Good morning. My name is Drew, and I will be your conference operator today. At this time, I would like to welcome everybody to the América Móvil Second Quarter 2022 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

[Operator Instructions] Thank you. Now I will turn the call over to Ms. Daniela Lecuona, Head of Investor Relations..

Hi, thank you. Good morning, and good morning to everyone. Thank you for joining us today to discuss our second quarter financial and operating results. We have on the line, Mr. Daniel Hajj, CEO; and Mr. Carlos Garcia Moreno, CFO..

Thank you, Daniela. Good morning, everyone. Carlos is going to make a summary of the second quarter of 2022 financial and operating results..

Thank you, Daniel. Good morning, everyone. The trend towards higher interest rates in the U.S. dollar market that began in March continued unabated in the second quarter as inflation fears dominated sentiment with both short and long-term interest rates rising.

By the second week of June, long-term rates peaked and began a downward trend as markets shifted its focus towards the negative impact on economic activity that would be derived from substantially higher and short-term interest rates.

By the end of the quarter, the dollar had appreciated vis-à-vis all major currencies in our region of operations, including the Mexican peso, the Brazilian real, the Colombian peso and the Euro. We ended June with 306 million wireless subscribers after incorporating 12.9 million subscribers from the acquisition of Oi in Brazil.

Organically, we had net additions of 3.1 million, which includes 1.8 million postpaid subscribers. And Brazil led the way in terms of postpaid growth, having added 779,000 subscribers followed by Colombia with 272,000.

We gained in the quarter, 1.3 million prepaid subscribers, of approximately 350,000 came from Mexico and Colombia, both more or less equal, and 257,000 from Brazil. In the fixed-line segment, we connected 186,000 broadband, of which half came from Brazil, 38,000 from Eastern Europe, 25,000 from Central America and 20,000 from Mexico.

In terms of active growth, mobile postpaid was the main driver growth at 7.9%, followed by mobile prepaid at 4.2% and fixed broadband at 3.5%. Fixed broadband access continues to decline by year-on-year basis, although the former seems to be on an improving trend.

Our revenue reached MXN 217.4 billion in the quarter, 3.3% more than in the year-earlier in Mexican pesos terms, with net service revenue expanding 4.5%. At constant exchange rates, the latter increased 4.9% excluding Argentina because of high inflation rate.

So it's 4.9% including the impact from the incorporation of former Oi's clients and revenue from May 1. Including that effect, services revenues were up 4.2%, excluding that effect. Both prepaid and postpaid revenue growth rates were similar in the quarter, approximately 8.5% once the Oi's clients had taken into account.

With 20% mobile service revenue growth, 13.7% without Oi, Brazil was our top performer, as our Eastern European operations posted 9.6% growth; Mexico, 8.8%; Peru, 7.5%; Dominican Republic, 6.9%; and Austria, 6.2%.

Broadband revenue was up 3.3%, a similar pace to the first quarter, whereas corporate network revenue growth increased to 8.9% from 4.9% in the prior quarter. The decline in PayTV revenue moderated somewhat to minus 5.3%, mostly on account of improvements in Brazil.

The strong performance in broadband revenues expansion were the Dominican Republic at 15%, Eastern Europe at 11.3% and Puerto Rico, 10.4%. This slide was not included Argentina [indiscernible]. Nonetheless, it must be pointed out that the Argentina is executing the fastest actual goals in this area.

Second quarter EBITDA totaled MXN 82.7 billion, a 4% increase in nominal terms and 4.2% at constant exchange rates, with the EBITDA margin rising 0.2 percentage points to 38%. EBITDA expanded 10.3% in our Eastern European operations, 8.8% in Brazil, 8.6% in Dominican Republic and 5.2% in Mexico.

Our operating profit of MXN 41 billion in the quarter resulted in a net income of MXN 13.7 billion after comprehensive financing costs of MXN 18 billion, which approximately half were net interest payments.

Throughout the first half of the year, our operating cash flow, which already reflects our working capital requirements, fully covered our capital expenditures in the amount of MXN 65.6 billion.

