Executive Summary / Key Takeaways

• América Móvil is solidifying its leadership in Latin American telecommunications through aggressive 5G and fiber optic network expansion, driving resilient revenue growth and enhanced profitability. The company's strategic focus on high-value postpaid and fiber broadband customers, coupled with robust corporate services, is proving effective against competitive pressures.
• Recent financial performance highlights include a 13.9% year-over-year increase in total operating revenues for the first six months of 2025, reaching Ps. 465.82 billion, and a tripling of net profit to Ps. 43.34 billion over the same period. This growth is underpinned by strong postpaid and broadband additions across key markets.
• The successful integration of Claro Chile, SpA, and ongoing operational efficiencies are expected to unlock significant synergies and drive future market share and EBITDA margin expansion in the Southern Cone.
• Management projects a disciplined capital expenditure of approximately MXN 6.7 billion to MXN 6.8 billion for 2025, a reduction from prior years, leveraging substantial past investments in network infrastructure and IT systems. This capital efficiency, combined with a stable leverage ratio of 1.56x net debt to LTM EBITDA, signals increased free cash flow availability for shareholder distributions.
• While facing macroeconomic headwinds in Mexico and intense competition from MVNOs, América Móvil's superior network quality, strategic bundling, and focus on customer experience are critical differentiators, positioning it for sustained market leadership and long-term value creation.

A Latin American Telecom Powerhouse Forges Ahead

América Móvil, S.A.B. de C.V. ($AMX), established in 2000, stands as a telecommunications titan across 23 countries, predominantly in Latin America. The company has cemented its position as a market leader in wireless, fixed-line, broadband, and Pay TV services, with its operations in Mexico and Brazil collectively accounting for over half of its total Revenue Generating Units (RGUs). This expansive footprint and diversified service portfolio, marketed under prominent brands like Telcel, Telmex Infinitum, Claro, and A1, form the bedrock of its overarching strategy: to leverage its extensive network, focus on high-value customer segments, and drive operational efficiency through continuous technological advancement.

The company's history is marked by strategic expansion and modernization. A significant milestone occurred in late 2024 with the consolidation of Claro Chile, SpA, a move designed to enhance profitability and market share through substantial network upgrades and operational synergies. This integration underscores América Móvil's commitment to strengthening its regional dominance and adapting to evolving market dynamics. The competitive landscape remains intense, characterized by established players like Telefónica (TEF) and TIM (TIMB), alongside aggressive MVNOs and local ISPs. América Móvil's strategic response centers on competing not merely on price, but on the superior quality, extensive coverage, innovative products, and exceptional customer care that its robust infrastructure enables.

Technological Edge: The Backbone of Growth

América Móvil's competitive advantage is deeply rooted in its differentiated technology and relentless investment in next-generation infrastructure. The company's core technological differentiators include its expansive 5G network, widespread fiber-to-the-home (FTTH) infrastructure, and advanced IT systems, cloud, and data centers. These are not merely operational necessities but strategic assets that yield tangible, quantifiable benefits.

The company boasts "by far, the best network in Mexico," being the sole provider of "the real 5G" across "more than 100 cities," offering superior coverage, speed, and quality. In Colombia, América Móvil operates the "biggest 5G network," with approximately 20% of its traffic now running on 5G. Brazil also sees América Móvil holding a significant 38% to 40% market share in 5G, recognized by ANATEL as the "fastest network" in the country. These 5G deployments translate directly into enhanced customer experience, enabling higher data consumption and supporting premium postpaid plans.

Beyond wireless, fiber optics are a critical component of its fixed-line strategy. In Mexico, an impressive "91% of the customer base [is] already connected with fiber," delivering "very great speed [and] very great quality." Brazil is also a key focus, with "almost 11 million home passes with fiber to come." This extensive fiber rollout reduces churn, allows for higher-speed broadband offerings, and supports value-added services like streaming bundles. The company's continuous investment in IT systems and digitalization aims to "give better customer service, install faster, and time to repair also faster," directly impacting operational efficiency and customer satisfaction.

América Móvil also strategically utilizes low orbit satellites (including OneWeb, AST (ASTS), and SpaceX for resale/backhaul in Chile) for mobile backhaul in rural areas where traditional fiber or microwave deployment is cost-prohibitive. While not currently offering direct-to-phone satellite connectivity, this approach optimizes network reach and cost efficiency. For investors, these technological advantages translate into a robust competitive moat, enabling higher Average Revenue Per User (ARPU) in key segments, lower operational costs over time, and a strong foundation for sustained market share gains and resilient financial performance.

Operational Momentum Across Key Segments

América Móvil's operational strategy is yielding positive results across its diverse geographic and service segments, despite varying local market conditions.

