Good morning. My name is Kiki, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil Second 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. Now, I will turn the call over to Ms. Daniela Lecuona, Head of Investor Relations. Daniela, please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today to discuss our second quarter results. We have on the line Mr. Daniel Hajj, our CEO; Mr. Carlos García Moreno, CFO; and Mr. Oscar von Hauske, COO.

Thank you, Daniela. Welcome everyone to América Móvil's second quarter of 2024 financial and operating report. Carlos is going to make a summary of the results. Hi, Carlos, you can.

Hello. Thank you, Daniel. Good morning, everyone. Well, the second quarter of the year got started with an important surge in long-dated U.S. Treasury yields with those in the 10-year tenor advancing 50 basis points in April on the back of unexpectedly strong employment figures. They remained volatile throughout the quarter, closing June at 4.4%, practically the mid-point of the range in which they traded throughout the period. The Mexican peso, which had withstood well the U.S. interest rate volatility, weakened sharply following the Mexican presidential elections on June 2nd. After months of appreciating vis-a-vis, not only the U.S. dollar, but also practically all the currencies in our region of operation, the Mexican peso was to depreciate against all. We added in the quarter 2.4 million subscribers, of which 1.8 million were postpaid, with Brazil contributing roughly half, Colombia 183,000, and Mexico 99,000. The numbers you see for Austria also include machine-to-machine. In our prepaid platform, we registered 599,000 net additions, with Colombia gaining 261,000 subscribers, followed by Argentina with 191,000. In the fixed-line segment, we obtained 376,000 broadband accesses, including 148,000 in Mexico and approximately 63,000 each in Argentina and Brazil. Voice lines and PayTV units registered losses in the period, and were down 63,000 and 56,000, respectively. Our postpaid base increased 6% year-on-year, with prepaid expanding 1.6% and fixed broadband accesses 4.9%. Our second quarter revenue, MXN206 billion, was up 1.5% from a year before, with service revenue expanding 3.5% and equipment revenue falling 9.8%. At constant exchange rates, service revenue increased 4.7% year-on-year, practically the same pace it had maintained the prior quarter, but with slightly faster mobile revenue growth and somewhat slower fixed-line revenue growth. And that's helped to bring about a 6.9% increase in EBITDA. The greater operating leverage stemming from positive revenue growth on both platforms has been the main driver of EBITDA growth, obviously, coupled with strong cost controls. Mobile service revenue accelerated to a 5.1% pace from 4.9% in the preceding quarter on the back of stronger postpaid revenue growth, as prepaid revenue stayed on pace. On the fixed-line platform, service revenue growth decelerated to a 4.1% pace from 5.1% the prior quarter, basically on account of corporate networks revenue, which had seen a big jump then. Broadband revenue growth continued to improve, reaching 7.9%, up from 6.4% in the first quarter and corporate networks revenue increased 7.2% after having seen a 13% jump in the prior quarter on account of some extraordinary contracts that have been obtained. It is important to note that fixed broadband revenue consolidated has come to be nearly 25% higher than the combined PayTV and fixed-voice revenue. EBITDA totaled MXN83.1 billion in the quarter, which represented a 5.6% increase in Mexican peso terms from the year-earlier quarter and 6.9% at constant exchange rates, as seen before. The consolidated EBITDA margin reached 40.4% in the quarter, which was a 1.5 percentage points improvement from a year before, again on great operating leverage and solid cost controls. Our operating profit came in at MXN46 billion, having risen 12.9% from the year-earlier quarter, but our comprehensive financing costs reached MXN40 billion on account of foreign exchange losses resulting mainly from the depreciation of the Mexican peso. Because of this, we ended up posting a net loss of MXN1 billion in the quarter. I have to say that at the end of May, prior to depreciation of the peso, two-thirds of our net debt was Mexican peso based. In cash flow terms, our net debt increased by MXN14.3 billion and together with MXN67 billion in operating cash flow, allowed us to cover CapEx, totaling MXN56 billion, share buybacks in the amount of MXN12.5 billion, and labor obligations for a similar amount in the six months of June. Now, our free cash flow was MXN10 billion greater than that of the first half of 2023, partly because of lower capital expenditures, which were down MXN8 billion. Our share buybacks in the period were four times those registered a year before, going from MXN3 billion in the first half of 2023 to MXN12.5 billion in the first half of 2024. Our leverage ratio came down to 1.38 times EBITDA from 1.5 times the prior quarter. That's the summary, and I will turn the floor back to Daniel for the Q&A. Thank you.

