América Móvil - Q1 2024

Transcript

Operator (participant)

Good morning. My name is Candace, and I will be your conference operator today. At this time, I'd like to welcome everyone to the América Móvil first quarter 2024 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2. Thank you. I would now like to turn the conference call over to Ms. Daniela Lecuona, Head of Investor Relations.

Daniela Lecuona Torras (Head of Investor Relations)

Thank you so much. Good morning, everyone. We're very excited to have you today on the line discussing our financial and operating results for the quarter. We have Mr. Daniel Hajj, our CEO, Mr. Carlos García Moreno, CFO, and Mr. Oscar Von Hauske, COO.

Daniel Hajj Aboumrad (CEO)

Good morning. Welcome to the América Móvil 1st Quarter financial and operating report, and Carlos is going to make a summary of the report. Carlos.

Carlos García Moreno Elizondo (CFO)

Thank you, Daniela. Good morning, everyone. Thanks for being here in the call. Well, the strong rally in interest rates that took place in the latter part of 2023 came to an end in the first quarter. Strong employment readings and other indications of a still vibrant economy kept pushing back the timing of expected reductions by the Fed at its federal funds rate and cutting back the expected number of such reductions to be had this year. The Mexican peso, which had depreciated slightly versus the dollar at the beginning of the year, rode out the interest rate increases and resumed its appreciating trend, gaining ground versus the dollar and all other currencies in our region of operations. In the first quarter, we added 1.5 million wireless subscribers, of which 1.3 million were postpaid clients, including Brazil with 555,000, Austria with 260,000, Colombia with 126,000, and Mexico with 105,000.

On our prepaid platform, we gained 263,000 subscribers in the period. Colombia added 378,000, followed by Argentina with 226,000, and Brazil with 146,000. On the other hand, we disconnected 584,000 subscribers in Central America, mostly on account of a cybersecurity incident that affected our ability to activate clients. On the fixed broadband segment, we connected 562,000 new broadband accesses, the best performance in four years. Mexico was the main contributor with 325,000 clients, followed by Brazil with 92,000 and Colombia with 23,000. Our postpaid rates increased 6.4% year-over-year, while fixed broadband accesses were up 4.8%. We continue to lose pay-TV clients and fixed post lines, and this has been a circular trend for quite some time. Our fixed core revenue totaled MXN 203 billion, with service revenue expanding 1.1% in pesos to MXN 171 billion, and other revenue declining 71.7% to MXN 2.4 billion.

The latter figure reflects extraordinary revenue in the first quarter of 2023 on account of the sale of towers by Dominican Republic and Peru. This quarter, there were practically no tower sales. At constant exchange rates, service revenue increased 5%, up from 3.7% the preceding quarter. We saw an acceleration of service revenue growth on both the fixed line and the mobile platforms, as you can see in the slide, which improved sequentially from 3% to 5.1% on the fixed line side and from 4.2% to 4.9% on the mobile side. So an acceleration in revenue growth on both fixed and mobile, which means an acceleration of service revenue growth in América Móvil as a whole. In most of our main markets, including Mexico and Brazil, service revenue growth exceeded inflation for the period, with Argentina and Colombia being the principal markets where revenue did not increase in real terms.

Mexico was the main driver behind fixed line revenue expansion, which went from 5.9% in the preceding quarter to 9.7% in the current period, the fastest rate of growth in years. It was followed by Peru, where the revenue growth rate nearly doubled sequentially from 4.4% to 8%. Brazil reported a 1% increase, its best showing in seven years, as the headwinds from pay-TV of the last five years gave way to solid broadband revenue growth. Within the fixed line platform, corporate network revenue, which represents 21% of fixed line service revenue, was the most dynamic business line, climbing 13.5% year-on-year, followed by broadband services that were up 6.4%.

