Q3 2025 America Movil SAB de CV Earnings Call
Speaker #1: Good morning. My name is Kevin, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil third-quarter 2025 conference call and webcast.
Speaker #1: 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. If you would like to ask a question during that time, simply raise your hand.
Speaker #1: If you are connected via telephone, please press star followed by the number nine on your telephone keypad and star followed by the number six to unmute.
Speaker #1: I will now turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.
Speaker #2: Good morning, everyone. Thank you for joining us today to discuss our third-quarter financial and operating report. We have on the line today Mr. Daniel Hash, our CEO; Mr. Carlos García Moreno, our CFO; and also Mr. Oscar Bonhauske, our COO.
Speaker #3: Thank you, Daniela. Welcome to America Movil's third quarter 2025 financial and operating report. Carlos is going to provide us with a summary of the results.
Speaker #4: Thank you, Daniel. Good morning, everyone. Well, we saw in the third quarter that the U.S. economy finally appeared to slow down, as evidenced by a sharp decline in the number of new jobs created.
Speaker #4: In fact, when I heard about the March anticipated reduction in this policy rate, which was brought down by 25 basis points in September. Since mid-July, long-term interest rates have been on a downward trend, with 10-year rates falling from nearly 4.5% to 4.1% at the end of the quarter.
Speaker #4: With lower interest rates and the expectation of further interest rate cuts by the Fed, the US dollar lost ground versus practically all currencies in our region of operations, declining 2.7% versus the Mexican peso, 2.5% versus the Brazilian real, and 4.1% versus the Colombian peso.
Speaker #4: The dollar remained practically flat versus the euro, with the Argentine peso the only major exception is the period that depreciated versus the dollar. We added just over 3 million post-pay clients in the quarter, with Brazil contributing practically half, as you can see in the chart.
Speaker #4: One and a half million, followed by Colombia with 251,000, Peru with 198,000, and Mexico with 98,000. On the prepaid platform, we recorded net disconnections of 31,000, as you can see on the right-hand side of the slide, resulting from losses in Brazil, Ecuador, and Chile, which offset net subscriber additions of 10 in several countries, including Argentina with 53,000, Colombia with 237,000, and Mexico with 136,000.
Speaker #4: And the prepaids. In the fixed-line segment, we gained 536,000 broadband accesses, including 211,000 in Mexico. That's roughly half of what we had overall in América Móvil, 86,000 in Brazil, 56,000 in Argentina, and 51,000 in Colombia.
Speaker #4: At the end of September, we had 480 million accesses, of which 140 million were post-pay clients, and 79 million were fixed-line IUUs. Year over year, our post-pay rates increased 8.1%, as you can see that the access line that has been increasing the fastest, and then fixed broadband accesses with 5.1% growth.
Speaker #4: Third quarter revenue, total 233 billion pesos, they were up 4.2% in Mexican peso terms and 6.2% at constant exchange rates. The service revenue also expanding at the 6.2% pace.
Speaker #4: The difference between the rate of growth in nominal terms versus that at constant exchange rates mainly reflects the appreciation of the Mexican peso versus the dollar, the Chilean peso, and the Argentine peso, as the former remained practically flat, versus the Brazilian that the Mexican peso flat versus the Brazilian real, and the Colombian peso.
Speaker #4: On the mobile platform, service revenue posted its best rate of growth in two years. 7.1%. Capital loan by the continued recovery of prepaid revenue.
Speaker #4: The latter expanded 3.9%, the fastest pace in two years. While post-pay revenue climbed at 9.1%, very similar pace to that of the precedent quarter, which was the quickest one in 10 quarters, so very, very fast mobile revenue growth, both in prepaid and in post-pay.
Speaker #4: We are seeing the fastest pace in a couple of years. Mexico, Colombia, and Chile were the main operations behind the acceleration of mobile service revenue growth.
Speaker #4: As for fixed-line service revenue, it decelerated to 4.7% to 7.9% from 7.9% in the prior quarter. This deceleration has to do with the significant slowdown registered in corporate network revenue.
Speaker #4: Which fell from 15% increase in the second quarter to 3.5% increase in the third. Corporate network revenue tends to be more volatile as it is associated with the pipeline of corporate network contracts, and IT projects.
