Good morning. My name is Juan and I will be your conference operator today. At this time, I would like to welcome everyone to the America Movil Fourth Quarter 2021 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. Now, I will turn the call to Ms. Daniela Lecuona, Head of Investor Relations. Please. Ms. Daniela, go ahead.

Thank you. Good morning, everyone. Thanks for joining us today to discuss our Fourth Quarter operating and financial results. We have on the line Mr. Daniel Hajj, CEO, Mr. Carlos Garcia Moreno, CFO, and Mr. Oscar Von Hauske, COO.

Thank you, Daniela. Good morning, everyone. Carlos is going to make a summary of the fourth quarter results.

Thank you, Daniela. Good morning, everyone. Throughout the fourth quarter, concern about the rise in patient rates across the board kept financial markets alert about the policy of the patients with 10-year yields moving around a relatively wide band driven 5 basis points. But ending the quarter very much where they had started, at about 1.5%. Notwithstanding the volatility in interest rates, equity markets continued to advance with the S&P 500 delivering a 10% increase in the quarter. In our region of operation, the Mexican peso, the Colombian peso, and the Chilean peso all experienced bouts of volatility in November, with the former recovering fully by the end of the year and the other two depreciating further. In the fourth quarter, we added 4.8 million wireless subscribers, including 2.2 million postpaid clients and 2.5 million prepaid drops. Brazil contributed approximately half of our postpaid additions, followed by Colombia with 357,000 and Austria and Peru with close to 200,000 each. In the prior quarter, Mexico provided most of the new prepaid clients at 1.2 million with Colombia contributing 349,000 clients and Central American Argentina approximately 300,000 each. Fourth quarter revenue totaled 227 billion pesos, a 7.7% year-on-year increase. Service revenue expanded 5.4% to our total revenue. The consolidated figures mentioned above will be referenced later. Exclude platform, which has been deemed to be discontinued operations, and they also exclude Argentina as we have done for several quarters during the continued inflation of the country. At constant exchange rates, service revenue growth came in at 4.4%, very similar to the 4.61% posted in the prior quarter. The Mexican peso appreciated versus most currencies in our regional operations on an annual basis and depreciated slightly versus the U.S. dollar. The dependent growth of activity revenue stayed roughly constant in the quarter at 6.9%, while that of fixed line service revenues declined relative to the prior quarter to 0.5%. On the mobile platform, postpaid revenue expanded 5.9% practically at the same pace as in the previous quarter, while prepaid revenue growth increased to 8.7%. Several operations, including Peru, Puerto Rico, and the Dominican Republic, as well as Mexico and Brazil experienced brief mobile service revenue growth between 8% and 12%. On the fixed line platform, revenue growth from corporate networks accelerated to 6.8%. Meanwhile, revenue from fixed services slowed down to 4%. Both trends are consistent with those followed throughout the year. Our Eastern European operations experienced a 75% revenue growth in fixed line services with 13% and 11% respectively. They were followed by Colombia and the Dominican Republic, which each saw physical service growth of 10%. The decline in Puerto Rico revenue was due to the suspension of funding provided by the department. Within fixed line services, program revenue climbed 19% and 17% in the Dominican Republic and Peru, respectively. In Puerto Rico, Eastern Europe, and Central America, all posted revenue growth between 6% and 9%. EBITDA reached 89.8 billion pesos. This figure reflects one-time items during the impact of the sale of towers. Adjusted EBITDA was up 7.7% year-on-year, slightly more than the 7.2% increase in sales that we prepared for. In the Dominican Republic, Central America, and Europe, we exhibited the fastest pace of EBITDA growth at 12.4%, 11%, and 9.7% respectively, with Mexico and Colombia posting growth rates of 8% and 7.2%. Practically all of the operations showed increases in the margin. Our adjusted operating profit reached 41 billion pesos and was up 20% in Mexican peso terms and 15% at constant exchange rates. We generated a net profit from continuing operations of 23 billion pesos. The net profit from discontinued operations totaled 115 billion pesos. Together with net income from continuing operations, it resulted in a net profit of 196 billion pesos in the fourth quarter. For the full year 2021, our net income stood at 196 billion pesos, significantly larger than the previous year. Our operating cash flow and the proceeds from the assets allowed us to fund 170 million pesos of capital investments, 62 billion pesos in net shareholder distributions, and to reduce our net debt by a substantial amount. Excluding leases, our net debt at the end of the year was considerably lower than at the end of 2020. Our net debt calculation includes cash equivalent securities available. The value of the assets we hold at the end of the year was just over 62 million pesos. We would like to turn the floor back for Q&A.

