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

AMOV 
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America Movil SAB de CV (ADR) (AMOV)

Q2 2013 Earnings Call

July 26, 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

Oscar Von Hauske Solís - Chief Fixed Line Operations Officer, Director and Member of Operations in Puerto Rico & the United States of America Committee

Analysts

Andrew T. Campbell - Crédit Suisse AG, Research Division

Mauricio Fernandes - BofA Merrill Lynch, Research Division

Andrés Medina-Mora - Sinca GBM, S.A. de C.V.

Walter Piecyk - BTIG, LLC, Research Division

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

Kevin Smithen - Macquarie Research

Michel Morin - Morgan Stanley, Research Division

Will Milner - Arete Research Services LLP

Fabio Levy - Banco BTG Pactual S.A., Research Division

Kenneth Berlin - Legal & General Investment Management America Inc.

Alejandro Gallostra - BBVA Research SA

Jonathan Dann - Barclays Capital, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the América Móvil Second Quarter Conference Call and Webcast. My name is Marie, and I will be your operator for today. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. And now I would like to turn the call over to Daniela Lecuona, IR Officer. Please proceed, ma'am.

Daniela Lecuona Torras

Good morning, everyone. Thank you for joining us today. With us on the call is Daniel Hajj, Chief Executive Officer; Carlos Garcia Moreno, Chief Financial Officer; Oscar Von Hauske, Chief Operating Officer; and Carlos Robles, Chief Financial Officer of Telmex. I wanted to remind -- I want to remind you that this morning, our webcast is going to be supported by slides, you can access the presentation on our website.

Daniel Hajj Aboumrad

Good morning, everybody. Thank you for the América Móvil second quarter of 2013 financial and operating report. And Carlos is going to give us a presentation of the results.

Carlos José García Moreno Elizondo

Thank you. Good morning, everyone. With the U.S. economy seemingly on better footing, economic activity in Latin America appeared to pick up in the second quarter, underpinning stronger top line growth throughout the region. As part of the financial volatility that we saw is from the Fed's statement in May, they would likely start calling back on its bond purchases before the end of the year, given the resilience of the U.S. economy. This volatility led to major swings in exchange rates. And for the most part, we saw a significant strengthening of the U.S. dollar vis-à-vis other currencies, with the Mexican peso depreciating 6.7%; the Brazilian real, 10.1%; the Colombian peso, 4.9%; the Peruvian sol, 7.5%; and the Chilean peso, 6.6% versus the U.S. dollar.

We ended the quarter with 329 million accesses, 5% more than a year before. Our fixed-line RGUs increased 9.1% and our wireless subscriber base, 4.1%, after 2.5 million subscribers were disconnected in the quarter due to changes in our churn policy. Most of the disconnections, 1.9 million, took place in Peru.

PayTV and broadband accesses continued to grow rapidly, by 18% and 13%, respectively. Triple-play bundles remained popular, accounting for over half of the net RGU additions. On the wireless front, we kept on making progress in developing our postpaid base. It was up 12% year-on-year, the subscribers -- postpaid subscribers increasing 12% year-on-year.

Consolidated revenues were up 1.6% from the year-earlier quarter to MXN 194.8 billion, bringing to MXN 387.8 billion the total for the year. However, the increase in peso terms underestimates the real revenue growth, given the noise generated by the currency movements. In constant peso terms, service revenue growth shot up to 7.8% year-on-year from 4.6% the prior quarter, and total revenues were up 10% compared to 6.1% the prior quarter.

The acceleration on service revenue growth was particularly strong in Mexico and the South American block, rising from minus 1.6% to 1.0% in Mexico and from 5.0% to 8.5% in South America. In the latter block, the pace of growth picked up very noticeably in Brazil, Chile and Ecuador, gaining nearly 5 points in Brazil and almost 4 points in Ecuador relative to the first quarter.

Data revenues in both platforms continued to gain share of revenues, as the PayTV revenues have now account for 9% of the total.

Mobile data services led the way in service revenues with 27%, followed by PayTV at 21%. Fixed data revenues are accelerating. The acceleration of service revenue growth in the second quarter was mostly driven by the voice segment, with mobile voice recovering sharply from the downturn it observed the prior 2 quarters of Mexico, Brazil, Chile, Ecuador and Colombia. All posted significantly better growth figures than they had the prior quarter. Fixed-line voice revenues continued their steady recovery in Brazil.

The U.S. led the way in terms of service revenue growth with 35.6%. This pace of growth has risen each one of the last 4 quarters. Our service revenue growth was also in the double digits in Argentina, Uruguay, Paraguay, in Ecuador and in Peru.

Second quarter EBITDA, MXN 65 billion, was slightly lower than that of the year-earlier quarter in peso terms, minus 2%. At constant exchange rates, however, consolidated EBITDA swung from minus 2.4% in the first quarter to 5.0% in the second one, supported by the strong top line performance. The EBITDA margin stood at 33.4%, compared to 34.6% a year before.

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