Gustavo Faria

Gustavo Faria inquired about América Móvil's capital allocation strategy, considering strong free cash flow growth and a recent slowdown in share buybacks. He also followed up on whether cash flow previously earmarked for M&A in Chile would now be redirected to deleveraging.

Answer

Daniel Hajj (CEO) and Carlos García Moreno (CFO) explained that the company's target net debt to EBITDA ratio is 1.3-1.5x, and they are currently slightly above this. Capital allocation priorities include reducing debt, preparing for M&A opportunities within their operating regions (not outside), and returning value to shareholders through buybacks and dividends. They confirmed that if M&A opportunities do not materialize, cash flow would be directed towards deleveraging.

Gustavo Faria from UBS Group AG asked about América Móvil's capital allocation strategy, considering strong free cash flow growth and a recent slowdown in share buybacks.

Answer

CEO Daniel Hajj and CFO Carlos García Moreno outlined a balanced capital allocation approach focused on reducing net debt to their target range of 1.3x-1.5x EBITDA, preparing for M&A opportunities within their operating regions (e.g., Desktop in Brazil, small fiber companies), and returning value to shareholders through buybacks and dividends. They emphasized financial health for future opportunities and confirmed no plans for material M&A outside their current regions.

Gustavo Faria asked about the operational aspects of modulation gain from hydroelectric power plants, the trading market for modulation hedging, its liquidity, and the price for future contracts. He also inquired about the recurrence and frequency of AXIA Energia's dividend payments.

Answer

Rodrigo Limp, EVP of Regulation, Institutional, and Markets at AXIA Energia, explained that hydroelectric modulation benefit was BRL 14-15 in the last quarter and is expected to grow. Italo Freitas, VP of Commercialization and Energy Solutions at AXIA Energia, noted that a liquid modulation product for trading does not currently exist. Eduardo Haiama, CFO of AXIA Energia, stated that dividend methodology is updated quarterly, with payments depending on significant events and the model's discipline.

Gustavo Faria asked about the operational aspects of modulation gain from hydroelectric power plants, including the trading market, liquidity for future modulation hedging, and future contract prices. He also inquired about the recurrence of dividend payments, specifically if quarterly payouts could be expected.

Answer

Rodrigo Limp, EVP of Regulation, Institutional, and Markets, stated that hydroelectric modulation benefit was BRL 14-BRL 15 in the last quarter and is expected to grow. Italo Freitas, VP of Commercialization and Energy Solutions, clarified that a liquid modulation product doesn't exist in the current energy-only market, requiring regulatory changes. Eduardo Haiama, CFO, explained that dividend recurrence involves quarterly methodology updates based on significant events, but a fixed quarterly payout depends on the model and financial health.

Inquired about a potential bid for Total's assets, the timetable for power sector liberalization, and the potential upside from it.

Answer

Pampa is interested in growing its oil acreage but is bound by NDAs regarding specific M&A. There are no synergies with Total's assets. The power liberalization timetable is unknown but they are optimistic for news soon. Deregulation would benefit their low-cost thermal units.