We raised MXN 43.8 billion in net financing in the period that helped us fund MXN 19.6 billion for the purchase of Oi and a price adjustment related to the sale of TracFone and MXN 11.6 billion in labor obligations.

Shareholder distributions of MXN 16.3 billion in share buybacks were partly funded by MXN 3.2 billion in dividend income from our KPN and Verizon stakes. Given the high seasonality of our working capital requirements, we foresee a reduction in the second half of the year.

Our net debt excluding leases stood at MXN 414.7 billion at the end of June, a MXN 7.1 billion relative to December. It was equivalent to 1.36x net debt to LTM EBITDA.

Approximately MXN 55 billion in debt obligations will be transferred to Sitios Latinoamérica upon its spin-off from América Móvil expected -- very much expecting it to take place in this third quarter. With that, I would like to pass the floor back to Daniela for the Q&A..

Thank you, Carlos..

Thank you. We can now begin the question-and-answer session..

[Operator Instructions] So our first question is from Alejandro Gallostra. Your line seemed to be open shortly. Your line is now open. Alejandro, go ahead..

Thank you. Good morning, everyone. Good morning, Daniel, Carlos, Daniela. I have a couple of questions about Brazil. The first one is about the mobile business. We have seen the company reporting stable ARPUs in Brazil on a sequential basis, following the integration of Oi subscribers. Although I expect that was to decline slightly in the subscriber mix.

So could you please explain what is behind the receiving ARPU this quarter? This is my first question. Thank you..

We don't hear you very well to answer. Can you repeat it, please, because we don't hear you very well..

Sure, I will repeat the question. In spite of the mobile business in Brazil since we have seen the company reporting stable outputs in the country on a sequential basis, following the integration of Oi's subscribers, although I expect the ARPUs to decline slightly in the new subscriber mix.

So I was wondering if you could explain what is behind the -- you've seen in ARPU in Brazil this quarter?.

Nothing new. I think what -- you know what we have this quarter in Brazil. In Brazil, we grow part because we get the subscribers from Oi around 12 million subscribers for and something on postpaid and the rest in the prepaid. The organic growth besides Oi was very good, around 14%. That is what we have. And we have a very good subscriber base.

We still are doing our combos. We are also having a very good network. Number portability is we're gaining subscribers in number portability. So all overall, I think we are doing a very good job in the prepaid and postpaid subscribers in Brazil, and that's why the ARPU is stable this quarter..

As you point out, Alejandro, I think that we had already -- had a slight decrease in ARPU in the first quarter. And this is basically continuing in the second quarter, it's a little bit higher. And yes, the numbers even after incorporation of the Oi. So we're having a 2.1% increase in ARPU to 22 average..

Okay. Great. Thank you. And my second question is related to the fixed telecom business in Brazil.

Since a few days ago, the CEO of part in Brazil described difficult competitive environment in the fixed broadband market in the country, mentioning a high household penetration on market prices that do not provide an adequate financial return on this business segment in his view, obviously.

Nevertheless, you and your other firms in Brazil continue rolling over FTTH in the country.

So could you please share with us your views on the competitive environment in broadband? And what are the opportunities on financial returns that you see in the fixed telecom business in Brazil justify upgrading your cable infrastructure to FTTH in the country? Thank you..

Well, I think the -- it's -- I don't know exactly what those delegates said. But it's true that fixed broadband market in the country, it's a difficult market. We have been having other competitors and a lot of companies putting fiber to the home for the last three years.

So there's -- the other competitors, let's call them the other competitors has been growing. They are regional, the ISPs. A lot of ISPs are over there and putting fiber. But I think, in our case, we have all the telecom business.

Also we have broadband, we have TV, we have fixed, then we have corporate and we have all the corporate applications and new services that we're doing. So for us, it's -- I think, good business to do fiber to make the combos and to grow in the Brazil market. We still have some areas where we haven't had some fiber.

And we're putting, I think, this quarter, we entered in 24 cities -- new cities in Brazil. And we're going to do it in fiber or in the other side, we're going to do also 5G. So we have two different ways of giving the broadband, and we're going to start maybe this third quarter to do more 5G in Brazil.

