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: Six months ended June 30, 2022 (unaudited)
Filing Date: July 18, 2022
América Móvil is a leading telecommunications provider in Latin America and Europe, operating in 24 countries. As of June 30, 2022, the company reported 305.8 million wireless subscribers and 74.6 million fixed Revenue Generating Units (RGUs). The company operates primarily under the Claro brand, with Telcel and Telmex in Mexico and A1 in Europe.
Key Financial Metrics
| Metric (Six Months Ended June 30, 2022) | Amount (MXN Millions) | Amount (USD Millions) |
|---|---|---|
| Total Operating Revenues | 428,617 | 21,447 |
| Operating Income | 80,800 | 4,043 |
| Net Profit (Continuing Operations) | 47,052 | 2,354 |
| Net Profit (Total) | 47,052 | 2,354 |
| Net Debt | 408,000 | 20,416 |
| Capital Expenditures | 65,600 | 3,283 |
| Share Repurchases | 16,300 | 816 |
Note: USD amounts are translated at the rate of Ps. 19.9847 to U.S.$1.00 as of June 30, 2022.
Material Changes vs. Prior Period
- Revenue Growth: Total operating revenues increased 2.9% (5.1% at constant exchange rates) compared to the first six months of 2021. Service revenues rose 4.0%, while equipment sales declined 2.7%.
- Profitability: Operating income increased 5.0% to Ps. 80.8 billion. Operating margin improved to 18.9% from 18.5% in the prior year. Net profit from continuing operations rose 20.2% to Ps. 47.1 billion, driven largely by a significant foreign currency exchange gain.
- Subscriber Growth: Total wireless subscribers grew to 305.8 million (up 10.2% YoY), with significant growth in Brazil (up 26.5% due to the Oi acquisition) and Colombia. Fixed RGUs remained relatively flat at 74.6 million.
- Discontinued Operations: Results for the U.S. operations (TracFone) are classified as discontinued following the sale to Verizon in November 2021. The prior year included Ps. 7.7 billion in profit from discontinued operations, whereas the current period had none.
Guidance, Outlook, and Risks
- Acquisitions and Divestitures: On July 1, 2022, the company completed the sale of 100% of its interest in Claro Panama for U.S.$200 million. The acquisition of Oi in Brazil closed on April 20, 2022, significantly boosting subscriber counts in that segment.
- COVID-19 Impact: The company notes that capital expenditures are expected to return to pre-pandemic levels in 2022. Supply chain disruptions for handsets have largely been mitigated through excess ordering in late 2021.
- Financial Risks: Results are heavily influenced by currency fluctuations. The company recorded a net foreign currency exchange gain of Ps. 26.7 billion in the first half of 2022, compared to Ps. 4.7 billion in 2021, primarily due to the appreciation of the Brazilian real and U.S. dollar against the Mexican peso. Conversely, valuation losses on derivatives were Ps. 18.5 billion.
- Outlook: Management continues to monitor economic conditions, inflation, and regulatory developments across its operating regions. Share repurchases will depend on operating cash flow and market conditions.
Investor Verification Checklist
- Currency Sensitivity: Verify the impact of exchange rate fluctuations on reported earnings, as a significant portion of the net profit increase is attributed to foreign currency gains rather than operational performance.
- Discontinued Operations: Confirm that comparisons with prior years exclude TracFone results to ensure an accurate assessment of ongoing business performance.
- Debt Structure: Review the maturity profile of long-term debt (Ps. 439 billion) and the extent of hedging strategies used to manage interest rate and currency risks.
- Segment Performance: Analyze the specific performance of the Brazil segment post-Oi acquisition versus the Southern Cone segment, which faced adverse economic conditions in Argentina.
- Capital Allocation: Monitor the balance between capital expenditures (Ps. 65.6 billion) and share repurchases (Ps. 16.3 billion) to assess liquidity management.