Q2 2026 America Movil SAB de CV Earnings Call
Speaker #2: 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 Q2 2026 conference call and webcast.
Operator 3: My name is Caleb, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil Q2 2026 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. Thank you. I will now turn the call over to Miss Daniela Lecuona, Head of Investor Relations.
Speaker #2: All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press * followed by the number 1 on your telephone keypad.
Speaker #2: If you would like to withdraw your question, press *1 again. Thank you. I will now turn the call over to Ms. Daniela Lacquana, Head of Investor Relations.
Speaker #3: Hi, good morning, everyone. Thank you for joining us today to discuss our Q2 2026 financial and operating results. We have on the line Mr. Daniel Cash, CEO.
Daniela Lecuona Torras: Hi. Good morning, everyone. Thank you for joining us today to discuss our Q2 2026 financial and operating results. We have on the line Mr. Daniel Hajj, CEO, Mr. Carlos Garcia Moreno, CFO, also Mr. Oscar von Hauske, COO.
Speaker #3: Mr. Carlos García Moreno, CFO. Also, Mr. Oscar Mojauzque, CEO.
Speaker #4: Thank you, Daniela. Welcome, everyone, to AMERICA MOVIL Q2 2026 financial and operating report. And Carlos is going to give us a summary of the results.
Daniel Hajj: Thank you, Daniela. Welcome everyone to América Móvil Q2 2026 financial and operating report. Carlos is going to give us a summary of the results.
Carlos García Moreno: Thank you, Daniel. Well, good morning, everyone. We can see that throughout the Q2, with the Iran war raging, oil prices remained elevated, peaking mid-May at a price 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 yield curve. We've had a year US Treasury notes with the highest yield in nearly 20 years. However, in spite of the supporting dollar rates, the US dollar did not grow stronger against most currencies in our region of operations this quarter. In fact, actually depreciated 6% versus the Colombian peso. In the Q2, we added three and a half million postpaid subscribers, with Brazil leading the way with one and a half million subscribers.
Speaker #5: Thank you, Daniel. Good morning, everyone. Well, we can see that throughout Q2, with the Iran war raging, oil prices remained elevated, peaking in mid-May at a price roughly 70% higher than prior to the war.
Speaker #5: 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 yield curve.
Speaker #5: The 30-year US Treasury notes reached their highest yield in nearly 20 years. However, in spite of the supporting dollar rates, the US dollar did not grow stronger against most currencies in our region of operations.
Speaker #5: This is in the Q2. And, in fact, actually, we appreciated 6% versus the Colombian peso. In Q2, we added 3.5 million postpaid subscribers, with Brazil leading the way with 1.5 million subscribers.
Speaker #5: Colombia followed with 250,000; Peru with 173,000; Argentina with 154,000; and Mexico with 101,000 posted subscribers. In the prepaid segment, we registered 3.1 million net losses as Colombia and Argentina cleaned up their bases.
Carlos García Moreno: Colombia followed with 250,000, Peru with 173,000, Argentina with 154,000, and Mexico with 101,000 postpaid subscribers. In the prepaid segment, we raised a three point million net losses as Colombia and Argentina cleaned up the 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 Pay TV, we added approximately 10,000 units, with most of them coming from Argentina, Eastern Europe, and Central America. Mobile postpaid and fixed broadband accesses remain the main drivers of growth of our customer base, increasing at an even faster pace, 9.1% and 6.1% respectively, compared with the year-earlier quarter.
Speaker #5: In the fixed-line segment, we collected 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.
Speaker #5: As regards pay TV, we added 110,000 units, with most of them coming from Argentina, Eastern Europe, and Central America. Mobile postpaid and fixed broadband accesses remain the main drivers of growth of our customer base.
Speaker #5: Increasing at an even faster pace, 9.1% and 6.1% respectively, compared with the year earlier Q2. Q2 revenue was up 3.1% year-on-year in Mexican peso terms to 241 billion Mexican pesos.
Carlos García Moreno: Q2 revenue was up 3.1% year-on-year in Mexican peso terms to MXN 241 billion. Our service revenue increased 3.4% and EBITDA 3.8%. Compared to a year earlier quarter, the Mexican peso appreciated significantly versus the dollar and the euro at 12% and 9% respectively, while remaining flat versus the Brazilian real and depreciating 3% versus the Colombian peso. At constant exchange rates, service revenue was up 5.1%, while EBITDA increased 5.3%. It would have increased 6.7% absent a one-off charge in Mexico. Mobile service revenue maintained the pace it 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 fixed 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.
Speaker #5: As service revenue increased 3.4%, and EBITDA 3.8%. Compared to the year-earlier Q2, the Mexican peso appreciated significantly versus the dollar and the euro.
Speaker #5: 12%, 9%, and 6%, respectively, while remaining flat versus the Brazilian real and depreciating 3% versus the Colombian peso. At constant exchange rates, service revenue was up 5.1%, while EBITDA increased 5.3%.
Speaker #5: It would have increased 6.7%, absent a one-off charge in Mexico. Mobile service revenue maintained the pace it has observed over several quarters, at 6.5%, while fixed-line service revenue accelerated to 2.7% from 1.7% in the prior quarter, with the downward trend in fixed-line growth coming to an end.
Speaker #5: On the mobile platform, postpaid revenue expanded 7.2%, as in the preceding Q2, with prepaid revenue growth continuing to accelerate to 5.3%, up from 3.1% a year ago.
Speaker #5: Mexico, Colombia, Central American, and Eastern European blocks were the best performers in terms of improved mobile service revenue growth. Regarding fixed-line service revenue, the residential segment, both broadband and pay TV revenue growth somewhat more rapidly than in the preceding Q2, 4.2% to 5.4%, up from 3.1 to 4.6% respectively.
Carlos García Moreno: Mexico, Colombia, Central America, and Eastern Europe blocks were the best performers in terms of improved mobile service revenue growth. Regarding fixed line service revenue in the residential segment, both broadband and Pay TV revenue growth 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 recovering the Pay TV segment, Brazil was the top performer, moving up from a 4.7% pace to 7.5% pace. 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.
Speaker #5: 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 a 7.5% pace.
Speaker #5: Operating profit totaled $51.8 billion and was up 9.5% in Mexican peso terms. Our comprehensive financing cost rose to $10.4 billion pesos, reflecting lower foreign exchange gains that more than offset lower net interest costs.
Speaker #5: Our net income totaled 24 billion pesos, a 9.2% increase from the year-earlier Q2. It was equivalent to 40 pesos cents per share and 47 cents per ADR.
Carlos García Moreno: It was equivalent to MXN 0.40 per share and $0.47 per ADR. At H1 of the year, our CapEx amounted to MXN 48 billion, our share buybacks 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, allow us to reduce our net debt in cash flow terms by MXN 3.9 billion, as you can see in this slide. 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. With that, I will conclude this presentation, and will pass the floor back to Daniel.
Speaker #5: Throughout the first half of the year, our capital expenditures amounted to $48 billion pesos. Our share buybacks to 4.6 billion and the service of our labor obligations to 8.4 billion pesos.
Speaker #5: These were all covered by our cash flow, which, together with net dividend income of 1.1 billion pesos, allowed us to reduce our net debt in cash flow terms by 30.9 billion pesos.
