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hello everyone at the america mobile second quarter 2025 conference call and webcast will begin shortly if you would like to ask a question please press star followed by one on your telephone keypad thank you for your patience Good morning, my name is Nadia and I'll be your conference operator today. At this time, I would like to welcome everyone to the American Mobile second quarter 2025 conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. Thank you. Now I will turn the call over to Ms. Daniela Laquana, Head of Investor Relations.

Thank you. Good morning, everyone. Thank you for joining us today to discuss our second quarter financial and operating results. We have on the line Mr. Daniel Hash, CEO, Mr. Carlos García Moreno, CFO, and also Mr. Oscar Ronjauske, CEO.

Thank you, Daniela. Welcome, everyone. Carlos is going to make a summary of the second quarter results.

Thank you, Daniel. Good morning, everyone. Well, the second quarter was characterized by significant uncertainty associated with the U.S. to impose on merchandise inputs. While this uncertainty did not have much of an impact on interest rate volatility during the period, the 10-year treasury notes ended the first quarter at 421 and the second quarter at 423, It did weigh on the value of the US dollar, which during the period fell against most currencies in our region of operation. 7% versus the Mexican peso, 5% versus the real, 2.9% versus the Colombian peso, 2.1% versus the Chilean peso, and 8.2% versus the euro. We added 2.9 million posted clients with Brazil contributing 1.4 million. followed by Colombia with 9,000 and Mexico with 2,000. On the Pripet platform, we recorded net disconnections of 1.1 million subscribers, with each of Brazil, Chile, and Central America is connecting approximately 500,000 clients each, while Colombia added 229,000 subscribers, Argentina 251,000, and Mexico 83,000. Altogether, we gained 1.7 million wireless subscribers in the quarter between Pripet and Postex. In the fixed-time segment, we gained 462,000 broadband accesses, including 231,000 in Mexico, compared to 165,000 the prior quarter, 66,000 in Brazil, and 51,000 in Central America. Both lines and face-to-face units declined by 164,000 and 61,000 respectively during the quarter. At the end of June, we had 404 million accesses, of which 147 million were post-decline, and 78 million were fixed-line RUUs. Year-over-year, our post-paid breaks increased 6.8 percent, which was the fastest-growing by accesses, and fixed-bound accesses increased by 4.5 percent. Those accesses constitute our main drivers of revenue growth. In Mexican peso terms, our second quarter revenue totaled 234 billion pesos. That's a 13.8 percent year-on-year increase which partly reflects depreciation over that period of the Mexican peso versus most of the currencies in our region of operations. We're talking about a second quarter versus the second quarter of 2024. Our constant exchange rates, we posted our strongest revenue performance in over a year. I think in some reports I saw that it was over 12 years, in 12 years, a 7.9% increase. Our revenue expansion was broad-based across business lines and across countries. with service revenue growth moving up to 7.3%, as can be seen in this slide, and that of equipment revenue to 12.5%. It's important to note that practically all our subsidiaries registered faster growth sequentially, practically all of them. On the mobile platform, post-pre-service revenue expanded 9.5%, also the best result in about a year, with prepaid revenue growth recovering to 3.1% from a 0.9% in the preceding quarter. The rebounding pre-preventive growth was driven by Mexico, with the first pre-preventive climbing 2.2% in the quarter after posting a 2.2% decline in the first quarter. As can be seen in this slide, pre-preventive growth mirrors the growth rate of private consumption in the country, which is likely bottomed in the first quarter. On the fixed-land platform, corporate net worth revenue and pay-to-do revenue were up 15% and 10.1% respectively, representing also the best performance in federal quarters, with broadband revenue decelerating slightly sequentially to 8.2% or 9.3%. Mexico and Colombia were the countries that had the greatest impact on the sequential acceleration of revenue growth as can be seen here in this slide. EBITDA came in at 92.4 billion pesos, It was up 11.2% in Mexican pesos and 5.1% at constant exchanges, improving sequentially from the prior quarter. And I think, again, something to note is that EBITDA margins were nearly flat sequentially across the board, practically in all countries. Margins were flat sequentially. Our operating profit came in at 47 billion pesos. That's a 4% increase from the earlier quarter, As the depreciation of price of use associated with our leases jumped 24.5% on account of the consolidation with Chilean operation and certain effects associated with the accounting methodology applicable to Argentina as a hyperinflationary country. Our integral financial costs were down significantly on account of our having registered 11 billion pesos in foreign exchange gains. This helped us post a net profit of 22.3 billion pesos in the quarter. Our net profit was equivalent to $0.37 per share and $0.88 per ADR. In cash flow terms, our net debt fell by $7.3 billion in six months to June. In that period, our capex amounted to $54.9 billion. Our shareholder distribution to $9.4 billion, and that's including $8.7 billion in share buybacks, and we covered $2.7 billion in labor obligations. Our net debt to last month's EBITDA stood at 1.56 times, a slight increase over the prior quarter, mostly on account of the appreciation in the second quarter of the Mexican peso and the euro, the U.S. dollar. As I mentioned before, in cash flow terms, net debt actually fell over the quarter by 7.3%. So that should come to a reduced leverage in North American letters. the greater leverage is basically on account of exchange rate movement. So with that, I will pass the floor back to Daniel, and then you can open it for Q&A.

