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United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM6-K
REPORT OF A FOREIGN PRIVATE ISSUER
PURSUANT TO RULE13a-16 OR15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2019
Commission File Number:1-16269
AMÉRICA MÓVIL, S.A.B. DE C.V.
(Exact Name of the Registrant as Specified in the Charter)
America Mobile
(Translation of Registrant’s Name into English)
Lago Zurich 245
Plaza Carso / Edificio Telcel, Piso 16
Colonia Ampliación Granada, Miguel Hidalgo
11529 Mexico City, Mexico
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form20-F or Form40-F.
Form20-F ☒ Form40-F ☐
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form6-K in paper as permitted by RegulationS-T Rule 101(b)(7): ☐
This Report on Form6-K shall be incorporated by reference into the Registrant’s
Registration Statement onForm F-3ASR (FileNo. 333-227649).
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We have prepared this report to provide our investors with disclosure and financial information regarding recent developments in our business and results of operations for the three months ended March 31, 2019.
The information in this report supplements information contained in our annual report on Form20-F for the year ended December 31, 2018 (FileNo. 001-16269), filed with the U.S. Securities and Exchange Commission on April 11, 2019 (our “2018 Form20-F”).
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Some of the information contained or incorporated by reference in this report may constitute “forward-looking statements” within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Although we have based these forward-looking statements on our expectations and projections about future events, it is possible that actual events may differ materially from our expectations. In many cases, we include, together with the forward-looking statements themselves, a discussion of factors that may cause actual events to differ from our forward-looking statements.
Examples of forward-looking statements include the following:
• | projections of our commercial, operating or financial performance, our financing, our capital structure or our other financial items or ratios; |
• | statements of our plans, objectives or goals, including those relating to acquisitions, competition and rates; |
• | statements concerning regulation or regulatory developments; |
• | statements about our future economic performance or that of Mexico or other countries in which we operate; |
• | competitive developments in the telecommunications sector; |
• | other factors and trends affecting the telecommunications industry generally and our financial condition in particular; and |
• | statements of assumptions underlying the foregoing statements. |
We use words such as “believe,” “anticipate,” “plan,” “expect,” “intend,” “target,” “estimate,” “project,” “predict,” “forecast,” “guideline,” “should” and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements.
Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors, some of which are discussed under “Risk Factors” in our 2018 Form20-F, include economic and political conditions and government policies in Mexico, Brazil, Colombia, Europe and elsewhere, inflation rates, exchange rates, regulatory developments, technological improvements, customer demand and competition. We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements. You should evaluate any statements made by us in light of these important factors.
Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.
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We provide telecommunications services in 25 countries. We are a leading telecommunications services provider in Latin America, ranking first in wireless, fixed-line, broadband and Pay TV services based on the number of revenue generating units (“RGUs”). Our largest operations are in Mexico and Brazil, which together account for over half of our total RGUs and where we have the largest market share based on RGUs. We also have operations in 16 other countries in the Americas and seven countries in Central and Eastern Europe as of March 31, 2019. As of March 31, 2019, we had 277.4 million wireless subscribers and 84.5 million fixed RGUs.
The following table sets forth the number of our wireless subscribers and our fixed RGUs, which together make up our total RGUs, in the countries where we operate. Wireless subscribers consist of the number of prepaid and postpaid subscribers to our wireless services. Fixed RGUs consist of fixed voice, fixed data and Pay TV units (which include customers of our Pay TV services and, separately, of certain other digital services). The table includes total subscribers and fixed RGUs of all of our consolidated subsidiaries, without adjustment where our equity interest is less than 100%, for the reportable segments that we use in our consolidated financial statements.
As of March 31, 2019 (in thousands) | As of December 31, 2018 (in thousands) | Percent Variance | As of March 31, 2018 (in thousands) | Percent Variance | ||||||||||||||||
Wireless subscribers: | ||||||||||||||||||||
Mexico Wireless | 75,611 | 75,448 | 0.2 | 73,984 | 2.2 | |||||||||||||||
Brazil | 56,383 | 56,416 | (0.1 | ) | 58,809 | (4.1 | ) | |||||||||||||
Colombia | 29,887 | 29,681 | 0.7 | 29,401 | 1.7 | |||||||||||||||
Southern Cone(1) | 31,090 | 30,971 | 0.4 | 31,197 | (0.3 | ) | ||||||||||||||
Andean Region(2) | 20,126 | 20,344 | (1.1 | ) | 20,508 | (1.9 | ) | |||||||||||||
Central America(3) | 15,841 | 14,364 | 10.3 | 16,101 | (1.6 | ) | ||||||||||||||
Caribbean(4) | 5,980 | 5,887 | 1.6 | 5,700 | 4.9 | |||||||||||||||
United States | 21,599 | 21,688 | (0.4 | ) | 22,761 | (5.1 | ) | |||||||||||||
Europe(5) | 20,908 | 21,000 | (0.4 | ) | 20,640 | 1.3 | ||||||||||||||
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Total wireless subscribers | 277,425 | 275,798 | 0.6 | 279,102 | (0.6 | ) | ||||||||||||||