Speaker #5: As you can see in the slide, excluding capitalized last list obligations, net debt totaled 402 billion pesos at the end of June, which represented 1.331 times last 12 months' EBITDA, after leases.
Speaker #5: With that, I will conclude this presentation and pass the floor back to Daniel.
Speaker #4: Thank you, Carlos. And we can start with the Q&A.
Daniel Hajj: Thank you, Carlos. We can start with the Q&A.
Speaker #2: At this time, I would like to remind everyone in order to ask a question, press star then the number 1 on your telephone keypad.
Operator 3: At this time, I would like to remind everyone, in order to ask a question, press star, then 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Leonardo Olmos, UBS. Your line is open. Go ahead.
Speaker #2: We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Leonardo Olmos, UBS. Your line is open.
Speaker #2: Go ahead.
Speaker #6: Hi everyone. Good morning. Thank you for taking the question. Congrats on the numbers. We love the leveraging we saw. My question would be regarding competition in Brazil.
Leonardo Olmos: Hi, everyone. Good morning. Thank you for taking the question. Congrats on the numbers. We love the leveraging 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? How do these entry-level hybrid plans, such as Claro Flex, fit in these scenarios? I'm asking specifically about the new, around BRL 30 per month, low-end hybrid plans that all the three mobile carriers launched. Thank you.
Speaker #6: You mentioned a more competitive and promotional environment in Brazil. Which segments are most concerned and how does this entry-level hybrid plans such as Claroflex fit in these scenarios?
Speaker #6: So I'm asking specifically about the new around 30 reais per month low-end hybrid plans that all the three mobile carriers launched. Thank you.
Carlos García Moreno: Thank you, Leonardo. We're talking a little bit about Brazil. I think in Brazil, we have a lot of things. Well, the first is, if you see 1 year ago, Q2, the growth was very high. The comparative between Q2 last year and Q2 this year is a little bit difficult because Q2 of last year, the growth was higher than it used to be in the other quarters. It's a difficult comparison between quarters, okay? That's one of the things. The second, no doubt that the market has been more promotional, where we are seeing more promotions are in prepaid and in postpaid. What you told about the Claro Flex, I don't think there's any change on the trends on Claro Flex, postpaid, prepaid. I think everybody's more or less seeing the same trends, we are not selling more cheap
Speaker #5: 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 one year ago, second quarter, the growth was very high.
Speaker #5: So, the comparison between the second quarter last year and the second quarter this year is a little bit difficult because the second quarter of last year, the growth was higher than it used to be in the other quarters.
Speaker #5: So it's a 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.
Speaker #5: What you see, what you told about the Claroflex, I don't think there's any change on the trends on Claroflex—postpaid, prepaid. I think everybody's more or less seeing the same trends.
Speaker #5: 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 stronger.
Daniel Hajj: Postpaid or more cheap prepaid. We are seeing the same trends. The only thing is that promotions are becoming a little bit stronger. I still think that we're going to have a recovery in Q2, but better in Q3, but more in Q4. We're going to see again, a little bit more growth in mobile. If promotions and our competitors are more aggressive, we need to be a little bit more aggressive. I'm not sure what is going to happen in the next months. Maybe the promotions are not so aggressive, we don't know. It depends a lot. We're following them. Since May TIM and Vivo have become more aggressive, we have to follow, and we're going to follow that. That is what is happening. In the other side, in the fixed side, we are being and growing revenues.
Speaker #5: I still think that we're going to have a recovery in the second, and in the third, but more in the fourth quarter. We're going to see, again, a little bit more growth.
Speaker #5: 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.
Speaker #5: Maybe the promotions are not so aggressive, but we don't know, so it depends a lot. We've been following them since May. TIM and Vivo have become more aggressive.
Speaker #5: So we have to follow, and we're going to follow that. So that is what is happening. On the other side, on the fixed side, we are being and growing revenues.
Daniel Hajj: 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%. In fixed, things are going better and things are looking stronger. At the end of the day, we have a very strong network. We are doing very good in 5G. We are investing in customer care. We have a very good NPS. We are doing convergence. If the market is aggressive for this moment, then we're going to be a little bit more aggressive. In the future, if things are going the other way and less promotions, then we're going to see better revenue. We are still gaining in mobile portability. We are the gainers in postpaid in mobile portability. Overall, we are looking Brazil good.
Speaker #5: We are growing revenues from, let's say, in Brazil. I can tell you, we started one year ago with 1.5% growth, then 1.8%, then 2.6%.
Speaker #5: And today, 4.1. So, in fixed, things are going better and things are looking stronger. So, at the end of the day, we have a very strong network.
Speaker #5: We are doing very well in 5G. We are investing in customer care. We have a very good MPS. We are working on convergence. So, if the market is aggressive at this moment, then we're going to be a little bit more aggressive.
Speaker #5: And in the future, if 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.
Speaker #5: We are the gainers in postpaid in mobile portability. So overall, we are looking at Brazil as good. And the other important thing that you can see is that we think, and we're feeling, a little bit of a slowdown in the economy.
Daniel Hajj: 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 month, and then we can find if the trend is going slow or it's going to stay the way it is. That's more or less what we have in Brazil, Leonel.
Speaker #5: That's also one of the things that we're looking at—why revenues are decreasing a little bit. Because of the economy, we see a little bit of slowdown.
Speaker #5: But it's too early to say. Let's see what happens in the next few months, and then we can find out if the trend in the economy is slowing or if it's going to stay the way it is.
Speaker #5: So that's more or less what we have in Brazil, Leonardo.
Leonardo Olmos: Makes a lot of sense. Thank you very much, Daniel.
Speaker #6: That makes a lot of sense. Thank you very much, Daniel.
Speaker #5: Thank you.
Daniel Hajj: Thank you.
Speaker #2: Your next call comes from the line of Marcelo Santos, JP Morgan. Your line is open. Go ahead.
Operator 3: Your next call comes from the line of Marcelo Santos, J.P. Morgan. Your line is open. Go ahead.
Speaker #7: Hi, good morning. Thank you for the opportunity to ask questions. I wanted to ask about Mexican prepaid performance. The revenue growth we are seeing there has been accelerating every quarter for many quarters already.
Marcelo Santos: Hi. Good morning. Thank you for the opportunity to ask questions. I wanted to ask about Mexican prepaid performance. The revenue growth we're seeing there has been accelerating every quarter for many quarters already. Usually, you discuss this in light of improving Mexican economy. What we hear from consumer companies, it's kind of a not such a great story in the consumption side, yet your performance is good. What kind of initiatives have you been putting forward? What is happening in the competitive environment, from inside or outside of América Móvil, that's helping you to deliver these results? Thank you.
Speaker #7: Usually, you discussed this in the light of improving the Mexican economy, but what we hear from consumer companies is that it’s not such a great story on the consumption side.
Speaker #7: Yet your performance is good. What kind of initiatives have you been putting forward? What is happening in the competitive environment, from inside or outside of America Movil, that's helping you to deliver these results?
Speaker #7: Thank you.
Speaker #5: Well, as you said, we think that the economy at the beginning, when we were almost flat in prepaid and we were growing maybe 1% in prepaid, was maybe two years ago.