Thank you, Carlos. We can start the Q&A.

On your first question comes from Leonardo Olmos from UBS. Leonardo, your line is now open.

Hello, everyone. Good morning, good afternoon. My first question is related to 5G CapEx, specifically about the expected auctions that you're already booking in 2021, as far as I understand. Can you disclose a bit the breakdown between the expected auctions schedule both in 2021 and please confirm if the total amount was $1.1 billion. Thank you.

Yes. Good morning. On the CapEx of 2021 regarding the spectrum CapEx, I don't remember exactly, but it was around $800 million in Brazil and then some more in Mexico, a little bit more in Peru. But yes, it's around $1.1 billion on net spectrum that we have in 2021, mostly in Brazil, about $800 million.

Crystal-clear. Thank you very much. And my follow-up question. Also on 5G, can you discuss what you expect for 2022 and 2023? You don't need to be specific on numbers, but mostly what countries do you expect to deploy, what overall spectrum auctions are you expecting for the DCF? Thank you.

I think we mostly have spectrum in all the countries in Latin America. We expect to launch in 94% of the places where we operate in 2022. The CapEx that we're going to expand in 5G, as we mentioned in previous calls, we have been investing in virtualization. We have been investing a lot in fiber to the node, virtualization. We are planning $8 billion in CapEx this year, including 5G, and we're going to launch in 90% of the countries overall. I don’t have a specific date, but it's likely all over the year where we're going to launch. We hope to do it in the first semester of this year, mostly. Colombia is the only one that we don’t have spectrum, and we hope that the government will speed up that auction. Having 5G available in all the countries where we operate is essential. We have been doing investments in Colombia also, to prepare for the launch. In 2022, we will have nearly all the countries ready to go. We have modernized our cell sites over the last five years. In all the countries, we have 3G, 4G, 4.5G, and we're ready to implement 5G as well.

Very good, very good. Thank you very much. Glad to see the plans are winning, have a good day.

Thank you very much.

Thank you. Our next question comes from Walter Piecyk from LightShed, please. Walter, your line is now open.

Thanks. Can you just give us a sense of what your plans are for the Verizon shares that you received as part of the closing of the transaction?

Well, we don’t have any plans today. We are receiving about a 5% dividend yield in Verizon, and we don’t have any lockup on the shares. Anytime we want to sell, we can sell. Right now, we intend to maintain the shares for the near future.

Okay. And then just to go back to the CapEx question, if we look at the network equipment CapEx, in 2021, if you excluded spectrum, it was about a little over $7 billion, and in 2020, it was about $6 billion. So, you talked about the $8 billion for this year. I assume that's all network CapEx. Is this just a rising trend because your overall business is growing, or is this kind of residual 5G? When we look out to the years of 2023 or 2024, might we return to the capital spending levels you had in 2020 of $6 billion?

No, I think with the numbers you provided, what we have is that in 2020, due to the pandemic, the CapEx reduced to $6 billion instead of the planned $8 billion. We have been maintaining an $8 billion CapEx for a long time, possibly since 2018 or 2017. Some years, we invest more in spectrum than infrastructure, and in other years, vice versa. We are doing a lot with fiber to the home, virtualization, and modernizing and digitalizing our equipment. That’s the CapEx we've been discussing, and that's what we have also planned for this year.

And then just one last question, if you don’t mind. If you look at the equipment revenue base, it appears that there are some supply constraints, perhaps, and getting phones to sell to customers. Is that the case? Or are your customers not upgrading their phones? And if it is supply constraints, what's the outlook for that over the course of 2022 to get more supply to sell more phones?

In 2021, we faced problems with the supply of phones due to shortages. There's no doubt that there were shortages worldwide, which we experienced in Mexico and Latin America. I think for the first and second quarters, things are improving. We are receiving more supply now. It’s a bit different because supply is better for high-end handsets, but we are still facing shortages in the mid and low segments. The brands producing handsets indicated that they expect production to normalize in the second half of this year.

Okay. Thank you.

Thank you.

Thank you. Our next question comes from Fred Mendes from Bank of America. Please, Fred, your line is now open.

Hello. Good morning, everyone, and thanks for the call. I had two questions as well. The first one, I see the performance from Telmex was quite strong. Just trying to make sense of the numbers here. According to IFT, they said that around 40% of their connections are already on fiber. Can you double-check this number to see if it makes sense? And do you have something like a target for the number of connections in fiber?

I think as you said, Telmex is doing well and is going to do better. We're putting more fiber to the home in Mexico, increasing the speed, and implementing bundles. But Oscar can provide a better explanation.