Fixed RGUs: | ||||||||||||||||||||
Mexico Fixed | 22,350 | 22,337 | 0.1 | 21,988 | 1.6 | |||||||||||||||
Brazil | 34,993 | 35,285 | (0.8 | ) | 35,861 | (2.4 | ) | |||||||||||||
Colombia | 7,320 | 7,171 | 2.1 | 6,840 | 7.0 | |||||||||||||||
Southern Cone(1) | 2,274 | 2,199 | 3.4 | 2,037 | 11.6 | |||||||||||||||
Andean Region(2) | 1,894 | 1,856 | 2.1 | 1,775 | 6.7 | |||||||||||||||
Central America(3) | 6,867 | 6,465 | 6.2 | 5,919 | 16.0 | |||||||||||||||
Caribbean(4) | 2,545 | 2,546 | — | 2,656 | (4.2 | ) | ||||||||||||||
Europe(5) | 6,248 | 6,261 | (0.2 | ) | 6,035 | 3.5 | ||||||||||||||
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Total Fixed RGUs | 84,492 | 84,120 | 0.4 | 83,111 | 1.7 | |||||||||||||||
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Total RGUs | 361,917 | 359,919 | 0.6 | 362,213 | (0.1 | ) | ||||||||||||||
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(1) | Argentina, Chile, Paraguay and Uruguay. |
(2) | Ecuador and Peru. |
(3) | Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. |
(4) | Dominican Republic and Puerto Rico. |
(5) | Austria, Belarus, Bulgaria, Croatia, Macedonia, Serbia and Slovenia. |
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OPERATING AND FINANCIAL REVIEW – FIRST QUARTER 2019
The following is a summary and discussion of our unaudited condensed consolidated financial information as of and for the three months ended March 31, 2019 and 2018. The following tables and discussion should be read in conjunction with our audited consolidated financial statements included in our 2018Form 20-F.
In the opinion of our management, the unaudited condensed consolidated financial information discussed below includes all adjustments, consisting only of normal and recurring adjustments, necessary for the fair presentation of this financial information in a manner consistent with the presentation under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board made in our audited annual consolidated financial statements included in our 2018 Form20-F.
References herein to “U.S.$” are to U.S. dollars. References herein to “Ps.” are to Mexican pesos. U.S. dollar amounts in the tables are presented solely for convenience. You should not construe these translations, or any other currency translations included herein, as representations that the Mexican peso amounts actually represent the U.S. dollar or other foreign currency amounts or could be converted into U.S. dollars or such other foreign currency at the rate indicated. Unless otherwise indicated, we have translated U.S. dollar amounts from Mexican pesos at the exchange rate of Ps.19.3201 to U.S.$1.00, which was the rate on March 29, 2019, as reported byBanco de México and published in the Official Gazette of the Federation (Diario Oficial de la Federación).
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Condensed Consolidated Financial Data of América Móvil
For the three months ended March 31, | ||||||||||||
2018 | 2019 | |||||||||||
(in thousands of Mexican pesos) | (in millions of U.S. dollars) | |||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||
Income Statement Data | ||||||||||||
Operating revenues: | ||||||||||||
Revenues services | Ps. | 215,871,787 | Ps. | 207,800,480 | U.S.$ | 10,756 | ||||||
Sales of equipment | 37,669,237 | 37,852,155 | 1,959 | |||||||||
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Total operating revenues | 253,541,024 | 245,652,635 | 12,715 | |||||||||
Operating costs and expenses: | ||||||||||||
Cost of sales and services | 121,594,918 | 114,510,844 | 5,927 | |||||||||
Commercial, administrative and general expenses | 57,855,262 | 54,676,728 | 2,830 | |||||||||
Other expenses | 2,082,987 | 1,417,019 | 73 | |||||||||
Depreciation and amortization | 41,412,494 | 39,661,670 | 2,053 | |||||||||
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Total operating costs and expenses | 222,945,661 | 210,266,261 | 10,883 | |||||||||
Operating income | 30,595,363 | 35,386,374 | 1,832 | |||||||||
Net interest expense | (7,570,363 | ) | (8,764,215 | ) | (454 | ) | ||||||
Foreign currency exchange gain, net | 22,903,239 | 8,250,171 | 427 | |||||||||
Valuation of derivatives, interest cost from labor obligations and other financial items, net | (14,419,675 | ) | (674,142 | ) | (35 | ) | ||||||
Equity interest in net result of associated companies | 13,596 | 15,499 | 1 | |||||||||
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Profit before income tax | 31,522,160 | 34,213,687 | 1,771 | |||||||||
Income tax | 12,604,745 | 14,005,696 | 725 | |||||||||
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Net profit for the period | 18,917,415 | 20,207,991 | 1,046 | |||||||||
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Net profit for the period attributable to: | ||||||||||||
Equity holders of the parent | 18,765,516 | 19,443,415 | 1,006 | |||||||||
Non-controlling interests | 151,899 | 764,576 | 40 | |||||||||
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Ps. | 18,917,415 | Ps. | 20,207,991 | U.S.$ | 1,046 | |||||||
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As of December 31, 2018 | As of March 31, 2019 | |||||||||||
(in thousands of Mexican pesos) | (in millions of U.S. dollars) | |||||||||||
(audited) | (unaudited) | (unaudited) | ||||||||||
Balance Sheet Data | ||||||||||||
Total current assets | Ps. | 349,055,524 | Ps. | 358,479,914 | U.S.$ | 18,554 | ||||||
Totalnon-current assets | 1,080,167,868 | 1,184,263,458 | 61,297 | |||||||||
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Total assets | 1,429,223,392 | 1,542,743,372 | 79,851 | |||||||||
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Total current liabilities | 467,090,889 | 533,472,508 | 27,614 | |||||||||
Long-term debt | 542,691,819 | 492,917,419 | 25,513 | |||||||||
Long-term lease debt | — | 89,860,929 | 4,651 | |||||||||
