America Movil (AMX) Q1 2024: Broadband Adds 562K, Fiber Penetration Hits 80% as Fixed Growth Outpaces Pay TV Decline
America Movil’s first quarter saw fixed broadband and mobile subscriber momentum drive service revenue acceleration, with fiber investment now reaching 80% of the broadband base in Mexico. The company’s shift from legacy pay TV to broadband and digital B2B is strengthening top-line growth across major markets, while disciplined capital allocation and aggressive buybacks signal confidence in cash generation. Management’s focus on network quality and bundled offerings is supporting share gains despite intensifying competition, setting up a multi-year transition to higher-value connectivity and enterprise services.
Summary
- Fiber-Led Fixed Growth: Broadband and fiber expansion in Mexico and Brazil now drives fixed-line revenue gains, offsetting secular pay TV declines.
- Disciplined Capital Allocation: Buybacks and stable leverage point to financial flexibility and confidence in recurring cash flow.
- B2B and Digital Services Momentum: Corporate network and cloud offerings are scaling, broadening AMX’s revenue base and margin profile.
Business Overview
America Movil (AMX) is a diversified telecom operator with leading positions in wireless, fixed broadband, and enterprise services across Latin America and Europe. AMX generates revenue from mobile subscriptions, fixed broadband, pay TV, and digital B2B solutions, with Mexico and Brazil as its largest markets. Key segments include mobile (voice, data, postpaid, prepaid), fixed-line (broadband, pay TV, corporate networks), and emerging digital/cloud services targeting enterprise and SMB customers.
Performance Analysis
AMX delivered a strong Q1 performance led by subscriber gains in both mobile and fixed broadband, with 1.5 million new wireless subscribers and 562,000 new broadband connections—the latter marking the best quarterly result in four years. Mexico’s fixed-line business was the standout, with revenue growth accelerating to nearly 10% year over year, the fastest pace in years, as fiber penetration reached 80% of the broadband base.
Service revenue growth outpaced inflation in key markets, reflecting strategic fiber and 5G investments that are now producing volume and ARPU uplift, especially in Mexico and Brazil. The company’s reported EBITDA was down due to the absence of tower sales seen last year; however, normalized for these one-off effects and at constant currency, EBITDA grew at its fastest rate in eight quarters. Free cash flow was pressured by seasonal spectrum and telecom tax payments, but capital allocation remained disciplined, with buybacks tripling year over year and leverage steady at 1.5x net debt/EBITDA.
- Fixed-Line Inflection: Broadband revenue now more than twice pay TV in Brazil, with secular pay TV declines no longer a material headwind.
- Postpaid Upsell: Postpaid mobile base up 6.4% YoY, with ARPU uplift in Mexico and gradual migration from prepaid in Brazil.
- Corporate Networks Acceleration: B2B/corporate network revenue up 13.5%, now 21% of fixed-line revenue, reflecting traction in cloud and managed services.
AMX’s multi-year fiber and 5G build is translating into lower churn, higher customer satisfaction, and improved cross-sell, positioning the company for sustainable growth as legacy revenue streams fade.
Executive Commentary
"All the big investments in fiber that we have been doing for the last three years, I think they are working and we're having good... around 17 million fiber households, home passes, and 80% of our customers are already with fiber. So it helps a lot to reduce the churn... and the customers are in with a very good speed with the service."
Daniel Hash, CEO
"Within these digital services, we include all, there is cybersecurity, cloud, network management, and in cloud, we are receiving software as a services, infrastructure as services, and has been very, very well received in the market."
Carlos García Moreno, CFO
Strategic Positioning
1. Fiber and 5G Network Expansion
AMX’s sustained fiber rollout in Mexico and Brazil is now the cornerstone of fixed-line growth, with 17 million homes passed and 80% of the broadband base migrated to fiber in Mexico. 5G deployment in 125 Mexican cities and continued investment in Brazil and Peru are driving ARPU and customer experience improvements, supporting both retention and upsell.
2. B2B and Digital Services Scale-Up
Corporate networks and digital B2B are now key growth vectors, with cybersecurity, cloud, and managed network services gaining traction. This business now accounts for over one-fifth of fixed-line revenue, and management highlights high cash conversion due to revenue-share models and limited incremental CapEx needs.