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

Thank you. Your first question comes from the line of Leonardo Olmos from UBS. Leonardo, your line is now open. Please go ahead.

Good morning. Thank you for taking our questions. So, we have two. The first is, can you break down the FX losses in this quarter? I know there is unusual behavior, but considering what you just said about two-thirds of net debt being peso-based, how should we forecast this line, the FX losses in correlation with the Mexican peso? That's the first question. The second one, completely unrelated, across LatAm, we're seeing prepaid decelerating not only in AMX, but its competitors as well. Do you expect prepaid revenue to return to growth at some point? Thank you.

Well, Carlos can start with it.

Okay. On the FX side, as I said, two-thirds of the exposure, the net exposure, are in pesos. But the net exposure you get after using derivatives and the impact of derivatives is different from the results from the one that you get from the actual FX movements or FX gains or losses on the underlying debt. So, there are differences there. We can guide you through them, but it's not easy to predict how those movements can take place. Then, there's a portion of our own debt, which has to do with intercompany transactions, and they basically wash all of them, we retain a certain exposure to real. And in this quarter, we had the depreciation of the peso, but also with real. And that's what resulted in this. But there's a little bit of noise in the results associated with the underlying depreciation.

Well, on the second question, on the prepaid deceleration, I think prepaid is related and in each country is a little bit different, but what we can see in all the countries is that some prepaid customers are moving to postpaid. They're getting better plans as we move to 5G, and giving more data and better handsets. So, that's one thing. The second, very important, is depending on the economy of the country, so prepaid is a lot related to how the economies are doing and the spending of the people. So, that's more or less what you have been seeing all around Latin America. People moving from prepaid to postpaid, depending on the economies we can see if they're going to spend more or not, along with some promotions in some countries that we are seeing all around. So, that's more or less.

And just to go back on the FX question, there is very comprehensive information that is sent over to the Mexican Bolsa, is available to all the analysts and investors, and you have all the details of the underlying debt positions and of the underlying derivatives position.

Very good. Thank you very much, Daniel.

Thank you.

Thank you. The next question comes from Walter Piecyk. Walter, your line is now open.

Thanks. I guess, first question, just in general on ARPU growth. I know I ask this every quarter, but just always want to check in on it. It seems like it's sustaining. And again, I'm primarily interested in Mexico, Brazil, and Colombia. When you look out over '24 and '25, do you see the trends of usage or perhaps maybe price alterations continuing to sustain that growth in the average revenue per user?

Well, we've been seeing that for the last two years, since we've been putting 5G in, and customers are using more, doing more applications, they are moving to better plans. So, that's more or less what the ARPU is moving and increasing because of two things. Customers are moving to a better plan, so they are a little bit more of the rent, with more for more, more data, but you pay a little bit more, and then I give you more. So, that's one thing. And the second is you stay in your plan, but you are consuming more. We have more than 10 million customers on 5G. We have developed these networks all around, and people are using more data. So, that's more or less what we have been seeing. More things that people are doing online, they are using their phones more, and that's what is happening. I hope and I think that for '25 and '26, we're going to see that trend continue.

Okay. Thank you.

And Walter, I think the average quarterly growth in ARPU in Mexico is 3.3% for the quarter, that's for the last five quarters. And in Brazil, it should be in the range of 6%.

I'm sorry, say again, that you think it should be in the range of 6% going forward?

No, it's what we had for the last five quarters.

Sure. Regarding equipment revenue, it didn't appear as strong. You report churn, so we can assess the gross additions. It doesn't seem like new additions are affecting that. It could be related to other equipment revenue, upgrades, or various accessories sold in stores. Could you provide insight into what you're observing with phone purchases? Do you think this might change with the launch of the new AI services on the iPhone, Samsung, and other devices?

