America Movil Sab De CV (AMX) Q4 2025 Earnings Call Transcript

Good morning. My name is Hillary, and I will be your conference operator today. At this time, I would like to welcome everyone to the America Mobile 4th Quarter 2025 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. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star again. I will now turn the call over to Ms. Daniela Lacona, Head of Investor Relations.

Thank you so much. Good morning, everyone. Thank you for joining us today to discuss our fourth quarter results. We have today on the line Mr. Daniel Hash, CEO, Mr. Oscar Ronjauzke, CEO, and Mr. Carlos Garcia Moreno, CFO. Thank you for joining.

Thank you, Daniela. Welcome, everybody, to America Mobile fourth quarter 2025 report. Carlos is going to make us a summary of the results, Carlos.

Thank you, Daniela. Good morning, everyone. Well, the U.S. government shutdown in effect through the middle of the fourth quarter ended of raising uncertainty about the state of economic activity in the U.S. Not only did it have a direct impact on employment, but on account of the shutdown, several economic indicators generated by the government agencies failed to be released at all. On December 10th, less than a month after the shutdown ended, and with still incomplete economic data, the Fed reduced the policy rate by 25 basis points in the absence of strong inflation pressures and the appearance of a softening economy. The dollar depreciated versus practically all the currencies in our region of operations in the quarter, except for the Brazilian real, the Argentinian peso, but it declined 2.3% versus the Mexican peso, 3.7% versus the Colombian peso, and 5.7% versus the Chilean peso. Remaining practically flat versus the euro in the quarter. Well, we added 2.5 million wireless subscribers in the quarter, 2.8 million post-pet net gains, and 298,000 prepaid losses, and ended up in December with 331 million wireless subscribers. Our postpaid base was up 8.4% year-on-year. Brazil led the way in terms of postpaid data with 644,000 subscribers, followed by Colombia with 276,000, Peru with 148,000, and Mexico with 135,000 postpaid subscribers. Now, in the prepaid segment, Mexico contributed a 497,000 new subscribers, Argentina 226,000 and Colombia 224,000, whereas in Brazil and Chile, we had prepaid losses of 381,000 and 315,000 subscribers respectively. In the fixed-line segment, we connected 524,000 broadband accesses, 184,000 in Mexico, 113,000 in Brazil, 57,000 in Argentina, and 49,000 in Colombia. ATV posted a good performance, adding 77,000 units. We disconnected 79,000 board lines. Our access lines exceeded 410 million at the end of December. 331 million were wireless subscribers, 79 million were FishLine IGUs. The growth of our mobile post-paid base and our broadband accesses, which you can see in the chart, our most dynamic business lines, has been accelerated over the last quarter, with that of post-paid reaching an 8.4% year-on-year increase, and broadband access is expanding 5.6%. So these are some of our highest access growth rates in years. Fourth quarter revenue rose 3.4% in Mexican peso terms from a year ago to 245 billion Mexican pesos. They grew up 6.2% at constant exchange rates with service revenue expanding 5.3%. The difference between the rate of growth in nominal terms versus that at constant exchange rates mainly reflects the 9.6 percent appreciation relative to the year earlier quarter or the Mexican peso versus the U.S. dollar. The apparent deceleration of service revenue growth, which extends to most revenue categories, extends from the incorporation of our Chilean operation from November 2024. EBITDA was up 4.2% in Mexican peso terms to 95 billion pesos, and it was up 6.9% at constant exchange rates in the early quarter. As well as the case over several quarters in 2022-2024, EBITDA expanded more rapidly than revenue on greater operating lenders. Mobile service revenue growth remained strong at 6.2%, supported by post-paid revenue that was up 7.6%. Prepaid revenue growth maintained the pace in the prior quarters, which was the fastest in at least five quarters, and with exceptional developments here in Mexico. As you can see in the next chart, Mexico accelerating from 2.38 percent to 3.8 percent on the back of a strong recovery of private consumption in the country. Six-line service revenue was of 3.6 percent year-over-year, with fixed broadband revenue increasing 6.4 percent. The non-Chilean operations were growing faster over the last couple of quarters, which you can see in the dotted green line. Mexico performed well, with broadband growth rising from 2 percent to really 4 percent. Our operating profit totaled 49 billion pesos. It was up 5.9 percent in nominal terms and 8.3 percent, 8.3 percent at constant exchange While our comprehensive financing costs were roughly half those of the yearly quarter, this resulted in a net profit of 19 billion Mexican pesos in the quarter, which was four times larger than that of a year before. It was equivalent to 32 Mexican pesos cents per share or 35 dollar cents per year. Our operating capital for the year 2025 came in at 213 billion pesos. After deducting from our EBITDA leases, a 16 billion pesos increase in working capital and 82 billion pesos in interest payments and taxes. After CAPEX, in the amount of 131 billion pesos, we were left with a free cash flow of 82 billion pesos. The latter figure represents a nearly 40% year-on-year increase in our free cash flow. Shareholder distributions reached 45 billion pesos, including 12 billion pesos in share buybacks, even if we reduced our net debt in capital terms by 20 billion pesos. At the end of the year, our net debt to EBITDA after Lisa's ratio stood at 1.52 times and was on a downward credit. With this, I will pass the floor back to Daniel Cash, and we will begin the Q&A session.

