Earnings Call Transcript - AMX Q1 2026

Samantha, Conference Operator

Good morning. My name is Samantha, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil First Quarter 2026 Conference Call and webcast. The call will include a presentation followed by a question-and-answer session. I will now turn the call over to Ms. Daniela Lecuona, Head of Investor Relations.

Daniela Lecuona, Head of Investor Relations

Good morning. Thank you all for joining us today to discuss our first quarter of 2026 financial and operating report. We have today on the line Mr. Daniel Hajj, our Chief Executive Officer; Mr. Oscar Von Hauske, our Chief Operating Officer; and Mr. Carlos Jose Garcia Moreno Elizondo, our Chief Financial Officer.

Daniel Hajj Aboumrad, Chief Executive Officer

Thank you, Daniela. Thank you, everyone, for being on the call. Carlos is going to make a summary of the first quarter results. Carlos?

Carlos Jose Garcia Moreno Elizondo, Chief Financial Officer

Thank you, Daniel. Good morning, everyone. The downward trend on short-term dollar interest rates following the 25 basis points rate reduction of the policy rate by the Federal Reserve in December continued into the beginning of the first quarter as the market became increasingly concerned with a potential slowdown in economic activity in the U.S. The value of the dollar versus other currencies, including those in our region of operations, declined throughout the first part of the quarter, with the dollar falling 4.3% versus the Mexican peso, 3% versus the Chilean peso and 6.4% versus the Brazilian real by the end of February. With the major exception of the latter, the U.S. dollar made up practically all its losses in the weeks after the initiation of the war with Iran. Throughout the period, the differential between short-term rates and 10-year rates widened significantly from 8 basis points to 64 basis points at the close of the quarter, with investors eyeing both a slowdown in the pace of economic activity, possibly even a recession, and higher inflation rates. In this context, in the first quarter we continued to observe a trend toward an acceleration of both postpaid subscriber growth and that of broadband accesses, as you can see in the slide. The base increased 8.8% and 6%, respectively, versus the year-earlier quarter. First quarter revenue was up 2.1% in Mexican peso terms to MXN 237 billion, with service revenue up 0.6%, equipment revenue up 7.4% and other revenue up 108%, including the proceeds of a favorable ruling in Chile on account of a dispute around certain TV rights. EBITDA increased at nearly twice the pace of revenue at 3.8% in Mexican peso terms. The figures cited reflect the appreciation of the Mexican peso versus practically all other currencies in our region of operations, having gained 16% versus the dollar, 4.6% versus the euro, 4.5% versus the Brazilian real and 2.5% versus the Colombian peso with respect to the same period of 2025. At constant exchange rates, revenue rose 6.1% on the back of a 4.6% increase in service revenue and 11.3% in equipment revenue, driving an 8% expansion in EBITDA. Adjusted for the extraordinary proceeds of the legal ruling, EBITDA was up 7.0%. The greater operating leverage is allowing for faster EBITDA growth, with EBITDA now expanding more rapidly than service revenue and leading our consolidated EBITDA margin to reach 40%, one of our highest margins. Mobile service revenue grew 6.4% year-on-year, a similar pace over the last several quarters. Mobile service revenue growth has been resilient with postpaid revenue growth at 7.3% and prepaid revenue at 5%, having expanded faster quarter after quarter over the last year. Mobile service revenue growth has been on an upward trend in Mexico and Colombia on the back of greater prepaid revenue, which has been recovering over the last several quarters. On the fixed-line platform, service revenue growth was up 1.7% in the first quarter. Some regions, in particular Eastern Europe, Central America, Peru and Ecuador, registered very rapid growth driven by residential demand. As regards our operating profit, it came in at MXN 50.5 billion, up 12% in Mexican peso terms, while our comprehensive financing costs declined 9.9%, reflecting lower net interest expenses. These concepts brought about a 25% increase in our net income to MXN 23.4 billion, which was equivalent to MXN 0.39 per share and $0.44 per ADR. Our financial debt reached MXN 527 billion at the end of March, having increased by MXN 2.5 billion versus the amount outstanding at the close of December. Our net debt for the period at the end of March stood at MXN 437 billion and was equivalent to 1.41x EBITDA after leases. Our cash flow in the first quarter allowed us to cover MXN 21.6 billion in capital expenditures, MXN 1.4 billion in share buybacks, MXN 1.5 billion in labor obligations and further to reduce our net debt by MXN 1 billion. With that, I thank you for listening to the presentation, and I will pass the floor back to Daniel for Q&A.

Daniel Hajj Aboumrad, Chief Executive Officer

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

Conference Operator, Conference Operator

We will now begin the question-and-answer session. Your first question comes from the line of Leonardo Olmos with UBS.

