America Movil SAB de CV (AMOV) Q1 2012 Earnings Conference Call April 27, 2012 10:00 ET Executives Daniel Hajj – Chief Executive Officer Carlos Garcia Moreno – Chief Financial Officer Oscar Von Hauske – Chief Operating Officer Analysts 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 Presentation Operator
Carlos Garcia Moreno – Chief Financial OfficerGood 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. Read the rest of this transcript for free on seekingalpha.com