Yes, as you mentioned, Telmex has been improving fiber to the home. Last year, we did significant migration from copper to fiber. Currently, we have 52% of our customer base connected with fiber, and we will continue to accelerate that transition. We are also enhancing our enterprise marketing intelligence, which is not only based on connectivity but includes value-added services like cloud services and security. That segment is growing quite well.

Thank you, Daniel. Very clear. If I just double-check, 52% already of the connections are on fiber. And if I may follow up, is there a difference in terms of margins between the clients you have on fiber? I'm assuming you charge a little bit more versus the decline that you have in copper? Thank you.

Yes. The competitive advantage is based on speed. We are increasing speeds while maintaining quality to protect the customer base. We just launched one-gigabit speed, and we will see how the market reacts to this program.

To answer your question, having more customers on fiber is indeed more efficient. It could slightly improve margins depending on the ARPU. The operations are more efficient with fiber than with copper. As we increase fiber connections, we will phase out copper.

Just to complement the answer, I’d like to mention that Oscar referred to the revenue in the corporate segments, which is growing strong. In Mexico, revenues from corporate networks increased by 5.5%, and in Brazil, it’s around 9.6%. Both Mexico and Brazil are seeing strong performance in their corporate networks.

Thank you.

Perfect. Thanks very much, Daniel, Carlos, and Oscar. Very clear.

Thank you. Thank you.

Thank you. Our next question comes from Marcelo Santos from JPMorgan, please. Marcelo, your line is now open.

Hi. Good morning. Thanks for taking my questions. I have two. The first one is on Colombia. Could you please expand a little bit more on the positive performance with accelerating EBITDA despite the increased competitive pressure as the first question? And the second question is on Brazil and Broadband. We see at least from data that America Movil seems to continue to lose broadband subscribers. How do you see this trend going forward? Do you think the new plans will lead to a reversion? What could you talk about that? Thank you.

I'm going to start in Brazil, and Oscar can provide additional details. I think we remain leaders in broadband and ultra-broadband. The market in Brazil is highly competitive with many new entrants offering fiber. We have several initiatives like adding 2 million fiber connections this year and planning for another 3 million. We believe we can grow our broadband segments based on these efforts. We also launched one-gigabit speed options for customers, and we're reworking packages to stay competitive given market changes.

As you said, we are delivering one-gigabit speeds nationwide, and we are deploying fiber in new cities. We've passed close to 4 million homes with fiber and are planning for another 3 million this year. In the market, we are focusing on bundles and fixed-mobile convergence, which we believe adds value to the customer base. The market has changed competitively, but we are optimistic about beginning to see growth again.

As for Colombia, we had an extraordinary quarter. We are performing well in broadband even against new competition. Claro's brand remains strong, and our customer care is excellent. Convergence is important now, and we have great network reliability. We have been expanding our base into four-play services, which supports our growth. Quality and service are paramount for consumers in Colombia, and our performance reflects that.

Perfect. Thank you very much. Very clear.

Thank you.

Thank you. Our next question comes from Gilberto Garcia from Barclays. Please, Gilberto, your line is now open.

Hello, good morning, and thank you for the call. You had a relatively strong performance in prepaid in Mexico and postpaid in Brazil. Can you comment on what is driving the divergence in these two markets?

Well, these are two very different markets. Since the pandemic, people in Mexico have preferred prepaid. Our prepaid platform is excellent, growing significantly with service revenue in prepaid increasing more than 10% in the quarter. In Brazil, postpaid has been performing well, but the economic climate slowed, causing people to spend less there. Our postpaid has been strong, and we've been the leaders in that segment for over two years.

But then, are you being more aggressive in terms of promotions for contract subscribers in Brazil to drive this very strong performance?

In Brazil, the strong performance we see in postpaid isn’t just a recent phenomenon. We’ve been investing consistently in network coverage, and we’re also ensuring we offer good options for phones. We have built a substantial presence in postpaid over the years, and we’re maintaining that.

Understood. Thank you very much, very clear.

Thank you. Our next question comes from Diego Gargao from Goldman Sachs. Please, Diego, your line is now open.

Yes. Thanks. Hello everybody. My first question is on Mexico. Can you help explain who is the buyer? What will the price be for each tower, and the number of towers that would be helpful? Any updates on the pay-TV license? We've seen some articles about rumors that there might be a chance for you to get a pay-TV license in Mexico.

First, regarding the tower spin-off, we have completed all local planning in the different countries. Local tower companies are now operating independently from us. The spin-off at the America Movil level is subject to authorizations from the tax authorities and requires approval from the Mexican Security Commission. We expect to finalize this spin-off around the second quarter of this year. Regarding the towers that Telmex sold, approximately 900 towers have been sold, but we still have more to sell.