On the mobile platform, in Mexico, Brazil, and Peru, where the countries' revenue growth picked up the most sequentially, going from 4.5%-5.8% in Mexico, from 7.1%-8.5% in Brazil, and from 2.6%-4.9% in Peru. Colombia returned to positive mobile revenue growth after two quarters of declines. EBITDA came in at MXN 80.6 billion. It was 2.6% lower than a year before on account of the extraordinary tower sales for the first quarter mentioned before, which affected the annual comparison. But at constant exchange rates and adjusting for the tower sales, EBITDA increased 7.5% year on year, its fastest pace in eight quarters, buoyed by strong subscriber and revenue growth on both platforms and consistent control over costs and expenses. Our operating income reached MXN 4.8 billion, a 7.6% decline from the year before, correcting for the tower sales.

It was up 2.5% in Mexican peso terms and 13% at constant exchange rates. Our comprehensive financing costs totaled MXN 13 billion in the first quarter. They were close to zero a year before on the back of strong foreign exchange gains that had amounted to MXN 13.7 billion then. This year, we instead booked MXN 1.7 billion in foreign exchange loss. We registered a net profit in the amount of MXN 13.5 billion that was equivalent to MXN 0.22 per share and $0.25 per ADR. The difference vis-à-vis the year-end quarter is mostly explained by the aforementioned tower sales and the difference in foreign exchange gains loss.

In cash flow terms, we obtained net financing in the amount of MXN 17 billion, MXN 17.4 billion, which helped us fund our capital expenditures of MXN 21.8 billion and cover MXN 4.8 billion in share buybacks and MXN 6.5 billion in debt obligations. In the first part of every year, as we have mentioned several times, we face working capital requirements that need to be financed. On top of it, in March, we have to pay duties on the usage of spectrum and several telecom-related taxes in various countries. These taxes and duties are paid for the most part in March. This was an important; it's an important amount that we don't see every quarter, which in this particular quarter added up to nearly MXN 13 billion. Every year, we have to make this payment.

Every year, it's in March, and it happened this year was it amounted to nearly MXN 13 billion. Our share buybacks in the first quarter, which were MXN 8 billion I mentioned before, were 2.5 times greater than those of the year-earlier quarter and 9% greater than those of the first quarter of 2022. In fact, this quarter, we acquired 3 times more shares than the quarter of last year and the year before. And in terms of leverage, as you can see in the slide, it's been very flat. It's been for over a year practically flat at 1.5 times net debt to EBITDA. We expect that we will be we will remain within the range that we have mentioned between 1.3 and 1.5 times net debt to EBITDA. Okay? So with that, I will pass the floor back to Daniela and for Q&A. Thank you, Daniela.

Daniela Lecuona Torras (Head of Investor Relations)

Thank you, Carlos. We can start with the Q&A.

Operator (participant)

Thank you. At this time, I would like to remind everyone, in order to ask a question, please press Star 1 on your telephone keypad. We will pause here momentarily to compile the Q&A roster. Our first question comes from the line of Vitor Tomita of Goldman Sachs. Your line is now open. Please go ahead.

Vitor Tomita (Analyst)

Hello all, and thank you very much for taking our questions. We would have two questions from our side. The first one is, both are on Mexico. The first one is on the commercial strategy for Mexico broadband. If you could give us an update on that commercial strategy following your investment in fiber and also amid this swift improvement in volume trends there and also your policy of not raising prices in Mexico. And our second question would be on the very solid EBITDA margin performance you saw in Mexico. If you could give us some more color on the drivers supporting that margin and on whether this 42% margin level could be sustainable in coming quarters. Thank you very much.

Daniel Hajj Aboumrad (CEO)

Well, talking on Mexico, first, in the fixed side, I think all the big investments in fiber that we have been doing for the last three years, I think they are working and we're having a good what we put in the report is that we have around 17 million fiber households.

Oscar von Hauske Solís (COO)

home passes.

Daniel Hajj Aboumrad (CEO)

home passes, and 80% of our customers are already with fiber. So helps a lot to reduce the churn, and the customers are with a very good speed, with service. So that helps. The second one is that we have good packages. We have an increased prices, and we have very good packages in the market. A lot of bundling in that. We do some streaming. We do more speed. And that's working. And the operation also all around.

Oscar von Hauske Solís (COO)

Customer experience.

Daniel Hajj Aboumrad (CEO)

The customer experience, it's every day, is doing much better in the fixed side. Oscar, I don't know if you want to add something.