So with the fiber plus the 5G, I think we have a good telecom service for all the customers. And I think it's been a good business for us. Although what Felix is saying that the broadband market is very competitive, it's true. It's a lot of competition, a lot of ISPs, a lot of regional competitors.

But we're doing okay, I think we have a good penetration in our network. We're penetrating very good all these new homes that we're having good ARPU. So all overall, we're okay on what we're doing in Brazil..

Thank you, Daniel. Thank you, Carlos..

I think the conditions for a company like Claro are different than the conditions for the ISPs in Brazil. I think it's totally -- we have all the services, we have access to financing. I think it's going to be different what the rollout, what they are starting to do three or four years ago than what they are going to do in the next three years.

The financing is going to be different. So let's see, let's see how it's going to behave in the next years, the broadband market in Brazil..

Okay. Thank you for your comments..

Our next question comes from Alejandro Chavelas from Credit Suisse. Your line is now open. Go ahead, Alejandro..

Hi. Thanks for taking the question. Just a couple. The first one on TracFone.

Can you tell us what was the pricing adjustment that you mentioned? What was the amount? And also on Sitios Latinoamérica, do you seem to be very confident that you can complete it in the next, let's say, two months? So why are you so confident? Have you had any feedback from the authorities or something? Or have you progressed on any front that leads you to be so optimistic about completing it so soon or in the same time line?.

Yes, on the city of LatAm, we are optimistic. The approvals has been advancing at all overall in the countries, and we're optimistic that we can have the spin-off in the third quarter, yes, that's true. We are optimistic and things are moving. So that's why we're optimistic.

So that's -- we think that in the third quarter -- end of the third quarter, we can have the spinoff done. And on the TracFone, Carlos, I don't know if you want to explain..

What happened with TracFone is that besides the purchase price, there was to be an adjustment that was based on changes in working capital in particular. And there was an unexpected change because already the closing of TracFone took place in the middle of the month. It will technically be completed in the month of November, if I very correctly.

And so there was an adjustment that was estimated. And then based on that adjustment, we received an additional amount beyond the stated price. And this additional amount eventually were basically given back because by December, we have the financial -- the complete financial is estimated, from that point actually..

Okay.

I don't know if you mentioned that I couldn't hear very well, but what initial amount was?.

I think it was around $200 million what they give us the -- and then we'll return that..

That was [indiscernible] basically return it..

Great. Thanks so much. I have a follow-up just on Brazil on the -- now on the wireless segment on mobile. I don't know now that you have successfully integrated the old subscribers.

How -- what are you seeing in terms of the competitive environment? Are you already seeing market repair? Do you see players will try to win market share or will keep stable market share? What are your thoughts on Brazil in the mobile segment?.

Well, we acquired the subscribers, and the subscribers are -- we are moving and making all the adjustments in our infrastructures, in IT and everything is going to take around three, four, five months more to have everything done. But what we can see is that we in the Oi subscribers, we're having number -- positive number portability.

So we're net gainers on that. So there are more Oi subscribers that are coming to Claro than leaving Claro. So that's more or less what we have been seeing. It's too early to see because they're only 1.5 months, maybe two months on that. But we're confident at the end of the day, we have a very good network.

We have a very good coverage and good speeds and the brand is doing very well. So in Brazil, we -- as you see the numbers that we have, we're doing very good in wireless in Brazil. So that's --.

And beyond the Oi guidance, I think what I mentioned at the beginning is that América Móvil gained 1.8 million postpaid, of which Brazil was the main contributor because Brazil generated nearly 800,000 net addition. So this is over and above for the clients. So we are having very, very good subscribers.

And at the same time, we are having an increase in active..

All overall, we are executing very well what we need to do on Oi. And we think that subscribe -- we're going to get more subscribers in portability than what we're going to lose. We have a very good quality of the network, capacity, good commercial execution. So we're doing okay. We're happy with the way we're doing wireless in Brazil.

And the numbers that we're showing said that..

Thanks so much for the answers..

Our next question comes from Carlos Legarreta from GBM. Carlos, your line is open..

