Executive Summary / Key Takeaways

• América Móvil ($AMX) is solidifying its position as a leading telecommunications provider across Latin America and Europe, driven by strategic investments in advanced fiber and 5G networks, which are enhancing service quality and operational efficiency.
• The company's financial performance in the first half of 2025 demonstrates robust growth, with total operating revenues increasing by 13.9% year-over-year and net profit tripling, supported by strong postpaid and broadband subscriber additions and effective cost control measures.
• AMX is transitioning from a heavy investment cycle to a phase of optimized capital allocation, with a projected CapEx of MXN 6.7 billion to MXN 6.8 billion for 2025, signaling a focus on free cash flow expansion and potential for increased shareholder distributions.
• Despite intense competition from aggressive MVNOs and established rivals, AMX leverages its superior network quality, extensive coverage, and diversified service offerings to maintain market leadership and drive ARPU growth, particularly in the postpaid and corporate segments.
• Key risks include economic and political volatility in its operating regions, currency fluctuations, and evolving regulatory landscapes, particularly in Mexico, which could impact future growth and profitability.

América Móvil's Enduring Connectivity Empire

América Móvil, S.A.B. de C.V. ($AMX), established in 2000, has grown into a telecommunications behemoth, commanding a leading position across 23 countries in Latin America and Central and Eastern Europe. The company's core business spans wireless and fixed voice, data services, residential broadband, IT solutions for businesses, and Pay TV. This expansive footprint, with Mexico and Brazil alone accounting for over half of its total Revenue Generating Units (RGUs), underscores its foundational strength in a critical, high-growth sector. AMX's overarching strategy centers on leveraging its scale, continuously upgrading its network infrastructure, and enhancing operational efficiency to deliver superior customer experiences and capture market share.

The company's historical journey is marked by aggressive investment and strategic expansion. This includes the significant consolidation of Claro Chile, SpA in late 2024, which is now fully integrated into AMX's financial statements. This move, part of a multi-year plan, aims to bolster market share and profitability in a highly competitive Chilean market. AMX's strategic responses to market dynamics are evident in its focus on migrating prepaid users to higher-value postpaid plans and aggressively pursuing growth in the corporate segment, which consistently demonstrates strong revenue expansion.

Technological Bedrock: The Fiber and 5G Advantage

América Móvil's competitive moat is significantly reinforced by its advanced technological infrastructure, primarily its extensive fiber optic network and rapidly expanding 5G capabilities. The company has made substantial investments in these areas, particularly in Mexico, where approximately 84% of its broadband customers are now connected via fiber. This fiber-to-the-home (FTTH) deployment offers tangible benefits, including significantly higher and more stable internet speeds, lower latency, and enhanced reliability compared to traditional copper networks. This translates directly into a superior customer experience, fostering loyalty and enabling AMX to offer premium, value-added services.

The company's commitment to 5G is equally robust. Telcel, AMX's Mexican wireless arm, is the only provider with "real 5G" coverage in over 100 cities, offering unparalleled speeds and capacity. In Colombia, AMX boasts the biggest 5G network, with approximately 20% of its traffic already running on 5G. These 5G deployments provide a critical performance advantage, allowing for faster data transmission, support for a greater density of connected devices, and the enablement of new services like enhanced mobile broadband and IoT applications. For investors, this technological leadership translates into a stronger competitive position, higher Average Revenue Per User (ARPU) from customers consuming more data, and a more efficient network that can handle increasing traffic demands at a lower cost per bit.

AMX is also actively exploring and deploying other innovative technologies. The company utilizes low-orbit satellites from various vendors, including Star One, Starlink, and AST (ASTS), for mobile backhaul in rural areas. This strategic use of satellite technology provides cost-effective connectivity in regions where traditional fiber or microwave infrastructure would be prohibitively expensive, extending AMX's reach and enhancing its coverage moat. While direct-to-phone satellite connectivity is still under review, the current application for backhaul demonstrates AMX's pragmatic approach to leveraging technology for operational efficiency and broader service delivery.

Competitive Arena: Dominance in a Dynamic Landscape

América Móvil operates within a fiercely competitive telecommunications landscape, yet it maintains a dominant position across its key markets. The company ranks first in wireless, fixed-line, broadband, and Pay TV services based on RGUs in Latin America. This leadership is particularly evident in Mexico and Brazil, where it commands the largest market share.

In Mexico, AMX faces competition from established players like Telefónica (TEF) and AT&T (T), as well as aggressive Mobile Virtual Network Operators (MVNOs) such as BAIT. While MVNOs have shown aggressive growth, their Average Revenue Per User (ARPU) of MXN 38 is significantly lower than Telcel's MXN 177, indicating AMX's focus on higher-value customers. AMX's competitive edge in Mexico is its "best network," offering "real 5G" coverage in over 100 cities, superior speed, and quality. This technological advantage allows AMX to compete on service quality and coverage rather than solely on price, attracting and retaining high-ARPU postpaid customers.

