was up 1.8% on a sequential basis. It is to be noted that the second quarter of 2020 were the one in which we effectively pandemic, both in terms of commercial activity and revenue were more deeply felt. So the annual comparison, maybe be some partners leaving. But the first quarter of 2020 was largely free of the effects of the pandemic and happened to be a good reference.
In the first quarter of this year, service revenue had risen 1.2% from the prior year. So service revenues and mobile service revenues are both greater than pre-pandemic levels. Prepaid and postpaid mobile service revenues are both at higher levels than they had prior to the pandemic with prepaid revenues surging on the strength of the economic expansion in Mexico, the U.S., Central America, Caribbean and Eastern Europe. Prepaid revenues were up 9.5% and postpaid 4.4% year-on-year.
As for the fixed-line platform, revenue in the different business lines has exceeded a smoother trend over the last several quarters, led by fixed broadband that has increased at levels of between 7% and 9% and corporate networks that has recovered ground in the last 2 quarters. PayTV and wireline both -- are both showing improving trends.
Second quarter EBITDA came in at MXN 34.9 billion, a 2.8% decrease in nominal peso terms from the year earlier quarter. At constant exchange rates, it increased 11.9%. However, adjusted for the carrier discounts obtained by platform in the second quarter of last year, EBITDA had an even stronger performance, increasing 14.6%. The EBITDA margin was 33.6%, which was 0.8 percentage points more than a year before in spite of the greater commercial activity. Our operating profit increased 9.3% to MXN 44.7 billion.
Depreciation and amortization charges held steady at 19% of service revenues, resulting, given the increase in EBITDA, in an operating profit that was up 17.9% at constant exchange rates on an annual basis and 6.2% quarter-over-quarter. Correcting for the carrier discounts referred to before, the annual increase in our operating profit would have been 23.7%. We registered a net comprehensive income in the amount of MXN 17.2 billion as foreign exchange gains MXN 21.1 billion and gains in other financial expenses, which were MXN 4.4 billion, more than offset our net interest expense of MXN 8.4 billion.
Our net profit totaled for MXN 42.8 billion in the second quarter, more than doubling that of the year-earlier quarter on the back of strong EBITDA growth and our net comprehensive financing income. It was equivalent to MXN 0.65 per share or $64 per ADR.
In the 6 months to June, our operating cash flow allowed us to fund capital expenditures in the amount of MXN 57.4 billion, reduced net debt in the amount of MXN 36.9 billion which was quite substantial, certainly for the first half of the year, and buy back shares in the amount of MXN 11 billion and also quite substantial. In addition, we reduced by MXN 5.6 billion our labor obligations. In fact, our share buybacks through June, which amounted to 755.1 million shares, topped those ones of each of the last 6 years for the 7th year.
Our free cash flow has attributed a trend of strong growth, as you can see on the chart, for the last 6 years. We have seen very steady, very consistent increase in free cash flow year after year for the last 6 years, increasing over 80% in dollar terms in the period.
And finally, our net debt-to-EBITDA ratio plunged in this quarter, and it stood at 1.64x last 12 months EBITDA, down from 1.9x a year before. So we have had the largest correction in the net debt-to-EBITDA ratio that we have seen probably in as many as 10 years.
So with that, I would like to open this for Q&A and pass the floor back Daniel Hajj. Thank you.
Thank you, Carlos.
[Operator Instructions] Your first question is from Marcelo Santos from JPMorgan.
I wanted to ask about broadband in Brazil and in Mexico. So the first question related to Brazil is you have been losing subscribers in broadband at least when we look at Anatel data until May. And we are seeing many players in Brazil going to fiber, so new ISPs is trying to list. We are seeing the large like Oi team Vivo creating these vehicles to invest in fiber. What are your plans in Brazil? How do you see this going? Do you plan to test yourself more in fiber, migrate maybe your cable network to fiber and what would be the impact on CapEx?
And on Mexico, I just wanted you 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, Marcelo. Is there Oscar?
Yes. Marcelo. Well, first, talking about Brazil. As you know, we have 8 cable networks in Brazil. So what we've been doing is upgrading the network. So we have a very strong plan to break down the notes in order to deliver more speed to our customers. When you look at the new sales, 60% of the new sales is in a product that is 240 megabits. So we already prepare the network through that. So we believe that we will protect all the HFC network. By the end of the year, we will upgrade 70% of the network to really deliver the speed that the market is needed.
And secondly, talking about Fiber to the Home, we already have 3 million home passes with Fiber to the Home. We opened 110 new cities with GPON technology in order to compete with fiber. And when you look at those cities, 110 cities, the penetration that we are getting in those areas is quite relevant. We have a program to finish the year with around 5 million home passes with GPON. And when you look at the figures, we are the leaders on ultra broadband in the marketplace. And no, we are not only focused on the speed that we need to deliver the speed that the market is needed and the competition is offering. But as you know, we are focused on the combo play that we had Claro Box, mobile, and that proposition has been working pretty good. And as you know, the ISPs are growing pretty rapidly, but in a region that we don't have network. When you look at the market share and where we have network, we even increased a little bit the market share. So that's the plan for Brazil.
And in Mexico, when you look at the customer base, 43% of the internet base is already GPON and the rest is with VDSL. Just to give you a flavor on the first half of the year, we built 1 million home passes with fiber, and we migrate 500,000 customers from copper to fiber. We want to increase that part of construction and migration in Mexico. And as well in Mexico, the market has been receiving well-accepted bundles that we are doing with the streamers providers. As you know, we have bundled with Netflix, with the Business Plus and basically relaunch with HBO Max. So we are moving the customers to fiber as well in Mexico.
Your next question comes from the line of Leonardo Olmos from UBS.
