AMX America Movil SAB de CV

Mexico City - América Móvil, S.A.B. de C.V. (“América Móvil”) [BMV: AMX] [NYSE: AMX, AMOV], announced today its financial and operating results for the fourth quarter of 2022.

⁽³⁾ EBITDA / Average Shares Outstanding

⁽⁴⁾ Reflects the impact of the deconsolidation of Claro Chile. Most of it has to do with the depreciation of the Chilean currency vs the Mexican peso over the years.

Note

Upon their sale in November 2021 and July 2022 TracFone Wireless and Claro Panama became discontinued operations. Claro Chile did so as well upon the establishment of the joint venture with Liberty Latin America in October 2022. The financial statements presented in this report account for those operations as discontinued operations.

The reported figures for Argentina corresponding to the fourth quarter of 2022 are presented in accordance with IAS29 reflecting the effects of inflationary accounting as the Argentinean economy is deemed to be hyperinflationary. All comparisons at constant exchange rates for América Móvil’s consolidated figures will exclude Argentina to ensure consistency.

Relevant Events

S&P upgraded Telekom Austria’s credit rating to A-

In October, Standard and Poor’s upgraded Telekom Austria’s credit rating to A-. This is the best credit rating in Telekom Austria’s history. The improved rating reflects our commitment to maintain a strong operating performance and prudent financial policies.

We issued the largest ever Sustainable Bond in the Mexican market

On November 29th we placed a four-tranche bond issue in the Mexican market raising 24 billion pesos. It included a 10-year note in the amount of 14.7 billion pesos with a 9.52% coupon; an inflation protected bond with a 15 year maturity and a 4.84% coupon for a total amount of 7.1 billion pesos; and two floating-rate peso notes with two and three year maturities for a total amount of 2.3 billion pesos. The first two bonds issued are committed to the development of environmental and high impact social projects.

AMX shareholders approved stock conversion into a single series

On December 20th América Móvil’s shareholders approved among others: 1) the conversion of all its series “A”, “AA” and “L” shares into common shares of a single new series “B” with full voting rights with a 1:1 conversion ratio; and 2) the cancellation of AMX treasury shares acquired as part of the company’s buyback program. The adopted resolutions are a big step to improve governance and enable a better business environment.

Telmex reached an agreement with its labor union

On January 16th Telmex reached a constructive agreement with its labor union on retirement conditions (pensions) applicable for newly hired personnel. This agreement reduces the maximum retirement benefit from 80% to 60% of the employee’s last salary, as integrated with certain benefits. Employees with 35 years of service and at least 65 years old will have the retirement benefits under the new agreement which, also, allows Telmex’s active and retired employees to convert part of their pension liability into shares representing Telmex’s capital stock.

Access Lines

3.3M wireless net adds

We added 1.5 million postpaid clients and 1.8 million prepaids, organically, in the fourth quarter for a total of 3.3 million subscribers. Brazil, Austria and Colombia were the main contributors of postpaid gains at 599 thousand, 322 thousand and 160 thousand, respectively, whereas Mexico was the main contributor of prepaid net additions with 975 thousand followed by Colombia and Central America with 546 thousand and 247 thousand, respectively.

We effected a clean-up of 4.1 million subscribers in Brazil— 2.6 million postpaid and 1.5 million prepaid—pursuant to the acquisition of Oi mobile clients in May 2022 since they were not generating traffic.

110k new broadband accesses

On the fixed-line segment we obtained 110 thousand broadband accesses and 97 thousand Pay TV clients, with voice access lines coming down by 234 thousand for a net reduction of 27 thousand RGUs in the quarter.

At the end of the year we had 300 million wireless subscribers, 114 million were postpaid and 73 million RGUs, including 31 million broadband accesses, 13 million Pay TV clients and 29 million land-lines.

⁽¹⁾ Includes total subscribers of all companies in which América Móvil holds an economic interest; does not consider the date in which the companies started being consolidated.

⁽¹⁾ Fixed Line, Broadband and Television (Cable & DTH).

⁽²⁾ The number of Pay TV units has been adjusted to the criteria by which we report to the local regulator.