Speaker #4: We are an increasingly relevant player in this business segment, which is an ever more important revenue item for us. Its share of fixed-line service revenue has reached 21%.
Speaker #4: In return, the total was $94 billion pesos, with a growth rate of 4.9% in Mexican peso terms and 6.8% at constant exchange rates, compared to the same quarter last year.
Speaker #4: We returned to the trend seen over several quarters when EBITDA was expanding more rapidly than revenue. We expect that this will continue to be the case going forward.
Speaker #4: Our operating profit came in at 50 billion pesos and was up 5.6% in nominal terms and 6.4% at constant exchange rates. With our comprehensive financing costs roughly cut in half compared to those of the year-ago quarter, and this is basically on account of FX gains, our net income surged to 23 billion pesos, which is equivalent to 38 Mexican pesos per share, or $40 per ADR.
Speaker #4: We ended up with a 138 billion pesos in operating cash flow in the nine months to September, after deducting from our EBITDA after leases, 34 billion in increased working capital, and 67 billion in interest payments and taxes.
Speaker #4: This capital expanded to total 85 billion pesos over the period, our free cash flow amounted to 53 billion pesos compared to 36 billion pesos a year before.
Speaker #4: This means a 47% increase year on year. This free cash flow was 2.3 billion pesos in dividend income that we obtained over the action shares.
Speaker #4: Allowed us to distribute $29 billion pesos to our shareholders, including $11 billion pesos in share buybacks. Increased our equity investments by $1 billion pesos, laid out $10 billion pesos out of our labor obligations due this year, and reduced our net debt by $16 billion pesos.
Speaker #4: At the end of September, our net debt stood at $4.54 billion pesos, which is equivalent to 1.55 times net debt to EBITDA after leases. With that, I would pass the floor back to Daniel, and we would open up this floor for Q&A.
Speaker #4: Thank you all. Thank you, Carlos. Are you ready for the Q&A, please?
Speaker #5: Yes.
Speaker #1: We'll now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now.
Speaker #1: If you have dialed in to today's call, please press Star 9 to raise your hand, and Star 6 to unmute. Please stand by while we compile the Q&A roster.
Speaker #1: Your first question comes from the line of Vitor Tomita from Goldman Sachs. Vitor, your line is now open. Please go ahead.
Speaker #6: Hello, good morning, all, and thanks for taking our questions. Two quick questions from our side. The first one is on mobile prepaid revenues in Mexico; prepaid revenues have been recovering well.
Speaker #6: Is this driven by better macroeconomic factors or other influences? And are you seeing this positive trend, if it is macro, continue into the fourth quarter for prepaid in Mexico?
Speaker #6: And our second question would be on Chile, Uruguay, and Paraguay, where in that segment, even though it's small, we saw some very strong margin expansion quarter on quarter and year on year there.
Speaker #6: Was this due to accounting factors following the end of the JV there, or any one-off effects? Is there anything that we should bear in mind? Thank you.
Speaker #3: Well, Vitor, talking about the mobile prepaid market in Mexico, as we mentioned in the last quarter and the previous two quarters, it's very related to the economy.
Speaker #3: I think the worst that we did in the revenues in the prepaid sector was at the end of last year or the beginning of this year, and since then, we're starting to recuperate the revenues.
Speaker #3: I think revenues should recuperate as we have been doing, I hope that the economy will get better and better and hope for next year we can have a better mobile revenues.
Speaker #3: It's very related to the economy, so it depends a lot on that. As we see that things are going better, then mobile prepaid will do better.
Speaker #3: On the Chile-Uruguay and Paraguay, we have been working very hard in Chile. We do all the synergies, then we bought the Liberty piece shares, and I think we're happy. We're gaining a lot of new subscribers, revenue is growing, and we are being very careful with the costs and expenses, so that's why the increase in EBITDA that we have.
Speaker #3: There's nothing different on that. So that's only the operations, and the growth that we have been having, better churn, good subscribers, subscribers better subscribers because we used to have the lowest segment of subscribers were having better post-paid subscribers, better revenue, better ARPUs, so all of this is helping us to grow our EBITDA, and that's what we have been saying, we need that we need some time to do the synergies and that we're having a very good moment right now in Chile.
Speaker #1: Very clear. Thank you very much.
Speaker #3: Thank you.