Deferred income taxes | 24,573,441 | 25,865,203 | 1,339 | |||||||||
Income tax | 7,891,042 | 5,081,038 | 263 | |||||||||
Deferred revenues | 3,239,301 | 3,032,465 | 157 | |||||||||
Derivative financial instruments | 3,567,863 | 3,427,847 | 177 | |||||||||
Asset retirement obligations | 15,971,601 | 15,955,864 | 826 | |||||||||
Employee benefits | 118,325,014 | 115,358,254 | 5,971 | |||||||||
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Total liabilities | 1,183,350,970 | 1,284,971,527 | 66,511 | |||||||||
Equity: | ||||||||||||
Capital stock | 96,338,378 | 96,338,332 | 4,986 | |||||||||
Retained earnings: | ||||||||||||
Prior periods | 184,689,288 | 237,085,337 | 12,271 | |||||||||
Profit for the period | 52,566,197 | 19,443,415 | 1,006 | |||||||||
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Total retained earnings | 237,255,485 | 256,528,752 | 13,277 | |||||||||
Other comprehensive income items | (137,598,218 | ) | (145,143,870 | ) | (7,513 | ) | ||||||
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Equity attributable to equity holders of the parent | 195,995,645 | 207,723,214 | 10,750 | |||||||||
Non-controlling interests | 49,876,777 | 50,048,631 | 2,590 | |||||||||
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Total equity | 245,872,422 | 257,771,845 | 13,340 | |||||||||
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Total liabilities and equity | Ps. | 1,429,223,392 | Ps. | 1,542,743,372 | U.S.$ | 79,851 | ||||||
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Consolidated Results of Operations for the Three Months Ended March 31, 2019 and 2018
Our financial statements are presented in Mexican pesos, but our operations outside of Mexico account for a significant portion of our revenues and expenses. Currency variations between the Mexican peso and the currencies of ournon-Mexican subsidiaries affect our results of operations as reported in Mexican pesos.
We adopted IFRS 16 Leases as of January 1, 2019. The principal effect of adopting IFRS 16 on our consolidated statement of financial position was to increase lease debt and right of use assets by similar amounts. In our condensed consolidated statement of comprehensive income, the adoption of IFRS 16 resulted in lower operating costs and higher depreciation and interest expense, with a limited effect on net profit. We have not restated prior periods to give effect to IFRS 16 because we elected the modified retrospective approach in our adoption of this new standard, so the comparison of our results of operations for the first quarter of 2019 and 2018 is affected by the adoption of IFRS 16. The tables below set forth the effects of IFRS 16 on our income statement and balance sheet data presented above in this Form6-K.
For the three months ended March 31, 2019 | ||||||||||||
(in millions of Mexican pesos) | ||||||||||||
Before impact of IFRS 16 | Impact of IFRS 16 | As reported | ||||||||||
Operating revenues | Ps. | 245,653 | Ps. | — | Ps. | 245,653 | ||||||
Total costs and expenses | 177,665 | (7,060 | ) | 170,605 | ||||||||
Depreciation and amortization | 33,801 | 5,861 | 39,662 | |||||||||
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Operating income | 34,187 | 1,199 | 35,386 | |||||||||
Net interest expense | (6,701 | ) | (2,063 | ) | (8,764 | ) | ||||||
Foreign currency exchange gain, net | 8,250 | — | 8,250 | |||||||||
Valuation of derivatives, interest cost from labor obligations and other financial items, net | (674 | ) | — | (674 | ) | |||||||
Equity interest in net result of associated companies | 16 | — | 16 | |||||||||
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Profit before income tax | 35,078 | (864 | ) | 34,214 | ||||||||
Income tax | 14,088 | (82 | ) | 14,006 | ||||||||
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Net profit for the period | 20,990 | (782 | ) | 20,208 | ||||||||
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Net profit for the period attributable to: | ||||||||||||
Equity holders of the parent | Ps. | 20,225 | Ps. | (782 | ) | Ps. | 19,443 | |||||
Non-controlling interests | 765 | — | 765 | |||||||||
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Ps. | 20,990 | Ps. | (782 | ) | Ps. | 20,208 | ||||||
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As of March 31, 2019 | ||||||||||||
(in millions of Mexican pesos) | ||||||||||||
Before impact of IFRS 16 | Impact of IFRS 16 | As reported | ||||||||||
Total current assets | Ps. | 358,480 | Ps. | — | Ps. | 358,480 | ||||||
Totalnon-current assets | 1,068,721 | 115,542 | 1,184,263 | |||||||||
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Total assets | 1,427,201 | 115,542 | 1,542,743 | |||||||||
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Total current liabilities | 507,010 | 26,463 | 533,473 | |||||||||
Long-term debt | 492,917 | — | 492,917 | |||||||||
Long-term lease debt | — | 89,861 | 89,861 | |||||||||
Other liabilities | 168,720 | — | 168,720 | |||||||||
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Total liabilities | 1,168,647 | 116,324 | 1,284,971 | |||||||||
Total equity | Ps. | 258,554 | Ps. | (782 | ) | Ps. | 257,772 | |||||
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Total liabilities and equity | Ps. | 1,427,201 | Ps. | 115,542 | Ps. | 1,542,743 | ||||||
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In the following discussion regarding our operating revenues and operating costs and expenses, we also include a discussion of the change in the different components of our revenues and cost and expenses between periods at constant exchange rates (i.e., using the same exchange rate to translate the local-currency results of ournon-Mexican operations for both periods). We believe that this additional information helps investors better understand the performance of ournon-Mexican operations and their contribution to our consolidated results.