Oscar von Hauske Solís (COO)

No, no. I think you're already covered.

Daniel Hajj Aboumrad (CEO)

So I think that's, and it's working, and we have the best growth of broadband subscribers this quarter since, I think, some years that we have more than 300,000. So it's working, less churn, good service, good speed, fiber.

Oscar von Hauske Solís (COO)

New packages.

Daniel Hajj Aboumrad (CEO)

New packages. All around makes a good very good for our customers, a good position.

Oscar von Hauske Solís (COO)

Solid. Okay.

Daniel Hajj Aboumrad (CEO)

Offer, a very good offer for our customers. In the margin, I think in Mexico also, in the wireless, our 5G network is working very good. I think we already have 125 cities with 5G, good coverage, good quality. What we're seeing is we are also not increasing prices in the wireless side. What we're seeing is that our people is choosing for a new plan, a higher plan, moving for a better ARPU, more data, and that is working very good. All the 5G investments that we are doing are working very good in Mexico. Those are the two things that we're seeing in Mexico.

Vitor Tomita (Analyst)

Very clear. Thank you very much.

Oscar von Hauske Solís (COO)

Thank you.

Daniel Hajj Aboumrad (CEO)

Thank you.

Operator (participant)

Thank you. Your next question comes from the line of Leonardo Olmos of UBS. Your line is open. Please go ahead.

Leonardo Olmos (Analyst)

Hello. Can you hear me well? Yes. Okay. Okay. Good morning, everyone. First of all, congrats on the revenue performance. We saw a few records on both mobile and fixed. We're glad to see it. But I'll center my questions on CapEx. We noticed Q1 had a low figure. Of course, there's seasonality. Can you discuss a little bit how do you expect the seasonality of CapEx throughout 2024?

Oscar von Hauske Solís (COO)

Can you?

Leonardo Olmos (Analyst)

We don't hear you very well. Can you talk a little bit slowly because we don't hear you so well?

Oscar von Hauske Solís (COO)

Yes. Better now?

Leonardo Olmos (Analyst)

Better. Better now.

Oscar von Hauske Solís (COO)

Okay. So first, I said congrats on the revenue performance. We saw a few records on mobile and fixed. Very glad to see it. And I'll center my questions on CapEx. We noticed a low figure in Q1. And the first question is, what's the seasonality you expect on the remaining 2024? Should we continue to expect the guidance to be matched? And second, going forward in 2025, do you expect the CapEx figure to go back to $8 billion per year? Thank you very much.

Daniel Hajj Aboumrad (CEO)

Well, as we said last call, we have a three-year plan in the CapEx. And the rest, what we're going to do this year is around $7.1 billion. We are on track on that. We do a little bit more the previous years, and that is helping us, as I said, as fiber in Mexico, 5G in other countries, the data centers, a lot on corporate services, applications. And that is helping us a lot. We think that we are okay with what we have been what we're going to invest this year. And your question for the next years, we're still reviewing what we're going to do in the next two years. We still don't know. But this year, I can tell you that our CapEx is going to be $7.1-$7.2 billion. I think it's what we said last call, and we are on track on that.

That's what we can say.

Leonardo Olmos (Analyst)

Okay. This is good news. Thank you very much. Have a great day.

Operator (participant)

Your next question comes from the line of Walter Piecyk of Lightshed Partners. Your line is now open. Please go ahead.

Walter Piecyk (Analyst)

Yeah. Hi. This is Joe for Walt. Thanks for taking the question. You discussed Mexico and the dynamics driving growth there. What's happening in the other markets that is giving you the ability to accelerate revenue growth? I know you mentioned that it's exceeded inflation in most of the markets. Is it just bundling? Are there price increases available there?

Daniel Hajj Aboumrad (CEO)

Well, what we're doing in Mexico is exactly what we're doing in other markets. We're investing in 5G. We are improving and giving better plans, moving ARPUs, doing fiber. In some markets, we increase prices, not in all of them. In some of them, we increase. In other ones, we don't increase, depending on the competition, depending on the segment, depending on what we're selling. Maybe in broadband, we don't increase in wireless yet. In prepaid, I think we are not increasing in any market, any price. So it's a mix of everything. But what we are doing in all the markets is investing in 5G, having a good network, giving good packages, moving better ARPUs. And Oscar can talk a little bit about what we're doing on the corporate side that is giving us a very good increase in revenue, so.