Daniel Hajj: 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. Right now, I think the economy is going back. Our prepaid customers are consuming, are recharging more, and are charging higher cards, higher prepaid cards. Okay? Instead of charging MXN 50, they are charging MXN 80 or MXN 100. People are starting to use more and more 5G in Mexico. Really, we're the only ones that have a very good 5G network. That's also helping us a lot. The other side, we have a little bit more coverage, so we're gaining some good subscribers that we didn't have. We're starting to do a little bit more coverage in some places.
Speaker #5: When we think that the economy was in a slowdown period. But right now, I think the economy is coming back. And our prepaid customers are consuming more, are recharging more, and are choosing higher cards, higher prepaid cards, okay?
Speaker #5: So instead of charging 50 pesos, they are charging 80 or 100. So people is starting to use more and more. 5G in Mexico, really we're the only ones that has a very good 5G network.
Speaker #5: 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 didn't have.
Speaker #5: We're starting to do a little bit more coverage in some places. But overall, we have a very good base on prepaid. Difficult to say, but we have a lot of our prepaid customers consuming.
Daniel Hajj: All overall, we have a very good base on prepaid. Difficult to say, we have a lot of our prepaid customers are consuming. We don't have a base that some of them are consuming, or they are maybe one month consuming and two months not. All these customers every month are charging and using more data. Those are the things that are helping a lot on the prepaid side. Our base of people who is recharging is growing, and that's very good for us.
Speaker #5: So we don't have a base that all some of them are consuming or they are maybe one month consuming and two months not. So all these customers are every month are charging and using more data.
Speaker #5: So those are the things that are helping a lot on the prepaid side. So our base of people who are recharging is growing, and that's very good for us.
Marcelo Santos: Perfect. Thank you very much.
Daniel Hajj: On the economy, Marcelo, Carlos.
Speaker #5: On the economy, Marcelo, Carlos, just a small detail on the economy. As Daniel points out, I think that the economy is on a recovery path.
Carlos García Moreno: Just a small detail on the economy. As Daniel points out, I think that the economy is on a recovery path. It is coming back. I think at this stage it's very uneven, so it's not affecting all the sectors the same way. I'll give you the two reference points. As of June, we have registered the highest ever volume of sales of automobiles. Highest ever. The growth of the automobile sales are almost identical to our prepaid revenues, the growth of the prepaid revenues. Just to put it in perspective. Another reference point is if you look at other services like restaurants, they are booming. All sorts of restaurants, high-end, low-end, all of them are booming. It's a little bit uneven. You have some sectors that are doing particularly well, some other sectors that are still not recovering.
Speaker #5: It is coming back. I think at this stage, it's very uneven, so it's not affecting all the sectors the same way. But I'll give you the two reference points.
Speaker #5: As of June, we have registered the highest ever volume of sales of automobiles, highest ever. And the growth of the automobile sales are almost identical to our prepaid revenues, the growth of the prepaid revenues.
Speaker #5: Just to put it in perspective, another reference point is if you look at other services, like restaurants—they are booming, and that's all sorts of restaurants.
Speaker #5: 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, and some other sectors that are still not recovering.
Speaker #7: Okay. Very interesting. Thank you.
Marcelo Santos: Okay. Pretty interesting. Thank you.
Speaker #5: Thank you.
Carlos García Moreno: Thank you.
Speaker #2: Your next question comes from the line of Fanny Kanamuri at HSBC. Your line is open. Go ahead.
Operator 3: Your next question comes from the line of Fanny Kanemori, HSBC. Your line is open. Go ahead.
Speaker #6: Hi everyone. Thanks for taking my questions. My first question is on Mexico mobile revenue growth. It has registered very strong growth, but I'm wondering if it had any positive impact from the World Cup that is happening in Mexico.
Fanny Kanemori: Hi, everyone. Thanks for taking my questions. 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 what percentage of customers have already been registered on this front? Thank you.
Speaker #6: 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 with mobile registration?
Speaker #6: And what percentage of customers have already been registered on this front? Thank you.
Speaker #5: All right. The first one—I think the World Cup impacts, but impacts a little bit. So, I don't think it's too much. The World Cup was not only in Mexico.
Daniel Hajj: Well, the first one, I think the World Cup impacts a little bit, so I don't think it's too much. The World Cup was not only in Mexico, so we have only seven games, something like that. There's people coming. We see more roaming here in Mexico, more people using. It's not only the roaming, since people is using more. We have a very good 5G network, so they are looking the games in the iPad, in the phone. That will have a little bit more consume. That will be only two weeks in June, so it's not too much. What we are seeing is that a lot of our customers who are coming back to our store and want to renovate, they are renovating. I can tell you that maybe half of our subscribers are upgrading their plan. That's very, very important.
Speaker #5: So, we have only like seven games, something like that. So there's people coming. We see more roaming here in Mexico, more people using.
Speaker #5: It's not only the roaming. People are using more. It looks like we have a very good 5G network, so they are watching the games on the iPad and on the phone.
Speaker #5: So that will have a little bit more consumption, but that will be only two weeks in June, so it's not too much. So what we are seeing is that a lot of our customers who are coming back to our store and want to renovate, they are renovating. Maybe I can tell you that maybe half of our subscribers are upgrading their plans.
Speaker #5: 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're using more the handset.
Daniel Hajj: They want to have a better plan. They want to use more. They're using more the handset. That is what is giving us on postpaid, a very good growth. A lot of our customers are moving to a higher plan. That's what you could see. The market is very competitive. We have a lot of competition in the market. As I said, we are the only really 5G network, very good network all around Latin America. We're working a lot on quality, we're working a lot on speed, customer care. We're trying to give our customers the best service, and that is making us to grow that. In the registration, well, for now on, what we said is that there's going to be new dates for the registration.
Speaker #5: So that is what is giving us, on postpaid, very good growth. A lot of our customers are moving to a higher plan.
Speaker #5: So that's what you could see. The market is very competitive; we have a lot of competition in the market. But as I said, we are the only truly 5G network, a very good network all around Latin America.
Speaker #5: We're working a lot on quality. 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 grow.
Speaker #5: 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 dates for the registration.
Daniel Hajj: 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 the prepaid subscribers. The postpaid are already in, so they don't need to register the postpaid subscribers. I don't know exactly the number on the industry, but there's still a lot to do on that. Every 15 days, every month, there's going to be a new number, and then you have to register your prepaid number. That's what it is. It starts in 15 August and ends on, I think end of November or beginning of December. 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 companies has to be registered.
Speaker #5: The dates are going to depend on the end of your number—that is where you need to be registered. It's going to be only the prepaid subscribers; the postpaid are already in.
Speaker #5: So, they are not—they don't need to register, the postpaid subscribers. And I don't know exactly the number in the industry, but there's still a lot to do on that.
Speaker #5: So every month, every 15 days, every month, there's going to be a new number. And then you have to register your prepaid number; so that's what it is.
Speaker #5: It starts in 15 of August and ends on I think end of November or beginning of December. And well, that's what the authorities are saying.
Speaker #5: 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 companies has to be registered.
Speaker #5: So, since that, all of them have to be registered. And this is only for the actual customers that need to register their numbers. So that's where we are.
Daniel Hajj: Since that, all of them has to be registered, and this is only for the actual customers that need to register their numbers. That's where we are, and we hope that all of them will register.