Operating Revenues
Total operating revenues for the first three months of 2019 decreased by 3.1%, or Ps.7.9 billion, over the first three months of 2018, reflecting the depreciation of most of our operating currencies against the Mexican peso. At constant exchange rates, total operating revenues for the first three months of 2019 increased by 3.0% over the first three months of 2018.
Revenues Services—Revenues services for the first three months of 2019 decreased by 3.7%, or Ps.8.1 billion, over the first three months of 2018. At constant exchange rates, revenues services for the first three months of 2019 increased by 2.5% over the first three months of 2018. This increase principally reflects increases in revenues from broadband and postpaid wireless services, which was partially offset by a decrease in Pay TV revenues.
Sales of Equipment—Sales of equipment for the first three months of 2019 increased by 0.5%, or Ps.0.2 billion, over the first three months of 2018. At constant exchange rates, sales of equipment for the first three months of 2019 increased by 5.5% over the first three months of 2018. The increase principally reflects higher sales of data-enabled devices and accessories and an increase in handset financing plans.
Operating Costs and Expenses
Cost of sales—Cost of sales for the first three months of 2019 decreased by 1.5%, or Ps.0.6 billion, over the first three months of 2018. At constant exchange rates, cost of sales for the first three months of 2019 increased by 1.8% over the first three months of 2018. This increase principally reflects increased sales ofhigher-end smartphones and an increase in handset financing plans.
Cost of services—Cost of services for the first three months of 2019 decreased by 7.9%, or Ps.6.5 billion, over the first three months of 2018. At constant exchange rates, cost of services for the first three months of 2019 decreased by 3.1% over the first three months of 2018. This decrease principally reflects the impact of our adoption of IFRS 16.
Commercial, Administrative and General Expenses—Commercial, administrative and general expenses for the first three months of 2019 decreased by 5.5%, or Ps.3.2 billion, over the first three months of 2018. At constant exchange rates, commercial, administrative and general expenses for the first three months of 2019 increased by 0.9% over the first three months of 2018. This increase principally reflects higher personnel costs and activation fees, which was partially offset by a reduction in lease expense.
Other Expenses—Other expenses for the first three months of 2019 decreased by 32.0%, or Ps.0.7 billion, over the first three months of 2018. This decrease principally reflects insurance expenses and asset retirements caused by Hurricane Maria in Puerto Rico in 2018.
Depreciation and amortization—Depreciation and amortization for the first three months of 2019 decreased by 4.2%, or Ps.1.8 billion, over the first three months of 2018. Absent the effect of our adoption of IFRS 16, depreciation and amortization would have decreased by 18.4%. As a percentage of operating revenues, depreciation and amortization for the first three months of 2019 was 16.1%, as compared to 16.3% for the first three months of 2018. This decrease principally reflects adjustments in 2018 to the useful lives of assets in Brazil, which was partially offset by our adoption of IFRS 16.
Operating Income
Operating income for the first three months of 2019 increased by 15.7%, or Ps.4.8 billion, over the first three months of 2018. Operating margin (operating income as a percentage of operating revenues) for the first three months of 2019 was 14.4%, as compared to 12.1% for the first three months of 2018.
Non-Operating Items
Net Interest Expense—Net interest expense (interest expense less interest income) for the first three months of 2019 increased by 15.8%, or Ps.1.2 billion, over the first three months of 2018. This increase principally reflects our adoption of IFRS 16.
Foreign Currency Exchange Gain, Net—We recorded a net exchange gain of Ps.8.3 billion for the first three months of 2019, compared to a net exchange gain of Ps.22.9 billion for the first three months of 2018. The gain principally reflects the depreciation of some of the currencies in which our indebtedness is denominated against our functional currency.
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Valuation of Derivatives, Interest Cost from Labor Obligations and Other Financial Items, Net—The net change in valuation of derivatives and other financial items represented a charge of Ps.0.7 billion for the first three months of 2019, compared to a charge of Ps.14.4 billion for the first three months of 2018. The charge principally reflects the interest cost of labor obligations, which was partially offset by a gain in the fair value of our derivative financial instruments, driven by the reduction in U.S. long-term interest rates and the appreciation of the Pound Sterling against the U.S. dollar.
Income Tax—Our income tax expenses for the first three months of 2019 increased by 11.1% over the first three months of 2018. This increase principally reflects higher profit before income tax due to higher operating income, lower foreign exchange gain and lower valuation of derivatives in 2019 compared to 2018. Our effective corporate income tax rate as a percentage of profit before income tax was 40.9% for the first three months of 2019, as compared to 40.0% for the first three months of 2018. This rate differed from the Mexican statutory rate of 30% principally because of taxable inflationary effects, employee benefits andnon-taxable items.