Speaker #1: Our next question comes from the line of Fanny Katamuri. Fanny, your line is open. Go ahead.
Speaker #7: Thanks for taking my questions. My first one is regarding your potential acquisitions. There's news on AMX trying to acquire a part of Telefónica in Chile along with Intel, as well as AMX pursuing some acquisitions for some ISPs in Brazil.
Speaker #7: So how do you view this acquisitions? Do you see more potential for the acquisitions in Brazil, and how does it impact average? Thank you.
Speaker #3: Well, on the M&A side, I want to talk about two things. First, on Chile, as we informed a few days ago, we are evaluating a potential joint bid with Intel to purchase Telefónica assets and operations in Chile. This process is currently at an early stage and will take some time.
Speaker #3: So there's nothing else I can say. We are reviewing the company, checking the numbers, and doing the due diligence, but nothing else than that.
Speaker #3: So, on Chile, that's what we have. It's an early stage, and we don't have anything else. On Brazil, on desktop, we're evaluating operations all around our markets, and our subsidiary in Brazil is currently evaluating desktop, but there's no binding commitment that exists until today.
Speaker #3: So there's nothing else. Only evaluating the company, and our people is looking at that. There's nothing else that we can say, and that's what we are.
Speaker #3: We are as we said open to see any opportunity that we have in the region or out of the region that make sense for us, and it's what we are doing and evaluating, and I think all around the world markets are consolidating and if that makes sense for us, we're going to participate on that.
Speaker #3: So nothing else on that.
Speaker #7: Thanks, Carlos.
Speaker #1: Okay, thank you. Our next question comes from the line of Gustavo Farrias. Your line is open.
Speaker #8: Hi, everyone. Thanks for taking my questions. I have two on my end. The first one is, if you could provide us color on the competitive environment in Mexico, especially coming from base new post-paid plans, but competition in general.
Speaker #8: And the second question focusing on Brazil: could we have a better view on the main drivers of performance in prepaid? How are you seeing the segment, especially with the good performance despite the disconnections we observed in the quarter?
Speaker #8: Thanks.
Speaker #3: Well, in Mexico, the competition with AT&T and Telefónica is quite intense. We have a lot of competition in Mexico. However, in the post-paid segment, I believe that people place a strong emphasis on quality, 5G capabilities, coverage, and the effectiveness of our customer care centers in attending to and resolving issues. I think we are by far much better than any other company in Mexico.
Speaker #3: We have more than 120 cities with 5G, nobody has that. We have customer care centers all around Mexico, with a lot of people very professional and training, to solve the problems, to help you, to activate your line, and in the other side, all of that helps you and if you have good prices and competitive prices, then well, you are in very good shape in Mexico.
Speaker #3: So, that's what we have. We are very competitive; we finance a lot of the devices, we have very good devices, we have very good distribution, and we have very professional people in the corporate segment. We have very professional people going to the companies in the small and medium business sector as well.
Speaker #3: So we have a very good company here that makes so the NP, let's say the NPS people think very good about Telcel, marketing, and all of that, that help us to be very strong.
Speaker #3: And that's why I can tell you that of the people who visit our stores, maybe 50% of them, who are actual customers, decide to increase the plan and extend the plan for some more time.
Speaker #3: So we are very, of course, we have a lot of competition. AT&T is doing good, Byte is also doing good, but they don't have all the things that we have, and people recognize a lot of that.
Speaker #3: There's a look at what we see: the phone is a very important thing for you. So you need to have it all day, every day. Since you wake up until you go to sleep, you have a lot of things to do.
Speaker #3: So what you want is to have the best network, the best customer care centers, the best coverage, and all of that helps us to be right now in this position.
Speaker #3: On Brazil, well, in prepaid in Brazil, well, prepaid in Brazil also we have been investing a lot in our network, we're gaining and doing a lot more coverage, we're doing a lot of 5G, and people in Brazil there's a lot of people from prepaid moving to customer space, but there's new people coming to stay with us in the prepaid side.
Speaker #3: So those are the things we in Brazil have been gaining and doing much better in the wireless segment for three years. I think it's also because it's not only one thing that we have; it's a lot of things.