In Brazil, AMX (under the Claro brand) holds a substantial 38-40% market share in 5G and is recognized by ANATEL as having the fastest network. This strong positioning, coupled with successful commercial efforts like the Claro Flex program and a partnership with Nubank (NU), drives robust postpaid growth. The company also leads in high-speed internet, with 11 million homes passed with fiber, demonstrating its commitment to broadband leadership despite competition from local ISPs.

The competitive dynamics are evolving, with management noting that market consolidation, such as the potential network integration of Tigo (TIGO) and Telefónica in Colombia, could lead to more rational market behavior. AMX itself is actively pursuing synergies from the Claro Chile, SpA merger to enhance its competitive standing in that market. While AMX acknowledges the presence of strong competitors across its regions, its strategy of investing in network quality, digitalization, and customer care, rather than solely price, positions it favorably. The company's extensive distribution channels and regulatory licenses also act as significant barriers to entry for new players, helping to protect its market share and profitability.

Financial Performance: A Story of Growth and Discipline

América Móvil's financial performance in the first half of 2025 underscores its operational effectiveness and strategic discipline. The company reported total operating revenues of Ps. 465.82 billion (U.S. $24.66 billion), a 13.9% increase over the first six months of 2024. At constant exchange rates, total operating revenues grew by 6.3%, or 3.8% excluding the effects of consolidating Claro Chile, SpA. This growth was broad-based, with service revenues expanding by 14.3% (6.5% at constant exchange rates) and equipment sales increasing by 11.5% (4.8% at constant exchange rates), driven by higher sales of smartphones and data-enabled devices.

Profitability metrics also showed significant improvement. Net profit for the first six months of 2025 surged threefold to Ps. 43.34 billion (U.S. $2.29 billion), compared to Ps. 14.18 billion in the same period of 2024. This substantial increase was aided by a significant shift from a net foreign currency exchange loss of Ps. 33.80 billion in H1 2024 to a net gain of Ps. 9.80 billion in H1 2025, primarily due to the appreciation of the Mexican peso against the U.S. dollar. Operating income for the first six months of 2025 increased by 6.8% to Ps. 92.15 billion. While the operating margin slightly compressed to 19.8% from 21.1%, this was influenced by increased operating costs, including lease space, network maintenance, IT services, and higher depreciation and amortization charges related to network investments and the consolidation of Claro Chile.

Liquidity and capital resources remain robust. As of June 30, 2025, net debt stood at Ps. 472 billion, an increase from Ps. 415.30 billion a year prior. However, in cash flow terms, net debt actually decreased by MXN 7.3 billion in the six months to June 2025. The net debt to last 12 months EBITDA ratio was 1.56x in Q2 2025, remaining within management's target range of 1.35x to 1.5x. Capital expenditures for the first six months of 2025 amounted to Ps. 54.90 billion, primarily funded by operating activities. The company also returned capital to shareholders, repurchasing Ps. 8.70 billion in shares during the first half of 2025.

Strategic Initiatives and Regional Momentum

América Móvil's strategic initiatives are deeply integrated with its regional operations, driving performance across its diverse geographic segments.

• Mexico: The Mexico Wireless segment saw a slight decrease in total wireless subscriptions but an increase in postpaid, with adjusted operating revenues growing by 0.4% and adjusted operating income by 0.9%. The adjusted operating margin improved to 43.8% due to cost savings. Mexico Fixed experienced a 2.8% increase in total fixed RGUs, driven by a 5.9% rise in broadband, with adjusted operating revenues up 3.1%. The company is aggressively expanding its fiber footprint, with 91% of its Mexican broadband customers now connected via fiber, and is bundling streaming platforms and value-added services to enhance competitiveness.
• Brazil: Brazil's wireless subscriptions saw a slight 0.1% increase, with strong postpaid growth (6.3%) offsetting prepaid declines as customers migrate. Adjusted operating revenues increased by 6.2%, and adjusted operating income surged by 20.2%, leading to an improved adjusted operating margin of 19%. This performance is attributed to network quality, an expanded sales force, and strict cost controls.
• Colombia: Colombia demonstrated strong recovery, with total wireless subscriptions increasing by 3.7% and total fixed RGUs by 1.2%. Adjusted operating revenues grew by 6.7%. Despite a slight dip in adjusted operating margin due to U.S. dollar-denominated costs and inflation, management expects 2025 to be a "good year" for Colombia, leveraging its leading 5G network.
• Southern Cone (Argentina, Chile, Paraguay, Uruguay): Argentina, despite hyperinflationary conditions, saw robust growth, with wireless subscriptions up 5.3% and fixed RGUs up 11.2%. Adjusted operating revenues increased by 18.2%. The consolidation of Claro Chile, SpA is a major strategic focus, with a multi-year plan to modernize the network, deploy 5G, and realize significant synergies, which are already contributing to strong EBITDA margin growth.
• Andean Region, Central America, and Caribbean, Europe: These regions also contribute to AMX's diversified growth. The Andean Region (Ecuador and Peru) saw wireless subscriptions up 2.3% and fixed RGUs up 6.5%, with improved operating leverage in Peru. Central America reported a 1% increase in wireless subscriptions and a 7.8% increase in fixed RGUs, with adjusted operating income surging by 48.5%, recovering strongly after a cybersecurity incident in early 2024. Europe also showed solid growth, with wireless subscriptions up 9.1% and adjusted operating revenues increasing by 3.9%.