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

Thank you so much. We'll now begin the question and answer session. Please limit yourself to one question and one follow-up. If you'd like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again. Please pick up your handset when asking a question. And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Marcelo Santos at JPMorgan. Marcelo, please go ahead.

Carlos, Oscar, Daniela. Thanks for taking my question. I wanted to inquire about the CapEx outlook for 2026 and coming years. Could you please provide us with an updated view? Thank you.

Hi, Marcelo. So, what we have been doing is that what we think, we are not still, we are not finalizing the capex for this year, but our target is to be around 14% to 15% revenues. That is what we have been saying, and it's what we're going to do. That's maybe around $6.8 to $7 billion. That's what I mean, and that's what we're targeting to do. So we are going to be in those ranges. We still don't finalize all the countries, but we're looking to have around that number.

Okay, thank you. As a follow-up, going forward, is it reasonable to assume a similar percentage of revenues for the coming years? I know you have not finalized, but just conceptually, does it make sense?

Yes, yes. Yes, is what we think. The next three years, let's say two, three years, yes, we can assume that we can have between 14% to 15%, 7 billion, 6.8, 7.1. and depending on spectrum, depending on a lot of things that are coming, but that's more or less what we're thinking.

Okay, very clear. Thank you very much. Thank you.

Thank you for your question. Your next question comes from Rojero Arajo. Please go ahead. Your line is now open.

Hi, everyone. Thanks for the opportunity. I have one. There is a line called pre-tax, no operating expenses. it came at 7.9 million maximum pesos this quarter. This is well above the quarterly average of 700 million in the past couple of years. So could you please remind what enters exactly in this line? What did impact it this quarter? And also what to expect going forward? Thank you so much.

Which line?

Which line you said? It's within financial results. It's called other pre-tax no operating expenses.

Other financial expenses.

We don't have it right now, but if you can talk to Daniela, we can give you the detail on what was the difference between the 4.9 to 7.8 this this year this quarter okay no worries i will thank you can i follow up to with another question as yes there was no answer on this one yes okay thank you so much for this uh could you comment on telefonicas announced sale of its operations in Chile, why America Mobile and Intel ended up stepping out of the deal and any early expectation of the expected competitive environment in the country with Millicone and French buying this asset.

