AMX

Business Context and Reporting Period

Company: América Móvil, S.A.B. de C.V.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Year ended December 31, 2009 (Supplemental to 2008 Form 20-F)
Filing Date: April 1, 2010
Accounting Standards: Mexican Financial Reporting Standards (Mexican FRS) with U.S. GAAP reconciliations provided. The company plans to transition to International Financial Reporting Standards (IFRS) for the fiscal year ending December 31, 2010.

Key Financial Metrics (Year Ended Dec 31, 2009)

Note: U.S. Dollar figures are translated at the exchange rate of Ps. 13.0587 to U.S.$1.00 (Dec 31, 2009).

Material Changes vs. Prior Period

• Revenue Growth: Operating revenues increased 14.2% in 2009 compared to 2008, driven by a 17.1% increase in service revenues and favorable exchange rate variations (appreciation of Brazilian real and Colombian peso).
• Subscriber Base: Total wireless subscribers grew 10.0% to approximately 201.0 million. Growth was organic, with significant contributions from Brazil (5.7 million new subscribers) and the U.S. (3.2 million new subscribers).
• Profitability: Net income increased significantly, aided by an 8.7 billion peso increase in operating income and a substantial reduction in comprehensive financing costs (down from Ps. 13.8 billion in 2008 to Ps. 3.0 billion in 2009) due to foreign exchange gains and lower net debt.
• Cost Pressures: Operating margin declined from 27.6% in 2008 to 26.4% in 2009. This was primarily due to a Ps. 4.5 billion depreciation charge in Brazil (shortening of useful life of GSM assets) and increased indirect taxes.
• Debt Reduction: Total consolidated indebtedness decreased from Ps. 143.5 billion in 2008 to Ps. 110.9 billion in 2009.

Guidance, Outlook, and Risks

Guidance and Outlook

• Capital Expenditures: Budgeted for 2010 is approximately U.S.$ 3.5 billion (Ps. 45.8 billion), focused on network expansion and 3G technology upgrades.
• Dividends: Shareholders approved a dividend of Ps. 0.32 per share for 2010.
• Strategic Moves: On January 13, 2010, the company announced proposed offers to acquire Telmex Internacional and Carso Global Telecom (CGT) to pursue synergies. Completion is subject to regulatory approvals.

Risks and Contingencies

• Regulatory Actions:
  • Mexico: The Federal Competition Commission (Cofeco) confirmed a finding that Telcel has "substantial market power." This could lead to specific regulations on tariffs and service quality by Cofetel. Telcel has filed an appeal.
  • Colombia: Regulators determined Comcel has a dominant position, imposing regulations limiting pricing flexibility for "off-net" calls.
• Taxation: A new 3% tax on certain telecommunications services in Mexico became effective January 1, 2010. Telcel has filed legal proceedings against this tax.
• Market Conditions: Continued pressure on Average Revenue Per User (ARPU) due to competition, promotions, and declining interconnection rates. Economic crises in operating regions may impact demand.
• Currency Risk: Significant exposure to exchange rate fluctuations, particularly the Mexican peso against the U.S. dollar and the Brazilian real.

Investor Verification Checklist

• Regulatory Status: Verify the outcome of the Cofeco appeal regarding Telcel's market power and the potential impact of new tariff regulations in Mexico and Colombia.
• Acquisition Progress: Monitor the status of the proposed offers for Telmex Internacional and CGT, specifically regarding regulatory approvals and financing terms.
• Depreciation Charges: Assess the long-term impact of the Ps. 4.5 billion depreciation charge in Brazil on future operating margins.
• Exchange Rate Sensitivity: Review the company's hedging strategies given the significant portion of debt denominated in U.S. dollars and the volatility of the Mexican peso.
• IFRS Transition: Confirm the timeline and potential financial statement impacts of the transition to IFRS reporting starting in 2010.