Leonardo Olmos, Analyst (UBS)

Congrats on the results. I have a couple of questions. First on capital allocation and buybacks: with the reduction of net debt to EBITDA to 1.4, how should we think about the balance between continued deleveraging and a more visible acceleration in buybacks from here? What leverage would make you more comfortable stepping up capital returns? Second, still on leverage but more on the M&A context: if operating trends and FX remain broadly stable, should we expect leverage to continue trending lower from here? How do you think about M&A activity in that context and how it will impact your free cash flow concerning the actual payments of the M&A?

Daniel Hajj Aboumrad, Chief Executive Officer

Thank you, Leonardo. What we need to see and what we want is some flexibility because the region is in very good shape and we anticipate opportunities both in Latin America and in Eastern Europe. We are growing and performing well, and we expect more opportunities in those regions. We recently closed the Azteca network in Colombia and the Desktop transaction, and we expect more opportunities like these. Therefore, we need a balance between buybacks, deleveraging and pursuing acquisitions that fit strategically. Carlos mentioned we would like to have debt roughly around 1.3x; that's our comfortable level. We are increasing our buyback fund by MXN 10,000 million to reach MXN 21,000 million so we can buy back more shares. We want to buy back more, pursue M&A opportunities and deleverage in a balanced manner. Personally, I see attractive opportunities in some countries that fit very well for us, and we are evaluating them.

Leonardo Olmos, Analyst (UBS)

You answered both of my questions in one answer. Just a quick follow-up: in the past you talked about fiber opportunities in LATAM. Are you still focused on fiber, or are you considering mobile or other types of network complementarity?

Daniel Hajj Aboumrad, Chief Executive Officer

We are considering everything: fiber, existing fiber companies, mobile spectrum and other network assets. There are many fiber companies in the region already serving customers, and there are spectrum opportunities as well — for example, last year we bought spectrum in Puerto Rico. The Azteca Colombia transaction and Desktop show the types of backbone and network deals we pursue. You will see additional opportunities this year across fiber, mobile and complementary network assets, and we want to be in a position to take them.

Conference Operator, Conference Operator

Our next question comes from Marcelo Santos at JPMorgan.

Marcelo Santos, Analyst (JPMorgan)

I have two questions. First, could you provide an update on the CapEx plan for 2026? There have been many currency changes, with the Mexican peso getting stronger, so I wanted to understand your CapEx plan for this year and perhaps the next couple of years. Second, you mentioned in the release some operational issues in Argentina. Could you comment on that and give more color?

Daniel Hajj Aboumrad, Chief Executive Officer

We have observed significant exchange rate movements and are reviewing CapEx by country because CapEx is partly in dollars and partly in local currency. We expect CapEx for 2026 to be around $7 billion, give or take a bit depending on exchange rates, and we expect a similar level for the next years. We will finalize and present more detail at our Investor Day in May. Regarding Argentina, could you specify what aspect you are referring to?

Marcelo Santos, Analyst (JPMorgan)

In the fixed-line business in Argentina you said the fixed-line market has become more challenging because of difficulties in accessing clients in the Buenos Aires metropolitan area. Could you elaborate on that?

Daniel Hajj Aboumrad, Chief Executive Officer

We are successfully deploying fiber in Argentina and are growing where we can deploy. The main difficulty is in the Buenos Aires capital city where it is hard to deploy because we face challenges renting telephone poles and obtaining permissions for underground deployments; it's more difficult there than in other areas. Where we have fiber, we are growing well, offering broadband, TV and quad-play. The main issue is regulatory and logistical constraints in Buenos Aires. Also, with Telecom acquiring Telefónica, the competitive landscape and market shares there may change, and we will monitor how the new owner manages strategy and investments in the market.

Conference Operator, Conference Operator

Our next question comes from Andres Coello of Scotiabank.

Andres Coello, Analyst (Scotiabank)

Starlink said in December that direct-to-cell service could be available in Mexico. This could be beneficial for users in remote areas. I'm wondering if América Móvil could work with Starlink to provide direct-to-cell service.

Daniel Hajj Aboumrad, Chief Executive Officer

I didn't hear you clearly. Could you repeat the question, please?

Andres Coello, Analyst (Scotiabank)

Starlink said in December that direct-to-cell service is available in Mexico since December, which could be beneficial for users in remote areas. Could América Móvil work with Starlink to provide direct-to-cell service?