If you could also comment on potential consolidation movements across Latin America as well, if there is anything active and expectations for consolidation in the near future, anything you can share would would be great thank you so much well you know that we were going together with intel to to to do a bit for telefonica we review we and we decide not in america mobile We decide no goal, finalize, and don't go together with Entel. So that's, I think, then I don't know if Entel decide to go alone or not. Then it was one, the other one that I heard that it was interested, and then Milicom. Finally, Milicom is the one who wins. I think we still have a lot of things to do in our company inside Chile. We are doing okay. We're gaining revenues. We're gaining market share. We are doing all the investments that we need, all the synergies that we need. So we still think that we're going to be a very strong and good competitor in Chile. And for us, it doesn't change a lot because we're changing as a competitor landscape. It will be very good to consolidate the market. But at the end of the day, Millicom is a new entrant. So it doesn't change anything having Telefonica and to change to Millicom. Let's see. I hope that in the future we can consolidate the market in Chile, not only in the wireless, also in the peaks, and let's see, Chile, it will be important to be consolidated. For us, while we were out, it was going to be a little bit complex because regulation, the split of the company, high leverage of the company, a lot of things that was going to be difficult to decide between Intel and OS and then the value of Telefonica. So it was not an easy deal and that's why we decided to quit and to stay where we are. But I think Chile is a difficult market. Of course, it's a difficult market, but we are preparing and we're making all the investments and that we need to do to be competitive there. And as I said, hope that in the future, the market in Chile can consolidate.

Fair enough. Thank you so much. Have a great day, everyone. Thank you.

Thank you for your question. Your next question comes from Gustavo Farraia from UBS. Please go ahead. Your line is now open.

Everyone, thanks for taking the question. I'd like to hear some thoughts on capital allocation. So given the strong growth in free cash flow, and we also saw a slowdown in share buybacks lately. So how are you thinking about capital allocation going forward? Thank you.

Well, I think as Carlos said, Carlos said two things. We do very good growth in the free cash flow. We grow around 40% in the free cash flow. But he also said that the target that we have, and always we're saying that the target on debt to EBITDA will be around 1.3 to 1.5 times debt to EBITDA. So we are a little bit above. So, well, when you said we are reducing, I don't know if you are saying we are reducing in 2026 or we reduce from 2025, but it's important. We have a target on leverage, and we want to be on our target. So, that's one thing. So, the excess and the cash flow that we have, we're going to put it on reducing debt. Second, we have some M&A, as we said. We used to have telephonic in Chile. We are not there, but we still have a desktop in Brazil, and we want to be financially healthy because we're not looking on M&A in other regions or material ones. We're not doing and looking on anything on that, but in our region where we operate, I think there's going to be consolidation in the market, and we want to be prepared to consolidate, let's say, small companies or small fiber companies. There will be a lot of things. The competitive landscape in Latin America is changing. We're having new competitors. Small ones are getting out. I hope there are new ones coming. So there's going to be a lot of things through the next year or two years. And we want to be prepared. We want to be healthy. And we want to be on target, okay, because as we said, the target is 1.3 to 1.5. We are a little bit slightly above on that. So what we want is to be on target and use the cash flow for that and also to return for the shareholders and will be on buybacks and dividends. So that's mainly what we're going to do on the free cash flow that we have, nothing else. And as I said, we don't have or we're not looking on going other countries, outside of our region to do material things, no? Because I read something this morning, so we are not thinking on doing nothing on that. But only to be prepared to have opportunities, I think we're going to have some opportunities in the region that we have. That's what we have. So reducing that and the opportunity.

Yeah, only just to follow up on what Daniel has said, you know, it's important to note that we, at the end of the quarter, were still a little bit marginally higher than the 1.5 times net debt with the ratio that we have as our upper limit, even though we paid down debt by 20 billion pesos, a bit more than a billion dollars throughout the year.

So we did devote some poor amount of cash to a reduction of debt to remain within the limits that we have uh told the market guys of the market for the last five years i mean these are not new limits okay yeah very clear uh um just a quick follow-up if i may so um considering uh what you just uh said and considering that uh the consolidation in chile is now out of the table uh is it fair to assume that any, let's say, cash flow that would be directed to M&A in Chile is now redirected towards the leveraging?

Towards what?