Let me discuss a bit the prepaid and postpaid division between mobile clients notice a lot of prepaid net additions, except for Brazil, of course, that had a lot of postpaid. But if you can discuss how they see the largest accounts in the regions, the prepaid and postpaid makes -- how does that play out in 2021, considering that you quite a -- you and the market had a lot of these connections prepaid last year due to the pandemic. How do you see the prepaid playing out in the second half of '21?
Well, we don't hear you so well. We don't know if you are talking about Mexico or Brazil. But I can tell you that, in my view, the pandemic -- since the pandemic starts, a lot of people are using more and more and becoming more digital. And of course, we have some disconnections last year in prepaid, but I can tell you that this year, today, we have more prepaid subscribers than what we had last year before the disconnection. So people start to reconnect again and start to use more our ARPU in Mexico, I'm talking about Mexico. The ARPU in Mexico is higher than the first quarter of last year. So people is using more, people is connecting and using more data. So that's more or less what I'm seeing.
In the postpaid, people is still a little bit worried about the pandemic. They don't want to get like something like a bill every month. So that's why also some people is moving from postpaid to prepaid. But as we're seeing, they are using a lot also data. So in prepaid and postpaid all around Latin America, we're seeing the same. Anything else?
Yes. Yes. Well, that was my question exactly. Just a quick follow-up. Besides Brazil and Mexico that you discussed specifically, which of the regions do think there's more potential for prepaid growth, specifically prepaid growth?
For the prepaid growth in, I think, Colombia, we're growing in prepaid, all Central America, we're growing also in prepaid, Dominican Republic, we're doing well, Eastern Europe also we're growing in the prepaid side. So all -- overall, people -- sometimes people doesn't want to have a commitment every month, but -- and they are moving to a prepaid platform. But we think that they are having good ARPUs and consuming well all the data. So it's -- we're okay on that.
[Operator Instructions] Your next question is from Alejandro Gallostra from BBVA.
We have been significantly increasing the pace of share buybacks in recent months and even before reaching the desired level of leverage, so should we expect an increased amount of capital distributions to shareholders once you reach your 1.5x net debt-to-EBITDA and complete the sale of Verizon or you're already reaching your levels of -- your inside levels of capital distributions to shareholders?
Well, I think, what I mentioned in the overview a moment ago was that we had actually a very good cash flow in this first half of the year, and that allowed us to pay nearly $2 billion of debt. And with the regular cash flow from the operation, this is before getting any of the proceeds from platform or whatever we might end up having with the towers.
So I think that, that gave us confidence that we were very much on track to get to our desired levels where we need to wait a little bit longer. So I think that, that solidity is depending on the company today. We will be reaching our level. We were confident that the 2 things I mentioned, both platform and the towers are still on track to close this year. And with that, I think that maintaining a good cash flow allows us to raise the share buybacks with very good cash flow.
Your next question is from Carlos Legarreta from GBM.
I have 2 questions, if I may. The first one regarding CapEx, we see that in the first 6 months of 2021, it's actually down versus the last year. Does this imply that you will pick up significantly during the second half? Or has something changed there?
And the second one, in terms of regulation in Mexico, there's been a public consultation regarding the potential wholesale deregulation for rates for Telmex in certain municipalities. So I'd like to understand if this can lead to perhaps the authorities granting Telmex a PayTV license in those areas.
Well, on the CapEx side, we have our budget of MXN 8 billion, 5% more, 5% less. So we're in that range, and we are on track for the first 6 months. We are on budget, and we are not increasing anything else. What Oscar says about Fiber to the Home in Brazil, Fiber to the Home in Mexico. We have also a lot of Fiber to the Home all around Latin America. Everything is including in this budget. So that's more or less.
And on Telmex, on PayTV, I hope we can get it. Yes, there's a lot of time that the IFT is saying that is going to give us the TV. So I hope that we can have the TV in Telmex for this year. So as we said -- always said, there is maybe not in the world, there's a company, a phone company that doesn't have a PayTV. PayTV license, I hope that we can get that PayTV license this year.
So do you think it's reasonable to think that those processes are related or none of it's certain?
I don't think so. I don't -- not necessarily is related to that. We have been having that -- the PayTV for maybe 10 years now. We're asking for the PayTV for more than that. So I hope this year we can get it.
Your next question is from Arturo Langa from Itau.
Just one, I wanted to see if you can provide any more color regarding Colombia and what you're seeing there from the launch of WOM's operation? Just to get a sense, how aggressive do you perceive them to be right now? And what is the base case that we should be working with?
Should we expect something like when AT&T went into Mexico or maybe want to come into Chile. Is that -- or with Anatel coming to Peru, is that your -- like your working assumption or do you expect something much less aggressive? That would be very helpful.
I cannot compare what they do AT&T in Mexico or the other ones in Chile or in Peru. So what I think one today in Colombia is very aggressive. Their plans are very aggressive. But I think it's not only aggressiveness. Now you need to have a good network, a good branding with that quad-play convergent, customer care centers, good distribution network. There's a lot of things around a good offer, okay? And customers, we have a very good NPS in Colombia, people prepare us.
So of course, there's strong competition there. There's 3 other big competitors, one Telefonica and the TiVo, but we feel comfortable. We're investing there in the network where we have moved the quality there. And the convergence is very important for us. We have been putting a lot of our subscribers in foreplay. So what can I say? So it's a big competition, it's a strong competition, good competitors. We're competing against good competitors, but we feel that we're in a good position in Colombia.
There are no further questions at this time. I will now turn the call over back to Mr. Daniel Hajj for final remarks.
Okay. Well, so it was a short call. Thank you, everyone. And I don't know if you want to add something, Carlos or Oscar.
No, no, thank you.
Thank you.
Thank you very much.
Thank you.
This concludes today's conference call. You may now disconnect.