Hi, thank you. Good morning. Just two quick questions. The first one on CapEx allocation. I just want to confirm that you are maintaining your guidance of MXN 8 billion for the year? And secondly, I guess this is a more general question.

But I think it's very commendable that in most of your core countries, say, for Colombia, you have managed to expand margins. And this is within the context of inflationary pressures. So I guess my question is, how are you managing to that given that you are not being aggressive in pricing? That's -- that will be my second question. Thank you..

On CapEx, I think we are in the budget that we have, MXN 8 billion plus some frequencies -- if we have some frequencies. But the CapEx is going to be MXN 8 billion, around MXN 8 billion for this year, and it's more or less what we have last year and what we are going to do for the next year. And then we cannot frequencies in that CapEx.

On Colombia, what -- it's very interesting. I think in Colombia, for me, the results in Colombia were very good because even that we reduced a little bit our EBITDA, the growth that we have in Colombia was excellent. We do 600 and 10,000 net adds in the quarter, 60% more than previous year.

We have 272,000 postpaid subscribers, 340,000 prepaid subscribers. So the growth was very good. Of course, that cost us a little bit more in expenses in acquiring the customers. But all overall, we did competition in prepaid in Colombia -- postpaid in Colombia, we're doing very good. Wireless all overall, we are doing very good.

And on the peak side, well, we are also not gaining us. There's a lot of ISPs over there also. But I think we're doing good. We're doing also the combos, the quadruple play, the triple play, and that bring us the EBITDA is more than 40%. So I think Colombia is doing very good..

Thank you, Daniel, for that color on Colombia. Go ahead, go ahead, Carlos..

And just to say that it's notwithstanding the issues of inflation, as you mentioned. I think working EBITDA margin increases in Brazil, in Mexico, in Austria and Eastern Europe. We are seeing it in Peru. So we're seeing increases in some of the major operations that the company has.

As Daniel pointed out, Colombia was a slight decline, but it's more than accounted for by the increase in....

60%. 60% more than the -.

No. I mean, I perfectly understand that.

I think my question was more directed at how are you achieving to have this margin expansions in these core countries, like I said, except for Colombia, which I know it's a different case? Because as you can imagine, most of our clients ask the EBITDA margin expansion will be sustainable in this environment, given that you are not fully passing on the burden on inflation through wireless pricing at least that we're aware?.

Well, the revenues are growing, the revenues are helping, and we have a very strict cost control and expenses -- taking out expenses. And we have something that we call digital transformation that we're moving a lot of things to do digital and that is reducing a lot of our costs.

So we have like a big policies in América Móvil to do everything through digital, and that's helping us to reduce cost and expenses. So it's what we have, and that's why we are increasing our EBITDAs in these core countries..

Thank you..

Our next question comes from Diego Aragao from Goldman Sachs. Diego, your line is now open..

Yes, thanks good morning, everyone. So the first question is related to the JV with [indiscernible] in Chile. Just wanted to get the latest on this one. So if you don't mind, just to provide what is the status on the regulatory approval that would be great. Thank you..

Not too much to say. We're advancing. I think we are doing okay. We are moving with the regulators over there. And I think that we expect that in the fourth quarter, we can do the merge. So that's more or less the timing that we have..

And maybe the second question -- yes, yes..

Yes. As you know, last month, we saw -- yes, we finished Panama and as we said in the results..

It sounds good. Thank you. And I guess the second question is actually just a very follow-up on the previous one regarding TracFone. I'm sorry, I couldn't hear well the answer. So would you mind just to explain again the adjustment that was made? Thank you..

What I was explaining is that besides the purchase price of TracFone, there was an adjustment to be made based on changes in the working capital and program net debt.

At the time that we made the closing, which was the middle of the month, we have made an estimate of what these adjustments will be and we got paid an additional amount over the purchase price for this adjustment. Eventually by the time that the financial results statements were ended up, some of these estimates were not correct.

And we basically have given back what was advanced as an adjustment payment. So that's essentially same price that we had agreed today..

Okay, understood. Thank you..

Thank you..