The other question was on the pay-TV license, any update would be great.

Yes. The application for the pay-TV license is still pending. It must comply with current regulations. The market is highly concentrated with two dominant players. There is no asymmetric regulation that has been imposed thus far. The competitive landscape indicates that Claro and America Movil could offer a strong alternative.

Very clear. And just on the numbers for the tower transactions.

The tower transaction is expected to generate around $7 billion in revenue.

Okay. Thank you.

Thank you. Our next question comes from Carlos Legarreta from GBM. Please, Carlos, your line is now open.

Hi. Good morning. Thank you for taking the questions. I have two quick questions. You mentioned share buybacks in the last 12 months, you spent around $2 billion, if I'm correct. At your Investor Day, you mentioned a figure of $3 billion. Is that still a number that we should reference? And regarding the competitive environment in Mexico in wireless, you've done well overall, but do you see any space to start increasing prices?

Our distribution plan includes shareholder distributions that encompass dividends, and we expected those to be as high as $3 billion, as we are not deploying all our cash flow for debt reduction anymore. The distributions for last year exceeded that figure, reaching about $3.17 billion.

Regarding the wireless market in Mexico, we aren't looking to increase prices at this time. We're doing well, and we have the preference of our customers. Customers can switch carriers easily, and we provide the best coverage and network quality.

Thank you both for your comments.

Thank you.

Thank you. Our next question comes from Cesar Davanco from Santander. Please, Cesar, your line is now open.

Hello, guys. Thanks for taking my question, and congratulations on your results. My question is regarding Colombia. I understand your explanation regarding the competitive landscape, but I would like to have more insight regarding ARPU since we've seen declines this semester.

I think ARPU is declining a bit due to intense competition. As we provide more data to customers, some choose to lower their plans. However, we maintain strong performance in growing prepaid and postpaid segments.

Do you have any expectations regarding the next quarters?

It's difficult to predict competitors' actions, but we have solid fundamentals across our operations in Colombia and expect to maintain our current trajectory.

Thank you. Very clear.

Thank you. The next question comes from Andres Queijo from Scotia Bank, please. Andres, your line is now open.

Thank you. Good morning. Two questions, please. In 2021, there was an increase in the funding of pension obligations. Can you explain what's behind that increase and if you're expecting a similar level for 2022? The second question is, is it public who the buyer of the towers in Mexico is?

The increase in pension funding has mostly to do with lower rates from last year. There was a shortfall that needed addressing, but this is reversing. As rates go up, the present value of future liabilities should decline again. We don't expect to continue funding at high levels.

I think the buyer was not clear but is identified. Thank you.

Thank you.

The next question comes from Alejandro Tavela from Credit Suisse. Please, Alejandro, your line is now open.

Thanks for taking my question. Most of my questions have been answered. Just two quick questions. First, if the IFT has indicated they expect to conduct a review of asymmetrical measures this year, do you have any ideas on what changes we should expect in regulation? The second question concerns a global acquisition in Brazil – could you share your thoughts on that issue?

Regarding the IFT revisions, it will start in December. All parts of the company are heavily regulated, so we hope to see some favorable regulations.

We recently had approval from the authorities. But I don't know what decision they will reach regarding the acquisition. We need to wait for their conclusion.

Thank you very much.

Thank you.

As a final reminder, if you would like to ask any question, please press star followed by one. Our next question comes from Valentin Mendoza from Actinver. Please, Valentin, your line is now open.

Hi. Good morning, ladies and gentlemen. Thank you for taking my questions, and congratulations on this strong set of results. I have a couple of questions on my side. The first one has to do with Chile. I was wondering if you could share your sense of the competitive landscape there as we continue to see ARPU pressures. Are you still expecting changes with the merger with VTR? The second question is a follow-up on Brazil; some media reports have cited that a competitor has requested regulatory intervention against the acquisition, is there anything to add?

Carlos, do you want to address the last point?

Yes, we’ve read the news. Currently, no regulatory decisions are in effect, and there’s no immediate concern. Approvals depend on our compliance and existing market structures.

In Chile, the competitive landscape is high. We are seeing many fiber providers entering the market and selling broadband. We are focusing on our networks and customers while preparing for the VTR merger approval.

Thank you very much.

Thank you.

We currently have no further questions. I will hand it back to Mr. Daniel Hajj for any final remarks.

Thank you all for the call. Good afternoon, goodbye.

Thank you all.

This concludes today's call. Thank you for joining. You may now disconnect your lines.