What you're seeing, let's say, equipment revenue, where you see that we have a decline, a big decline is in Mexico, 14%. It's really because we are only reducing 5% in units. The rest is that people are buying cheaper phones. So, the phones have been reducing prices. We used to have 5G phones at $300, $400; today we have 5G phones at $200. So, people are buying phones, cheaper phones with the same good quality. So, we have 5% decrease in units, but a 14% decrease in equipment revenue in Mexico. So that's more or less what the trend is and what is happening right now.

Dan, do you think that changes?

People are choosing the better phone...

Understood. But going forward, there is a lot of hype and interest in what Apple has recently announced. And obviously, Samsung has also added some AI features. Do you think that trend you saw this quarter will reverse and do something different at the end of this year and into 2025?

Well, I think AI is going to be very important. It's what Samsung is doing in their phones because they already have AI applications in some phones. I think that will be the case but at the end of the day, I think the AI application, in my view, is going to be available in all phones, not only the high-end phones, the mid-range phones are going to have this application as well. So that's the trend. Everything starts at the high end and moves down to the mid and low end. So, I think yes, the trend at the beginning will make people buy more of the high-end phones as the applications move to other phones, then people will choose the best phone at the best price.

Yeah. Thank you.

Thank you.

Thank you. The next question we've got is from Vitor Tomita from Goldman Sachs. Vitor, your line is now open. Please go ahead.

Hello, good morning, and thanks for taking my questions. I have two main questions from my side. The first one is, if you could give an update on how you were thinking about your share buyback strategy for the second half of the year, following what we understand, it was an acceleration in the second quarter? And my second question would be on Chile. If you could give any additional color on the competitive environments there? I noticed you've cited in the earnings release that client base in mobile and fixed have been growing over the last 12 months. So, wanted to understand better how you are thinking about the commercial approach and competition in there. Thank you.

Where? In Chile? Okay. On the buybacks.

On the buybacks, I would say we have mentioned that we typically schedule the buybacks to align more closely with our cash flow. Our cash flow is highly cyclical and seasonal, with the first half of the year needing substantial working capital, which we recoup in the second half of the year. This is why we make dividend payments in the second half. Generally, the distributions will closely match the free cash available to the company, unless we divert funds for mergers and acquisitions, which is not going to happen, and unless we need additional capital expenditures, which is also not anticipated.

Yes. On Chile, everyone knows it is a challenging and highly competitive market. We started in 2022 with Liberty, outlining a three-year plan focused on synergies, cost reductions, integrations, and improved infrastructure. We successfully closed a significant deal a year ago that enhanced our 5G, 4G, and 3G coverage. We are expanding our fiber network across the country and signed a capacity agreement with OneNet to transition part of our subscribers to fiber. We are on track with our three-year plan, which we will reassess by the end of 2025 to 2026. Overall, we are pleased with the progress. We have brought in new management and integrated it since the beginning. Although it requires time and effort, similar to our initiatives in Brazil and other countries, we’re confident in our advancements. Chile remains competitive, with four mobile operators and additional players in the fixed line market. Therefore, we are optimistic about the future in Chile.

Very clear. Thank you very much.

Thank you.

Thank you. The next question comes from Phani Kanumuri from HSBC. Phani, your line is now open.

Thank you for taking my questions. My first question is regarding Mexico's mobile revenues. It has decelerated from 5.8% in 1Q to 4% in 2Q. Is there any specific reason for this trend? And how do you expect this to trend going forward? My second question is regarding further extension on Chile. Do you have any plans to undertake M&A in Chile? You have stated in your Capital Markets Day that you don't have any major M&A plans, but with Chile's consolidation, do you see plans for M&A in Chile? Thank you.

In Chile, WOM is undergoing Chapter 11 proceedings, and while we are open to exploring alternatives, we are currently focused on improving synergies and implementing new infrastructure, including fiber, 5G, and expanding our capacity and coverage. In Mexico, revenue growth is slowing, but we are performing well in 5G, being the only company with a substantial 5G network in terms of coverage and capacity. Many of our subscribers are upgrading to 5G plans, which results in a favorable ARPU increase. We haven't raised prices across any of our segments; rather, the improvement in ARPU comes from moving to higher plans or increased usage. There is significant competition and ongoing promotions, and while we cannot predict future developments in this area, we are well-prepared to compete with a solid foundation, effective distribution networks, and high-quality customer care.