In Mexico Wireless, the company is effectively navigating a challenging environment. While total wireless subscriptions saw a slight decrease of 0.10% to 84.10 million as of June 30, 2025, adjusted segment operating revenues increased by 0.40% to Ps. 119.90 billion. This was primarily driven by strong postpaid growth, which offset a decline in prepaid revenues influenced by a slowing Mexican economy and aggressive MVNO competition. Management emphasizes that Telcel's ARPU of MXN 177 significantly outpaces competitors like BAIT, which operates at an ARPU of MXN 38, highlighting América Móvil's focus on higher-value customers.

The Mexico Fixed segment is demonstrating strong performance, with total fixed RGUs increasing by 2.80% to 22.30 million. Adjusted segment operating revenues grew by 3.10% to Ps. 46.40 billion, propelled by robust broadband and corporate network services. The company's aggressive fiber deployment, with 91% of its customer base now connected via fiber, is a key driver. New bundled packages, including streaming platforms like Netflix (NFLX) and Claro Video, are enhancing customer value and retention.

Brazil continues to be a strong performer. Total wireless subscriptions saw a slight increase of 0.10% to 88.40 million, driven by a 6.30% rise in postpaid subscriptions, which successfully offset a 9.20% decline in prepaid. Adjusted segment operating revenues increased by 6.20% to Ps. 85 billion, reflecting strong postpaid, broadband, and corporate network service growth. The company's high-quality network, successful Claro Flex program, and strategic partnership with Nubank (NU) are contributing to this momentum.

Colombia is showing significant recovery, with total wireless subscriptions increasing by 3.70% to 41.70 million and fixed RGUs growing by 1.20% to 9.60 million. Adjusted segment operating revenues rose by 6.70% to Ps. 35.80 billion, indicating a strong rebound in mobile, corporate networks, and broadband services. Despite a Q2 2025 margin impact from a content-related legal dispute and currency fluctuations, management anticipates a strong performance for 2025, leveraging its leading 5G network.

In the Southern Cone – Argentina, despite hyperinflationary conditions, América Móvil continues to invest. Total wireless subscriptions increased by 5.30% to 26.70 million, and fixed RGUs grew by 11.20% to 3.90 million. Adjusted segment operating revenues surged by 18.20% to Ps. 19.80 billion, driven by strong growth in both mobile and fixed services. The company is now a leading mobile player in Argentina and is actively deploying 5G.

The newly consolidated Southern Cone Chile, Paraguay, and Uruguay segment is a key focus for future growth. While reporting an operating loss of Ps. 4.50 billion for the first six months of 2025, the segment saw adjusted operating revenues increase by 5.90 times to Ps. 11.70 billion, reflecting the consolidation of Claro Chile and strong performance in Paraguay and Uruguay. América Móvil is pursuing a three-to-five-year plan in Chile, targeting both profitability and market share growth through network modernization, 5G deployment, and significant synergy realization from the merger.

Other regions, including the Andean Region (Ecuador and Peru), Central America, Caribbean, and Europe, are also contributing positively. Peru, for instance, is seeing improved operating leverage and strict cost controls, while Central America is recovering strongly from a prior-year cybersecurity incident, driven by investments in 5G coverage and fiber. The Dominican Republic continues to be an exceptional performer for América Móvil.

Financial Resilience and Disciplined Capital Allocation

América Móvil's financial performance for the first six months of 2025 underscores its operational strength and disciplined capital management. Total operating revenues reached Ps. 465.82 billion, marking a robust 13.9% increase year-over-year. At constant exchange rates, this growth was 6.3%, or 3.8% excluding the impact of Claro Chile, SpA consolidation. Service revenues, the core driver, grew by 14.3% to Ps. 401.15 billion (6.5% at constant FX, 4% ex-Claro Chile), primarily fueled by mobile and broadband services. Sales of equipment also contributed, increasing by 11.5% to Ps. 64.68 billion.

Despite a slight dip in operating margin to 19.80% from 21.10% in the prior year, operating income still grew by 6.8% to Ps. 92.15 billion. This margin compression was influenced by increased operating costs, including lease space, network maintenance, IT services, and higher depreciation and amortization charges (up 17.9% to Ps. 91.31 billion) due to network investments and the Chilean consolidation. Crucially, net profit for the period surged three-fold to Ps. 43.34 billion, significantly benefiting from a net foreign currency exchange gain of Ps. 9.80 billion, a stark contrast to the Ps. 33.80 billion loss in the prior year.

