Good morning. My name is Candice and I will be your conference operator today. At this time I'd like to welcome everyone to the América Móvil First Quarter 2024 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. Thank you. I would now like to turn the conference call over to Ms. Daniela Lecuona, Head of Investor Relations.

Thank you so much. Good morning everyone. We're very excited to have you today on the line discussing our financial and operating results for the quarter. We have Mr. Daniel Hajj, our CEO, Mr. Carlos Garcia Moreno, CFO, and Mr. Oscar Von Hauske, COO.

Good morning. Welcome to the América Móvil First Quarter Financial and Operating Report. And Carlos is going to make a summary of the report. Carlos.

Thank you, Daniel. Good morning, everyone. Thanks for being on the call. Well, the strong rally in interest rates that took place in the latter part of 2023 came to an end in the first quarter. Strong employment readings and other indications of a still vibrant economy kept pushing back the timing of expected reductions by the Fed of its discount rate and cutting back the expected number of such reductions to be had this year. The Mexican peso, which had depreciated slightly against the Dollar at the beginning of the year, reacted to the interest rate increases and resumed its appreciating trend, gaining ground against the dollar and all other currencies in our region of operations. In the first quarter, we added 1.5 million wireless subscribers, of which 1.3 million were postpaid clients, including Brazil with 555,000, Austria with 260,000, Colombia with 126,000, and Mexico with 105,000. On our prepaid platform, we gained 263,000 subscribers in the period. Colombia added 378,000, followed by Argentina with 226,000, and Brazil with 146,000. On the other hand, we disconnected 584,000 subscribers in Central America, mostly due to a cybersecurity incident that affected our ability to activate clients. On the fixed-line segment, we connected 562,000 new broadband accesses, the best performance in four years. Mexico was the main contributor with 325,000 clients, followed by Brazil with 92,000 and Colombia with 23,000. Our postpaid base increased 6.4% year-on-year, while fixed broadband accesses were up 4.8%. We continue to lose PayTV clients and fixed post lines, a trend we have seen for quite some time. Our first-quarter revenue totaled MXN203 billion pesos, with service revenue expanding 1.1% to MXN171 billion, and other revenue declining 71.7% to MXN2.4 billion. The latter figure reflects extraordinary revenue in the first quarter of 2023 due to the sale of towers in the Dominican Republic and Peru; this quarter there were practically no tower sales. At constant exchange rates, service revenue increased 5%, up from 3.7% in the prior quarter. We saw an acceleration of service revenue growth on both the fixed-line and mobile platforms, with improvements sequentially from 3% to 5.1% on the fixed-line side and from 4.2% to 4.9% on the mobile side. Most of our main markets, including Mexico and Brazil, saw service revenue growth exceed inflation for the period, with Austria and Colombia being the principal markets where revenue did not increase in real terms. Mexico was the primary driver behind the fixed-line revenue expansion, which grew from 5.9% in the prior quarter to 9.7% in the current period, the fastest rate of growth in years. This was followed by Peru, where the revenue growth rate nearly doubled sequentially from 4.4% to 8%. Brazil reported a 1% increase, its best showing in seven years, as the headwinds from PayTV over the last five years gave way to solid broadband revenue growth. Within the fixed-line platform, corporate network revenue, which represents 21% of fixed-line service revenue, was the most dynamic business line, growing 13.5% year-on-year, followed by broadband services that increased 6.4%. On the mobile platform, Mexico, Brazil, and Peru saw the most significant sequential revenue growth, going from 4.5% to 5.8% in Mexico, from 7.1% to 8.5% in Brazil, and from 2.6% to 4.9% in Peru. Colombia returned to positive mobile revenue growth after two quarters of declines. EBITDA came in at MXN80.6 billion, which was 2.6% lower than the year before due to the extraordinary tower sales mentioned earlier, which affected the annual comparison. At constant exchange rates and adjusting for the tower sales, EBITDA increased 7.5% year-on-year, its fastest pace in eight quarters, buoyed by strong subscriber and revenue growth on both platforms and consistent control over costs and expenses. Our operating income reached MXN4.8 billion, a 7.6% decline from the year before. Correcting for the tower sales, it was up 2.5% in Mexican pesos and 13% at constant exchange rates. Our comprehensive financing cost totaled MXN13 billion in the first quarter, compared to close to zero a year earlier due to strong foreign exchange gains that amounted to MXN13.7 billion then. This year, we instead booked MXN1.7 billion in foreign exchange losses. We reported a net profit of MXN13.5 billion, equivalent to 22 pesos cents per share and 25 dollars cents per ADR. The difference compared to the previous year is mostly explained by the aforementioned tower sales and the change in foreign exchange gains/losses. In cash flow terms, we obtained net financing of MXN17.4 billion, which helped us fund our capital expenditures of MXN21.8 billion and covered MXN4.8 billion in share buybacks and MXN6.5 billion pesos in labor obligations. In the first part of every year, we face working capital requirements that need to be financed. In March, we also have to pay taxes on spectrum usage and various telecom-related taxes in several countries. These taxes and duties are mostly paid in March, which is an important amount we don't see every quarter. In this particular quarter, they added up to nearly MXN13 billion. We have mentioned several times that in March, we must make these payments, which are nearly MXN13 billion this year. Our first-quarter share buybacks, which were MXN4.8 billion, were 2.5 times greater than those of the year earlier and 9% greater than those of the first quarter of 2022. In fact, this quarter we acquired three times more shares than in the same quarter of last year. In terms of leverage, as you can see in the slide, it has been very flat. We have remained nearly flat at 1.5 times. Net debt to EBITDA is expected to remain within the range we have mentioned, which is 1.3 times to 1.5 times.