Thank you, Carlos, and let's open the Q&A.

Of course. At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. The first question goes to Marcelo Santos of JP Morgan. Marcelo, please go ahead.

Hi, good morning. Thanks for the opportunity for asking questions. I have two. The first question is about the Brazilian mobile environment. If you could comment a bit, you had a strong performance with revenue acceleration. I just wanted to hear your comments on the main drivers of that. And the second question would be if you could comment a bit on the recently approved regulatory changes in the Mexican telco framework. Just wanted to hear your considerations. Thank you very much.

Hi, Marcelo. Well, I think talking about postpaid in Brazil, we're doing very good. We are growing. We have been some quarters growing revenue, doing good in postpaid. All of these things have to be with a very, very strong and good quality network. We have been improving our network and putting more coverage all around Brazil. We have also increasing our sales force, stores. and all the, let's say, all the commercial area, we have been increasing that. And we have been doing good plans also. Our Claro Flex program has been very successful. So all over all, we are doing good. Customer care is doing also, we have been a good performance, digitalizing everything. And our NPS has been growing very good. People are thinking of a very good service when we talk about Claro. And I think that's what we need to do. It's not only price. It's not only the commercial area. It's not only quality. When you do all the things together, then the market is responding very good. So that's what we have been doing. uh and and that's uh what we we have also our new bank it's still small but our agreement with new bank has been good and they are looking for good customers and that's also something that has been helping us convergence It's important. So a lot of our fixed customers have also our postpaid or prepaid or vice versa. So all over all, I think we have a very strong performance and we have been executing very good in Brazil. So that's more or less what you could see. I see for the next, no big changes on the next quarters in Brazil. doing very good. In the telecom law, what I can tell you is that the new telecommunications law and antitrust law are substantially similar to the original proposal sent by President Sheinbaum to Congress. Under the new law, we will be regulated by two different entities. The Comisión Nacional Antimonopolio, the new regulator for antitrust matters, which will be responsible for the imposition and revision of asymmetric regulations to preponderant and dominant agents. And the other one will be the Comisión Reguladora de Telecomunicaciones. The new Telecomunicaciones regulator will assume the powers and responsibilities of the former IFT. And I can tell you some of the most relevant changes that we see. The first one is increasing the fines regulators may impose. That's one. Potential discounts on payments for the use of a spectrum in exchange for coverage obligations in remote areas and highways. That's very good for us. The third one, similar terms for public and private concessions for obtaining a spectrum for commercial service. That one's something that we have a lot of questions, so all the spectrum is going to be with the similar terms. And the fourth is the new obligations relating to have the identity of all users of telecommunication services for activating and maintaining activated all the telecom service, including mobile and prepaid. So that would be a lot of work to do. And that's more or less the changes and the relevant things that we see in the new telecom law.