The company maintains a healthy liquidity position and a prudent debt profile. As of June 30, 2025, net debt stood at Ps. 472 billion, translating to a net debt to last 12 months EBITDA ratio of 1.56x. This is well within management's target range of 1.35x to 1.5x, indicating a balanced approach to leverage. Approximately 60% of the company's net economic exposure is denominated in local currencies, with the remainder primarily in U.S. dollars and euros, managed through derivative transactions.

América Móvil's capital allocation strategy remains disciplined. Capital expenditures for the first six months of 2025 amounted to Ps. 54.90 billion, primarily funded by operating activities. The company also returned value to shareholders, repurchasing Ps. 8.70 billion in shares during the same period. This commitment to shareholder distributions is expected to continue, as the company's robust cash flow generation and declining CapEx intensity free up capital.

Outlook and Strategic Imperatives

América Móvil's forward-looking strategy is anchored in leveraging its extensive infrastructure investments and adapting to evolving market dynamics. Management has guided for a disciplined capital expenditure of approximately MXN 6.7 billion to MXN 6.8 billion for 2025, a reduction from prior years. This lower CapEx is a direct result of significant investments over the past three years in 5G, fiber, and IT systems, which have established a robust and efficient network. The company aims to maintain a consistent CapEx to sales percentage in the coming years, signaling sustained capital efficiency.

A key assumption for future performance is the anticipated recovery of the Mexican economy. Management believes the economic slowdown, which impacted prepaid revenues, has likely bottomed out in the first quarter of 2025, with a recovery expected in the second half of the year. This rebound, potentially bolstered by a renegotiated USMCA agreement, is projected to positively influence consumer spending and prepaid recharges.

Segment-specific outlooks are optimistic. In Brazil, management foresees "no big changes on the next quarters," expecting continued strong performance driven by postpaid growth and network quality. Colombia is also projected to have "a good year in Colombia, 2025," building on its recent service revenue acceleration and 5G leadership. For Chile, the ongoing three-to-five-year plan is expected to drive both market share and EBITDA margin growth through network upgrades and synergy realization. Across Latin America, management highlights the "still low penetration in broadband," anticipating "good growth in the next years" as fiber expansion continues.

Strategically, América Móvil is committed to upselling customers with better plans and more data rather than relying solely on price increases, a strategy deemed more effective for long-term customer value. The company's strong pipeline in corporate services, particularly in cloud computing, digitalization, and data centers, positions it for continued growth in the B2B market. Furthermore, the trend of market consolidation in some regions is expected to foster a more rational competitive environment, which could benefit América Móvil.

Risks and Challenges on the Horizon

Despite a compelling growth narrative, América Móvil faces several pertinent risks and challenges that warrant investor attention. Macroeconomic and political conditions across its diverse operating regions, including inflation rates and exchange rate volatility, can significantly impact financial results. The depreciation of local currencies against the U.S. dollar, for instance, can increase the cost of dollar-denominated expenses and debt.

Regulatory developments pose a continuous challenge, particularly in Mexico. New telecommunications and antitrust laws, which are substantially similar to proposals from President Sheinbaum, could introduce increased fines, alter spectrum concession terms, and impose new obligations related to user density. These changes could necessitate significant operational adjustments and potentially impact profitability.

Intense competition remains a constant. In Mexico, aggressive MVNOs like BAIT, offering very low ARPU services, exert pressure on the prepaid segment. While América Móvil differentiates with superior network quality and value-added services, sustained aggressive pricing by competitors could impact market share and ARPU. The company also faces ongoing litigation risks, as evidenced by the content-related legal dispute in Colombia that impacted Q2 2025 margins.

Technological advancements, while a strength, also present a risk. The rapid pace of innovation requires continuous investment to maintain a competitive edge, and any delays or missteps in deploying new technologies could erode market position. Furthermore, the company's reliance on emerging markets exposes it to higher operational costs and potential political instability.

Conclusion

América Móvil is strategically positioned for sustained growth, leveraging its dominant market presence, extensive network infrastructure, and disciplined operational execution across Latin America and beyond. The company's proactive investments in 5G and fiber optics, coupled with a keen focus on high-value customer segments and corporate services, are driving resilient revenue expansion and robust cash flow generation. The successful integration of Claro Chile and ongoing efficiency initiatives further underscore its commitment to enhancing shareholder value.

While macroeconomic fluctuations, regulatory shifts, and intense competition present ongoing challenges, América Móvil's technological leadership and strategic emphasis on quality and customer experience provide a formidable competitive moat. The outlook for increased free cash flow, supported by a stable leverage profile and a disciplined CapEx strategy, suggests a compelling investment thesis for those seeking exposure to a leading telecommunications player poised to capitalize on the digital transformation of Latin America.