Oscar von Hauske Solís (COO)

No, as we mentioned before, we are pushing in the market what we call digital services. So within these digital services, we include all that is cybersecurity, cloud, network management. And in cloud, we are receiving software as a services, infrastructure as a services, and has been very, very well received in the market. And as well, we are doing a lot of network management, moving from MPLS networks to SD-WAN, and has been working pretty good on the B2B market.

Daniel Hajj Aboumrad (CEO)

Yeah. We just launched a new data center in Peru. We haven't had one there. So we're launched, and we finish in January. So we're going to put also more corporate focus on this market. I think we are in all the markets, we're having already corporate services. I think best networks and best customer service gain better clients. So that's what's happening in Mexico, in Brazil, in Colombia, in Peru, in Dominican Republic, in Central America, all around.

Oscar von Hauske Solís (COO)

In Austria, right?

Daniel Hajj Aboumrad (CEO)

Austria. Austria is doing very good also.

Oscar von Hauske Solís (COO)

I think, well, they're also important to not underestimate the change in Brazil. Brazil was the main headwind that we were facing on the fixed-line platform because pay-TV used to be the largest revenue line, the largest revenue line. But over the years, broadband has really more than overtaken pay-TV. So the headwinds from pay-TV are now being felt less. They are less important. So we are confident that we can continue to grow revenues on the fixed-line platform in Brazil going forward.

Daniel Hajj Aboumrad (CEO)

Brazil and all of it?

Oscar von Hauske Solís (COO)

All of it.

Daniel Hajj Aboumrad (CEO)

Last year, we do around in fiber, I think we do 14.

Oscar von Hauske Solís (COO)

14.

Daniel Hajj Aboumrad (CEO)

million home passes. So that helps to sell and to do more customers in broadband.

Walter Piecyk (Analyst)

Great. Thanks.

Daniel Hajj Aboumrad (CEO)

Thanks.

Operator (participant)

Your next question comes from the line of Brayan Muñoz of J.P. Morgan. Your line is now open. Please go ahead.

Brayan Munoz (Analyst)

Hello. Good morning. Can you hear me?

Daniel Hajj Aboumrad (CEO)

Yes. Yes.

Brayan Munoz (Analyst)

Perfect. Thank you so much. Two questions, please. The first one on Brazil, we saw that ARPU grew around 3%. However, we did see a lot of the base migrating to a postpaid plan within the Brazilian base. We were wondering, why didn't the ARPU grow a little bit better or faster? What's the explanation behind that? And secondly, in Mexico broadband, you mentioned 17 million home passes. How far can that number go, or are we reaching a trough level? Is that the maximum capacity in fiber that you can handle?

Daniel Hajj Aboumrad (CEO)

Well, in Mexico, we do already 17 million fiber home passes. We're reviewing what and we are seeing where it makes sense for us to still go and do home passes. There is still a lot of capacity in these 17 million home passes, so we can penetrate more also these houses. And it's what we're doing all around. In Brazil, the ARPU let me see the ARPU. Your question is that the ARPU is growing in Brazil? It was 3%. We found that number a little bit low given the postpaid migration that we saw. We have expected faster acceleration in ARPU. But just want to know if something changed or what could be the explanation of that low.

Oscar von Hauske Solís (COO)

No, I don't know exactly. But I can tell you that in Brazil, we're doing very good in postpaid. We're growing around 8% the base of postpaid. The subscribers in postpaid is good. Maybe some of these postpaid are in the higher plans. Other ones are in the lower plans. But all overall, Brazil is doing good, and we are moving a lot of our postpaid also to a lot of our prepaid also to postpaid. New customers plus upgrades from prepaid. And these upgrades from prepaid are moving slowly, so they are not moving to the high-end plans. So they are just jumping to postpaid. And then in the next years, I'm sure that with 5G and better handsets and more usage, these can improve the ARPU. So that's more or less what is happening in Brazil.