Perfect. Thank you very much for the comprehensive answers. Just one follow-up. In Brazil, do you have any particular comments regarding prepaid? There seems to have been a big shift in trends from first quarter to second quarter. Is there anything extra you could say on prepaid Brazil?

No. I think what is happening, I think, in all Brazil, not only for us, is that the prepaid is moving to postpaid. So it's helping us a lot on postpaid. the prepaid, but nothing new. So that's something that we have been working prepaid and postpaid, different strategies, but I think the same results. We're doing good in both. Perfect. Thank you very much. In prepaid, not only in Brazil, Marcelo, but in all the countries, it's very important to see in prepaid revenue growth, not subscribers, because subscribers, it's very different. Some companies will disconnect after, before, we don't know. So what it will be important is to follow the revenue growth in prepaid. And I think in prepaid, We have more than 10% growth in Brazil, so it's very good for us.

Thank you.

Thank you.

The next question goes to Gustavo Farias of UBS. Gustavo, please go ahead.

Hi, everyone. Thanks for taking my questions. I have two on my end. The first one, if you could comment on the outlook for Mexico ahead. Higher scene economic activity trending house competitive environment. In the country, especially for mobile, but also for broadband. And my second one we've seen. A lower increase in capex this quarter. I wonder if the target for the full year stands around 7 billion. Thank you.

Well, the first one is yes, on capex we are on target. I think it's going to be, I hope, less than 7 billion. It will be like 6.7, 6.8, what we discussed, and that's more or less what we're going to have this year. So no changes on that. There's a lot of questions about what will be the next year and the next one, The target that we have been having is to have the same percentage capex to sales that we had this year to have the next one at the next one. So I don't think there's going to be any change on the way we are going to invest in the next one or two years. That's something that a lot of people have been asking us, and we have been doing a lot of investments in the last year, so that will help us to reduce and maintain what we have been doing this year. So that's, I think, good news for all of us. In Mexico, you want to talk there? I don't think there's When you talk about the market, there's no different commercial or promotions in fixed or in wireless. I think we have the same competitors. Some of them are more aggressive, other ones less aggressive, but the competition in the market is the same as last year, this year. There's a lot of competition in the Mexico market. I think what we discussed last time and the rebound in revenues is also helped by we think that Mexico economy is starting to grow. It's starting to grow a little bit. And what we discussed last quarter is that the reduction in revenues on prepaid mostly is because it's related to the economy, the acceleration of the economy, and it's rebound a little bit today, and we hope that the next quarters will be also better. So the competition is there. We think we have a stronger, as we said, we have a stronger network. We have a good revenue and commercial area. good promotions, and good distribution also, customer care, and we're doing good. In the peak size, we increased to more than 200,000, so it's a very good growth for Telmex, and we hope we can sustain and we'll do good in the next quarters also. So we are accelerating also in the peak size.

Perfect. Thanks for the answers.

The next question goes to Pani Kanemuri of HSBC. Pani, please go ahead.

Yeah. Thanks for taking my questions. The first one is regarding the labor obligations. This first half you had paid much lower than you had paid last year. So do you expect the outflow to be lower in the labor obligations? And the second question is regarding, yeah. Hello? No, you want Carlos to say something?

No, on the pension, you understand. Part of the obligations, these are basically are paid out of a pension fund that they must have. And part of the payments are made out of pocket. And this changes throughout the year. Okay, so for the full year, I think you should not expect to see any major changes relative to what we had last year. So that's what I would say. Okay, so how much we take out of our fund in a given quarter, or how much we pay out of pocket, that can vary during the year, depending on market conditions and the like.