Our next question comes from Leonardo Olmos from UBS. Leonardo, your line is now open..

Hi, good morning everyone. I have two questions on mobile in Brazil. Sorry to go back in this subject. But hopefully, we can have some fresh discussions on it.

So number one, the ICMS change, the tax reduction that happened in Brazil, do you see as an opportunity to increase, maybe share of wallet to take some of the reduction to your price to increase net revenue? What are your plans there that you can share with us? And the second question is regarding what you mentioned before about 5G in the context of broadband, I'm not sure I got it right.

But are you considering FWA for 5G? Do you see that as an option, maybe a cheap option, maybe too expensive because of the equipment costs? How do you see FWA playing out in Brazil? Thank you..

All right. First, the tax that they are talking about -- so it's -- I think it's a good opportunity to increase the share of wallet for the people. This is something that we pass to the people, then if we are not going to ask them to our end customers, then I hope they can buy more data or more megas or something else.

So that's something that I think it can increase our share of wallet in Brazil. So that will be important. Now second, on the fixed broadband, yes, we're going to do 5G fixed and we're going to do 5G also for wireless. So we'll have a program and infrastructure rollout of IT, and that includes to give in the phones and also in fixed.

So we have -- we're still going to do fiber to other cities in Brazil. As I said, we do 24 new cities in this quarter. And we're also going to do -- so there's going to be an alternative for our customers to have 5G in broadband or fiber in broadband, depending in the play, depending in the neighborhood, depending in a lot of things.

But we can do all the technologies in Brazil, yes..

That's very interesting. The first company to openly talk about that and that opportunity. So very interesting. We're looking forward to hear more about that. Have a good day everyone. Bye..

Thank you..

Thank you. Our next question is from David Joyce from Barclays. David, your line is now open..

Thank you. A couple of questions, please. First, you continue to have improving churn trends in a number of countries like Mexico, Brazil, Colombia, Ecuador.

What would you attribute that? And how much further do you think that can improve? And then secondly, if you could just remind us or update us on when you think you'll have 5G fully rolled out in your key markets? Thank you..

Well, I think churn, it's a very important indicator. It means that the customers are happy, means that we're giving good service, good coverage, good quality. So we hope, and we're working a lot on having the best networks, the best quality and coverage all around Latin America.

And I think that's working because, as you said, the churn is being reduced. In Mexico, specifically in Mexico, we already have 40 cities with 5G. And it's been doing very well. People likes a lot, and they are part of the increase on ARPU is because people moving to 5G and 5G plans are giving you more, but you have to pay a little bit more.

So that's more or less what we're seeing. And I think at the end of maybe Colombia is going to take a little bit more of time because we don't have the frequencies. Chile a little bit more. But the rest, I think we -- in the main cities, we can have 5G at the end of this year.

Mexico, Brazil, we are going to have at the end of the year a good rollout in 5G. Austria, we already have in Austria. Peru, we already have something in Peru. But depending a lot on the spectrum also, now depends to where -- in which countries they are giving a spectrum or selling a spectrum, then we're going to roll out 5G very fast..

Great, thank you very much..

Thank you..

Our next question comes from Fred Mendes from Bank of America. Fred, your line is now open..

Hello, good morning everyone and thanks for the call. I have two questions as well. I mean the first one, again back to the mobile segment in Brazil. It looks like in this quarter, once we exclude Oi, your ARPU increased by close to 6%. That would imply almost like a double-digit pass-through of price in our calculation here.

So just wondering if that's the case. And if this is the case, if you're already seeing the benefits from having three plays instead of four, I think you already mentioned something close to that in a previous question. That would be my first one.

And then my second one, looking at Telmex, it looks like that over the last quarters, the service revenue has been under pressure. So just wondering if that's a signal due to the higher competition or maybe because now people are returning to work.

And then the demand for the broadband is not as strong as it used to be and then is putting some pressure in the recent quarters. Thank you very much..

I think that -- I think you're right. I think ARPUs have been on account of the market -- of market repair, as you see now some consolidation of the market, and that has been helping in the context of a very strong inflation that we are seeing in Brazil. I think that yesterday. I think it was up 12%.