Outlook and Guidance: Charting the Future

América Móvil's outlook for the remainder of 2025 and beyond is characterized by a strategic pivot towards optimizing its extensive network investments and driving free cash flow expansion. Management has provided concrete guidance for capital expenditures, projecting a figure of MXN 6.7 billion to MXN 6.8 billion for 2025, a reduction from previous years. This lower CapEx intensity is a direct result of significant investments already made in 5G and fiber deployments across its markets, as well as comprehensive upgrades to its IT systems and data centers. The company expects to maintain a similar CapEx-to-sales percentage in the coming years, indicating a shift from a heavy build-out phase to one focused on leveraging existing infrastructure for efficient growth.

A key assumption underpinning this positive outlook is the anticipated economic recovery in Mexico. Management believes the first quarter of 2025 marked the bottom of the recent economic slowdown, with a rebound expected in the second half of the year. This recovery is crucial for the prepaid segment, where revenues are closely tied to consumer purchasing power and recharge patterns. In Brazil, AMX foresees continued strong performance, driven by its high-quality network, successful commercial programs, and ongoing digitalization efforts. Colombia is also expected to have a "good year" in 2025, building on recent service revenue growth.

The company's commitment to shareholder remuneration remains firm. With leverage ratios at the lower end of its target band (1.35x to 1.5x net debt to EBITDA) and expectations of expanding free cash flow, more capital is anticipated to be available for distributions. This strategy is supported by an increasingly local currency-funded debt profile, managed through derivatives to mitigate foreign exchange risks. AMX's focus on upselling customers with more data and better plans, rather than solely relying on price increases, is expected to drive value-added revenue growth across its segments.

Risks and Challenges: Prudence in a Volatile World

Despite its strong market position and positive outlook, América Móvil faces several pertinent risks and challenges that could impact its investment thesis. Economic and political conditions across its diverse operating geographies, including Mexico, Brazil, Argentina, Colombia, and Europe, remain a significant factor. Inflation rates and exchange rate volatility, particularly the depreciation of local currencies against the U.S. dollar, can affect reported results and increase U.S. dollar-denominated costs, as observed in Colombia.

Regulatory developments pose another material risk. In Mexico, ongoing discussions in Congress regarding new telecommunication and antitrust laws, including potential changes to spectrum allocation and increased fines, could alter the competitive landscape and operational costs. The company is actively monitoring these changes and providing its perspective. Intense competition, particularly from aggressive MVNOs in Mexico and established rivals across Latin America, necessitates continuous investment in network quality and customer service to prevent market share erosion.

Operational challenges, such as the cybersecurity incident in Central America in early 2024 that temporarily impacted billing and client activations, highlight the need for robust IT security. Furthermore, specific legal disputes, like the litigation provision booked in Colombia related to content costs, can lead to unexpected financial outflows. While AMX's financial discipline and diversified operations provide resilience, these risks warrant careful monitoring by investors.

Conclusion

América Móvil stands as a formidable force in the global telecommunications sector, underpinned by a strategic vision that prioritizes network superiority, operational efficiency, and diversified growth across its vast Latin American and European footprint. The company's substantial investments in fiber and 5G have not only established a robust technological moat but are now translating into accelerating revenue, expanding profitability, and a disciplined capital allocation strategy. This transition, marked by a projected reduction in CapEx for 2025, signals a mature yet dynamic enterprise poised for enhanced free cash flow generation and increased shareholder returns.

While the competitive landscape remains intense and macroeconomic headwinds persist in certain regions, AMX's ability to consistently attract and retain high-value customers, particularly in its postpaid and broadband segments, underscores the strength of its service offerings and network quality. The company's proactive approach to digitalization, cost control, and strategic partnerships further solidifies its competitive standing. For discerning investors, América Móvil represents a compelling opportunity, offering a blend of market leadership, technological prowess, and financial discipline, all contributing to a narrative of sustainable growth and value creation in the evolving global connectivity market.