Speaker #3: In prepaid in Brazil, our ARPU is growing 7.3%; that is a lot. This means that people are consuming more, using more social networks or buying a package for more days. All of that is helping us achieve this.
Speaker #3: 5G is very important also.
Speaker #1: Very clear. Thank you very much.
Speaker #3: Thank you.
Speaker #1: And a reminder that if you would like to ask a question, please use the raise hand function. If you have dialed in to today's call, you can press star nine to raise your hand, star six to unmute.
Speaker #1: Our next question comes from the line of Luca Brindim from Bank of America. Your line is open.
Speaker #8: Hi, good afternoon, everyone. Thank you for taking my questions. I have one here on my side. So if you guys could give us an update on the compact on competitive market for Colombia and Chile, we saw many reports of potential acquisitions including your potential move in Chile, some of your peers are struggling financially in both regions.
Speaker #8: So, is this already reflecting positively in the numbers we're seeing in those markets? Obviously, our numbers for the region have been improving in both Chile and Colombia. How much of that is due to competition, and what do you think we can expect going forward?
Speaker #8: Thank you.
Speaker #3: Well, we know what is going to happen in Colombia. Colombia is a T1 Telefónica; they already merged their network, so they are going to have one network, better costs, and more efficiencies for them. What looks like is that Tiggo is going to end up having all Telefónica's ministers. They are waiting for the authorization of the government. I don't know what's going to happen, but it looks like there's going to be a consolidation in the market.
Speaker #3: In Colombia, we're doing well. We are growing, and we are number one in 5G in Colombia. We're making investments there, quality is improving, and service revenue is growing 7.8% overall, with 7.4% growth in wireless. This growth has been very good in Colombia.
Speaker #3: The competition with the WOM is not so hard because WOM is in not in very good shape, what I'm understanding, there's a new people buying the company, starting to do the changes, but all overall in Colombia, we're okay.
Speaker #3: Our EBITDA should increase a little bit more, but we're re putting some extra reserves that we're doing for some fiscal and legal things that we're seeing, so we're putting, but if not, maybe we can have around we can have the 5% increase instead of 3% increase in the quarter, we can go to 5% increase if we don't do these reserves.
Speaker #3: So next quarter, I think it's going to be the same because the reserves are until the end of the year, but the operations are doing good, we are what is the we are being conservative doing the reserves, doesn't mean that we win or lose, but we want to be conservative always, so that's what we're seeing, growing very good the revenues and growing good the EBITDA.
Speaker #3: Investing a lot more in fiber. We're doing our investments and putting fiber to the houses, changing more of our cable, and doing fiber. I don't know, Oscar, if you want to talk a little bit about the peaks in Colombia?
Speaker #4: No, as you mentioned, we are building home passes with fiber, and we are doing the migration from cable to fiber, so we expect to have a 60% of our network already in fiber, so we believe that we have the right network to be competitive in Colombia.
Speaker #4: Not only on fiber or residential, I think we are doing pretty well as well in corporate segment, selling cybersecurity cloud, data centers, solutions, so I think we have a good operation there in Colombia.
Speaker #4: And then in Chile, well, Chile is a lot of competition in Chile, but well, we hope that we can consolidate the market as Telefónica is they are moving selling on sale, but what we have been doing the last two or three years is since we buy the company, we modernize all the network, we put 5G, we grow our coverage, we do more customer care centers, we move the brand to Claro, has been extraordinary good, so people is migrate a lot of migration from cable to fiber, so we have been doing the last three years since we bought the company, we have been doing a lot of investments and well, that's why our EBITDA is more than double in in Chile, so but of course, competition is high in Chile, prices are also still very low in Chile in everything, but we have been doing a lot of things to be competitive in the market, okay?
Speaker #4: So we need to compete at the prices that we have; they are very low, but we need to compete at those prices. So that's what we're doing.
Speaker #1: Very clear. Thank you for the answers.
Speaker #3: Thank you.
Speaker #1: Thank you. One last call for questions or reminder if you would like to ask a question, please use the raise hand function. Or if you have dialed in to today's call, you can press star nine to raise your hand, and star six to unmute.
Speaker #1: Seeing no further questions at this time, I will now turn the call back over to Mr. Daniel Hash for closing remarks.
Speaker #3: Oh, well, thank you all for being on the call. We'll see you next quarter. Thank you very much.