Brayan Munoz (Analyst)

Thank you so much.

Operator (participant)

Your next question comes from the line of Fred Mendes of Bank of America. Your line is now open. Please go ahead.

Fred Mendes (Analyst)

Hello. Good morning, everyone, and thanks for the call. I have two questions here. The first one on Telmex, and especially on net adds, the results were very, very strong. Just trying to understand this dynamic. Obviously, as you pass through your fiber, 80% of the network already on fiber. I think that explains a lot. But trying to understand the profile of these clients, if you're basically getting new clients or if you're being able to get from other operators, basically trying to understand the dynamics behind such strong results, that would be my first one. And then the second one on Colombia, there was some news, I guess, mentioned that you expect to do a $1 billion investment CapEx this year. Correct me if I'm wrong. So just trying to understand your expectation there.

It seems it's still a competitive market, but one of the players is facing some challenges. So just trying to understand the rationale, if this is true, and the strategy for Colombia for 2024? Thank you.

Daniel Hajj Aboumrad (CEO)

But first, in Colombia, I don't have exactly the disclosure of what's going to be the CapEx in each country. But if you can talk to Daniela, we can review and see what we're going to do. In this CapEx, I don't know if they are accounting for the frequencies that we already get and renew, the frequencies that we renew in February. So I still don't know very good on that, but we can show you exactly what we're doing. But all overall, in CapEx, we're going to do the CapEx that we commit, and we're on target and it's what the plan is. It's $7.1-$7.2 billion on CapEx for this year. In Telmex, I don't know, Oscar, if you want to give your view.

Oscar von Hauske Solís (COO)

Yes. One is what you mentioned. I mean, we did a lot of migration to fiber. That helped us to reduce the churn, so that brings us net adds. Secondly, is that the market is still growing, so we are taking share of the total of the market. And the rest, I suppose, is coming from competition, right? So what has been working is what you mentioned, the new packages that we send to the market that include streaming video and very good speed. And another one that is important is that when we get into the fiber, we offer symmetrical speed, and that has been very well received in the market. So that's why we see this growth.

Fred Mendes (Analyst)

Perfect. Perfect. Very clear. Thanks, Daniel. Thanks, Oscar.

Oscar von Hauske Solís (COO)

Thank you. Great.

Operator (participant)

Thank you. Our next question comes from the line of Ernesto González of Morgan Stanley. Your line is now open. Please go ahead.

Ernesto Gonzalel (Analyst)

Hi. Thank you for taking our question. It's two. The first one is, this quarter, we saw a large increase in lease-related debt. Just wondering if you could give us some color on the drivers. And then the second one is on the outlook for Chile. The JV ownership is up for review soon, and you also had a deal with ON*NET. On the latter, we were wondering if it's only for expansion to replace the existing network and if you have any volume commitments with KKR, sorry, with KKR. Thank you.

Daniel Hajj Aboumrad (CEO)

Well, what we do is we do an agreement with ON*NET to use the fiber. Yes, it's a complex contract. We have a volume, and they give us some prices. So it's a contract that we think it's good for us. In one side, we have fiber in Chile, and we're going to use our fiber network. In the other side, where we don't have fiber, we're going to use ON*NET fiber. So that's what we do, and I think makes sense to do that. What else in Chile?

Ernesto Gonzalel (Analyst)

Yes. On the JV ownership review?

Daniel Hajj Aboumrad (CEO)

Yeah. The JV ownership, as we said, we've had some commitments. It's what we just announced. We have some commitments to put some money, and they can.

Oscar von Hauske Solís (COO)

Match up.

Daniel Hajj Aboumrad (CEO)

Let's catch up on, I think, it's the end of July. We don't know what they are going to do. So let's see. We still don't know. I think the company is in good shape. We are moving and doing a lot more coverage in wireless, 5G, 4G, better network. We do an agreement to do a big and state-of-the-art network in Chile. So in terms of the infrastructure, I think we are okay. We're moving in the commercial side. We are being more aggressive. We're being gaining a little bit in mobile and starting not to lose in fixed. So we are happy the way the company is developing, and we still have a lot of things to do to.

