America Movil SAB de CV (AMXOF) Q4 2024 Earnings Call Highlights: Strong Revenue Growth Amid ...

• Revenue: MXN237 billion, up 18% in Mexican peso terms.
• Service Revenue: Increased 19.1%.
• EBITDA: MXN91 billion, up 16.4%.
• Postpaid Subscribers: Added 2.1 million, with significant contributions from Brazil, Colombia, and Mexico.
• Prepaid Subscribers: Net disconnections of 1.3 million, with notable losses in Brazil.
• Fixed Broadband Accesses: Increased by 320,000.
• Operating Profit: MXN46.4 billion, up 11% year-on-year.
• Net Income: MXN9.5 billion, down 47.5% year-on-year.
• Net Debt: MXN485 billion, with a net debt to EBITDA ratio of 1.44 times.
• Capital Expenditures: MXN131 billion.

• Warning! GuruFocus has detected 3 Warning Signs with AMXOF.

Release Date: February 12, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• America Movil SAB de CV (AMXOF) added 2.1 million postpaid subscribers in the fourth quarter, with significant contributions from Brazil, Colombia, and Mexico.
• Fourth quarter revenue increased by 18% in Mexican peso terms, with service revenue growing by 19.1% and EBITDA by 16.4%.
• The company experienced a 5.3% year-on-year increase in its postpaid base and a 4.7% increase in fixed broadband accesses.
• Mobile service revenue expanded by 6.2% year-on-year in the fourth quarter, with notable growth in Brazil, Colombia, Ecuador, and Peru.
• The company is well-prepared for future growth in the corporate market, with strong investments in data centers and alliances across Latin America.

Negative Points

• The company registered 1.3 million net disconnections on its prepaid platform, with Brazil experiencing a significant cleanup of its profit space.
• Net income for the fourth quarter was 47.5% lower year-on-year due to higher comprehensive financing costs, including foreign exchange losses.
• The depreciation of regional currencies against the dollar, particularly the Brazilian real and Chilean peso, impacted financial results.
• Fixed service revenue growth decelerated in key markets like Mexico, Brazil, and Colombia compared to previous quarters.
• The slowdown in the Mexican economy has affected prepaid recharge rates, indicating potential challenges in consumer spending.

Q & A Highlights

Q: Do you have a specific CapEx guidance for this year, considering the sharp FX movements? Also, could you discuss the MVNO deal with Nubank in Brazil? A: We are on track with our three-year CapEx guidance, including Chile. We expect to finalize network modernization and 5G coverage in Chile this year. Regarding Nubank, we are not concerned about cannibalization of our prepaid subscribers and are happy with the partnership.

Q: Even with Chile included in the CapEx guidance, it seems like you might come in towards the low end of your range. What could push it higher? A: We are maintaining our three-year CapEx guidance of MXN22 billion. We had less CapEx than budgeted in 2024, with better revenue and cash flow. We are investing strategically to drive revenue growth.

Q: Could you comment on the pricing environment for Mexican broadband and any plans to increase prices this year? Also, what is your stance on potential M&A in Argentina? A: We do not plan to increase prices in Mexico currently. We are focusing on adding value through new packages. Regarding Argentina, we are open to opportunities but have not engaged in any discussions yet.

Q: How do you see prepaid revenue trends and competition in Mexico? A: We are seeing a slowdown in the economy affecting prepaid recharges. Competition remains stable, with no significant changes. We are moving some prepaid customers to postpaid, which is performing well.

Q: What is your outlook for shareholder remuneration in 2025, considering FX changes and increased CapEx? A: We expect strong revenue growth and reduced CapEx intensity, leading to potential free cash flow expansion. Our leverage is stable, allowing for more cash available for distributions.

Q: How do you view mobile competition in Brazil, and what is your debt profile strategy? A: Competition in Brazil is strong, but we are well-prepared with a robust network and market share. Regarding debt, we manage currency exposure through derivatives, with a significant portion in local currencies.

Q: Can you discuss competitive dynamics in Colombia and Chile? A: In Colombia, we are seeing good revenue growth and are well-positioned despite potential network consolidations by competitors. In Chile, we are consolidating synergies and have been gaining subscribers through number portability.

Q: When will you provide more disclosure on the Chilean operation, and what is the CapEx budget for Chile in 2025? A: We will begin reporting Chilean results next quarter. The CapEx budget for Chile in 2025 is approximately $250 million to finalize network upgrades and coverage expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.