América Móvil Consolidated Results

At the beginning of the fourth quarter uncertainty about inflation—and how much bringing it down would require in terms of additional interest rate hikes by the FED—drove long-term interest rates in the U.S. to their peak for the year in October, at 4.24%. They remained very volatile the rest of the quarter, ending the year at 3.87%. Nonetheless, the impression they had peaked ended up helping several currencies in the region, particularly the Mexican peso and Chilean peso, which appreciated sharply vis-à-vis the dollar, with the Colombian peso stopping and then reverting slightly its decline of several months. Throughout the period the Brazilian real remained quite volatile and with no apparent trend, as the country was in the midst of a disputed election.

Our fourth quarter revenue totaled 216.0 billion pesos, down 2.4% year-on-year in Mexican peso terms, with service revenue declining 1.4%. The yearly reduction in revenue in Mexican peso terms stems from the appreciation of the Mexican peso vis-à-vis practically all our main operating currencies: 5.5% vs. the U.S. dollar, 30.8% vs. the Colombian peso, 16.4% vs. the Chilean peso and 18.1% vs. the euro. In the period, the Mexican peso remained practically flat, -0.6%, vs. the Brazilian real.

At constant exchange rates—correcting for the currency movements mentioned above—service revenue actually increased 6.0%, the same pace seen in the preceding quarter, with both mobile and fixed-line service revenue expanding at a similar pace than in the prior quarter: mobile revenue growth was robust at 9.8%, whereas fixed-line service revenue growth was barely positive, 0.2%.

On the mobile platform postpaid service revenue growth, 10.5%, stayed strong but that from prepaid declined slightly, from 9.5% in the third quarter to 8.6% in the fourth. As for the fixed-line platform, both corporate networks and broadband revenue decelerated from the third quarter, from 12.4% to 10.5% that of corporate networks and from 3.6% to 2.9%, that of broadband. However, Pay TV revenue continued their recovery, declining only 3.5% in the fourth quarter, its smallest decline in at least five quarters.

Our Eastern European operations led the way in terms of service revenue growth, 12.0%, which becomes 9.6% at constant exchange rates. Brazil and Mexico followed with 9.0% and 5.7%, respectively.

EBITDA declined 4.4% year-on-year to 84.8 billion pesos in the fourth quarter. Adjusting for extraordinary items it reached 79.6 billion pesos and was down 2.3% in Mexican peso terms. Our adjusted EBITDA rose 5.0% at constant exchange rates with the margin remaining flat at 37.8% in relation to the year-earlier quarter. The adjustments include extraordinary revenue from the sale of towers by Telmex, both in the fourth quarter of 2021 and 2022, and by Peru in the current quarter; the reduction in medical costs and in property taxes levied on telecom infrastructure in Puerto Rico; and the elimination of a provision in Ecuador associated with revised terms for certain payment obligations.

Our operating profits totaled 44.7 billion pesos in the quarter, down 7.2% in Mexican peso terms, as depreciation and amortization charges dropped 1.2%. These incorporate the reduction in tower-related depreciation charges pursuant to the tower spin-off and the increased rights-of-use depreciation charges arising from the new tower-lease obligations.

After a comprehensive financing cost of 8.3 billion pesos in the quarter, 57.5% smalller than the one observed a year before, we ended up with a net profit of 23.1 billion pesos from our continued operations, 5.3% greater than that observed a year before, and of 13.7 billion pesos once the effect of the deconsolidation of Claro Chile is taken into account.

Our net debt including leases totaled 522.6 billion pesos at the end of 2022 having increased 16.3 billion pesos over the year. Excluding leases, our net debt totaled 388.5 billion pesos; it was down 19.2 billion pesos relative to the year-end figure in 2021. The net debt figure reflects the deconsolidation of 47.2 billion pesos of debt obligations that were transferred to Sitios Latam upon its spin-off in August 2022 and of 6.0 billion of debt at the Claro Chile level following the joint venture with Liberty Latin America last October.

Our cash flow and net borrowings of 7.0 billion pesos allowed us to cover capital expenditures in the amount of 159.8 billion pesos; net shareholder distributions of 50.2 billion pesos; labor obligations totaling 24.4 billion pesos; and net payments arising from the acquisition/sale of ownership interests totaling 11.7 billion pesos.

⁽¹⁾Adjusted to reflect the sale of TracFone and Panama, the spin-off of Sitios Latinoamérica and the deconsolidation of Claro Chile on account of the new joint venture.

⁽²⁾Total Revenue include Other Revenue.

⁽³⁾Reflects the impact of the deconsolidation of Claro Chile. Most of it has to do with the depreciation of the Chilean currency vs the Mexican peso over the years. n.m. Not meaningful.