Speaker #5: And we hope that all of them will register now.
Speaker #6: Yes. Thanks for the responses, everyone.
Fanny Kanemori: Yeah. Thanks for the responses, everyone.
Speaker #5: Thank you.
Daniel Hajj: Thank you.
Speaker #2: Your next question comes from the line of Rogerio Arujo, Bank of America. Your line is open. Go ahead.
Operator 3: Your next question comes from the line of Rogerio Araujo, Bank of America. Your line is open. Go ahead.
Speaker #7: Hi everyone. Thanks for the opportunity. I have a couple of questions. The first one is on the line 'Other Financial Expenses.' It rose to roughly 6.9 billion Mexican pesos in the quarter.
Rogério Araújo: Hi, everyone. Thanks for the opportunity. 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? 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 million 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. The second on NuCel. Could you gently walk us through how it's reflected in your accounting and KPIs? Specifically, are NuCel's users counted within your reported subscriber base and net adds? We think so, but if you could confirm.
Speaker #7: This was a 40% increase year over year. Could you please break down what drove that increase? Specifically, how much of this relates to cash outflows tied to your labor obligations and patient funds?
Speaker #7: We saw this was nearly $6.9 billion Mexican pesos 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?
Speaker #7: This is the first one. And the second, on new sales—could you gently walk us through how it's reflected in your accounting and KPIs? Specifically, are new sales users counted within your reported subscriber base and net adds?
Speaker #7: We think so, but if you could confirm. Also, how is the economic impact recognized? Is it full revenue or only Claro's revenue share, so we can have an idea of how this impacts ARPU?
Rogério Araújo: Also, how is the economics recognized? In full revenue or only Claro's revenue share, so we can have an idea on how this impacts ARPU. Finally, how should we think about the associated network commercial costs and margin profile of NuCel in our results? Thank you so much.
Speaker #7: And finally, how should we think about the associated network commercial costs and margin profile of new sales in your results? Thank you so much.
Carlos García Moreno: Sure. Thank you, Rogerio Araujo. On the 1st question, on all the 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 1st ruling was some years ago, part of the fine ended up being financial expenses. It was a financial penalty that were accrued since the initial ruling. Okay. The other part that is important, all expenses, generally, and you will see it all the time, is that is why we had the currency hedging transactions among other things. Typically when you are gaining on FX, to the extent that those gains had already been hedged, you are giving back part on your expenses. It works on opposite directions, both cases. That is part of it. It is part the fine and partly your expenses. Nothing to do with the pensions.
Speaker #5: See, thank you, Rogelio. On the first question, on all the expenses, all the financial expenses, basically what we are reflecting is partly a little bit of the elements of design that was mentioned a while ago.
Speaker #5: Because, as the first ruling was some years ago, part of the finance—developing financial expenses—it was financial penalties that were accrued since the initial ruling.
Speaker #5: Okay. The other part that is important in other expenses generally—and you will see this all the time—is that that's where we have the hedging.
Speaker #5: The currency hedging transactions among other things. So typically when you are gaining on the FX, to extend that those gains had already been or those gains had already been hedged, you are giving back a part on your expenses.
Speaker #5: It works on opposite directions, both cases. Okay. So that's part of it. So it's partly fine and partly your expenses. Nothing to do with the pensions.
Speaker #5: The pensions are accrued and accounting this but we are showing here is an accrual basis. It's not on a cash flow basis. Okay. The accrual basis, there's no changes.
Carlos García Moreno: The pensions are accrued, and accounting visit. What we are showing here is an accrual basis. It is not on a cash flow basis. Okay.
Rogério Araújo: And-
Carlos García Moreno: The accrual basis, there is no change. On NuCel, there are 2 types of MVNOs in Brazil. The one we call them credenciados, and the other ones authorized MVNOs. NuCel is the ones that are like credenciados, that they work like a commercial agent. Those customers count as our base. We count them as in our base in Claro. That is the way we count. All the NuCel subscribers are inside Claro customers.
Speaker #3: And on new sales, there are two types of MVNOs in Brazil. One, we call them 'acreditados,' and the other ones are authorized MVNOs. New sales are the ones that are like acreditados; they work like commercial agents, and those customers count as our base.
Speaker #3: We count them as in our base in Claro, so that's the way we count. All the new sales subscribers are inside Claro customers.
Speaker #7: Okay. Perfect. And the revenue is the full revenue charged by new sale that enters at your revenue or?
Rogério Araújo: Okay, perfect. The revenue is the full revenue charged by NuCel that enters as your revenue or the
Carlos García Moreno: No, the revenue is the part that is including in us, that's our revenue, and the rest is NuCel revenue. We divide that, so that's where we have. NuCel has been working maybe for one year or more, so.
Speaker #3: No. The revenue is the part that is included in us. That's our revenue, and the rest is new sale revenue. So we divide that.
Speaker #3: So, that's where we are. But New Sale has been working maybe for one year or more. So.
Speaker #5: More.
Rogério Araújo: More. Okay. Fair enough. Very clear. Thank you so much.
Speaker #7: Okay, fair enough. Very clear. Thank you so much.
Speaker #5: Thank you.
Carlos García Moreno: Thank you.
Speaker #2: Your next question comes from the line of Emilio Fuentes, GBM. Your line is open. Go ahead.
Operator 3: Your next question comes from the line of Emilio Fuentes, GBM. Your line is open. Go ahead.
Speaker #7: Hi. Thank you for taking my question. My question is regarding capital allocation. I was wondering, given the current weakness we've seen in the US dollar, how this could benefit your investment needs.
Emilio Fuentes De León: Hi. Thank you for taking my question. My question is regarding capital allocation. I was wondering, given the current weakness we've seen in the US dollar and how this could benefit your investment needs, do you see any downside risk to your full-year CapEx guidance? If so, 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? Thank you.
Speaker #7: Do you see any downside risk to your full-year Capex guidance? And if so, given that you are currently standing at the lower end of your leverage ratio, do you see incremental free cash flow as being destined for share buybacks?
Speaker #7: Thank you.
Carlos García Moreno: The weak dollar, it's difficult for us in CapEx because for the same things that you do, it's going to be more dollars. We need to say on dollars, it's more dollars for the same budget that we have. In terms of the CapEx, it's not helping. While in terms of revenues, it's helping. That's where we are, and we're deciding what to do. In CapEx, it's a little bit more. We are in the target that we have, $7 billion, and it was $7 billion, a little bit more, a little bit less, but we are in that target, and we're not going to move from that. Yeah. On the second question, can you repeat it, please?
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: 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.
Speaker #3: But we are in the target that we have, $7 billion, and it's what—$7 billion, a little bit more, a little bit less. But we are in that target, and we're not going to move on that.
Speaker #7: And the second question, can you repeat it, please? Leverage. The leverage, you said.
Emilio Fuentes De León: Leverage.
Carlos García Moreno: The leverage, you say-
Carlos García Moreno: Do you see any increa-
Speaker #6: Do you see any incremental free cash flow? Yeah.
Carlos García Moreno: No, I think.
Carlos García Moreno: Do you see any incremental free cash flow? Yeah.
Speaker #7: Do you see any do you see any incremental cash flow going for buybacks? No. No. I think what do we have said consistently is we first determine what our leverage ratio is meant to be.