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

Thank you. Our first question comes from Vitor Tomita of Goldman Sachs. Your line is now open. Please go ahead.

Hello all and thank you very much for taking our questions. We would have two questions from our side. The first one is on the commercial strategy for Mexico broadband. If you could give us an update on that commercial strategy following your investments in fiber, amid the swift improvement in volume trends there and also your policy of not raising prices in Mexico. And our second question would be on the very solid EBITDA margin performance you saw in Mexico. If you could give us some more color on the drivers supporting that margin and whether this 42% margin level could be sustainable in coming quarters. Thank you very much.

Well, talking about Mexico, first in the peak size, I think all the big investments in fiber that we have been making for the last three years are showing results. What we put in the report is that we have around 17 million fiber households passed, and 80% of our customers are already with fiber. So it greatly helps to reduce churn, and the customers experience high speeds with the service. The second factor is that we have attractive packages. We haven't increased prices, and we have very compelling offers in the market along with bundling options. We're also offering streaming services and higher speeds. Our operations around customer experience are improving every day on the fixed side. Oscar, I don't know if you want to add something.

No, no, you already covered it.

I think that it's working, and we have seen the best growth in broadband subscribers this quarter with more than 300,000. So it's successful—less churn, good service, good speed, fiber, new packages. It’s all contributing positively for our customers. Regarding the margin in Mexico, on the wireless side, our 5G network is performing well. We already have 125 cities with 5G coverage, and the quality is impressive. We have also not raised prices on the wireless side, and we're seeing that customers are opting for new plans, which are leading to better ARPU, more data, and it’s working extremely well. All the investments we’re making in 5G are paying off significantly in Mexico.

Very clear. Thank you very much.

Thank you, Vitor.

Thank you. Your next question comes from the line of Leonardo Olmos of UBS. Your line is open. Please go ahead.

Hello, can you hear me well?

Yes.

Okay. Good morning, everyone. First of all, congrats on the revenue performance. We saw a few records in both mobile and fixed-line. Glad to see it. But also, in terms of my questions on CapEx, we noticed Q1 had a low figure. Of course, there's seasonality. Can you discuss a little bit how to expect seasonality of CapEx throughout 2024?

Well, as we mentioned last call, we have a three-year plan in CapEx, and for this year, we expect to invest around $7.1 billion. We are on track with that investment. We've typically invested a bit more in previous years, and that has allowed us to enhance our services with fiber in Mexico, 5G in other countries, data centers, and corporate services applications. We think that we are okay with the investments we're making this year. For the next couple of years, we're still reviewing our future plans.

Okay, this is good news, thank you very much. Have a great day.

Your next question comes from the line of Walter Piecyk of LightShed. Your line is open. Please go ahead.