Okay, and the second question is regarding the changing competition in different markets. We are seeing a lot of M&A happen in different markets, whether it's Argentina, Colombia, or Ecuador, Uruguay. Are you seeing a changing competition there? Do you think the markets are becoming much more rational on a general level?

Yes, as markets consolidate, i think will be more rational promotions and and the market will be more rational and well it's what we hope and we expect so i think the latin market with all the sales that the telephonic about the sales that telephonic is having are not for consolidating the markets okay in in In Argentina, yes, it's consolidating the market. In Colombia, it's consolidating the market. In Peru, we're not. It's another one. It's a new entrant. In Uruguay and in Ecuador also, it's a new one. So it's not consolidating. So it's different in each market. But we hope that in the markets where it's consolidating will be more rational the competition. Yes.

yeah yeah thank you thank you for that thank you the next question goes to walter pisic of light shed partners walter please go ahead thanks i was hoping you guys could uh comment a little bit about bait i think if i look at this quarter compared to last quarter in mexico particularly in prepaid you did much better when we look at the bait numbers they did worse um so i'm just wondering if that was the reason you were doing better. And then in addition, I think Bait this week talked about maybe getting to the postpaid market. And I'm just curious kind of how you see that kind of playing out. It seems like the model is interesting in terms of them getting, you know, usage at grocery stores, I guess, to pay for service. So just if you can comment on what's going on in the market this quarter as it relates to Bait and how you anticipate competing against whatever they're planning to do on post-paid?

Well, I think the first thing is for us that we have been improving the prepaid is, as I said, I think the economy is doing a little bit better. So as the economy will do better, I think we will increase more. So that's the first thing. On bait, I cannot talk too much about bait because I don't understand their numbers. If they said that they have less subscribers, then they said that they have more, they are fools. I don't know. I really don't understand the numbers. So it's very difficult to compare quarter by quarter with bait. But I think something that I see that is important is when you are a new entrant, it's easy to, when you have nothing, it's easy to start to grow. But when you have a base, an important base, then it's important to maintain the base. So it's more difficult to grow. It's important to maintain the base. So I think it's maybe what is happening with them. But as I told you, very difficult to understand their numbers. I don't know their numbers. It's not clear. But in our case, I can tell you that we have been growing And we have a very good network, much better than all the other ones. And coverage also, very good coverage. So that economy and all these things are making that our prepaid start to grow again.

Yeah.

Thank you, Walter. The next question goes to Vitor Tomita of Goldman Sachs. Vitor, please go ahead.

Hello, and thank you very much for taking our questions. We have two from our side. The first one is on Mexico's broadband market. We saw an acceleration in broadband net ads this quarter, quite a bit of commercial effort in Mexico. Could you give us a bit more color on how you see that acceleration in your broadband volumes in Mexico in the quarter and on whether this commercial intensity is expected to continue into coming quarters? Also, my second question would be on the litigation provision you booked in Colombia that affected margins this quarter. Could you give us a little bit more color on that and particularly on whether the provisioning already assumes a worst case scenario or whether there is risk of further provisioning depending on how this goes or even of provisions being reversed? Thank you.

Well, talking about the Mexico broadband, first we increase our sales force in order to be more proactive in the market. Secondly, we reinforce all the retention areas in order to keep the customers with Helmex. And now we have 91% of the customer base already connected with Fiverr. So we are delivering a very great speed, very great quality. And another thing that has been working for us is to add into the broadband streaming platforms. So we've been adding streaming platforms, all the major ones, and has been very well received in the marketplace. So I believe if this continues, we will be seeing good figures in the next quarter.