So I think we are now saying that it's important to with inflation, and this is ensuring also what we get..

What was the second question, Fred, sorry?.

Very clear, Carlos. Thank you. The second question is about Telmex. At least once you look at the service revenue, on a quarterly basis, it looks like that over the last three years under pressure at around minus three and there was a pickup by the end of the last year positive.

So just wonder if this pressure comes from a higher competition on broadband? Or maybe that's just lower demand now that with supposedly the end of the pandemic, people are returning to work and then the demand from broadband at home is not as strong as it used to be in 2021..

No, no I think on Telmex, what we are doing is we are rolling more the fiber. We're moving more subscribers to our fiber network. So I think more than 50% -- maybe 60% of our subscribers are moving to the fiber that we're rolling out. On broadband, the revenue is growing 3.5%. So we're starting to grow on that.

And in the Corporate segment, I think Telmex is doing very good. So that's more or less what we have in Mexico in fixed. So there is more competition, of course, but we're rolling more fiber, we are doing more households and we're moving a lot more subscribers that we have in copper to fiber, and that's giving us a good churn..

And I think to add to what Daniel said, basically, you'll see broadband revenue growth has been quite steady, moving slightly up, it's 3.5% this quarter. Last quarter was 3.1%, and the previous one was 3.0. So it's been steady and improving the last few quarters.

What we see is and it's all mostly because with Telmex is copper networks business is stronger, and it tends to be more volatile. So this quarter, it was a slightly positive, 0.1%. Prior quarter were negative, 1.4%. The prior quarter was positive, 5.5%. A little bit more volatile there. So a steady growth on revenue growth.

Corporate networks is in the aggregate growth, but it tends to be more volatile on a quarter-over-quarter basis. And therefore we're seeing these voice revenues and voice revenues. It's -- I say within the incumbent, you are seeing some headwinds in both and we'll continue to see. But the amount that is left is much less than it used to be..

Okay, very clear. Perfect, very clear Daniel and Carlos, thank you..

Thank you..

Thank you..

Our next question comes from Marcelo Santos. Marcelo, your line is now open..

Hi, good morning. Thanks for taking my question.

I wanted to dig a little bit deeper into the fixed wireless strategy, where you aim to launch broadband using 5G, which are the countries you aim to launch that? And is the idea to clients from legacy networks? Or do you think this product will be competitive against fiber players?.

No, I think it's -- there's no fiber all around Latin America. We -- to start with this is, is we have like around 3 million fixed wireless subscribers through Latin America. So this is not new. We're doing good. And it's where they have that networks, but broadband networks or there are no networks in these places and we had these ones in 4G.

So I think that with 5G, the new boxes -- if the new boxes are at when there is economy of scale and we have good prices on the 5G boxes, I think 5G will be also a good product for all these places, low densities, no good network, not fiber, difficult to roll out fiber.

Some people, let's say in Austria, there's a lot of this product because people doesn't want to have cables inside the houses. So they put the box and then you don't have to cable all the house. So this is different. It's a new product, and I think it's going to be very successful in Latin America.

We already have around 3 million subscribers in this fixed broadband. So it's here, Latin America plus Austria we have that..

Perfect. And the second question would be about the ICMS in Brazil. You're very clear that you're going to pass that to prices. But are you creating some offer to try to keep somehow that money inside América Móvil, like something to take advantage that the customer will now have a little bit of savings and try to sell him something extra.

Are you creating something specific to try to capture that?.

No, we don't have anything specific at this moment, but we're working and thinking what will be the best for our customers. So we will see what will be the best. We're still thinking what will be -- but all overall, if we give or don't give anything to the customer, I think the customer is going to pay less.

And I'm sure that he's going to spend more in telecom by reducing this ISMS..

Perfect, thank you very much..

Thank you..

Our next question comes from Andres Coello from Scotiabank. Andres, your line is now open..

Thank you for taking my question. If you can give any color on taxes effectively paid in the first half of the year? I think taxes paid were increased to MXN 31 billion from MXN 15.5 billion last year. Wondering if there is anything extraordinary impact in taxes like profits connected to the sale of TracFone? Also second question, please.