Oscar von Hauske Solís (COO)

Synergies.

Daniel Hajj Aboumrad (CEO)

All the synergies that we do with the two companies, and we're in that process. It's not only 1 year. I think it's 2 years, 3 years to finalize all the synergies that we have, but we are in process, and we are okay on that.

Oscar von Hauske Solís (COO)

And great.

Daniel Hajj Aboumrad (CEO)

We'll put good management there also. The management is, I think, very good, and we're happy the way they are working.

Oscar von Hauske Solís (COO)

So, on, the question on lease-related debt, what was the question again?

Ernesto Gonzalel (Analyst)

Yes. We saw a large increase in lease-related debt from the end of 2023 to now. Non-current liabilities, for example, lease-related debt increased from MXN 100 billion to MXN 160 billion. So just wondering, what was the driver?

Oscar von Hauske Solís (COO)

I don't know. Maybe it might be FX movements. Obviously, we don't have anything else on taxes that has happened this year. But obviously, EPS, but he said that from the end of last year.

Daniel Hajj Aboumrad (CEO)

We can review that and get that.

Oscar von Hauske Solís (COO)

Yeah. Let's review it here. But yeah, we obviously have more debt since the spin-off of the European assets, EuroTeleSites. That should have been picked up by the end of last year.

Daniel Hajj Aboumrad (CEO)

Also Peru and Dominican Republic, that we sell it also last year, so that will be more lease.

Oscar von Hauske Solís (COO)

See, that's going to be a big deal.

Daniel Hajj Aboumrad (CEO)

Review that.

Oscar von Hauske Solís (COO)

Let's review it.

Walter Piecyk (Analyst)

Let's review that. Yeah.

Oscar von Hauske Solís (COO)

No new transactions.

Ernesto Gonzalel (Analyst)

Thank you so much.

Walter Piecyk (Analyst)

Thank you.

Operator (participant)

Your next question comes from the line of Alejandro Azar of GBM. Your line is now open. Please go ahead.

Alezandrol Jazal (Analyst)

Hi, everyone. Thank you for taking my questions. Just a quick one. What can you tell us in terms of the competitive landscape in Mexico, in both markets, in wireless and broadband? I mean, in wireless, with Bait having 2 million active users, how should we think about this new entry player? Are these guys unlocking new clients because we're not seeing churn in AMX? And on the other side, on the broadband, what are you seeing in terms of competition? You mean you're not increasing prices, but what are you seeing in regards to your competitors? Thank you.

Daniel Hajj Aboumrad (CEO)

Well, I think Mexico is a very competitive market, very competitive in both, in fixed and in wireless. And talking a little bit about Bait, Altán, they have been very aggressive, very big promotions. I don't know how profitable they are going to be these promotions, but they are doing big, big promotions. And maybe, as you are saying, they are unlocking some new subscribers, but we don't know still how long if they take out these promotions, they are going to stay with them because we had it 10 years ago in a lot of markets when you give a lot of things, big promotions. When you stop those promotions, they stop buying things. So we don't know, but it's a very competitive market. And what we have and what we have been doing very good is we have a very good customer service.

We have very good capacity, 5G, a very good 4G and 3G network, coverage, so a good naming, good distribution. So all overall, we are in good shape. And what we said, if you have a good network, good coverage, good quality, and you are competitive, then good clients, good customers are going to end in your network. But it's not only Bait. The other ones are also being very aggressive: AT&T, Telefónica, all the other. The MVNOs that are there. So Mexico has been very competitive for the last two, three years, and I think it's going to still be very competitive for the next years in the mobile side. And in the broadband, well, in the broadband, we delayed a little bit years ago the development of fiber, but we catch up.

We are with a lot of fiber, and we want to get back part of our market share. That's what we're going to do. We're being aggressive. We have good infrastructure, a lot of fiber, a good service, very good service. That is giving us less churn, as Oscar is saying, and less churn.

