America Movil, S.A.B. de C.V. (AMOV)

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America Movil S.A.B. de C.V. (AMOV)

Q1 2013 Earnings Call

April 19, 2013 10:00 am ET

Executives

Daniela Lecuona Torras

Daniel Hajj Aboumrad - Chief Executive Officer, Director, Member of Executive Committee, Member of Operations in Puerto Rico & the United States of America Committee, Director of Radiomvil Dipsa S A and Director of Telmexs Mexican

Carlos José García Moreno Elizondo - Chief Financial Officer

Analysts

Andre Baggio - JP Morgan Chase & Co, Research Division

Rodrigo Villanueva

Michel Morin - Morgan Stanley, Research Division

Andrew T. Campbell - Crédit Suisse AG, Research Division

Walter Piecyk - BTIG, LLC, Research Division

Richard Dineen - HSBC, Research Division

Soomit Datta - New Street Research LLP

Dan Kwiatkowski - UBS Investment Bank, Research Division

Richard H. Prentiss - Raymond James & Associates, Inc., Research Division

Will Milner - Arete Research Services LLP

Mauricio Fernandes - BofA Merrill Lynch, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the América Móvil First Quarter Conference Call and Webcast. My name is Lacey, and I'll be your coordinator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today, Daniela. Please proceed.

Daniela Lecuona Torras

Good morning. Welcome, everyone, to the call. With us today on the line, Daniel Hajj, Chief Executive Officer; Carlos García Moreno, Chief Financial Officer; Oscar Von Hauske, Chief Operating Officer; and Carlos Robles, Chief Financial Officer of Telmex. Daniel?

Daniel Hajj Aboumrad

Yes. Good morning, everybody. Thank you for joining América Móvil's first quarter of 2013 financial and operating report. And Carlos García Moreno is going to make us a summary of the results.

Carlos José García Moreno Elizondo

Okay. Thank you, Daniel. Good morning, everyone. The global economy continued to face strong headwinds in the first quarter of the year, with expected economic growth for 2013 worsening even further in Europe and China. In Latin America, several countries saw their economies weaken more in the face of softer commodity prices. In spite of the above, access growth remained relatively strong. In relative terms, and before considering subscriber disconnections in Colombia arising from a change in our commercial policy, net new access lines exceeded by 8.3% those obtained in the first quarter of 2012.

We ended March with 328.2 million access lines. Our wireless subscriber base improved 6.9% year-on-year, even after getting the effect of the Colombian disconnections, while fixed-RGUs were up 9.5%, with fixed-line accesses in South America climbing 18.3% year-on-year. We added 1.4 million wireless subscribers in the first quarter after disconnections of 2.7 million in Colombia, as a result of changes in our reporting policy. Brazil added 1.1 million clients and Mexico 854,000. Net adds in the U.S., 839,000, more than doubled those of last year. Postpaid net additions for the period were 1.1 million, 12.7% more than in the year-earlier quarter, with Brazil gaining 347,000 postpaid clients, 78% more than in 2012, and Mexico, 223,000, more than 1/4 of its total net adds. We added 1.1 million RGUs in the first quarter, including 753,000 PayTV subscriptions and 568,000 broadband accesses. The growth of the fixed-line platform was led by the offerings of triple-play packages. 56% of net RGU adds, excluding Mexico where we cannot yet provide PayTV, were sold under such bundles. Again, 56% of net additions of RGUs, 56% were driven by triple-play bundles.

In Brazil, our largest fixed-line operation, we ended March with 29.7 million RGUs, 18.7% more than a year before. PayTV and broadband were the main drivers of growth, reflecting increases of 24% and 22.7%, respectively. Our first quarter revenues totaled MXN 193 billion. They were slightly higher than those of the prior year in Mexican peso terms. As has been the case in prior quarters, the peso continued to gain ground vis-à-vis the U.S. dollar and other Latam currencies, with the result that when translated into pesos, the rate of growth of the revenues of our international operations falls below their rate of growth in local currency terms. On average, the peso appreciated 2.8% versus the dollar, 16% versus the real, almost 19% versus the Argentinean peso and 2% versus the Colombian peso compared to the year-earlier quarter. Correcting for this, our revenues increased by 6.1% year-on-year, at constant exchange rates, with service revenues growing 4.6%, led by mobile data and by PayTV, whose revenues expanded 25.6% and 20.6%, respectively, net of FX movement. Fixed-data revenues accelerated to 6.6% after a one-off decline in Mexico in the prior quarter, while fixed-line voice recovered somewhat, declining at a lower pace, 5.9%, than it had the prior quarter, only have been 7.2%.

From a regional perspective, service-revenue growth remained at the same pace in Mexico than it had in the fourth quarter. It was minus 1.6%. It decelerated in South America, along with the local economies, to 5%, and it accelerated in the U.S. where it rose to 32.4%. As regards EBITDA, it totaled MXN 63.8 billion and was down 6.8% in peso terms, while our operating profit came in at MXN 38.7 billion and was down 10% from the year before. At constant exchange rates, EBITDA improved from the prior quarter, declining 1.4% year-on-year, less than the 3.7% rate of the preceding quarter.

In Colombia, we had an extraordinary charge that will be fully recovered in the next several months. That accounted for the MXN 179 billion [ph], nearly 10% [ph] of EBITDA of their release. We posted a MXN 1.4 billion comprehensive financial income, with foreign exchange gains of MXN 17.4 billion, more than offsetting our net interest payments and other financial expenses. Foreign exchange gains arose mostly from the appreciation of the peso versus the dollar and of the dollar versus the euro. Our net profit for the quarter totaled MXN 26.9 billion, up nearly 80% from the preceding one, although down from the year-earlier quarter, partly on account of the lower operating profits and partly on account of the even larger foreign exchange gains that we had then. Our net profit represented MXN 0.36 per share and USD 0.56 per ADR.

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