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: Second Quarter 2021 (Ended June 30, 2021)
Release Date: July 13, 2021
América Móvil is a leading telecommunications provider operating primarily in Latin America, the United States, and Europe. The company reported strong operational recovery in Q2 2021, driven by increased commercial activity and subscriber growth across key markets, despite foreign exchange headwinds affecting nominal peso results.
Key Financial Metrics
| Metric | Q2 2021 | Q2 2020 | YoY Change (Nominal) | YoY Change (Constant FX) |
|---|---|---|---|---|
| Total Revenues | MxP 252.5 Billion | MxP 251.6 Billion | +0.4% | N/A |
| Service Revenues | MxP 209.5 Billion | MxP 219.5 Billion | -4.6% | +5.3% |
| EBITDA | MxP 84.9 Billion | MxP 82.6 Billion | +2.8% | +11.9% |
| EBITDA Margin | 33.6% | 32.9% | +0.7 pp | - |
| Operating Profit (EBIT) | MxP 44.7 Billion | MxP 40.9 Billion | +9.3% | +17.9% |
| Net Income | MxP 42.8 Billion | MxP 19.5 Billion | +119.6% | - |
| Net Debt | MxP 591 Billion | - | - | - |
| Net Debt / LTM EBITDA | 1.64x | - | - | - |
Cash Flow & Capital Allocation (Six Months to June 2021):
- Capital Expenditures (CapEx): MxP 57.4 Billion
- Net Debt Reduction: MxP 36.9 Billion
- Share Buybacks: MxP 11.0 Billion (765.1 million shares repurchased)
Material Changes vs. Prior Period
- Subscriber Growth: Added 4.2 million wireless subscribers in Q2 2021, with 2.0 million being postpaid. Brazil contributed 1.1 million postpaid net adds. Fixed-line broadband added 128,000 accesses, though total RGUs saw a net disconnection of 132,000.
- Revenue Dynamics: While nominal total revenue was flat (+0.4%), service revenue grew 5.3% at constant exchange rates. The nominal decline in service revenue (-4.6%) was primarily due to the appreciation of the Mexican peso against other currencies (e.g., +16.3% vs. USD, +61.6% vs. Argentine peso).
- Profitability Surge: Net income more than doubled (+119.6%) to MxP 42.8 billion. This was significantly boosted by a comprehensive financing income of MxP 17.2 billion, driven by foreign exchange gains of MxP 21.1 billion.
- Cost Management: Bad debt provisions plummeted 51.2% year-over-year. Selling, general, and administrative expenses decreased 9.3% in nominal terms.
Outlook, Risks, and Management Commentary
- Operational Recovery: Management highlighted a strong recovery in commercial activity, particularly in Mexico and the U.S., driving sequential growth in prepaid and postpaid service revenues.
- Technology Deployment: Claro Brazil became the first operator to launch 5G services in 15 cities. The company continues to expand fiber rollouts in Ecuador and Peru.
- Financial Strategy: The company secured a new five-year revolving credit facility of €1.5 billion (approx. $1.5 billion USD) with ESG metrics. Total committed liquidity buffers stand at $5 billion.
- Risks & Contingencies:
- Foreign Exchange Volatility: Significant appreciation of the Mexican peso negatively impacted consolidated nominal revenue and EBITDA figures.
- Regulatory/Litigation: An ICSID tribunal ruled against América Móvil in an arbitration regarding concessions terminated in Colombia in 2013, finding no expropriation occurred.
- Market Competition: A new mobile competitor launched in Colombia, creating a more complex commercial environment.
Investor Verification Checklist
- FX Impact: Verify the sensitivity of future earnings to Mexican peso strength, as it significantly masks underlying operational growth in nominal terms.
- Argentina Inflation: Confirm the methodology for IAS 29 inflationary accounting adjustments in Argentina, which affects comparability of local results.
- US Operations: Review the net disconnection trend in the U.S. (Tracfone/SafeLink), which saw 549,000 net disconnections due to a shift toward postpaid demand and handset supply constraints.
- Debt Profile: Assess the sustainability of the 1.64x Net Debt/EBITDA ratio given the aggressive share buyback program and ongoing CapEx requirements for 5G/fiber.
- One-Time Items: Isolate the impact of the MxP 21.1 billion foreign exchange gain on Net Income to understand core operating profitability.