Oscar von Hauske Solís (COO)

Packages. A very good offer that is packages, bundles, and everything. So we are doing good. But also, the broadband market is also very competitive. So, well, that's – and I think not only in Mexico. You can see in all Latin America; there's a lot of competition, a lot of competitors. And what we have been focused on for the last 5-8 years is to put a very good network infrastructure. In the corporate side, we have been putting a lot of cloud data centers, applications, training people, and do all the job to sell and to do every year more and more things on the cloud for all the corporate mid and high corporate segments, small and medium businesses, also for the big businesses. But not only the big businesses. We have been doing a lot also in the small and medium businesses.

Alezandrol Jazal (Analyst)

Thank you. Thank you, Daniel. That was very clear. And one more, if I may, on the KPN convertible bond, did you have to spend money to cover the full position, or was it enough with the shares that AMX had on their balance sheet?

Oscar von Hauske Solís (COO)

We basically delivered the shares we had in exchange for the bonds. That was it.

Daniel Hajj Aboumrad (CEO)

People decide to take the shares, and we give the shares, they give us the bonds.

Oscar von Hauske Solís (COO)

We have no more.

Alezandrol Jazal (Analyst)

Thank you, Carlos.

Oscar von Hauske Solís (COO)

You're welcome.

Operator (participant)

As a reminder, in order to ask a question, please press star, then the number one on your telephone keypad. Your next question comes from the line of Gabriela Chaparro of BCP Securities. Your line is open. Please go ahead.

Gabriela Chaparro (Analyst)

Hi. Thank you for taking my question. Part of my question has been already answered, but I was wondering if you can give us more color on your plans in Chile for mobile, given the highly competitive market, and following that WOM filed for Chapter 11. Thank you.

Daniel Hajj Aboumrad (CEO)

Well, this is WOM filed, as you said, for Chapter 11. We don't know what they are going to do, but we are investing in a much better network, quality, 5G, and we hope we can compete and we can gain more market share there. Maybe the market will be consolidated in the future. We don't know. We don't know what's going to happen with WOM. They filed for Chapter 11. I don't know what's going to be the future, but hope that the market can consolidate in Chile.

Gabriela Chaparro (Analyst)

Thank you very much.

Daniel Hajj Aboumrad (CEO)

Thank you.

Operator (participant)

Our next question comes from the line of Soomit Datta of New Street Research. Your line is open. Please go ahead.

Soomit Datta (Analyst)

Yeah. Hi. Thanks very much for giving me the opportunity. A couple of questions, please. One on Brazil, on the fixed business. Just to check, please, we saw a nice growth in the quarter. I don't think you called out the pay-TV component, but is it fair to say we are now at the stage where the pay-TV business is small enough that it's no longer a headwind for the overall Brazilian fixed business? And therefore, should we expect to see growth on an ongoing basis coming through from broadband? Any color around that would be helpful, please. And then secondly, on the corporate networks business that's performed super well this quarter, I wonder, kind of firstly, what visibility do you have on the revenues for the corporate networks business? And secondly, what kind of implications does it have for the margin profile of the business?

I would perhaps imagine it's a lower-margin business in the quarter laterally, but would be interesting, as that business kind of scales and becomes more significant, how much of an impact will it have on margins? Thank you.

Oscar von Hauske Solís (COO)

See, hi, Soomit. Well, I was mentioning it in a previous answer to a previous question that indeed, I think the headwinds that we were seeing in Brazil seem to, they are being felt less and less. I think some years back, maybe five years back, the revenue from pay-TV was twice as high as that from broadband, and the situation has changed. So now, it is more or less the opposite. I think now the revenue from broadband is more than twice that of pay-TV, and the difference keeps on growing. So yes, I think that we feel confident that going forward, this headwind from pay-TV, to the extent that it remains, will not be determinant in us maintaining revenue growth, positive revenue growth. So we expect that we will continue to grow in fixed.

As we have mentioned in previous calls, being able to grow both on mobile and in fixed is very, very significant for margins. In Mexico and Brazil, we have moved from only growing in mobile and not growing in fixed to growing on both fixed and mobile. I think that is a key element of the change that we have seen over the last couple of years. And corporate? Yeah. Corporate, you mentioned we are tracking, following revenues. What we did is that in the major countries, we have a dedicated team just focused on this market. So we bring expertise in the different fields: cybersecurity, verticals, AI. So yes, we are tracking those revenues, and we have our goals and budgets already defined.