Thank you. Very clear.

Thank you. The next question comes from Lucca Brendim from Bank of America. Lucca, your line is now open.

Good morning, everyone. Thank you for taking my questions. I have two from my side here. The first one, in Colombia, we saw some developments from your main competitors in recent quarters. And I wanted to know if this is already reflecting in some way in the competitive environment if you're already seeing some changes in it? And how do you expect this market to behave going forward? And then, second, on Mexico's fixed business, can you give us more color on how you're seeing competition? You have not raised prices in Telmex, but is there room for price hikes in the future in the coming quarters or years? So, if you could give us some color on that as well? Thank you.

Well, in Colombia, what happened? I think, in Colombia, two years ago, we had a new entrant, WOM; very aggressive, very aggressive plans. So, everybody had to compete in the market. This competition reduced growth and ARPU because if you give more data, then some people prefer to reduce the plan rather than increase it. It was a very aggressive entrance by WOM, but we can continue to compete. We are increasing 5G; 5G is attracting customers. We have grown more than 100,000 customers in postpaid in Chile this quarter. So, we're starting to perform better and we are confident. We have a strong base in Chile, good distribution, many stores, and good network coverage. So, I think we can see more improvements, and I hope we can maintain this trend for the rest of the year. So, that’s our expectation. In Mexico, regarding fixed, Oscar can provide some insights.

Regarding the fixed business, we're not planning to increase prices at this moment, so we're going to stay with these prices, and we're seeing growth in broadband and corporate services. Many of our upgrades have already moved to fiber, and consumers are generally satisfied with the service.

Very clear. Thank you.

Thanks.

Thank you. The next question comes from Carlos Legarreta from Itau. Carlos, your line is now open.

Yes, thank you. Good morning. I have two questions. The first is about the net additions in Mexico's fixed broadband. I'm curious if this growth is primarily due to existing customers transitioning from copper to fiber or if you are gaining new customers as well. Perhaps Oscar can address this. For my second question regarding Chile, I appreciate the clarity of the information you've provided, but I would like to know if there are any contributions you need to make. Now that you'll control the company after the debt conversion, I had understood that an equity injection was necessary for that company, and it seemed significant. Additionally, what are the future plans for equity or CapEx for the Chilean subsidiary? Thank you.

Well, Oscar can talk a little bit about Mexico, but just to clarify, of the 150,000 net adds that we have, many are new subscribers. So, while we are migrating our subscribers from copper to fiber, 150,000 are indeed new customers on our network.

You are correct. Migration does not count as net adds, so all net adds are new customers. The migration is counted separately, and 84% of the customer base is already on fiber.

We have successfully migrated a lot of our customers from copper to fiber.

We've been working on providing bundles of streaming video along with the customers, and it has been very well received in the market.

And regarding Chile, since the beginning, when we did the merge, we made a plan that included cash contributions to the company. We have to inject capital, and that's part of our plan. We decided to do agreements with Liberty to contribute cash for CapEx and part of the debt that we initially contributed, which will now be viewed as equity in Chile. That's what we decided from the beginning. Unfortunately, Liberty did not execute their part of these plans, but we remain comfortable with the financial position of the company by the end of this year. The company will be financially solid, and our operations will be robust, with our CapEx and networks well supported.

Going forward, we don't expect any major cash injections into Chile. I think the CapEx is going to be almost fully funded by their own EBITDA. So, it's going to be practically self-sufficient next year.

I think you'll observe this capitalization agreement for the company, and by the end of '24, we're going to have the company fully capitalized with all investments needed for a strong infrastructure, capacity, and quality.

Thank you. That's super clear. I appreciate it.

Thank you.

Thank you. The next question comes from Daniel Federle from Bradesco BBI. Daniel, your line is now open.

Thank you. The first one is a follow-up on the Mexico broadband business. RGU net additions were good in the second quarter, but significantly lower versus the first quarter. So, my question is, what has changed in the market from the first quarter to the second? Which level is like the sustainable level going forward? And the second question is related to Brazil. Brazil was a very strong region, especially in the mobile front. The company has been presenting like an acceleration in mobile services revenue growth. My question is, do you see room for further acceleration in the upcoming quarters? And I was wondering if maybe like growth in the second quarter could have been helped by any kind of mismatch in terms of the timing of price increases. I don't know if you are like increasing prices earlier this year versus last year and that has helped out. That's my question.