Net Profit
We recorded net profit of Ps.20.2 billion for the first three months of 2019, an increase of 6.8%, or Ps.1.3 billion over the first three months of 2018.
Segment Results of Operations for the Three Months Ended March 31, 2018 and 2019
The following table sets forth the exchange rates used to translate the results of our significantnon-Mexican operations, as expressed in Mexican pesos per foreign currency unit, and the change from the rate used in the prior period indicated. The U.S. dollar is our functional currency in several of the countries or territories in which we operate in addition to the United States, including Ecuador, Puerto Rico, Panama and El Salvador.
Mexican pesos per foreign currency unit (average for the period) for the three months ended March 31, | |||||||||||||||
2018 | 2019 | % Change | |||||||||||||
Brazilian real | 5.7812 | 5.0983 | (11.8 | ) | |||||||||||
Colombian peso | 0.0066 | 0.0061 | (6.7 | ) | |||||||||||
Argentine peso | 0.9536 | 0.4936 | (48.2 | ) | |||||||||||
U.S. dollar | 18.7629 | 19.2202 | 2.4 | ||||||||||||
Euro | 23.0664 | 21.8218 | (5.4 | ) |
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The tables below set forth operating revenues and operating income for each of our segments for the periods indicated.
For the Three Months ended March 31, 2018 | ||||||||
Operating revenues | Operating income | |||||||
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Mexico Wireless | Ps. | 50,326 | Ps. | 12,445 | ||||
Mexico Fixed | 23,532 | 2,251 | ||||||
Brazil | 52,071 | 4,590 | ||||||
Colombia | 18,527 | 3,544 | ||||||
Southern Cone | 19,985 | 2,957 | ||||||
Andean Region | 13,695 | 1,286 | ||||||
Central America | 11,079 | 1,392 | ||||||
United States | 37,606 | 806 | ||||||
Caribbean | 8,980 | 1,107 | ||||||
Europe | 24,750 | 74 | ||||||
Eliminations | (7,010 | ) | 143 | |||||
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Total | Ps. | 253,541 | Ps. | 30,595 | ||||
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For the Three Months ended March 31, 2019 | ||||||||
Operating revenues | Operating income | |||||||
(in millions of Mexican Pesos) (unaudited) | ||||||||
Mexico Wireless | Ps. | 53,390 | Ps. | 15,344 | ||||
Mexico Fixed | 22,682 | 980 | ||||||
Brazil | 46,605 | 7,426 | ||||||
Colombia | 18,042 | 3,556 | ||||||
Southern Cone | 21,482 | 423 | ||||||
Andean Region | 13,605 | 1,868 | ||||||
Central America | 11,450 | 1,425 | ||||||
United States | 38,297 | 53 | ||||||
Caribbean | 8,886 | 1,542 | ||||||
Europe | 23,775 | 1,841 | ||||||
Eliminations | (12,561 | ) | 928 | |||||
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Total | Ps. | 245,653 | Ps. | 35,386 | ||||
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The following discussion addresses the financial performance of each of our reportable segments by comparing results for the first three months of 2019 and 2018. In theperiod-to-period comparisons for each segment, we include percentage changes in operating revenues, operating income and operating margin (operating income as a percentage of operating revenues). Comparisons in the following discussion are calculated using figures in Mexican pesos. We also include percentage changes in adjusted segment operating revenues, adjusted segment operating income and adjusted operating margin (adjusted operating income as a percentage of adjusted operating revenues). The adjustments eliminate (i) certain intersegment transactions, (ii) for ournon-Mexican segments, the effects of exchange rate changes and (iii) for the Mexican Wireless segment only, revenues and costs of group corporate activities and other businesses that are allocated to the Mexico Wireless segment.
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Mexico Wireless
The number of net prepaid wireless subscribers for the first three months of 2019 increased by 1.4% over the first three months of 2018, and the number of net postpaid wireless subscribers increased by 5.9%, resulting in an increase in the total number of wireless subscribers in Mexico of 2.2%, or 1.6 million, to approximately 75.6 million as of March 31, 2019.
Mexico Wireless segment operating revenues for the first three months of 2019 increased by 6.1% over the first three months of 2018. Adjusted segment operating revenues increased by 5.9% over the first three months of 2018. This increase in segment operating revenues principally reflects an increase in postpaid wireless revenues and an increase in revenues from service plans offering higher data capacity, coverage and quality.
Mexico Wireless segment operating income for the first three months of 2019 increased by 23.3% over the first three months of 2018. Adjusted segment operating income increased by 22.8% over the first three months of 2018.
Mexican Wireless segment operating margin was 28.7% for the first three months of 2019, as compared to 24.7% for the first three months of 2018. Adjusted segment operating margin was 35.3% for the first three months of 2019, as compared to 30.5% for the first three months of 2018. This increase principally reflects increased equipment sales, a reduction in advertising costs and our cost-savings program.
Mexico Fixed
The number of fixed voice RGUs in Mexico for the first three months of 2019 increased by 0.4% over the first three months of 2018, and the number of broadband RGUs in Mexico increased by 3.3%, resulting in an increase in total fixed RGUs in Mexico of 1.6%, or 362 thousand, to approximately 22.3 million as of March 31, 2019.