And on Colombia, I think there's a case where we lost related to the content. It's not only for us, it's for all the industry. And what we booked is We have to pay something right now that is what we book, and then we have some payments to do in the next month until the end of the year. So less payments than what we booked today, but that case is closed. We lose. It's booked. It's until December. And what we already put is maybe more than half of what we need to pay, and the rest is divided in the next months. And we have to pay every month until the end of the year. So we are not going to see a big payment the next month. But it's a case that it's closed. It's something that we cannot reverse. But it's for all the industries, what I can tell you, related to the content.

Thank you very much. Thank you.

The next question goes to Valeria Miranda of GBM. Valeria, please go ahead.

Yes, thank you for taking my question. Focusing on Colombia, how are you seeing the dynamics with the consolidation there has been?

Well, the consolidation has to be declared on September. And September, I think, is the time where they are going to decide if they approve or they don't approve this consolidation. And if you see, consolidation are always good for the markets. Still, they are separate companies, so we don't know what is going to happen. But consolidation, I think, is good for the markets. uh but let's see let's see why the regulator or the the people who have to decide in colombia is what they are going to decide let's see let's wait until september thank you thank you as a reminder if you would like to ask a question please press star fill it by one on your telephone keypad

the next question goes to luca brendan of bank of america luca please go ahead hi good afternoon thank you for taking my questions i have two here uh first following up on marcelo's question can you please double click on phosphate net ads in brazil and break it down according to net anatel data for the past two months machine to machine that ads were really strong so Were there any new strategies on this front? And also you mentioned about Nubank that is already helping with results. It is all reported in the postpaid. And then the second question, can you also give us some color on lease expenses? During the quarter, it expanded at a higher rate than the revenues. So we wanted to understand how this line should behave going forward. Should it grow in line with revenues? Should it grow at a higher pace, lower pace? Any color on that would be great. Thank you.

The last question I don't understand. The first question is about post-pace and machine-to-machine. I think machine-to-machine is growing also, but I don't think there's a swap compared to the last quarters. I think it's more or less the same. But important, you have to see revenues. Revenues are very important and in POSPATE we're growing I think I don't have it here, and I don't have the mix on mobile, machine-to-machine, but on revenues, on the NetApps, we have 1.4, almost 1.4. I don't know exactly how many are machine-to-machine and how many are there, but our revenue is growing at 9%, almost 10% in postage, so it's very good. So a lot of this growth is on the real post-paid, not machine to machine. But if you want the numbers, I think Brazil has the numbers. They report the numbers, or Daniela can give you the numbers. But there's not a big difference between what we have been doing the last year and the last quarter than what we have right now. As I said, we are... doing very good in in brazil in in post space we are also doing good in free space prepaid and in peaks also nobody is asking on peaks and in peaks nobody is asking on things but in peaks we're starting to grow we have been two or three quarters growing our revenue in brazil so there are very good news also uh increasing uh putting a little bit putting more fiber changing some subscribers to fiverr corporate is also but we need to do much more, incorporate also. I think we have a good opportunity in BMS, in small and medium companies, and incorporate also to do, and we're focusing a lot there. So that's the second question. What will be the second question?

Yeah, the second question was on the lease expenses, lease. So how do you expect this line to grow going forward? This should grow in line with inflation or more or less than, sorry, with revenues or more or less than revenues. And also on the first question, if you can comment if new bank's numbers are reported under the postpaid for AMX.

It's a good question. I don't know if they have reported on prepaid or postpaid. Maybe when they are postpaid should be postpaid when they are. They are reporting in our numbers also, but I don't know how we reported, but I can check and Daniela will let you know. The leases?

On the leases, several of the lease agreements are just by inflation, but in many cases they are dollar-based. So to the extent that the currencies are appreciating the dollar, then you should not expect to see significant changes.

Perfect.

Thank you for the answers. The appreciation is greater than the inflation.

Okay, perfect.

Thank you.

Thank you. We have no further questions. I'll hand back to Daniel Hash for any closing comments.

No, just want to thank everyone for giving the call. I think we have a very good quarter. Thank you all.

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