Business Context and Reporting Period
Company: América Móvil, S.A.B. de C.V.
Filing Type: Form 6-K (Report of a Foreign Private Issuer)
Reporting Period: Second Quarter 2023 (Ended June 30, 2023)
Announcement Date: July 11, 2023
América Móvil is a leading telecommunications provider operating primarily in Latin America and Europe. The company reported strong subscriber growth across wireless and fixed-line segments, with significant operational improvements in key markets including Mexico, Brazil, and Austria. The financial results are presented in Mexican pesos (MXN), with constant currency adjustments provided to isolate foreign exchange impacts.
Key Financial Metrics
| Metric | 2Q23 (MXN) | 2Q22 (MXN) | YoY Change |
|---|---|---|---|
| Total Revenue | 202.5 billion | 212.3 billion | -4.6% |
| Service Revenue | 169.2 billion | 176.6 billion | -4.2% |
| EBITDA | 78.7 billion | 81.8 billion | -3.8% |
| EBITDA Margin | 38.9% | 38.5% | +40 bps |
| Operating Profit (EBIT) | 40.3 billion | 41.5 billion | -2.8% |
| Net Income | 25.9 billion | 13.7 billion | +89.1% |
| Earnings Per Share (MXN) | 0.41 | 0.21 | +95.2% |
| Net Debt (excl. leases) | 358.0 billion | 381.5 billion (Dec '22) | -6.2% (QoQ) |
| Net Debt / LTM EBITDA | 1.43x | N/A | N/A |
Cash Flow & Capital Allocation (YTD 2023):
- Capital Expenditures: 64.4 billion pesos
- Free Cash Flow: 0.4 billion pesos
- Shareholder Distributions: 5.0 billion pesos (3.1 billion buybacks, 2.0 billion dividends)
Material Changes vs. Prior Period
Revenue and EBITDA: Reported revenue and EBITDA declined in MXN terms due to the appreciation of the Mexican peso against operating currencies (USD, EUR, BRL). However, on a constant currency basis, service revenue grew 5.0% and EBITDA expanded 5.6%, driven by operating leverage and cost controls.
Net Income Surge: Net income nearly doubled year-over-year. This was primarily driven by a significant increase in foreign exchange gains, which rose from 4.4 billion pesos in 2Q22 to 14.0 billion pesos in 2Q23.
Subscriber Growth:
- Wireless: Added 2.2 million net subscribers (1.5 million postpaid). Key contributors: Brazil (632k postpaid), Austria (267k postpaid), Colombia (171k postpaid).
- Fixed-Line: Added 331,000 broadband accesses. Key contributors: Mexico (140k), Argentina (78k), Brazil (45k).
Debt Reduction: Net debt excluding leases decreased by 23.9 billion pesos from year-end 2022, largely due to the strengthening of the Mexican peso against the U.S. dollar and other currencies.
Guidance, Outlook, and Risks
Management Commentary:
- Fixed-Line Momentum: Fixed-line service revenue growth is accelerating, particularly in Mexico, Brazil, and Austria, driven by broadband and corporate network services.
- PayTV Stabilization: The decline in PayTV revenue is slowing, with a drop of only 1.3% in the quarter, the lowest decline in several quarters.
- Cost Discipline: EBITDA expansion reflects strong cost control amidst inflationary pressures and favorable currency movements in Latin America and Europe.
Recent Financing Activities:
- Launched a Global Peso Notes program with an inaugural 17 billion peso (approx. $1 billion USD) sustainable bond issuance.
- Secured 1 billion euros in financing for Euro Tele Sites (tower spin-off from Telekom Austria).
Risks and Contingencies:
- Foreign Exchange Volatility: Significant exposure to currency fluctuations, particularly the Mexican peso, which impacts reported revenue and debt levels.
- Argentina Inflation: Argentina is treated as a hyperinflationary economy (IAS 29); financial results are adjusted for inflation, and comparisons exclude Argentina for constant currency analysis.
- Regulatory and Competitive Pressures: Ongoing competition in prepaid segments (e.g., Colombia) and regulatory changes in various jurisdictions.
Investor Verification Checklist
- Constant Currency Adjustments: Verify the specific FX rates used to calculate the 5.0% service revenue and 5.6% EBITDA growth, as reported MXN figures show declines.
- Net Income Composition: Confirm the sustainability of the net income surge, which is heavily reliant on one-time foreign exchange gains rather than core operating profit growth.
- Argentina Reporting: Review the specific impact of IAS 29 inflationary accounting on Argentina's reported figures and the exclusion of this market from constant currency comparisons.
- Debt Maturity Profile: Assess the impact of the new Global Peso Notes and Euro Tele Sites financing on the company's long-term debt maturity schedule.
- Free Cash Flow: Note the low Free Cash Flow (0.4 billion pesos YTD) relative to capital expenditures and distributions; verify the sustainability of the current dividend and buyback program.