Segment operating revenues for the first three months of 2019 decreased by 3.6% over the first three months of 2018. Adjusted segment operating revenues decreased by 6.2% over the first three months of 2018. This decrease in segment operating revenues principally reflects a decrease in fixed voice revenues and equipment sales, which was partially offset by an increase in revenues from broadband and corporate network services.
Segment operating income for the first three months of 2019 decreased by 56.4% over the first three months of 2018. Adjusted segment operating income decreased by 140.8% over the first three months of 2018.
Segment operating margin was 4.3% for the first three months of 2019, as compared to 9.6% for the first three months of 2018. Adjusted segment operating margin was (2.5)% for the first three months of 2019, as compared to 5.6% for the first three months of 2018. This decrease principally reflects increases in personnel costs, energy costs and project development expenditures, as well as the payment of a fine to the telecommunications regulator and the adverse resolution of a dispute with another operator.
Brazil
The number of prepaid wireless subscribers for the first three months of 2019 decreased by 15.0% over the first three months of 2018, and the number of postpaid wireless subscribers increased by 15.1%, resulting in a decrease in the total number of wireless subscribers in Brazil of 4.1%, or 2.4 million, to approximately 56.4 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 decreased by 5.3% over the first three months of 2018, the number of broadband RGUs increased by 3.9%, and the number of Pay TV RGUs decreased by 4.0%, resulting in a decrease in total fixed RGUs in Brazil of 2.4%, or 868 thousand, to approximately 35.0 million as of March 31, 2019.
Segment operating revenues for the first three months of 2019 decreased by 10.5% over the first three months of 2018. Adjusted segment operating revenues increased by 1.3% over the first three months of 2018. This increase in segment operating revenues primarily reflects higher postpaid wireless and broadband revenues, which was partially offset by a decrease in Pay TV revenues.
Segment operating income for the first three months of 2019 increased by 61.8% over the first three months of 2018. Adjusted segment operating income increased by 91.4% over the first three months of 2018.
Segment operating margin was 15.9% for the first three months of 2019, as compared to 8.8% for the first three months of 2018. Adjusted segment operating margin was 15.2% for the first three months of 2019, as compared to 8.1% for the first three months of 2018. This increase principally reflects a reduction in costs related to interconnection rates, a decrease in handset subsidies and our cost-savings program, which was partially offset by an increase in energy costs.
Colombia
The number of prepaid wireless subscribers for the first three months of 2019 increased by 0.8% over the first three months of 2018, and the number of postpaid wireless subscribers increased by 4.7%, resulting in an increase in the total number of wireless subscribers in Colombia of 1.7%, or 486 thousand, to approximately 29.9 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 increased by 10.1% over the first three months of 2018, the number of broadband RGUs increased by 7.2% and the number of Pay TV RGUs increased by 4.2%, resulting in an increase in total fixed RGUs in Colombia of 7.0%, or 480 thousand, to approximately 7.3 million as of March 31, 2019.
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Segment operating revenues for the first three months of 2019 decreased by 2.6% over the first three months of 2018. Adjusted segment operating revenues increased by 4.3% over the first three months of 2018. This increase in segment operating revenues principally reflects an increase in broadband and corporate network services and higher sales of postpaid bundled packages.
Segment operating income for the first three months of 2019 increased by 0.3% over the first three months of 2018. Adjusted segment operating income increased by 9.3% over the first three months of 2018.
Segment operating margin was 19.7% for the first three months of 2019, as compared to 19.1% for the first three months of 2018. Adjusted segment operating margin was 24.6% for the first three months of 2019, as compared to 23.5% for the first three months of 2018. This increase principally reflects our cost-savings program, particularly in technical areas.
Southern Cone—Argentina, Chile, Paraguay and Uruguay
The number of prepaid wireless subscribers for the first three months of 2019 decreased by 1.7% over the first three months of 2018, and the number of postpaid wireless subscribers increased by 2.2%, resulting in a decrease in the total number of wireless subscribers in our Southern Cone segment of 0.3%, or 107 thousand, to approximately 31.1 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 increased by 10.8% over the first three months of 2018, the number of broadband RGUs increased by 17.9%, and the number of Pay TV RGUs increased by 7.7%, resulting in an increase in total fixed RGUs in our Southern Cone segment of 11.6%, or 237 thousand, to approximately 2.3 million as of March 31, 2019.
Southern Cone segment operating revenues for the first three months of 2019 increased by 7.5% over the first three months of 2018. Adjusted segment operating revenues increased by 25.6% over the first three months of 2018. This increase in segment operating revenues principally reflects increased postpaid wireless revenues, driven by higher data usage, and increased Pay TV revenues in Argentina, Paraguay and Uruguay and increased sales of equipment in Chile.
Southern Cone segment operating income for the first three months of 2019 decreased by 85.7% over the first three months of 2018. Adjusted segment operating income increased by 62.2% over the first three months of 2018.
Southern Cone segment operating margin was 2.0% for the first three months of 2019, as compared to 14.8% for the first three months of 2018. Adjusted segment operating margin was 21.0% for the first three months of 2019, as compared to 16.3% for the first three months of 2018. This increase principally reflects our cost-savings programs and supplier negotiations in Argentina, Uruguay and Paraguay and a reduction in subscriber acquisition costs and activation fees in Chile.
