América Móvil's Management Discusses AMX´s Strategy On Potential Acquisitions In Europe Conference (Transcript)

América Móvil, S.A.B. de C.V. (AMOV)

AMX´s Strategy on Potential Acquisitions in Europe Conference Call

June 21, 2012 01:30 pm ET

Executives

Carlos García-Moreno - CFO

Analysts

Andrew Campbell - Credit Suisse

Vera Rossi - Barclays

Andre Baggio - JPMorgan

Rizwan Ali - Deutsche Bank

Mauricio Fernandes - Merrill Lynch

Stanley Martinez - Legal & General

James Ratzer - New Street Research

Presentation

Operator

Good day ladies and gentlemen and welcome to the América Móvil corporate conference call and webcast to discuss this strategy and potential acquisitions in Europe. My name is Alicia and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to introduce your host for today, Mr. Carlos García-Moreno, Chief Financial Officer. Please proceed.

Carlos García-Moreno

Thank you, good afternoon everyone. Good evening to some of you. We have decided to have this conference call so that we could give you a bit more of a feel for how it is that we have been backing our decisions to make a move into Europe. We believe you have been following some of these from the press already we left here about a week, but as it is important that we give you an overview, a more comprehensive overview of América Móvil’s thinking in terms how and why to go into Europe.

If you recall in America, in Latin America, we are today investing cleverly. We are seeing good organic growth and we expect growth to continue to be fairly solid for a number of years. And that means although we are investing heavily on our networks, we are now investing, I believe we invested about $10 billion and this year it is going to be probably higher, and that we have audited those will turn roughly about $9.5 billion we are looking at for the year.

But the fact of the matter is that we are expecting to continue to see good growth in data services and the expectation that this growth will pick-up particularly in mobile requires more investment on the fixed-line side. So we are today basically deploying more fiber optic very much across the board and we are moving towards the segmentation of new technologies. We are very close to launching in Mexico our 4G network. We’ll be doing the same with some countries in the Caribbean too.

But having acquired the Comcel first and then the Telcel and the Telmex shares, and the Telmex Internacional shares over the last couple of years and also the same with Net Serviços. Looking at the region, you will not see very many more meaningful M&A opportunities. That’s partly because we have already a very well established footprint in the region. There is not many more places to go to. In South America, we are not in the (inaudible) we currently do not have any plans of going there.

And in terms of consolidating assets, well there is not that many more assets that we could buy partly because of regulatory reasons and partly because there is not that many more assets in Latin America. So from the point of view of M&A, not of organic growth, from the point of view of M&A, we were going out of meaningful opportunities here in Latin America.

Now for all of you that have been with América Móvil for some time, you know that M&A was actually for América Móvil it allowed us to diversify. We are evaluating today and the risk. They have allowed us to have more stable catalog. It also gave us scale which is strictly important in this business and in time, the scale and the diversification led to better credit ratings and that meant, that we actually pickup the markets and better funding conditions, which is we could end up becoming positively. So M&A resulted in diversification scale and better credit ratings and that in turn is allowing us to continue with more M&A.

If you look at what has happened over the last 10 years or so, you will see that the value creation was quite significant for América Móvil, led its original basis which was Mexico to innovate, to move to other countries particularly in South America. So today one could not consider América Móvil having we not entered markets like Brazil, like Colombia, like Argentina as we’re doing (inaudible) in this process M&A was a key ingredient of the value creation that we've developed over the years.

Now since we did not have that many more opportunities here in Latin America in terms of M&A, we really are running out of many meaningful opportunities. We started to look at other options, one option certainly was the US, that one that came up repeatedly in the last year, the last couple of years, but as you know we have in the US the MVNO that has been our model that has worked very, very well for us and for a number of reasons we have decided against owning a network, becoming a network operator in the US.

So we really started looking at other options and quite frankly we are not a rush to do anything and we basically took our time, but I would say that as of late, the evaluations in Europe start to make more sensible. Clearly, we will have a number of challenges the way that we have say, in the short term, but we think that with long-term perspective evaluations for Europe today appear to be at front peak probably and more so than in other regions of the world.

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