3. Capital Allocation and Shareholder Returns
Buybacks surged to 4.8 billion pesos, triple the prior year, with leverage stable at 1.5x net debt/EBITDA. Seasonal working capital and spectrum/tax payments impacted Q1 cash flow, but management reaffirmed commitment to its CapEx plan and financial discipline.
4. Competitive Response and Bundling
AMX is leveraging bundled offerings, customer service, and network quality as differentiators in hyper-competitive markets, particularly Mexico. Price discipline remains a core strategy, with selective increases in some markets but a focus on value and churn reduction through enhanced packages and streaming add-ons.
5. Portfolio Optimization and Market Share Recovery
Legacy pay TV headwinds in Brazil are now largely neutralized, allowing broadband to drive fixed growth. In Chile, AMX is executing a dual-fiber strategy via its own network and OnNet partnership, while remaining flexible on JV ownership pending partner actions.
Key Considerations
Q1 2024 marks a turning point for AMX’s fixed-line business, as broadband and digital services offset legacy declines and reposition the company for multi-year growth. Investors should weigh the following:
- Fiber Penetration and Utilization: The 80% fiber base in Mexico and continued home pass expansion provide further upside to ARPU and churn reduction.
- Mobile Upsell and Postpaid Mix: Postpaid migration, especially in Brazil, remains gradual, with ARPU uplift lagging subscriber growth but offering long-term leverage as 5G usage scales.
- B2B Revenue Quality: Digital/corporate services are margin-accretive with low CapEx intensity, but sustained growth depends on execution and competitive dynamics in cloud and cybersecurity.
- Competitive Intensity: Aggressive pricing and promotions from new entrants (e.g., Byte, Altan) in Mexico may pressure share and ARPU, but AMX’s network and bundling strategy is holding churn low for now.
Risks
AMX faces persistent competitive threats in both mobile and fixed markets, especially in Mexico and across Latin America where price wars and aggressive promotions are common. Secular declines in legacy pay TV and fixed voice still weigh on revenue mix, and while broadband is offsetting these trends, execution risk remains. Regulatory and spectrum costs, as well as currency volatility, can materially impact cash flow and reported results, as seen in Q1’s FX and tax-driven swings.
Forward Outlook
For Q2 2024, AMX guided to:
- Continued acceleration of service revenue in both fixed and mobile, supported by ongoing fiber and 5G investment.
- CapEx for full year 2024 reaffirmed at approximately $7.1–7.2 billion, with spend weighted to network upgrades and digital infrastructure.
For full-year 2024, management maintained guidance:
- Stable leverage in the 1.3–1.5x net debt/EBITDA range.
Management highlighted several factors that will influence coming quarters:
- Further broadband penetration of existing fiber footprint and cross-sell into bundled services.
- Scaling of B2B digital services and continued margin focus amid competitive pricing.
Takeaways
AMX’s Q1 results confirm the company’s multi-year pivot from legacy telco to a broadband and digital-first operator, with fiber and B2B now driving growth and margin resilience.
- Fixed-Broadband Inflection: The secular drag from pay TV is now outweighed by fiber-led broadband growth, especially in Brazil and Mexico, with churn falling and ARPU rising.
- Capital Discipline and Buybacks: Aggressive share repurchase and stable leverage reflect confidence in recurring free cash flow, even as cash outflows are seasonally elevated.
- Forward Watchpoint: Investors should monitor the pace of postpaid migration, B2B revenue mix, and competitive responses to AMX’s network and bundling strategy, as well as regulatory developments in key markets.
Conclusion
America Movil’s Q1 results showcase a business in transition, leveraging fiber and digital services to offset legacy declines and outpace inflation in its core markets. Disciplined capital allocation and operational execution support a constructive outlook, though competitive and regulatory risks remain central to the investment case.
Industry Read-Through
AMX’s results signal a broader industry shift in Latin America, where fiber and digital B2B are now the primary growth engines for incumbent telcos, and legacy pay TV is no longer a material headwind for fixed revenue in major markets. Network investment and bundling are proving effective against new entrants, but the competitive bar in both mobile and broadband continues to rise. For regional peers and global telecoms, AMX’s capital discipline, B2B scaling, and fiber penetration strategies offer a template for margin and cash flow resilience amid secular shifts in connectivity demand.