Andean Region—Ecuador and Peru
The number of prepaid wireless subscribers for the first three months of 2019 decreased by 2.5% over the first three months of 2018, and the number of postpaid wireless subscribers decreased by 0.5%, resulting in a decrease in the total number of wireless subscribers in our Andean Region segment of 1.9%, or 381 thousand, to approximately 20.1 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 increased by 4.6% over the first three months of 2018, the number of broadband RGUs increased by 14.2%, and the number of Pay TV RGUs decreased by 2.8%, resulting in an increase in total fixed RGUs in our Andean Region segment of 6.7%, or 119 thousand, to approximately 1.9 million as of March 31, 2019.
Segment operating revenues for the first three months of 2019 decreased by 0.7% over the first three months of 2018. Adjusted segment operating revenues decreased by 1.6% over the first three months of 2018. This decrease in segment operating revenues principally reflects lower prepaid wireless and service revenues, driven by a reduction in termination rates and an aggressive competitive environment in Peru, which was partially offset by higher equipment sales in Ecuador.
Segment operating income for the first three months of 2019 increased by 45.2% over the first three months of 2018. Adjusted segment operating income increased by 4.7% over the first three months of 2018.
Segment operating margin was 13.7% for the first three months of 2019, as compared to 9.4% for the first three months of 2018. Adjusted segment operating margin was 16.4% for the first three months of 2019, as compared to 15.4% for the first three months of 2018. This increase principally reflects our cost-savings program in Ecuador, which was partially offset by an aggressive competitive environment in Peru.
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Central America—Guatemala, El Salvador, Honduras, Nicaragua, Panama and Costa Rica
The number of prepaid wireless subscribers for the first three months of 2019 decreased by 2.6% over the first three months of 2018, and the number of postpaid wireless subscribers increased by 3.9%, resulting in a decrease in the total number of wireless subscribers in our Central America segment of 1.6%, or 260 thousand, to approximately 15.8 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 increased by 18.4% over the first three months of 2018, the number of broadband RGUs increased by 19.3%, and the number of Pay TV RGUs increased by 3.4%, resulting in an increase in total fixed RGUs in our Central America segment of 16.0%, or 948 thousand, to approximately 6.9 million as of March 31, 2019.
We began consolidating the operations of Telefónica Guatemala on February 1, 2019.
Segment operating revenues for the first three months of 2019 increased by 3.3% over the first three months of 2018. Adjusted segment operating revenues decreased by 4.6% over the first three months of 2018. This decrease in segment operating revenues principally reflects lower postpaid wireless and fixed voice revenues and country conditions, which was partially offset by revenue growth in prepaid wireless and Pay TV revenues.
Segment operating income for the first three months of 2019 increased by 2.4% over the first three months of 2018. Adjusted segment operating income increased by 18.7% over the first three months of 2018.
Segment operating margin was 12.4% for the first three months of 2019, as compared to 12.6% for the first three months of 2018. Adjusted segment operating margin was 14.7% for the first three months of 2019, as compared to 11.8% for the first three months of 2018. This increase principally reflects lower subscriber acquisition costs, driven by a decrease in handset subsidies and activation fees.
Caribbean—Dominican Republic and Puerto Rico
The number of prepaid wireless subscribers for the first three months of 2019 increased by 5.4% over the first three months of 2018, and the number of postpaid wireless subscribers increased by 3.9%, resulting in an increase in the total number of wireless subscribers in our Caribbean segment of 4.9%, or 279 thousand, to approximately 6.0 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 decreased by 6.7% over the first three months of 2018, the number of broadband RGUs decreased by 4.1%, and the number of Pay TV RGUs increased by 4.1%, resulting in a decrease in total fixed RGUs in our Caribbean segment of 4.2%, or 111 thousand, to approximately 2.5 million as of March 31, 2019.
Segment operating revenues for the first three months of 2019 decreased by 1.0% over the first three months of 2018. Adjusted segment operating revenues decreased by 5.5% over the first three months of 2018. This decrease in segment operating revenues principally reflects lower fixed data and voice revenues, particularly in areas still affected by Hurricane Maria, and project development expenditures.
Segment operating income for the first three months of 2019 increased by 39.3% over the first three months of 2018. Adjusted segment operating income increased by 18.3% over the first three months of 2018.
Segment operating margin was 17.3% for the first three months of 2019, as compared to 12.3% for the first three months of 2018. Adjusted segment operating margin was 15.8% for the first three months of 2019, as compared to 12.7% for the first three months of 2018. This increase principally reflects lower costs of sales and services and our cost-savings program.
United States
The number of prepaid wireless subscribers for the first three months of 2019 decreased by 5.1%, or approximately 1.2 million, to approximately 21.6 million total wireless subscribers in the United States as of March 31, 2019. This decrease principally reflects the termination of the Safelink program.
United States segment operating revenues for the first three months of 2019 increased by 1.8% over the first three months of 2018. Adjusted segment operating revenues decreased by 0.6% over the first three months of 2018. This decrease in segment operating revenues principally reflects lower sales of equipment, driven in part by lower U.S. federal tax refunds in 2019.