We have seen a certain slowdown in buybacks in the last few weeks. If you can comment on the outlook for buybacks for the rest of the year. Thank you very much..

I think in the case of the taxes that we effectively pay taxes, what for the first half of this year compared to the first half of last year is that in this -- it is in the first half, right, you noted in the first quarter, you miss the tax payments corresponding to the fiscal year or the past fiscal year.

And at the beginning of 2021, we have to make payments for the full taxes of 2020. And in 2020, we had quite substantial foreign exchange losses, and that allowed us to offset these losses against taxes. So there was less of payment of taxes on account of revision of 2021 as compared to 2022 because in 2022, we haven't had this issue.

We didn't have this kind of FX losses during the year 2021.

Is that clear?.

Yes, thank you. So the taxes related to the TracFone -- to the sale of TracFone are impacted last year, right.

They were paid in November of last year, they were paid this year, the TracFone taxes?.

I think the TracFone taxes will, for the most part, pay at the time of place and that took place in November. So that is not -- would not appear in the first half numbers. Those are in the first half numbers and the payment of the past fiscal year.

And we do have taxes for the year 2020, a contribution from the taxes for the year 2021 in Mexico on account of the FX loss of the year 2020..

Understood..

Okay.

And on the other question has to do with the share buyback and cost question?.

Correct, yes, we've seen a certain slowdown in buybacks in the last few weeks, if you can comment on the outlook for buybacks for the rest of the year. Thanks..

I think we don't focus on pricing, I think it has a lot to do with the liquidity we have at hand. We have purchasing price costs and to the extent we have -- we will be making our share buybacks throughout the year. That's a good on always. And it can basically to do with whatever excess cash we expect we will have having paid our dividends.

We are not seeing anything important in M&A, I want to think buying anything because we've already acquired with Oi for the second half of the year. We are not seeing as I said, anything extraordinary.

So whatever cash that we generated should allow us to stay where we have said we would stay in terms of leverage and rest with -- we'll distribute it to shareholders..

Understood, thank you..

Our next question comes from Walter Piecyk from LightShed. Walter, your line is now open..

Thank you. Daniel, I'd just like to quickly follow-up on that last comment. I mean, if you look at 2021, the pattern of your share repurchase increased in the second half of the year and then it slowed down in the first half of the year. I realized that you sold TracFone, you lost some free cash flow right, from selling TracFone.

But is the first half of this year compared to the second half of last year in terms of share repurchase activity, is that more a function of the seasonality of how you do distributions to shareholders or share repurchase? Or is it the fact that TracFone dropped out the free cash flow? So you just had a little less free cash flow to spend on share repurchase..

I mean, what Daniel a little bit something what I said in this prior question. I think we have cash flow throughout the year. We tend to have all things equal, less free cash flow in the first half of the year and in second half. I mentioned that we -- the capital -- booking capital is very seasonal in América Móvil.

It demands a lot of funds in this three, four months of the year, and then it tends to normalize throughout the rest of the year. So typically, first half tends to be less intense than second half, all things equal. We did have more share buybacks in the first half of this year than we had last year in favorable terms. So that's key.

And we're going to have more dividends also this year and last year..

Okay, thank you. Sorry for that. I just want to get -- just to be clear on that. And then just one other one and just one other one on -- just going back to an earlier answer on CapEx, Daniel, you had mentioned that you can still intend to spend MXN 8 billion this year and next year.

I mean, the dollar has been very strong against the currencies in all of the markets that you operate. I think a lot of people are concerned about the global economic outlook.

At what point, if at all, like if the dollar continues to strengthen or if the economic outlook gets worse, do you consider maybe paring back on your capital investment to adjust for what's going on with currency and economic outlook?.

See, I think you are right. We have already do the budget and all the analysis for this year, but we're open to see what's going to happen next year. Also depending on the demand, the demand is not so high, then we don't have to put too much capacity. So we're going to be open.