Daniel Hajj Aboumrad, Chief Executive Officer

From what I understand, the true direct-to-cell capability will be widely available around 2027 when they launch additional satellites. They have been successful selling fixed broadband via satellite in Latin America and worldwide. We are open to partnerships that make sense and are already talking with them. For a direct-to-cell service you typically need spectrum; I am not certain whether they have spectrum in Latin America beyond purchases in the U.S. and some in Europe. We are open to explore collaborations because the service could be complementary to our offerings.

Andres Coello, Analyst (Scotiabank)

As you know, Entel is doing direct-to-cell in Chile and Peru, and I understand the service will be available soon in Costa Rica. Are you saying you will wait until 2027 for the service to be available in Mexico?

Daniel Hajj Aboumrad, Chief Executive Officer

We are not waiting to talk to them. We are already in discussions. My point is that the full-scale direct-to-cell capability relying on a new satellite constellation is expected around 2027, according to what they have communicated. They can already provide fixed broadband with their existing constellation, but the large-scale direct-to-cell rollout tied to the new satellites is expected in 2027. Meanwhile, we are engaged in talks to explore opportunities.

Conference Operator, Conference Operator

Our next question comes from Luca Bernardinelli at Bank of America.

Luca Bernardinelli, Analyst (Bank of America)

First, could you comment on how you are seeing the expansion of your partnership with NuCel and how relevant it has been for the strong expansion in Brazil mobile this quarter in terms of new net additions? Second, how do you see the potential impact of the recently announced M&A in Mexico mobile and what impact this could have on the market and on América Móvil specifically?

Daniel Hajj Aboumrad, Chief Executive Officer

Regarding NuCel in Brazil, we do not disclose the exact portability numbers by partner, but I can tell you we have been gaining portability over the last three to four years across regions and versus all competitors. With NuCel, our portability gains have increased. We have been performing well due to strong 5G, customer care, bundles with fixed services and promotions. We have been investing in Brazil and seeing good results over the past year. As for the recent M&A involving Telefónica in Mexico, Telefónica's presence in Mexico has been shrinking in terms of infrastructure and spectrum over recent years. I do not yet know the new buyer's strategy, whether they will operate primarily as an MVNO or invest in infrastructure and spectrum to compete more aggressively. We will monitor the situation and see how the strategy unfolds.

Conference Operator, Conference Operator

Our next question comes from Phani Kanumuri of HSBC.

Phani Kanumuri, Analyst (HSBC)

My first question is on Mexico Mobile. Growth seems to be accelerating. What are the major drivers behind the growth in Mexico Mobile and can we expect this growth to continue in 2026? My second question is on working capital. It seems to have increased a bit in 1Q '26 compared to 1Q '25. What are the reasons behind the increase?

Daniel Hajj Aboumrad, Chief Executive Officer

In Mexico Mobile, part of the growth is tied to an improving economy. Wage growth, including an increase in minimum wages of around 12%, supports higher consumer spending, which benefits prepaid. Prepaid is closely related to the economy, and the recovery is contributing to growth. Postpaid is growing consistently due to attractive promotions and rising ARPU as customers migrate to better plans and consume more. Postpaid growth has been strong for multiple consecutive quarters, and prepaid is recovering after a slowdown last year. Overall, we expect the positive trends to continue as the economy improves and customers upgrade their plans.

Carlos Jose Garcia Moreno Elizondo, Chief Financial Officer

On working capital, there are two contributing factors. First, we have increased inventory because we have been cautious about supply availability. Equipment revenues have been very strong across countries, especially Mexico and Brazil, which is reflected in higher inventories. Second, we have been financing handsets successfully. In Mexico, for instance, we effectively lease handsets to customers, which entails additional working capital. These actions have supported strong equipment sales and have been successful.

Daniel Hajj Aboumrad, Chief Executive Officer

To add, handset prices and memory chip costs have been increasing, so we want to ensure we have enough handsets to serve our customer base. Given price increases and possible supply shortages, we decided to increase inventory to secure availability.

Conference Operator, Conference Operator

Our next question comes from Emilio Fuentes De Leon from GBM.

Emilio Fuentes De Leon, Analyst (GBM)

I have two questions regarding Mexico on the operating side. First, regarding the disconnections from the initiative from the digital transformation agency, could you give us more color on the nature of these clients? Were they mostly inactive lines? Second, on the broadband side: given that you're reaching 90% of customers connected through fiber, should we expect net adds to decelerate going forward?

Daniel Hajj Aboumrad, Chief Executive Officer

Since January 9, the registration of lines has been required by law, including verification steps. This process may lead some people to activate fewer new lines or to not register lines, which will reduce the number of active reported lines. Ultimately, the record cleaning will remove inactive or unregistered lines by the July 1 deadline. That will clean up the subscriber base. Importantly, this is a change in reported line counts, not necessarily in consumption or revenue. From an economic perspective, it's more valuable to focus on active customers who consume and generate revenue rather than simply raw line counts. The registration process may temporarily slow gross activations, but it will result in a cleaner, more meaningful subscriber base by July.