United States segment operating income for the first three months of 2019 decreased by 93.5% over the first three months of 2018. Adjusted segment operating income decreased by 20.9% over the first three months of 2018.
United States segment operating margin was 0.1% for the first three months of 2019, as compared to 2.1% for the first three months of 2018. Adjusted segment operating margin was 5.3% for the first three months of 2019, as compared to 6.6% for the first three months of 2018. This decrease principally reflects an increase in costs associated with payments to other operators, advertising costs and activation fees.
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Europe
The number of prepaid wireless subscribers for the first three months of 2019 decreased by 5.9% over the first three months of 2018, and the number of postpaid wireless subscribers increased by 3.6%, resulting in an increase in the total number of wireless subscribers in our Europe segment of 1.3%, or approximately 267 thousand, to approximately 20.9 million as of March 31, 2019. The number of fixed voice RGUs for the first three months of 2019 decreased by 2.3% over the first three months of 2018, the number of broadband RGUs increased by 2.0% and the number of Pay TV RGUs increased by 14.7%, resulting in an increase in total fixed RGUs in our Europe segment of 3.5%, or 213 thousand, to approximately 6.2 million as of March 31, 2019.
Segment operating revenues for the first three months of 2019 decreased by 3.9% over the first three months of 2018. Adjusted segment operating revenues for the first three months of 2019 increased by 1.5% over the first three months of 2018. This increase in segment operating revenues principally reflects higher service and fixed data and voice revenues, which was partially offset by lower equipment sales. We analyze segment results in euros because it is the functional currency in our operations in Europe.
Segment operating income for the first three months of 2019 increased by 2381.1% over the first three months of 2018. Adjusted segment operating income for the first three months of 2019 increased by 1279.7% over the first three months of 2018.
Segment operating margin was 7.7% for the first three months of 2019, as compared to 0.3% for the first three months of 2018. Adjusted segment operating margin was 12.9% for the first three months of 2019, as compared to 5.8% for the first three months of 2018. This increase in segment operating margin for the first three months of 2019 principally reflects lower charges for amortization of brands, which was partially offset by higher personnel costs due to restructuring charges.
Liquidity and Capital Resources
As of March 31, 2019, we had net debt (total debt minus cash and cash equivalents and equity investments at fair value through other comprehensive income and other short-term investments) of Ps.586.5 billion, compared to Ps.568.2 billion as of December 31, 2018. Net debt excludes Ps.116.3 billion of lease debt that was included as a result of our adoption of IFRS 16. As of March 31, 2019, cash and cash equivalents and equity investments at fair value through other comprehensive income and other short-term investments amounted to Ps.67.8 billion, compared to Ps.70.7 billion as of December 31, 2018.
Our total indebtedness, excluding lease debt, as of March 31, 2019, was Ps.654.3 billion, of which Ps.161.4 billion was short-term debt (including the current portion of long-term debt). Without considering the effect of hedging instruments used to manage our interest rate and foreign exchange exposures, approximately Ps.194.6 billion, or 29.7%, of our total indebtedness as of March 31, 2019, was denominated in U.S. dollars.
The maturities of our long-term debt as of March 31, 2019, excluding lease debt, were as follows:
Years | Amount | |||
(in millions of Mexican pesos) | ||||
2020 | Ps. | 69,604 | ||
2021 | 52,554 | |||
2022 | 96,256 | |||
2023 and thereafter | 274,503 | |||
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Total | Ps. | 492,917 | ||
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We regularly assess our interest rate and currency exchange exposures in order to determine how to manage the risk associated with these exposures. As of March 31, 2019, the net fair value of our derivatives and other financial items was a net liability of Ps.6.7 billion.
During the first three months of 2019, we used approximately Ps.27.9 billion to fund capital expenditures, which was primarily funded by our operating activities. We have also continued to repurchase shares of our capital stock under our share repurchase program: during the first three months of 2019, we spent Ps.0.02 billion repurchasing our shares in the open market. Whether we continue to do so will depend on our operating cash flow and on various other considerations, including market prices and our other capital requirements.
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The information presented below concerns recent developments since the original filing of our 2018 Form 20-F on April 11, 2019, through the date of this report on Form 6-K.
On April 29, 2019, the Salvadoran antitrust authority (Superintendencia de Competencia or “SC”) notified us that our request made on March 5th for the authorization to purchase Telefonica’s Operations in El Salvador could not be admitted for analysis of its merits by the SC due to an alleged failure to provide certain corporate documentation. We will file a new request for authorization.
The United States and other jurisdictions have expressed concerns relating to alleged security risks and violations of intellectual property rights and export controls relating to Chinese telecommunications companies such as Huawei, one of our key suppliers. The United States has announced restrictions on exports to Huawei and has taken steps towards imposing additional restrictions on the use within U.S. jurisdiction of information and communications technology from China. If these measures have an impact on Huawei’s ability to timely deliver materials, equipment, and services to us, our business could be adversely affected, but we cannot yet predict the impact, if any, of any such measures. See “Risk Factors—We rely on key suppliers to provide equipment that we need to operate our business” in the 2018 Form 20-F.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 24, 2019
AMÉRICA MÓVIL, S.A.B. DE C.V. | ||
By: | /s/ Alejandro Cantú Jiménez | |
Name: | Alejandro Cantú Jiménez | |
Title: | General Counsel |