Business Context and Reporting Period
Company: AMÉRICA MÓVIL, S.A.B. DE C.V. (America Móvil)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Second Quarter ended June 30, 2011
Business Overview: America Móvil is a leading telecommunications provider in Latin America and the United States, operating through subsidiaries such as Telcel (Mexico), Claro (various Latin American countries), and TracFone (USA). The company provides wireless, fixed-line, broadband, and PayTV services.
Key Financial Metrics (2Q 2011)
| Metric | Value (2Q 2011) | YoY Change |
|---|---|---|
| Total Revenues | 159.7 billion MXN | +7.8% |
| EBITDA | 62.0 billion MXN | +1.8% |
| EBITDA Margin | 38.8% | -2.3 percentage points |
| Operating Profit (EBIT) | 38.2 billion MXN | -1.4% |
| Net Income | 24.2 billion MXN | +14.1% |
| Earnings Per Share (MXN) | 0.61 | +16.0% |
| Earnings Per ADR (USD) | $1.04 | +24.1% |
| Net Debt | 217 billion MXN | N/A |
| Net Debt / EBITDA (LTM) | 0.87x | N/A |
| Capital Expenditures | 41 billion MXN | N/A |
| Shareholder Distributions | 32 billion MXN | N/A |
Material Changes vs. Prior Period
- Subscriber Growth: Added 5.1 million wireless subscribers in 2Q11, reaching 236 million total wireless subscribers (+11.7% YoY). Total accesses reached 290 million (+12.1% YoY).
- Revenue Drivers: Mobile revenues grew 9.4% YoY, driven by a 26.7% increase in mobile data revenues. Fixed-line revenues grew 5.2%, supported by PayTV (+71.3%) and broadband (+6.3%).
- Profitability: While EBITDA grew slightly, the EBITDA margin declined 2.3 percentage points to 38.8%, primarily due to a 3.4 percentage point margin compression in Mexican operations. Net profit increased 14.1% YoY, aided by a 42.3% reduction in comprehensive financing costs and foreign exchange gains.
- Regional Performance:
- Mexico: Revenues grew 1.7% YoY; EBITDA declined 4.4% due to a 71% reduction in mobile termination rates (MTRs) mandated by regulators.
- Brazil: Added 2.1 million wireless subscribers (+59% YoY); revenues grew 8.8%.
- Colombia & Panama: Net adds tripled to 689k; EBITDA margin expanded to 47.0%.
- USA (TracFone): Revenues surged 33.9% YoY; added 225k subscribers.
Guidance, Outlook, Risks, and Unusual Items
- Regulatory Impact (Mexico): The Mexican regulator (Cofetel) reduced mobile termination rates by 71% effective May 17, 2011. This significantly impacted interconnection revenues and EBITDA margins in Mexico. Telcel is applying these rates under protest.
- Legal Contingencies:
- Conecel Suit: A favorable, definitive ruling was obtained in June 2011 regarding a breach of agreement suit related to the acquisition of a minority interest in Ecuador's Conecel.
- Cofeco Fine: The Mexican Competition Commission (Cofeco) accepted a reconsideration request regarding a fine levied on Telcel for alleged monopolistic practices (2006-2009). A final resolution is expected by September 30, 2011.
- Capital Allocation: The company returned nearly 32 billion MXN to shareholders in 2Q11, consisting of 29.6 billion MXN in share buybacks and 2.2 billion MXN in dividends.
- Stock Split: A 2:1 stock split was executed on June 29, 2011.
- Outlook: Management highlights strong growth in mobile data, PayTV, and broadband. The company expects continued subscriber growth, particularly in Brazil and Colombia, though Mexican operations face headwinds from regulatory rate reductions.
Key Facts for Investor Verification
- Verify the long-term impact of the 71% reduction in Mexican mobile termination rates on Telcel's future EBITDA margins.
- Monitor the final resolution of the Cofeco monopolistic practices fine against Telcel, expected by September 30, 2011.
- Assess the sustainability of the 26.7% growth in mobile data revenues across key markets.
- Review the effectiveness of the 29.6 billion MXN share buyback program in supporting EPS growth.
- Track the integration and performance of recent acquisitions, including Net Servicos and Telint (2 billion MXN).