Business Context and Reporting Period
Company: América Móvil, S.A.B. de C.V. (NYSE: AMX, AMOV)
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: Third Quarter 2023 (Ended September 30, 2023)
Announcement Date: October 19, 2023
América Móvil reported financial and operating results for Q3 2023. The company operates across Latin America and Europe, with significant exposure to currency fluctuations, particularly the appreciation of the Mexican peso against regional currencies.
Key Financial Metrics
| Metric | Q3 2023 | Q3 2022 | YoY Change (Nominal) | YoY Change (Constant FX) |
|---|---|---|---|---|
| Total Revenue | 203.8 billion MXN | 210.8 billion MXN | -3.3% | N/A |
| Service Revenue | 169.1 billion MXN | 176.6 billion MXN | -4.3% | +3.8% |
| EBITDA | 79.9 billion MXN | 82.8 billion MXN | -3.6% | +5.0% |
| EBITDA Margin | 39.2% | 39.3% | -0.1 pp | N/A |
| Operating Profit (EBIT) | 41.5 billion MXN | 44.5 billion MXN | -6.7% | N/A |
| Net Income | 2.0 billion MXN | 18.0 billion MXN | -88.7% | N/A |
| EPS (MXN) | 0.03 | 0.28 | N/A | N/A |
| Net Debt (excl. leases) | 389.7 billion MXN | N/A | N/A | N/A |
| Net Debt/EBITDA Ratio | 1.43x | N/A | N/A | N/A |
Capital Allocation (YTD 9 Months): Capital expenditures totaled 100.2 billion MXN. Shareholder distributions (dividends and buybacks) reached 24.0 billion MXN.
Material Changes vs. Prior Period
- Currency Impact: Nominal revenue and EBITDA declined due to the appreciation of the Mexican peso against all other currencies in the region. At constant exchange rates, service revenue grew 3.8% and EBITDA grew 5.0%.
- Subscriber Growth: Added 3.0 million wireless subscribers (2.0 million postpaid). Postpaid base grew 3.7% organically YoY to 119 million. Fixed-line broadband accesses grew 3.2% YoY to 31.6 million.
- Net Income Volatility: Net income dropped significantly to 2.0 billion MXN from 18.0 billion MXN in Q3 2022. This was driven by a 4.7 billion MXN impairment charge on the Claro/VTR joint venture in Chile and a 12.3 billion MXN foreign exchange loss.
- Operating Costs: Operating profit declined partly due to a 17.6% increase in depreciation of rights of use associated with tower leases, following lease renegotiations in Brazil.
Guidance, Outlook, and Risks
- Management Commentary: Management highlighted strong organic growth in service revenue and EBITDA at constant exchange rates. Broadband revenue expanded at the fastest rate in over two years (6.4%). Corporate network services are gaining revenue share, now accounting for 19% of fixed-line services.
- Strategic Events:
- Increased stake in Telekom Austria to 56.55%.
- Completed spin-off of EuroTeleSites AG (towers) in September 2023.
- Risks and Contingencies:
- Foreign Exchange: Significant exposure to currency fluctuations, particularly the Mexican peso, Brazilian real, and Argentine peso. A 12.3 billion MXN FX loss was recorded in Q3.
- Hyperinflation: Argentina is treated as a hyperinflationary economy (IAS 29), complicating comparisons. Real EBITDA in Argentina declined 10.9% YoY due to a 130% devaluation of the peso.
- Impairment: Partial impairment of the stake in Claro Chile (JV with Liberty Latin America) impacted net income.
Investor Verification Checklist
- Constant FX Adjustments: Verify the company's methodology for constant exchange rate calculations, as nominal results are heavily distorted by the strong Mexican peso.
- Argentina Inflation Accounting: Review the specific impact of IAS 29 on Argentina's reported figures, as real-term performance differs from nominal reporting.
- Claro Chile JV: Assess the long-term impact of the 4.7 billion MXN impairment charge on the joint venture with Liberty Latin America.
- Debt Structure: Confirm the composition of the 389.7 billion MXN net debt, specifically the portion denominated in foreign currencies versus local currencies.
- Tower Sales Impact: Evaluate the sustainability of EBITDA growth after adjusting for one-off tower sales in Mexico and Peru.