Yeah, hi. This is Joe for Walt. Thanks for taking the question. You discussed Mexico and the dynamics driving growth there. What's happening in the other markets that is giving you the ability to accelerate revenue growth? I know you mentioned that revenue exceeded inflation in most of the markets. Is it just bundling? Are there price increases available there?

What we're doing in Mexico is exactly what we're doing in other markets. We're investing in 5G, improving our plans, increasing ARPUs, and expanding fiber. In some markets, we increase prices, while in others, we do not increase prices depending on the competition and other factors. In prepaid, we currently aren’t increasing prices in any market, but it's a mix of many factors that contribute to our success.

As we mentioned before, we are also focused on what we call digital services. Within these digital services, we include cybersecurity, cloud, network management. The cloud services have been very well received in the market, and we're transitioning from MPLS networks to SD-WAN, which has also proven successful in the B2B segment.

We just launched a new data center in Peru. We haven't had a data center there before, and it was completed in January. So we're also going to focus on corporate services in that market as well. Across all our markets, we are enhancing corporate services, leading to better network quality and customer service, which results in better client retention. We're seeing improvements in Mexico, Brazil, Colombia, Peru, and Central America. Austria is also performing well.

What's also important to note is that Brazil has changed significantly. It used to face significant headwinds from PayTV, but now broadband has surpassed PayTV in revenue generation, leading to continued growth in the fixed-line segment.

Last year, we reached around 14 million fiber home-passes in Brazil, helping us sell and improve customer experience.

Hello, good morning. Can you hear me?

Yes, yes.

Okay, thank you very much. Two questions please. The first one on Brazil. We saw that ARPU grew around 3%. However, we did see a lot of the base migrating to a post-paid plan within the Brazilian base. We were wondering why didn't the ARPU grow a little bit better or faster? What's the explanation behind that? And secondly, in Mexico broadband, you mentioned 17 million home-passes. How far can that number go? Or are we reaching a capacity limit in fiber?

In Mexico, we already have 17 million fiber home-passes. We're evaluating where it makes sense to expand further. There is still significant capacity within these 17 million passes, so we can penetrate more households. In Brazil, regarding ARPU growth, we are indeed growing in the post-paid sector. While we're seeing an 8% growth in the post-paid base, some customers are moving to higher plans while others are on lower plans. Overall, Brazil is performing well. Our strategy is to transition more prepaid customers to post-paid while enhancing their plans. In the future, with our 5G investments and better handsets, we expect improvement in ARPU.

Thank you so much.

Hello, good morning everyone and thanks for the call. I have two questions here. The first one on Telmex and you know, special net ads results are very, very strong. Just trying to understand this dynamic. Obviously, as you pass through your fiber, you know, 80% of the network already on fiber, I think that explains a lot, but trying to understand the profile of these clients, if you're basically getting new clients or if you're able to get from other operators. Basically trying to understand the dynamics behind such strong results would be my first question. The second one is on Colombia; there was some news that you expect to do $1 billion investment, CapEx, this year, correct me if I'm wrong. So just trying to understand your expectations there. It seems to still be a competitive market, but one of the players is facing some challenges. So just trying to understand the rationale, if this is true, and the strategy for Colombia for 2024. Thank you.

But first in Colombia, I don't have the exact disclosure of what's going to be the CapEx in each country. If you can talk to Daniela, we can review that. In this, I don't know if they are accounting for the frequencies that we already renewed earlier this year. Overall, in CapEx, we're committed to the $7.1 billion for this year.

Yes. As for Telmex, we have made significant migrations to fiber. This has helped us to reduce churn, leading to strong net additions. The market itself is growing, and we are capturing share from our competitors. Our new packages include streaming video and offer symmetrical speed, which has resonated well in the market.

Hi, thank you for taking our question. It's two. The first one is, this quarter we saw a large increase in lease-related debt. Just wondering if you could give us some color on the drivers. And then the second one is on the outlook for Chile. The JV ownership is up for review soon and you also had a deal with OnNet. On the latter we were wondering if it's only for expansion to replace the existing network and if you have any volume commitments with KKR. Thank you.

Well, we have an agreement with OnNet to utilize their fiber. We believe it makes strategic sense to partner with them. On our end, where we have fiber, we'll use it, and in areas where we don’t, we will rely on OnNet's fiber. What more can we share about Chile?