Well, as we said, yes, we don't have anything else in M&A. Of course, we're going to do through leverage, and if we have an opportunity, then we're going to do something there. So we don't have something. We're looking for a lot of things, small things in Latin America where we are, And if not, then we're going to do leverage and be in the lower range of our targets to be prepared for opportunities. That's what we have.

All right. Very clear. Thank you.

Thank you for your question. A reminder that if you would like to ask a question, please press star 1 on your telephone keypad to withdraw your question.

Please press star 1 again. please pick up your handset when asking a question and if you're muted locally please remember to unmute your device our next question comes from caesar medina at morgan stanley caesar your line is now open hi thanks for taking my question um how should we think of the impact of fx uh on your overall results and i'm asking because you know the mexican peso strength is very visible and you're exposed to different currencies and your capex and debt also has sort of high currency exposure in net, how should we think of the impact on the cash flow? I think, as you say, you know, this is a company that has many operating exchange rates in our revenue, and then we also have very different exchange rates on our debt. So what we were talking about a little while ago in terms of the leverage ratio, that's something that tends to move both because the EBITDA flows move in terms of, say, if you measure them in dollars or pesos, whatever, but also the net debt itself also moves at a lot in terms of dollars or pesos, precisely because we have all of these currencies. So, yes, it becomes a bit complex to manage these issues. Now, and that's, you know, why we always highlight here in the report how we are doing at constant exchange rates, because we need to take out all of the noise that is created by the exchange rates. But, yeah, I think net-net, I think that we have a clear idea of how we manage the company. I think in terms of financial exposure, we manage our exposure to currencies. We really have exposure only to three currencies for the most part, three-four currencies. And in terms of the operating cash flows, well, that obviously has to do with – there's nothing we do in that respect. There's nothing that we do in terms of hedging cash flows. That's something that just comes up our cities. And this is why, you know, for us, it's always going back to what we were saying in the prior question. We need to balance, on the one hand, the desire to do distributions, share buybacks, and also the need to adjust our level schedule by paying down some debt. And again, this is something that we cannot predict exactly from the beginning because it has to do a lot with where the exchange rates are. And, you know, you can see them at some point, but also they are reality. They are there, and we are going to be measuring our net attribution, which we measure with the rating agency, because we measure with you every time that we have a good policy report. Well, we need to be consistent with what we are doing. Balancing share vivax, balancing capital, balancing the net leverage we have.

Exactly. What Carlos is saying is a balance, a balance between the capital allocation. It will be reducing our leverage, returning to the shareholders via buybacks or dividends, and be healthy to be prepared if there is something in our regions that will come as an opportunity. So these three things we're going to balance through all this year to be okay. So that's mainly what we're talking about on the capital allocation.

Thank you. Thank you for your question. Your next question comes from Alejandro Azar from JBM. Your line is now open.

Good morning, everyone, and thank you for taking my question. This is just on the consolidation that we are seeing all over Latin America. Colombia, Chile, Brazil. There's even rumors on big players in Mexico being interested in AT&T. So my question is, how do you see the regulatory environment for AMX as it seems that we are moving to a tighter market with two, three players? Do you think we should see in five years, 10 years, less regulatory or less asymmetric regulation where AMX currently has one? Thank you.

Well, the only place where we have asymmetric regulation is in Mexico. So all the other places, we don't have any, let's say, asymmetric regulation in all the other 20 countries that we operate. We don't have any asymmetric regulation. It's only in Mexico. Your question is how I see in three, four years is exactly what we're saying. I see more consolidation in all these markets, and I think it's going to be good for the business to consolidate more or less. I think, like, not only in mobile, but in fixed, maybe five years or six years ago, there's a lot of companies putting fiber, giving there in a lot of countries fiber plus very aggressive promotions. I'm not seeing any more these companies putting fiber. There are still companies that they are doing, more competitors, but no new ones doing that. So they are seeing that the business, it's not as easy as it looks. And so we are not seeing new competitors, let's say, in terms of fiber. Then the other ones, maybe they are going to consolidate between them or they are going to consolidate with other ones. So there's going to be a new landscape in Latin America, and I think that's going to be good for us and for all the people who are staying here, who are staying in Latin America. In Mexico, what you say, rumors about AT&T, well, they are rumors. The only thing that I can say is that AT&T is a very strong competitor, and if they sell to other ones, there are going to be also strong competitors. So nothing to say. So what we need is to do our job to have the best 5G network, the best quality, customer care, everything, systems, IT, AI, and to do everything that we are doing, all the investments that we need to do to compete against, or it's still AT&T here, or if they sell to the other ones. So that's exactly what I said in Chile. In Chile, we used to have a Telefonica as a competitor. Today it's not going to be Telefonica. It's a pity that we cannot consolidate this market because this market will be good to consolidate, but it's going to stay more or less the same with four competitors in mobile and the same in pigs. So let's see and see if in the future we can consolidate that market. So that's what, yes.