Emilio Fuentes De León: We.
Emilio Fuentes De León: Do you see any incremental cash flow going for buybacks?
Carlos García Moreno: No, I think what we have said consistently is, we first determine what our leverage ratio is meant to be. Okay. We need to look at our leverage ratio, considering the expenses that we are already committed to make, which will include the purchase of Desktop, which likely is going to close this year. Okay. That's our expectation in any case. We basically manage to stay within the range that we have said. It's not more than 1.5x net debt to EBITDA, not less than 1.2x net debt to EBITDA. That you can see that we have some limits in terms of how much we can reduce our leverage at this point.
Speaker #7: Okay, so we need to look at our leverage ratio considering the expenses that we are already committed to make, which would include the purchase of Desktop, which is likely going to close this year.
Speaker #7: Okay. That's our expectation in any case. Okay. So we basically manage to stay within the range that we have set. So it's not more than one and a half times net debt to EBITDA.
Speaker #7: Not less than 1.2 times net debt to EBITDA. So, you can see that we have some limits in terms of how much we can reduce our leverage at this point.
Daniel Hajj: 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, more than 3 million houses passed with fiber, half a million customers, and make a lot of synergy with us. We're open to see more of those acquisitions. They are good for us. 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 we're growing and doing very good there.
Speaker #3: 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.
Speaker #3: It's some more fiber, like more than 3 million houses passed with fiber, half a million customers, and makes a lot of synergy with us.
Speaker #3: So and we're open to see more of those acquisitions. So there are good for us. We're going to they are broadband customers that we can sell prepaid, postpaid, or TV also.
Speaker #3: This network is outside of Lima, and it's a good complement for us. It also helps us with the fiber to serve corporate customers, where we're growing and doing very well.
Oscar von Hauske Solís: Small businesses.
Speaker #3: So, small businesses, as Oscar is saying. We are also looking for other good acquisitions that we can have. Yes. Next question.
Daniel Hajj: Small businesses, as Oscar is saying. We are also looking for other good acquisitions that we can have. No.
Carlos García Moreno: Yes.
Daniel Hajj: Next question.
Speaker #2: Just a reminder to everyone: if you would like to ask a question, please press star, then the number one on your telephone keypad. Our next question comes from the line of Ernesto Gonzalez.
Operator 3: Just a reminder to everyone, if you would like to ask a question, press star, then the number one on your telephone keypad. Our next question comes from the line of Ernesto Gonzalez, Morgan Stanley. Oh, excuse me. Our next question comes from the line of Carlos Sequeira, BTG Pactual. Go ahead.
Speaker #2: Morgan Stanley. Oh, excuse me. Our next question comes from the line of Carlos Sequeira at BTG Pactual. Go ahead.
Speaker #8: Hi. Hey. How are you? Hope all is well. So I have one question, please, and it's related to M&A strategy in Europe. If you can let us know what you're looking at, what makes sense for MX at this point when you look to Europe, please.
Carlos Sequeira: Hi. How are you? Hope all is well. I have one question, please, and it's related to M&A strategy in Europe, if you can let us know what you are looking at or what makes sense for AMX at this point when we look to Europe, please. Thank you.
Speaker #8: Thank you.
Speaker #3: Well, we're open to see everything. But what we're really looking is this type of companies like desktop, like WOW that has fiber customers that have 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 small and medium companies.
Carlos García Moreno: Well, we're open to see everything, but what we're really looking is this type of companies like Desktop, like WOW, that add fiber customers, that add the fiber complement to our fiber network, that we can sell more things to those customers, like prepaid, postpaid. As I said also, the fiber will be in small and medium companies, have a lot of synergies. I think we can have a lot of synergies with this company. Those are the companies that we're looking. We are not looking to go outside right now to other countries, but we're looking things inside our country that will make us grow a little bit faster and consolidate the market. Consolidation of the market will be important.
Speaker #3: We have a lot of synergies. I think we can have a lot of synergies with these companies, so those are the companies that we're looking at.
Speaker #3: So we are not looking to go outside right now to other countries, but we're looking things inside our countries that will make us grow a little bit faster.
Speaker #3: And consolidate the market. Consolidation of the market will be important.
Speaker #8: Perfect. Thank you.
Carlos Sequeira: Perfect. Thank you.
Speaker #3: Thank you.
Carlos García Moreno: Thank you.
Speaker #2: Your next question comes from the line of Ernesto Gonzalez, Morgan Stanley. Your line is open—you may go ahead.
Operator 3: Your next question comes from the line of Ernesto Gonzalez, Morgan Stanley. Your line is open. You may go ahead.
Speaker #5: Hi. Thank you for taking our question, and congratulations on the results. So, it's two questions. The first one is on Colombia. You delivered really strong results, consistent with past quarters.
Ernesto González: Hi. Thank you for taking our question, and congratulations on the results. It's two questions. The first one is on Colombia. You delivered really strong results consistent with past quarters. Could you talk about how you see this market evolving, especially now that some time has passed since the acquisition of Telefónica closed? The second question is on Argentina. Given the recent competition authorities resolution on potential consolidation in the market, does it change how you view the long-term outlook for Argentina? Any comments you can give are greatly appreciated. Thank you.
Speaker #5: Could you talk about how you see this market evolving, especially now that some time has passed since the acquisition of Telefónica closed? And the second question is on Argentina.
Speaker #5: Given the recent competition authorities resolution on potential consolidation in the market, does it change how you view the long-term outlook for Argentina? Or any comments you can give are greatly appreciated.
Speaker #5: Thank you.
Speaker #3: Well, it's good that you're talking about other countries. So, Colombia—I think we're doing very well in Colombia, growing very fast in mobile. We were the first ones in—let me tell you, we're growing from 7 to 7.6, then to 10—the growth in mobile revenue.
Carlos García Moreno: Well, good that you're talking about other countries. Colombia, I think we're doing very good in Colombia, growing very fast in mobile. We were the first ones in, let me tell you, we're growing from seven to seven six, then to 10, the growth in mobile revenue. We were the first ones that do 5G there. We have a very good network, and portability is going well with us. That's the reason why we're growing. Also, a lot of customers are moving to higher plans. We work a lot on also service quality, speed. All of that is making that our customers will use more the service, and that new customers are coming to our network. In the other side, in the fixed side, we're moving also to do more fiber. It's more challenging-
Speaker #3: So we were the first ones to do 5G there. We have a very good network, and portability is going well with us. So that's the reason why we're growing.
Speaker #3: Also, a lot of customers are moving to higher plans. We work a lot on service quality and speed, so all of that means our customers will use the service more.
Speaker #3: And new customers are coming to our network. On the other side, on the big side, we're also moving to do more fiber. It's more challenging—mobile is more challenging.
Daniel Hajj: Mobile is
Daniel Hajj: Mobile is more challenging, but I think we can grow. We are doing fiber. We have a good network, good sales, and distribution. I think we're going to do much better in the fixed.
Speaker #3: But I think we can grow. We are doing fiber. We have a good network, good sales and distribution. So I think we're going to do much better in the big, as well in Colombia, as Daniel was saying. I think on the corporate segment, we are growing pretty nicely in Colombia as well.
Daniel Hajj: In corporate, yeah.