About the profitability of the business, we don't get in any business that we don't see that we have the right payback in the corporate. There is some part of the revenues coming from corporate that is more software as a service. So it's a lot of alliance that we do. There is a revenue share with them. So we don't invest in CapEx even. It's more a resale operation for our services. So it's a very good free cash flow because it's a totally revenue share with some of these alliance that we have in the market.

Soomit Datta (Analyst)

Okay. Thank you.

Oscar von Hauske Solís (COO)

Thank you.

Operator (participant)

Your next question comes from the line of Juan Cruz of Morgan Stanley. Your line is now open. Please go ahead.

Juan Cruz (Analyst)

Hi. Good morning. Can you hear me okay?

Oscar von Hauske Solís (COO)

Yes.

Juan Cruz (Analyst)

Excellent. Going back to the Chilean JV, if I may, in December, you issued a press release saying that you had agreed to invest the equivalent of about CLP 972 billion in the JV through June of this year, or roughly about $1 billion, a little over $1 billion through that date. And as of then, about 74% had been invested already. Can you give us an update as to how much has been invested up to today in the JV in Chile? And second, with regards to the ownership agreements with Liberty, I know they have up until August 1st to match the 50% of the contribution. But what should we expect after August 1st? Should we expect some sort of announcement as to whether or not they did and how the ownership structure is going to look going forward? That'll be helpful. Thank you.

Daniel Hajj Aboumrad (CEO)

Well, first, in this announcement, the money that you are saying, $900 million, that includes the debt that we put that was guaranteed for has the guarantee of América Móvil, and we put it when we do the merge. So that includes exactly this amount of debt that we contribute to the JV, and it was guaranteed for us. So we guarantee that, and that's why we put that amount in this press release. The other thing was to operate. The rest was to operate, to invest, to put CapEx. So that's what we decide to put. What you're asking me is what they are going to do, if they are going to catch up or not. I don't know. We need to ask them, not us. So they have the right to catch up, and we don't know what they are going to do.

Either way, if they catch up or not, we are prepared to go with them and manage the company with them. They are good partners, and we're happy if they stay. On the other side, if they don't stay, we are also doing what we need to do to make successful this company and do the investments that we need to do. We are prepared for both scenarios, and we really don't know what they are going to do. Let's wait until that date and see what they are going to do.

Juan Cruz (Analyst)

Okay. So to clarify, in the press release, the amount of invested inclusive of the debt contributed to the JV was CLP 972.4 billion. Presumably, the debt that was at Claro level, right, was about $300 million equivalent. Is that right?

Daniel Hajj Aboumrad (CEO)

I think a little bit more. But we don't know exactly the numbers, but we can.

Oscar von Hauske Solís (COO)

If you want to have a working session maybe with Daniela, we can go through all the numbers.

Daniel Hajj Aboumrad (CEO)

Because we don't have exactly the numbers here, but we can open and tell you exactly what it is. No problem.

Juan Cruz (Analyst)

Okay. Since December, has América Móvil invested more in the Chilean JV? Have there been more investments since that announcement?

Daniel Hajj Aboumrad (CEO)

We don't know. I don't know exactly how much. We have a limit to put, and we are not exceeding that limit of what we said. But talk to Daniela. You can have the numbers clear there.

Juan Cruz (Analyst)

Okay. Okay. Thank you.

Daniel Hajj Aboumrad (CEO)

Thank you.

Operator (participant)

As there are no additional questions at this time, I'd like to hand the conference back over to Daniela Lecuona for closing remarks.

Daniela Lecuona Torras (Head of Investor Relations)

Thank you so much, everyone, for joining us in this call. I want to remind you that we're hosting an Investor Day, May 7th. The event will be held at the New York Stock Exchange. Most of you have probably received an invitation. For those of you who have not, please email us. We'll be very, very happy to see you there. And yeah, if you have any questions on the event, please contact Stephania, Anna, or myself.

Daniel Hajj Aboumrad (CEO)

Okay. Thank you. Thank you.

Operator (participant)

This concludes today's conference call. You may now disconnect your line.