But as Daniel is saying, I mean, I do believe that you can see that there's very much of a wave of consolidation happening in the world. You look at Europe. There used to be many more players in each one of the countries. There's been a reduction. And this basically has to do with the dynamics of the industry. This industry requires scale to get the returns for the investment. And when you have a very fragmented market, there's no returns and no investment. And typically, layers end up probably not in the best of shapes. So I think that this is an issue that is more and more taken into account by the layers and generally governments worldwide.

Okay. Thank you. Thank you both for the answers.

Thank you.

Thank you for your question. Your next question comes from Marcelo Santos at JPMorgan. Your line is now open.

Hi, thank you very much for the follow-up here. I just wanted to use this opportunity to ask about the Brazilian number portability. You mentioned in the release that Brazil is seeing the same customer preference as evident by positive number portability trends, which indeed has been very strong and stronger than usual.

My question is, is this portability that has been stronger mostly explained by NuCell, which you have the mvno or is it mostly explained by your like flat operation in brazil just wanted to see what's driving this strong portability which we also see using the data thank you yeah i think they are both okay i i there's no doubt that nucell is helping us in number portability and and we're doing very good with them but in the other side we are doing strong, and we have been growing more on revenues than our competitors in Brazil, and I think that's good, number portability plus new subscribers, we are doing okay. And the other thing that I'm seeing is that we are getting also very good ARPU subscribers, So we're not only in the prepay or in the low end. We're getting also good high-end subscribers. So it's been good. That's what I can say. There's no doubt that Nuzel is helping us, but it's not only Nuzel. There's all the things that we have on the back of that that we have been doing that. We have been always gaining number portability through the year, and in the fourth quarter, we get strong because of ourselves. So it's been good, and we are a little bit more good, a little bit more better than what we used to be, is what I can tell you.

So, just to clarify, the jump we saw in the fourth quarter, that could be attributed to You were having very good portability across the year, that's claro, but the change we saw in more recent months, that would be Nucel.

Part, not all, but part could be, yes, part could be Nucel, but not all is Nucel. Also, it's fourth quarter, fourth quarter, a lot of people is changing, there's new handsets that people want to change for handsets, so they want to do, promotions. So there's a lot of things.

Okay, clear. Thank you very much. Thank you.

Thank you for your question. Your next question comes from Emilio Fuentes at GBM. Your line is now open.

Hi, thank you for taking my question.

I'm wondering, given the stellar net ads you have had in Broadway and Mexico the recent quarters how sustainable do you see this performance going forward specifically as we're reaching higher penetration for these services in the market thank you yes yes we see a good trend on the netapps within the last four quarters in a future problem in mexico we have a very good promotions in the market that the the customers have received very well the bundles with the streaming increasing the speed so we see the same trend through the year through this year right so we see the bundles are working pretty good with the streaming video platforms and the speed that we bring to the market are really good we have 92% of the customers already with Fiverr so we believe that we will retain the customers we believe the trend will be more or less the same yeah thank you there are no further questions at this time i will now turn the call back to mr

daniel hash for closing remarks well to thank everyone for being in the call and And thank you Carlos, Daniela, Oscar. Thank you very much. Thank you all.