Yes, on the JV ownership review.

Yes, on the JV ownership, as we stated, we have commitments to inject investment, and they have until the end of July to match our contribution. We don’t know what they will do, but we have contingencies in place for any scenario.

And regarding the lease-related debt, what was the question again?

Yes, we saw a large increase in lease-related debt from the end of 2023 to now. Non-current liabilities, for example, lease-related debt increased from MXN100 billion to MXN160 billion. So just wondering what was the driver?

I don't know. There might be some ASEC moves. We don’t have any new towers or similar transactions this year, but let’s review it.

Let’s review that and get back to you.

Your next question comes from the line of Alejandro Azar of GBM. Your lines are open. Please go ahead.

Hi everyone. Thank you for taking my questions. Just a quick one. What can you tell us about the competitive landscape in Mexico, in both markets, wireless and broadband? I mean, in wireless with the new entrant Byte having 2 million active users, how should we think about this new player? Are they unlocking new clients because we're not seeing churn in América Móvil? And on the broadband, what are you seeing regarding your competitors? Thank you.

Mexico is a very competitive market, both in fixed and wireless. In terms of new players, they are very aggressive with major promotions. We don’t know how sustainable these promotions are in the long term, and historical patterns show that once they stop, customers may not continue with them. Nonetheless, we have good customer service, strong coverage, and competitive offerings, which should retain clients. Additionally, broadband's competitive landscape is considerable. Despite not increasing prices, we are enhancing our fiber infrastructure and offering better service to regain market share.

Thank you, Daniel. That was very clear. And one more, if I may. On the KPN convertible bond, did you have to spend money to cover the full position, or was it enough with the shares that AMX had on their balance sheet?

We basically delivered the shares we had in exchange for the bonds. That was it.

Thank you, Carlos.

Your next question comes from the line of Gabriela Chaparro of BCP Securities. Your line is open. Please go ahead.

Hi. Thank you for taking my question. Part of my question has been already answered, but I was wondering if you can give us more color on your plans in Chile for mobile, given the highly competitive market, and following that one, if Movil has filed for Chapter 11. Thank you.

Regarding the recent filing for Chapter 11, we're unsure of its implications, but we are certainly investing in a better network with quality 5G. We hope to compete effectively and possibly gain more market share. The market is undergoing consolidation, so it's an evolving landscape.

Hi, thanks very much for giving me the opportunity. A couple of questions please. The first on Brazil's fixed business. Just to check please, we saw a nice growth in the quarter. I don't think you called out the PayTV component, but is it fair to say that we are at a stage where the PayTV business is small enough that it's no longer a headwind for the overall Brazilian fixed business and therefore should we expect to see ongoing growth from broadband? Any color around that would be helpful. And then secondly, on the corporate networks business that's performed super well this quarter. I wonder what visibility you have on the revenues for the corporate networks business, and secondly what kind of implications does it have for the margin profile of the business. I would imagine it's a lower margin business than the overall business, but as that scales, how much of an impact will it have on margins?

Yes, as I mentioned earlier, the revenues from PayTV in Brazil are being felt less and less, allowing us to maintain positive growth in fixed. Previously, the revenue from PayTV was higher than that from broadband, but the situation has now reversed. Revenue from broadband is more than double that of PayTV, and this trend is continuing.

And the corporate?

For corporate networks, we are closely tracking revenues, and we have established goals and budgets. We only engage in projects where we anticipate a satisfactory payback. Some revenue comes from corporate partnerships involving software-as-a-service, which means minimal capital expenditure from our side, resulting in excellent free cash flow due to revenue-sharing models.

As there are no additional questions at this time, I'd like to hand the conference back over to Daniela Lecuona for closing remarks.

Thank you so much, everyone, for joining us in this call. I want to remind you that we're hosting an investor day on May 7th. The event will be held at the New York Stock Exchange. Most of you have probably received an invitation. For those of you who have not, please email us. We'll be very, very happy to see you there. And yeah, if you have any questions about the event, please contact Stephanie, Anna, or myself.

Okay. Thank you.

Thank you.

This concludes today’s conference call. You may now disconnect your line.