And of course, if we don't need it, we're not going to put CapEx that we don't need. So the CapEx that we're putting has to give us some return and that's what we're looking for. So we are open, and we don't have anything done. What I said is that we have an average of $8 billion. But remember that in 2020, we reduced that because of the pandemic.

And then 2021, we do that. 2022, we're going to do that, but we don't know exactly what's going to be as to 2023, and we're open to review that, yes..

Great, thank you very much..

One last thing on the distribution I think that dividend for this year is going to importantly related to last year, I think it's 10% increase in dividend per share.

And as opposed to years, we are paying everything in one installment in August, okay, five years, we had made two installments, one in July, one in November, this time I want it to be installment in August..

I appreciate that. And my only feedback for that is I think that investors, at least income investors, I think, seem to prefer rather than once a year or one quarter a year maybe the consideration of a quarterly dividend. I mean I appreciate everyone loves to see growth in dividends, and that's a very big positive for sure.

But maybe a quarterly dividend as opposed to once a year might be a possibility in the future for 2023, just a thought..

We review that, and we'll keep you posted. We will review that..

Okay, thanks Carlos. Appreciate it. Thank you..

Thank you..

Our next question is from [indiscernible] from HSBC. Your line is now open..

Thanks for taking my question. I have a couple of questions.

So the first one is that in the group level, the service growth -- the service revenue growth was much higher than EBITDA growth this quarter, but that is something that we have not seen for a long time, given that the macro remains very difficult, do you see that your EBITDA growth would be lagging service revenue growth for the rest of the year? That's my first question..

It wasn't too high because the service revenue was 4.9% growth and EBITDA 4.2% growth. So it's not a big difference on that. And as we discussed a little bit, it is also depending -- the revenue is going well. And the EBITDA, it depends a little bit on cost and expenses inflation.

We have a lot of that in all the countries, different inflation, different increases in different countries. But I think we -- this quarter, we maintained very good our EBITDA. I think it's good. We still grow a lot. As I said, in Colombia, it was also a 60% growth, and that with the 60% growth, we have more cost selling costs and acquisition costs.

So -- but I think all overall, our service revenue and our EBITDA has been growing well..

And earlier in the last we will see that 4.4% EBITDA growth was in line with what we had in last quarter. And this corresponds to a margin that is slightly higher than where we were last year at 38%. So it a little bit higher margin with higher revenues and that gets you revenue growth of 4% -- more than 4% and it gives you EBITDA growth of 38%..

And growing well with three -- organically, we have been growing 3.1 million subscribers in the quarter. So we're still growing very well..

Commercial subscribers..

Commercial subscribers..

Yes, thank you. Okay. So my second question is regarding the markets that you're struggling in EBITDA, basically Peru and Chile.

So how do you see the quantitative dynamics there and how do you think that the EBITDA will evolve going forward?.

Well, in Chile, we are not doing well. I think the country has been very competitive and difficult. Also, we lose a little bit of revenue because we used to have and they put the network and then they are not buying from us. So we lose a little bit of revenue over there.

But we're working -- we're reducing cost and gaining, I think, we have a good month -- a good quarter on the wireless. We're going to see what will the competition and the market do. But I think we're going to start -- we're starting to gain again market share in the wireless side.

And well, that's -- and we need to improve more on the commercial side..

And on Peru, what is the outlook on that Peru?.

On Peru, if you see Peru, Peru is -- everything is on acquisition and a little bit on subsidies on equipment. So if you take out that, we're growing -- our revenues are growing well, and we have to take advantage of that market. So we think that there's growth in the market. We're going to go there, and we're going to try to take that growth there.

So we review carefully and see that -- if you compare this year against last year, this year, we have more acquisition -- the only thing that increases in cost and expenses is the acquisition cost and a little bit of subsidies in postpaid. And that's all. The rest, I think we're doing very well in Peru, growing also in the fixed side.

So Peru, in my view is doing well, and that's where we want to go, grow the company and grow the revenues..

Thank you..

Thank you very much..

Now I turn the call to Mr. Daniel Hajj for final remarks..

So thanks to all of you to be in the call, and thanks to Carlos and Daniela. Thank you very much..

Thank you all. Have a good day..

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