Oscar von Hauske Solís: No, as well in Colombia, as Daniel was saying, I think on the corporate segment, we are growing pretty nicely in Colombia as well.
Speaker #3: Okay. So, good in mobile, good in corporate, and moving to be better in broadband and fixed, in TV, mobile, and broadband and fixed TV.
Daniel Hajj: Good in mobile, good in corporate, and moving to be better in broadband and fixed, in TV, mobile, and broadband and fixed TV. That's where we are. Well, in Argentina we're going to compete against a big competitor there. Nothing else to do, we have fiber, we have good broadband, we have 5G, and we're growing. That's what we want to do, and that's the same strategy that we have. Do fiber to be more customers in broadband, in TV, and we are competitive in price, we have good prices there. That's where we are. Well, we're growing also very good. We don't say about Peru, but in Peru we're growing very good in broadband, very good in corporate segment. The growth in Peru, I think on the peak side was around 12%, it was incredible the growth in Peru.
Speaker #3: That's where we are. And in Argentina—well, in Argentina, of course, we're going to compete against a big competitor there, but nothing else to do.
Speaker #3: So, we have fiber, we have good broadband, we have 5G, and we're growing. That's what we want to do, and that's the same strategy that we have.
Speaker #3: Do fiber to be more customers in broadband, in TV, and we are competitive in price. So we have a good prices there. So that's where we are where we're growing also very good.
Speaker #3: We don't talk about Peru much, but in Peru, we're growing very well in broadband, very well in the corporate segment. The growth in Peru, I think, on the fixed side was around 12%.
Speaker #3: So it was incredible the growth in Peru. And that's what we are doing. And looking to still grow more there. So there's a lot of opportunities in the corporate segment also in Peru.
Daniel Hajj: That's what we are doing and are looking to still grow more there. There's a lot of opportunities in the corporate segment also in Peru.
Oscar von Hauske Solís: Peru, yeah.
Speaker #3: Yeah.
Speaker #5: Really clear. Thank you.
Ernesto González: Really clear. Thank you.
Speaker #2: Your next question comes from the line of Rodrigo Arrujo, Bank of America. Your line is open. Go ahead.
Operator 3: Your next question comes from the line of Rogerio Araujo, Bank of America. Your line is open, go ahead.
Rogério Araújo: Hi. Thanks for the follow-up question. If you could provide more details on the regulatory fine of MXN 1.3 billion on Telmex, what are the reasons behind it, and also the potential recurrences of regulatory fines going forward? Thank you.
Speaker #6: Hi. Thanks for the follow-up question. If you could provide more details on the regulatory fine of 1.3 billion Mexican pesos on Telmex, what are the reasons behind it?
Speaker #6: And also, the potential recurrences of regulatory fines going forward. Thank you.
Speaker #3: Well, this is something that dates back to 2017. And in 2020, this fine was imposed on an alleged violation of asymmetric measures. So, we contested the fine.
Daniel Hajj: Well, this is something that dates back to 2017, and in 2020, this fine was imposed on an alleged violation of asymmetric measures. We contested the fine, and now in June it became final. We believe it's disproportional, it doesn't make any sense, this fine. It's 6% of the revenue, which is the minimum accordance to the law, and we think it's completely absurd what they do. Unfortunately at this stage, we cannot do anything. That's what we have. It's not on Telmex, it's on Telnor, an affiliate of Telmex, and that's what give us this 6%.
Speaker #3: And now in June, it became final. So we believe it's this proportional. It doesn't make any sense, this fine. It's 6% of the revenue, which is the minimum according to the law.
Speaker #3: And we think it's completely absurd what they do. So, unfortunately, at this stage, we cannot do anything. So that's what we have. So it's not on Telmex.
Speaker #3: It's on Telnor. An affiliate of Telmex. And that's what gave us this 6%. So we don't think it's we think those fines are absurd.
Rogério Araújo: Okay.
Daniel Hajj: We think those fines are absurd. We hope, and we don't think there's going to be any more of those, let's see.
Speaker #3: So, we hope, and we don't think there's going to be any more of those. So, let's see.
Speaker #6: Okay. Thank you.
Rogério Araújo: Okay, thank you.
Speaker #2: Your next question comes from the line of Marcelo Santos, JP Morgan. Your line is open. Go ahead.
Operator 3: Your next question comes from the line of Marcelo Santos, J.P. Morgan. Your line is open, go ahead.
Speaker #7: Hi, thank you very much for the follow-up. I just want to circle back to the first question regarding Brazilian mobile. So, based on what you said, you expect the growth to improve in the third and fourth quarters.
Marcelo Santos: Hi. Thank you very much for the follow-up. I just wanted to go back to the first question regarding Brazilian mobile. Based on what you said, you expect the growth to improve in Q3 and Q4. Do you see room to increase the control prices, the mobile control price, hybrid prices this year, or not? Could you make some comments on that, please? Thank you.
Speaker #7: Do you see room to increase the control prices—the mobile control price or hybrid prices—this year, or not? Could you make some comments on that, please?
Speaker #7: Thank you.
Speaker #3: I think we can do an increase in prices. But, well, there’s a lot of competition in Brazil. So we are not going to do anything on that until we see, at the end of the day, if we are going to be competitive. We have the network.
Daniel Hajj: I think we can do increase of prices. Well, there's a lot of competition in Brazil, we are not going to do anything on that until we see. At the end of the day, we are going to be competitive. We have the network, we have the coverage to be competitive, and if there's one, two, or three months or quarters that the promotions are more aggressive, we're going to be there. That happened in May with Vivo. In May with Vivo, we need to put more promotions and to be more aggressive. That's what we do in May and June. We don't know what is going to happen. As I said, we don't control the competition. We control what is internal in the company, not the competition.
Speaker #3: We have the coverage to be competitive. And if there are one, two, or three months or quarters when the promotions are more aggressive, then we're going to be there.
Speaker #3: If there's something that happens in May with Vivo, then in May with Vivo, we need to put more promotions and, within that, we need to be more aggressive.
Speaker #3: So that's what we do in May and June. We don't know what is going to happen. As I said, we don't control the competition.
Speaker #3: We control what is internal in the company, not the competition. So I don't know exactly what they are going to do. But in Brazil, and in all the countries, we are prepared to compete. If they do more promotions, then we're going to do more promotions.
Daniel Hajj: I don't know exactly what they are going to do. In Brazil and in all the countries, we are prepared to compete, and if they do more promotions, we're going to do more promotions. If their promotions are a little more relaxed, we can relax the promotions. We are a long-term player, and if it's for some quarters or 1 year that they're too aggressive, well, that happened in Colombia like 3 or 4 years ago with the entrance of the new competition there, very aggressive. Well, today, we're growing, and we do what we need to do in the market, in our network, in training our people.
Speaker #3: And if the promotions are a little not relaxed, then we can relax the promotions. But we are a long-term player. And if it's for some quarters, or one year, that they are too aggressive, well, that happened in Colombia like three or four years ago, with the entrance of new competition there—very aggressive.
Speaker #3: Well, today we're growing, and we do what we need to do in the market—in our network, in training our people. Another thing that we're doing is we're using, and starting to use, a lot more AI agents, a lot more AI.
