AMX

Business Context and Reporting Period

This Form 6-K filing by América Móvil, S.A.B. de C.V. provides an operating and financial review for the nine months ended September 30, 2011. The report was filed on January 31, 2012, and supplements the company's 2010 Form 20-F. The company operates in the telecommunications sector across Mexico, Brazil, and other Latin American markets, offering mobile and fixed voice, data, and paid television services.

Key Financial Metrics

The following table summarizes the unaudited consolidated financial data for the nine months ended September 30, 2011, compared to the same period in 2010. Figures are presented in millions of U.S. dollars (USD) and billions of Mexican pesos (Ps.).

Note: USD conversions use an exchange rate of Ps.13.4217 to USD 1.00.

Material Changes vs. Prior Period

• Revenue Growth: Total operating revenues increased by 7.37% (Ps.33.2 billion) driven by significant growth in mobile data (+28.84%) and paid television (+65.42%). This was partially offset by a 1.19% decline in fixed voice revenues.
• Profitability Decline: Despite revenue growth, operating income decreased by 3.21% and net profit fell by Ps.1.5 billion. The operating margin contracted from 26.68% to 24.06% due to higher costs for subscriber acquisition, content, network maintenance, and advertising.
• Exchange Impact: The company recorded a net exchange loss of Ps.15.7 billion in 2011, compared to a gain of Ps.3.7 billion in 2010, primarily due to the depreciation of the Mexican peso against the U.S. dollar.
• Debt Levels: Net debt increased to Ps.238.8 billion from Ps.206.7 billion at year-end 2010, reflecting new borrowings and cash used for acquisitions.

Guidance, Outlook, and Recent Developments

The filing does not provide specific forward-looking financial guidance for the full year 2012 but highlights several material recent developments and risks:

• Acquisitions and Divestitures: On November 30, 2011, the company acquired 100% of Digicel Honduras and divested its operations in Jamaica. Additionally, a tender offer for Telmex shares was settled in November 2011, increasing ownership to approximately 93% for a total price of Ps.62.5 billion.
• Regulatory Risks:
  • Fine: The Mexican Competition Commission (Cofeco) imposed a fine of Ps.11,989 million on subsidiary Telcel for alleged monopolistic pricing. The company contests this and has not recorded a provision, believing payment is not probable.
  • Interconnection Rates: Regulators mandated significant reductions in interconnection rates for Telmex, which the company expects to challenge but will comply with pending legal outcomes.
  • Mobile Termination Rates: Telcel agreed to gradually reduce mobile termination rates over the next four years.
• Brazilian Operations: Regulatory changes in Brazil allowed the company to analyze acquiring a controlling interest in Net Serviços de Comunicação S.A.
• Capital Allocation: The company repurchased approximately Ps.44.8 billion of its own shares during the first nine months of 2011 and used Ps.73.2 billion for capital expenditures.

Investor Verification Checklist

• Regulatory Outcomes: Monitor the status of the Ps.11.9 billion Cofeco fine and the legal challenges regarding interconnection rate reductions, as these could materially impact future profitability.
• Exchange Rate Sensitivity: Verify the impact of continued peso depreciation on future earnings, given that over 50% of indebtedness is denominated in U.S. dollars.
• Margin Compression: Assess whether the decline in operating margin (from 26.68% to 24.06%) is a temporary trend or indicative of structural cost increases in the competitive landscape.
• Debt Maturity Profile: Review the long-term debt maturity schedule, noting Ps.37.3 billion due in 2013 and Ps.32.9 billion due in 2014, to evaluate refinancing risks.
• Integration of Acquisitions: Evaluate the financial integration and performance of the newly acquired Digicel Honduras and the increased stake in Telmex.