America Movil SAB de CV (AMOV)

Q1 2012 Earnings Conference Call

April 27, 2012 10:00 ET


Daniel Hajj – Chief Executive Officer

Carlos Garcia Moreno – Chief Financial Officer

Oscar Von Hauske – Chief Operating Officer


Mauricio Fernandes – Bank of America Merrill Lynch

Walter Piecyk – BTIG

Michel Morin – Morgan Stanley

Richard Dineen – HSBC

Rizwan Ali – Deutsche Bank

Vera Rossi – Barclays

James Ratzer – New Street Research

Gil Alexandre – Darphil Associates

Ric Prentiss – Raymond James

Matthew Campbell – Goldman Sachs

Fernando Remis – GBM Global



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Good day and welcome to the AMX First Quarter 2012 Results Conference Call. Today's conference is being recorded. At this time, it is my pleasure to turn the call over to your host, Mr. Mauricio Fernandes. Please go ahead.

Mauricio Fernandes – Bank of America Merrill Lynch

Thank you, (Antony). Good morning or good afternoon to everyone. My name is Mauricio Fernandes and I am the Latin American telecom and media analyst of Bank of America Merrill Lynch. We are honored to host this quarter's conference call to discuss America Movil's first quarter 2012 results. I am in Sao Paulo, Brazil and from America Movil team is Daniel Hajj, CEO; Carlos Garcia Moreno, CFO; Oscar Von Hauske, COO; and Daniela Lecuona, Head of Investor Relations.

Daniel, thank you very much for the opportunity of hosting this call. You may now go ahead with your initial remarks. Thank you.

Daniel Hajj – Chief Executive Officer

Thank you, Mauricio. Good morning everyone. Thank you for being in our first quarter of 2012 financial and operating report. And Carlos is going to make us more summary of the results of this quarter. Carlos?

Carlos Garcia Moreno – Chief Financial Officer

Good morning, everyone. Thank you, Mauricio for hosting the call. Well, we had world financial markets that observed a remarkable stabilization in the first quarter following the strong turbulence encountered in most of the second half of the prior year. The economic outlook appeared to have improved and in the first quarter, consumer confidence in our (indiscernible) operation was on the rise with local currencies appreciating in most of the region, particularly for longer.

We finished March with 306 million accesses, which is 7.7% more than a year before having added 6.1 million accesses in the quarter. Approximately, two-thirds of them 4.2 million were wireless subscribers. A significant part of the 1.9 million new RGUs came from Brazil, which has become our largest fixed-line operation by accesses with 25.2 million. Brazil also led the way in terms of wireless subscribers with 1.2 million net adds followed by Mexico with 1.1 million. We continue to grow well our postpaid base with postpaid net adds of 1 million subs that represented a quarter of our net subscriber gains.

As of March, we have $35.7 million postpaid subs came in (indiscernible) more than in the year earlier quarter, out of a total of 246 million subs. As regard to our 60 million RGUs, half like telephony lines, 15 million are broadband accesses, and 14 million PayTV clients, which are growing at 33% based on the year before.

We are seeing a significant move towards multiple-play services as our clients seek new services from us, with more double and triple-play plans and even quadruple-play plans where mobile and fixed services are bundled together.

On our financial results, it is important first to know that we are consolidating the results of net services from January 1. We are also presenting revenue formation in gross terms and not netting out the commissions paid to these TV revenues, which should facilitate comparisons with other operators that also (indiscernible).

And we are now moving to a definition of EBITDA that starts out with operating profits as defined on the IFRS and that's depreciation and amortization charges. IFRS does not make any differentiation between operating and non-operating revenues and costs, which (indiscernible) that items like employee profit sharing which are mandatory by Law in Mexico, Peru and Ecuador to be considered the cost in the financial statement.

Our consolidated first quarter revenues increased 12.4% in Mexican peso terms and wireless revenues that increased 50.8% and fixed-line revenues that was 7%. Wireless revenues account for 62.5% of the total. At constant exchange rates, revenue growth for the period was 8.9% led by mobile data revenues that increased 30.7% and PayTV revenue does grow up 25.4%. Fixed-line data growth came in at 8.5%.

Several subsidiaries posted double-digit revenue growth. EBITDA came in at 68 billion pesos and was 6.3% higher in the year before. Service cost generally rose faster than revenues on account of rapid postpaid subscriber growth, increased content charges and the rolling out and maintenance of larger and more spread-out networks. The EBITDA margin declined 2 points to 35.1%. In addition to the reasons mentioned before, the reduction in the margin also reflects the new conformation of our business lines, with TracFone in the U.S. having become a higher volume, lower margin business, and with our PayTv operations and the content charges recovered them becoming increasingly relevant.

The appreciation of various currencies relative to the U.S. dollar, particularly the Mexican peso, led to a foreign exchange gain of 19.3 billion pesos that resulted in our posting a comprehensive financing income of 5.8 billion pesos. We registered a net profit of 2.6 billion peso that was 37.5% higher than the one registered the prior year. Our net profit per share rose to 42 peso cents from 30 the year before, a 43.3% increase which already reflects the impact of our 4.1% reduction in the average number of AMX shares outstanding given our buybacks.

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