Carlos Jose Garcia Moreno Elizondo, Chief Financial Officer

On broadband, we have reached approximately 93% of our base on fiber. We recently increased speeds by almost one-third at the same price for many customers, and our bundles are very competitive. We expect to continue to achieve a good level of net adds given our product improvements and marketing efforts.

Daniel Hajj Aboumrad, Chief Executive Officer

We do not expect broadband net adds to slow significantly because much of what we are doing is migrating customers from copper to fiber, offering speed upgrades and improving bundles. We believe these enhancements will sustain net adds.

Conference Operator, Conference Operator

Our next question comes from David Lopez at New Street Research.

David Lopez, Analyst (New Street Research)

Congrats on the results. Two questions. First, a follow-up on Mexican broadband competition: have there been changes recently, and why did you increase speeds across packages? With Televisa upgrading to fiber for a large part of its business, will that make net adds harder for you? Second, on Brazil: could you comment on plans for price increases this year?

Daniel Hajj Aboumrad, Chief Executive Officer

On Brazil, at this time we do not have a plan to increase prices in mobile, broadband or TV. We may evaluate options during the year, but currently there are no price increases planned.

Carlos Jose Garcia Moreno Elizondo, Chief Financial Officer

Regarding broadband competition in Mexico, we upgraded our network and continue to differentiate our broadband offering, especially to small businesses. We bundle cloud services, cybersecurity and productivity tools for small business customers, and we have a dedicated team focused on small business penetration. These value-added services and bundles have been well adopted in the market and support our competitive position.

Daniel Hajj Aboumrad, Chief Executive Officer

I would add that, beyond Mexico and Brazil, we have seen strong recoveries and performance in other countries: Colombia is recovering well with expanding broadband and strong postpaid growth driven by our investment in 5G; Peru is performing well in broadband and growing net adds; Central America is doing well; and Eastern Europe has moved from mobile-only to converged mobile and fixed services, improving growth. We are cutting costs, digitalizing processes, investing in IT and selling more cloud and business services. Across our footprint we are focused on digitalization, productivity and opportunities to accelerate growth via M&A where it makes strategic sense.

Conference Operator, Conference Operator

Our next question comes from the line of Ernesto Gonzalez with Morgan Stanley.

Ernesto Gonzalez, Analyst (Morgan Stanley)

You mentioned Colombia earlier. Could you discuss the trends you're seeing there and in a few other markets where Telefónica has recently exited? For example, Colombia saw an acceleration in revenues; how much of that is driven by your commercial strategy versus market consolidation?

Daniel Hajj Aboumrad, Chief Executive Officer

In Colombia we have invested for a long time, including in 5G, and we currently have one of the best 5G networks there. Our customers are satisfied, traffic is growing, and our recent broadband performance improved this quarter after a small decline last year. There are many ISPs in Colombia, and market consolidation has also played a role, but our own commercial strategy, network investment and service quality are key drivers of our improved results. Consolidation can create opportunities, but success still requires investment and competitive offerings, which we have provided.

Ernesto Gonzalez, Analyst (Morgan Stanley)

On Mexico, margins improved to their highest level in a long time and fixed grew strongly. What drove the margin improvement and how sustainable is this level?

Daniel Hajj Aboumrad, Chief Executive Officer

Margin improvement in Mexico is driven by several factors. On fixed, we upgraded the network and increased speeds for many customers, improving service perception and enabling retention and upsell. Prepaid has recovered and contributed to growth as the economy improves. We have been strict on cost control and have benefited from digitalization across processes, which has increased productivity and reduced costs. We are also investing in IT and using advanced tools to better understand customers and improve operations. These factors combined support margin expansion, and many of them are structural improvements that should be sustainable over time.

Conference Operator, Conference Operator

We have reached the end of the Q&A session. I will now turn the call over to Mr. Daniel Hajj for final remarks.

Daniel Hajj Aboumrad, Chief Executive Officer

Daniela wants to.

Daniela Lecuona, Head of Investor Relations

Just before we end the call, I want to remind everyone that we are hosting our next Investor Day in New York City on May 27. The save-the-date has been sent out, and we will share details on the agenda soon. We hope to see you all there. Please don't hesitate to contact the team if you have any questions or need help with registration.

Daniel Hajj Aboumrad, Chief Executive Officer

Thank you. Thank you very much.

Conference Operator, Conference Operator

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