Sorry, the first question was on fixed broadband in Mexico, but the second question, which country are you referencing?

Exactly. The first question is regarding Mexico RGUs, that were good, but lower than in the first quarter. What has changed from one quarter to the next? And the second is related to Brazil because mobile services revenue growth has been accelerating. So I'm asking if you see room for further acceleration? And if the second quarter could have been helped by any kind of mismatch in terms of the timing of price increases, like increasing prices earlier this year than last year?

In Brazil, I think we had a very good quarter in terms of revenue and mobile revenue. Also, in fixed revenue, we have been increasing. I think we increased the revenue in Brazil. We've been seeing growth in broadband net adds and decreased losses in TV and fixed revenues as well. Overall, in Brazil, we have good increases, but there is still a lot of competition. Brazil is quite large. Some states showcase more promotions than others, but overall, we have controlled costs well, leading to increased EBITDA growth more than revenue growth. All synergies, investments, and our digital strategies have been paying off in terms of managing costs. So, I think in mobile, we have been experiencing growth. We are expecting sustained growth moving forward, but we note that competition will remain in place.

In Mexico, we cannot specify the exact reason behind the decline in net adds; however, we believe productivity declines resulted from weather conditions affecting installations, and we saw a slight increase in churn in May and June. We believe those issues should be resolved in the third quarter. However, we're confident that we will see improved net adds going forward.

What we see overall is that even if one quarter shows fluctuations, we anticipate stronger overall performance for the year compared to last year.

Thank you. Very clear.

Thank you. The next question comes from Alejandro Lavin from Santander. Alejandro, your line is now open.

Thank you. Good morning, everyone. Thank you for taking my question. I have a couple of quick questions. First of all, on M&A, I mean, you mentioned that you're always open to opportunities. So, I'm wondering what kind of geographies or assets would you be looking at? Number two, it's more of a longer-term question. I mean, we hear a lot about artificial intelligence and all the possibilities that this might enable. So, what are your thoughts on this megatrend? And how do you think América Móvil can position to benefit from this megatrend? Thank you.

Hello, Alejandro. I think that what we have said is that we don't expect any M&A to take place this year, that's what we said in our Investor Day. I think there was a recent question on whether the new environment in Chile would lead to any. We only know that there is this issue with Chapter 11, which WOM has filed for, but we don't expect to engage in any M&A as of now.

Regarding the second question on the megatrend, I think it's crucial. Artificial intelligence is something we already have in mind, but it's going to take time for full implementation in the company. We are focusing on digitalizing all processes, working on data, and implementing AI to become more efficient, understand customers better, save costs, and reduce energy consumption. There are multiple applications for AI, and we’re preparing to embrace these megatrends to enhance efficiency in our organization. However, it won't be an immediate shift; we are actively preparing our company for these advancements.

Okay, understood. Thanks a lot.

Thank you very much.

Thank you. The next question comes from Juan Cruz from Morgan Stanley. Juan, your line is now open.

Thank you, and good morning. And I apologize if this was already answered. I joined late, so my apologies. Going back to the Chilean JV, I just wanted to know now that América Móvil is assuming ClaroVTR if there is going to be disclosure on the operations and financials of the JV going forward. That's number one. And number two, given that VTR had bonds outstanding, what are the plans with those bonds? What is the company going to do with those, if anything, as a result of the JV's consolidation? That's it. Thank you.

I think that when we consolidate the company, we will present similar information for Chile, as we do for our other countries.

Yes, once we consolidate, the bonds will remain outstanding as they have been, and they will be serviced as any other debt of América Móvil.

Okay, got you. But there is no plan to either refinance those for the time being or do anything with them?

No plans.

Thank you.

Thank you. We currently have no further questions. So, I will hand back to Mr. Daniel Hajj for final remarks.

I just want to thank everyone for being on the call. And Carlos, Oscar, and Daniela, thank you very much. Bye-bye.

Thank you all.

Bye-bye.

This concludes today's conference call. You may now disconnect.