Business Context and Reporting Period
Company: América Móvil, S.A.B. de C.V. (AMX)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Unaudited interim condensed consolidated financial statements for the nine months ended September 30, 2021.
Business Overview: AMX provides telecommunications services (mobile/fixed voice, data, internet, Pay TV) and sells equipment across 25 countries in Latin America, the U.S., the Caribbean, and Europe. The functional and reporting currency is the Mexican Peso (Ps.).
Key Financial Metrics
| Metric (in thousands of Ps.) | 9 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2020 |
|---|---|---|
| Total Operating Revenues | 754,067,840 | 761,857,079 |
| Operating Income | 133,096,069 | 124,925,557 |
| Net Profit (Consolidated) | 64,442,153 | 13,258,702 |
| Net Profit Attributable to Parent | 60,436,744 | 9,540,321 |
| Earnings Per Share (Basic/Diluted) | Ps. 0.91 | Ps. 0.14 |
| Operating Cash Flow | 201,946,436 | 200,397,624 |
| Total Debt (Short + Long Term) | 585,850,283 | 628,382,956 |
| Cash and Cash Equivalents | 35,505,293 | 35,917,907 |
Margins (Calculated): Operating margin improved to approximately 17.6% in 2021 from 16.4% in 2020. Net profit margin attributable to the parent rose significantly to 8.0% from 1.3%.
Material Changes vs. Prior Period
- Profitability Surge: Net profit attributable to equity holders of the parent increased by 533% (from Ps. 9.5 billion to Ps. 60.4 billion). This was primarily driven by a massive reduction in net foreign currency exchange losses, which decreased by Ps. 94.7 billion compared to the prior year.
- Revenue Decline: Total operating revenues decreased slightly by 1.0% (Ps. 7.8 billion), with service revenues down 2.4% and equipment sales up 6.7%.
- Debt Reduction: Total debt decreased by Ps. 42.5 billion (6.8%) due to repayments exceeding new borrowings, despite significant share repurchases.
- Shareholder Returns: The company repurchased shares totaling Ps. 22.4 billion in 2021, compared to Ps. 1.9 billion in 2020. Dividends paid increased to Ps. 15.0 billion from Ps. 4.1 billion.
Outlook, Risks, and Unusual Items
- Strategic Transactions:
- TracFone Sale: Completed the sale of 100% of TracFone Wireless (U.S. prepaid operator) to Verizon in November 2021.
- Claro Panama: Agreed to sell 100% of Claro Panama to Cable & Wireless Panama for US$200 million; closing expected in H1 2022.
- Chile JV: Agreed to combine Chilean operations (VTR and Claro Chile) with Liberty Latin America into a 50-50 joint venture; closing expected in H2 2022.
- Oi Brazil: Brazil's antitrust authority approved the joint acquisition of Oi Group's mobile business by Claro, Telefonica, and TIM (announced Feb 2022).
- Capital Structure: Entered a new credit agreement ("Sitios Credit Facility") in March 2022 for Ps. 20.6 billion to support the spin-off of telecommunications towers into a new entity, Sitios Latinoamérica.
- Risks and Contingencies: No material changes in contingencies as of September 30, 2021. The company remains compliant with all debt covenants, including a debt-to-EBITDA ratio not exceeding 4:1.
- Unusual Items: The 2020 period included a significant foreign currency exchange loss of Ps. 101.6 billion, which distorted year-over-year comparisons. The 2021 period included a net loss on derivative valuation of Ps. 7.4 billion.
Investor Verification Checklist
- Currency Impact: Verify the sustainability of the profit improvement, which was heavily influenced by the reversal of massive foreign exchange losses seen in 2020.
- Transaction Closings: Monitor the regulatory approval and closing dates for the Claro Panama sale and the Chilean joint venture.
- Debt Maturities: Review the schedule of debt maturities, noting Ps. 22.5 billion due in 2022 and Ps. 24.7 billion in 2023.
- Share Repurchases: Assess the impact of the Ps. 22.4 billion share buyback program on future liquidity and capital allocation.
- Segment Performance: Analyze the divergence in segment profitability, specifically the losses in Brazil and Southern Cone versus the strong performance in Mexico and the U.S.