Daniel Hajj: Other thing that we're doing is we're using and starting to use a lot more AI agents, a lot more AI, and it's going to help us to reduce costs. It's going to help us to understand more our customers and to see what opportunities we have. It's not a short term. I think that's something that we're going to do long term, and it's going to help us. We're seeing that we are growing more our EBITDA than our revenues, and that's because we are controlling our costs and expenses. That's where we are. That's really the strategy of the company all around Latin America and in Europe. Well, in some countries, maybe we have some competition Q1 or for 6 months, in other ones, another one. Well, we are prepared to do that.
Speaker #3: And it's going to help us reduce costs. It's going to help us better understand our customers and to see what opportunities we have.
Speaker #3: It's not a short term. I think that's something that we're going to do a long term. And it's going to help us in the we're seeing that we are growing more our EBITDA than our revenues.
Speaker #3: And that's because we are controlling our costs and expenses. So that's where we are. That's really the strategy of the company all around Latin America and in Europe.
Speaker #3: And well, in some countries, maybe we have some competition one quarter or for six months. In other ones—in other ones. And well, we are prepared to do that.
Speaker #3: So that's where we are, and that's our strategy.
Daniel Hajj: That's where we are and that's our strategy.
Speaker #7: All right. Thanks a lot.
Marcelo Santos: All right. Thanks a lot.
Speaker #3: Thank you.
Daniel Hajj: Thank you.
Speaker #2: Your next question comes from the line of Walter Piecyk from LightShed. Your line is open. You may now go ahead.
Operator 3: Your next question comes from the line of Walter Piecyk from LightShed. Your line is open. You may now go ahead.
Speaker #7: Thanks. So, in Mexico, you've had very good margins for quite some time. I think they stepped up a couple of years ago. But you do show revenue growth there.
Walter Piecyk: Thanks. In Mexico, you've had very good margins for quite some time. I think they stepped up a couple of years ago. You do show revenue growth there. Just curious if there's a way to further leverage that to take margins higher, specifically in Mexico.
Speaker #7: Just curious if there's a way to further leverage that to take margins higher, specifically in Mexico.
Speaker #3: Well, as I said, we are really working hard to control costs and expenses and to find ways that will be good for our customers to increase their plan.
Daniel Hajj: Well, what I said. We are really working as, starts to control costs, to control expenses, to find ways that will be good for our customers to increase their plan. We don't want that we sell a better plan and the people and our customers don't use that plan. We want that what we sell, they use, they will be happy. We want customers for a long term, we don't want customers for short term. Of course, if we can find a way to increase more revenue and to control cost in all the companies, of course, the margin will increase. I think all over all this Q2 against last Q of last year, the Q2 of last year, the margins of all the companies increased a little bit.
Speaker #3: Because we don't want that we sell a better plan and the people—and our customers—don't use that plan. We want that what we sell, they use, they will be happy.
Speaker #3: We want customers for the long term, so we don't want customers for the short term. So, of course, if we can find a way to increase more revenue and to, yes, and to control costs in all the companies, of course, the margin will increase.
Speaker #3: I think overall, this quarter against last quarter, or the second quarter of last year, the margins of all the companies increased a little bit.
Daniel Hajj: Almost, not all, but in almost all the companies, our margin of EBITDA increased this Q2.
Speaker #3: So, almost—not all, but in almost all—the companies, our margin of EBITDA increased this quarter.
Speaker #7: Okay. And then, sorry if this was touched on before, but the fiber acquisition and maybe potential other acquisitions—I assume this is not going to negatively impact what has been a good trajectory in terms of capital return with dividends, as well as share repurchase?
Walter Piecyk: Okay. Sorry if this was touched on before, but the fiber acquisition and maybe potential other acquisitions, I assume is not going to negatively impact what has been a good trajectory in terms of capital return with dividends as well as share repurchase. Related to that, you still have a stake in Verizon. Is there any thought of monetizing that stake in order to provide additional cash for acquisitions or capital return? Obviously, the leverage ratio of the company is within your target range. Just kind of curious how all those things fit together in terms of maybe selling Verizon, how much fiber more to build, and whether we're going to see a big step up more in capital return in 2027.
Speaker #7: But related to that, I mean, you still have a stake in Verizon. Is there any thought of monetizing that stake in order to provide additional cash for acquisitions or capital return?
Speaker #7: Obviously, the leverage ratio of the company is within your target range. So, I'm just kind of curious how all those things fit together in terms of maybe selling Verizon, how much more fiber to build, and whether we're going to see a big step up in capital return in '27.
Speaker #3: Well, the cash flow this first six months was really good. I think we increased our cash flow a lot. But still, we need to give the dividends.
Daniel Hajj: Well, the cash flow this H1 was really good. I think we increased a lot our cash flow. Still, we need to give the dividends. The dividends for the H2 are there. With the dollar appreciated, it's a lot of dollars what we need to give. It's good. No, I think what Carlos is saying, we have a target, at the end of the day, we can use that. It doesn't have to be immediately in the short term. I can tell you that in the long term, there's going to be acquisitions, if we have acquisitions, and return to capital to the shareholders and reduce the debt. Those are the three things that we have. We want to be as financially healthy as possible because, well, maybe we can have other opportunities in the future.
Speaker #3: The dividends for the second half are there. So, and with the dollar appreciated, it's a lot of dollars that we need to give. So it's good.
Speaker #3: And no, I think what Carlos is saying is that we have a target, and then at the end of the day, we can use that. It doesn't have to be immediately in the short term.
Speaker #3: I can tell you that, in the long term, there are going to be acquisitions if we have acquisitions, and a return of capital to the shareholders.
Speaker #3: And reduce the debt. Those are the three things that we have. We want to be as financially healthy as possible because, well, maybe we can have other opportunities in the future.
Speaker #3: So that's what we are. Still, what Carlos is saying—we need to pay for the acquisition of desktop at the end of the year. So overall, we are going to be looking for those three things.
Daniel Hajj: That's what we are. Still, what Carlos is saying, we need to pay the acquisition of Desktop at the end of the year. Overall, we are going to be looking for those three things, acquisitions, returning capital to shareholders, and reducing debt. That's where we are.
Speaker #3: Acquisitions, return of capital to shareholders, and reducing debt. So that's where we are.
Speaker #7: Thank you. But is there any reason to?
Walter Piecyk: Thank you. Is there any reason we can-
Speaker #3: No, but what we're not seeing is things in the short term, okay? So today, what is today, and then tomorrow—we need to see a little bit more in the medium and long term to do all these things, okay?
Daniel Hajj: We are not seeing the things in a short term, okay. Today, what is today and then tomorrow, we need to see a little bit more on medium and long-term to do all these things, okay. That's where we are. I still personally think that there will be more opportunities like Desktop, like WOW in the future. Let's see, that's why we want to be healthy and to be prepared to do those things, those acquisitions.
Speaker #3: So that's where we are. I still personally think that there will be more opportunities, like desktop, like WoW, in the future. And let's see.
Speaker #3: That's why we want to be healthy and to be prepared to do those things, no? Those acquisitions.
Speaker #7: And why continue to own Verizon?
Walter Piecyk: Why continue to own Verizon?
Speaker #3: Well, Verizon, when the share was at some price, we sold some of that. We took the decision to sell half of that. We haven't taken the decision on the other half of that.
