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: First Quarter 2009 (Ended March 31, 2009)
Business Overview: América Móvil is a leading telecommunications provider operating across the Americas. The company reported a total wireless subscriber base of 186.6 million and total lines (wireless and fixed) of 190.4 million as of March 31, 2009. Key markets include Mexico, Brazil, Argentina, Colombia, and the United States (via Tracfone).
Key Financial Metrics
| Metric (Millions of MXN unless noted) | 1Q 2009 | 1Q 2008 | YoY Change |
|---|---|---|---|
| Total Revenues | 93,834 | 81,329 | +15.4% |
| Service Revenues | 84,247 | 71,101 | +18.5% |
| EBITDA | 38,322 | 33,943 | +12.9% |
| EBITDA Margin | 40.8% | 41.7% | -0.9 pp |
| Operating Profit (EBIT) | 26,899 | 23,766 | +13.2% |
| Net Income | 16,350 | 13,776 | +18.7% |
| Earnings Per Share (MXN) | 0.49 | 0.40 | +24.8% |
| Earnings Per ADR (USD) | 0.70 | 0.74 | -4.9% |
| Net Debt (MXN) | 112,000 | 120,900 (Est.) | -8.9B MXN |
| Capital Expenditures | 10,600 | N/A | N/A |
| Share Buybacks | 6,000 | ~6,000 | Similar |
Material Changes vs. Prior Period
- Subscriber Growth: Added 3.9 million wireless subscribers in 1Q09, bringing the total to 186.6 million (+17.2% YoY). Mexico added 1.2 million, Brazil 855k, and Tracfone (US) 567k. Colombia saw a net reduction of 440k subscribers due to a "clean-up" of low-usage accounts.
- Revenue Drivers: Service revenues grew 18.5% YoY, driven by a 47.2% increase in data revenues (3G services). Equipment revenues declined 6.3% due to slower subscriber growth in major markets.
- Profitability: Net income rose 18.7% to 16.4 billion pesos. This was aided by a 6.1% reduction in comprehensive financing costs due to lower interest rates and reduced net debt.
- Currency Impact: The Mexican peso depreciated significantly against other currencies in the region (e.g., +34% vs USD), contributing to the growth in consolidated peso figures.
- Balance Sheet: Net debt decreased by 8.9 billion pesos to 112 billion pesos. Cash and securities dropped 64.8% quarter-over-quarter to 7.8 billion pesos.
Guidance, Outlook, and Risks
- Management Commentary: Management highlighted solid revenue and EBITDA growth despite economic recessions in the U.S. and Mexico. Data revenues and 3G adoption are key growth drivers. Postpaid markets are expanding in Mexico, Brazil, and Argentina.
- Strategic Initiatives:
- Launched operations in Panama under the Claro brand in March 2009.
- Issued a USD 145 million bond in Chile (first foreign issuer in the local market).
- Secured a USD 1 billion loan agreement with the China Development Bank for network equipment financing.
- Risks and Contingencies:
- Economic Downturn: Severe economic conditions in the U.S. and potential lagging effects in South America.
- Foreign Exchange: Significant exposure to currency fluctuations, though hedging strategies are in place. The depreciation of the peso increased the peso value of dollar-denominated debt.
- Competition: Intense competition in major markets, leading to price reductions (e.g., voice prices in Mexico are among the lowest in the OECD).
Key Facts for Investor Verification
- Subscriber Quality: Verify the impact of the subscriber "clean-up" in Colombia on future revenue trends and whether similar actions are planned in other markets.
- Currency Sensitivity: Assess the ongoing impact of peso depreciation on consolidated financials and the company's hedging effectiveness against foreign exchange losses (which were 2.1 billion pesos in 1Q09).
- Debt Structure: Confirm the terms and utilization of the new USD 1 billion China Development Bank loan and the status of the USD 2 billion revolving credit line.
- Data Revenue Sustainability: Evaluate the sustainability of the 47.2% YoY growth in data revenues as 3G penetration matures.
- US Operations: Monitor Tracfone's performance given the severe U.S. economic downturn, noting that while subscriber growth was strong (18.8% YoY), EBITDA margin compressed slightly.