Daniel Hajj: Well, Verizon, when the share was at some price, we sold some of that. We've take the decision to sell half of that. We haven't take the decision of the other half of that. We are looking. We are sure that in the future we are going to divest, maybe. We don't know exactly when we're going to divest. Nothing. We are not in a hurry. There has to be a good price, and we are not in a hurry to buy.
Speaker #3: So we are looking. So that's nothing – we're not, we are sure that in the future, we are going to divest maybe. We don't know exactly when we're going to divest.
Speaker #3: Nothing we are not going to carry. So there has to be a good price, and we are not going to carry.
Walter Piecyk: It's a pretty good price right now.
Speaker #7: That's a pretty good price. It's a pretty good price right now.
Speaker #3: Well, yes. We sold it at a higher price than this one. Yes.
Daniel Hajj: Well, yeah. We sold them at a higher price than this one. Yes.
Speaker #7: I know. I know.
Walter Piecyk: I know.
Daniel Hajj: Okay. Thank you.
Speaker #3: Okay. Thank you.
Speaker #7: Thanks.
Walter Piecyk: Thanks.
Speaker #3: Thank you.
Daniel Hajj: Thank you.
Speaker #2: Your next question comes from the line of Jesus Romo, Global Data. Your line is open. You may go ahead.
Operator 3: Your next question comes from the line of Jesús Romo, GlobalData. Your line is open. You may go ahead.
Speaker #5: Hello. Good morning, and thank you for taking my call. Just a quick follow-up on the Mexico numbers, specifically the prepaid subscriber numbers. I noticed that you had positive net adds in Q2 2026 versus Q1 2026.
Jesús Romo: Hello, good morning, and thank you for taking my call. Just a quick follow-up on the Mexico numbers, specifically the prepaid subscriber numbers. I noticed that you had positive net adds in Q2 2026 versus Q1 2026. Since we're in the middle of the, or we're still on the ongoing registration process, I wonder if you could share a little bit of color or the factors that guide you to have positive net add numbers in this quarter. Was it promotions, the World Cup, mobile portability, or a combination of factors? Thank you.
Speaker #5: And since we're still in the middle of, or rather, still undergoing the registration process, I wonder if you could share a little bit of color on the factors that guided you to have positive net adds numbers this quarter?
Speaker #5: Was it promotions, the World Cup, mobile portability, or a combination of factors? Thank you.
Speaker #3: So, look, it's very difficult to explain what is happening, since the registration in January is with the new customers. It's very difficult because some customers decide not to renew; because if they renew, they have to register.
Daniel Hajj: Look, it is very difficult to explain what is happening since the registration in January is with the new customers. It is very difficult because some customers decide not to renew because if they renew, they have to register. People are not registered. We have less disconnections. A little bit less sales, but less disconnection. It is very difficult the way we still we're seeing and trying to understand what people is thinking. Change a little bit because people used to buy very cheap and then use, and then buy another handset, and then use. The behavior of the prepaid subscribers are changing a little bit, and we need to see. At the end of the day, the most important thing in prepaid is the amount of revenue that you are getting per month.
Speaker #3: So people are not registered, but we have less disconnection. So, a little bit less sales, but less disconnection. But it's very difficult the way we still—we're seeing and trying to understand what people are thinking.
Speaker #3: But things have changed a little bit because people used to buy a very cheap handset, use it, then buy another handset and use that. The behavior of prepaid subscribers is changing a little bit.
Speaker #3: And we need to see. But at the end of the day, the most important thing in prepaid is the amount of revenue that you are getting per month.
Speaker #3: And I think that's what is doing well. And we are doing fine on that.
Daniel Hajj: I think that's what is doing good, and we are doing fine on that.
Carlos García Moreno: Yeah, just to give you a reference point. Net adds, prepaid net adds Q2 were 146,000 in Mexico. A year ago, Q2 of last year, they were 83,000. Two years ago, they were 106,000. If you look at the last three years, Q2 has given us better net adds in prepaid.
Speaker #6: And just to give you a reference point, net ads, prepaid net ads in the second quarter were at 146,000 in Mexico. A year ago, in the second quarter of last year, they were 83,000.
Speaker #6: And two years ago, they were 106,000. So if you look at the last three years, the second quarter has given us the better net adds in prepaid.
Speaker #3: Okay. I know another thing that is happening in all the countries is that there are a lot of people moving from prepaid to postpaid. So, in some countries, they are moving more from prepaid to postpaid.
Daniel Hajj: Sí. Another thing that is happening in all the countries is that there's a lot of people moving from prepaid to postpaid. In some countries, they are moving more from prepaid to postpaid, in other ones a little bit less. As people is understanding that, well, the handset is part of the life of the person, so they are moving. When they can, they move to a postpaid, and in postpaid, they hire more data and more applications and do more things. That's going to be the trend for the next 5 years. There's going to be more people moving from prepaid to postpaid.
Speaker #3: In other ones, a little bit less. But as people are understanding that, well, the handset is part of the life of the person, so they are moving—when they can, they move to postpaid. And in postpaid, they hire more data and more applications and do more things.
Speaker #3: So that's going to be the trend for the next five years. There's going to be more people moving from prepaid to postpaid.
Speaker #6: Just a quick follow-up, if I may. Do you perceive there is an effect of customers coming in from Movistar, now that there's an announcement of a deal—not an approval yet, but there's an announcement of Movistar changing hands?
Jesús Romo: Just a quick follow-up, if I may. Do you perceive there is an effect of customers coming in from Movistar now that there's an announcement of a deal, not an approval yet, but there's an announcement of Movistar changing hands? Do you think that is getting customers to potentially look themselves?
Speaker #6: Do you think that this is customers?
Speaker #3: I think it's difficult. I think it's difficult that the customers, or the customers, will know whether the company is going to be for sale or not for sale.
Daniel Hajj: I think it's difficult that all the customers will know that the company's going to be for sale or not for sale. Some of them know, other ones no. I think what we have is in number portability, we have been gainers in number portability, and we still are gaining number portability. I don't know exactly if it's because the company was for sale and then it's still not for sale, or they are not selling because they don't have the authority. I don't know exactly what those regulatory is happening. Well, we're gaining customers from all the companies.
Speaker #3: Some of them know. Other ones know. But I think what we have is, in number portability, we have been gainers in number portability. And we still are gainers—we're gaining in number portability.
Speaker #3: So, I don't know exactly if it's because the company was for sale and then it's still not for sale, or they are not selling because they don't have the authority.
Speaker #3: I don't know exactly what those regulatory things are that are happening. But, well, we're gaining customers from all the companies.
Speaker #6: Thank you.
Jesús Romo: Thank you.
Speaker #3: Thank ank you.
Daniel Hajj: Thank you.
Operator 3: We have reached the end of the Q&A session. I will now turn the call over to Mr. Daniel Hajj for final remarks.
Speaker #2: We have reached the end of the Q&A session. I will now turn the call over to Mr. Daniel Hash for final remarks.
Speaker #3: Just thank everyone for being on the call. Thank you very much. Bye-bye.
Daniel Hajj: Just thank everyone for being in the call. Thank you very much. Bye-bye.
Operator 3: This concludes today's conference call. You may now disconnect.
