America Movil (AMX) Q3 2024: Postpaid Adds Top 1.4M as Fiber Penetration Hits 84%
America Movil’s third quarter saw a decisive shift toward higher-value postpaid and fiber customers, with 1.4 million postpaid net adds and fiber now reaching 84% of fixed broadband subscribers. With service revenue growth accelerating at constant currency and operational gains across major markets, management’s focus is on upselling, network upgrades, and disciplined capital allocation. Looking ahead, AMX’s strategic emphasis on technology leadership and customer migration positions it for resilient growth despite currency volatility and intensifying regional competition.
Summary
- Postpaid and Fiber Migration Accelerate: High-value customer growth and network upgrades drive segment leadership.
- Disciplined Capital and Leverage: Capex remains on target, leverage at the bottom of guided range, supporting stable capital returns.
- Strategic Focus on Upselling and Technology: Management prioritizes upselling and 5G/fiber expansion over price hikes or M&A.
Business Overview
America Movil (AMX) is a leading telecom operator in Latin America and Eastern Europe, generating revenue from mobile, fixed-line, broadband, and corporate services. The business is structured across mobile (postpaid and prepaid), fixed broadband, and B2B segments, with major markets in Mexico, Brazil, Colombia, and Argentina. Revenue streams are diversified by geography and service type, with a growing emphasis on high-value postpaid and fiber access, as well as enterprise solutions such as cloud and cybersecurity.
Performance Analysis
AMX posted service revenue growth of 5.5% year-over-year at constant currency, an acceleration from the prior quarter, with mobile service revenue up 5.2% and fixed-line service revenue up 5.9%. The company added 1.8 million subscribers, with a notable 1.4 million coming from postpaid, led by Austria, Brazil, Colombia, and Mexico. Fiber penetration reached 84% of fixed broadband customers in Mexico, reflecting ongoing network investment and customer migration from legacy technologies.
EBITDA increased 7.3% at constant currency, while operating profit and net profit benefited from both higher operating leverage and lower financing costs. Regional performance was robust: Brazil and Colombia posted sequential improvements in service revenue growth, while Central America and Eastern Europe outpaced group averages in fixed broadband. The prepaid segment remained stable, with management noting resilient recharge rates despite macro uncertainty.
- Subscriber Mix Shift: Ongoing migration from prepaid to postpaid in Brazil and other markets is boosting ARPU and retention.
- Fiber and 5G Expansion: Aggressive fiber upgrades and 5G rollout underpin fixed and mobile revenue growth, with Mexico and Brazil leading in network modernization.
- Regional Outperformance: Fixed broadband revenue growth exceeded 8% in Brazil, Colombia, and Central America, demonstrating operational strength beyond core markets.
Net debt increased due to currency effects, but leverage remains at the low end of AMX’s targeted range, supporting ongoing capital returns through buybacks and dividends.
Executive Commentary
"We have been putting a lot of fiber in the last years, but not only putting fiber, we have been upgrading our customers to fiber. Maybe 84% of our customers are with fiber, good speeds, good quality. IT has been improving a lot in Mexico. It's one of the things that we have been doing, improving IT so we can give better customer service, install faster, time to repair also faster."
Daniel Hash, Chief Executive Officer
"Our net debt ended September at 443 billion pesos, having increased by 47.3 billion pesos relative to December 2023, partly reflecting the impact of the depreciation of the Mexican peso on our non-peso financial obligations. In cash flow terms, our net debt increased by 19.7 billion pesos, and our net debt to EBITDA ratio ended September at 1.34 times last month's EBITDA, practically at the lower leverage limit that we committed to maintain."
Carlos García Moreno, Chief Financial Officer
Strategic Positioning
1. Upselling and Customer Migration
AMX’s core strategy centers on migrating prepaid users to postpaid and upgrading fixed broadband customers to fiber, driving higher ARPU and stickier customer relationships. Management emphasized upselling over price hikes, particularly in Brazil and Mexico, as the lever for sustainable margin expansion.
2. Network Leadership and Technology Investment
Relentless investment in fiber and 5G is cementing AMX’s network quality advantage, with 84% of Mexican fixed broadband customers now on fiber and Brazil’s high-speed DOCSIS 3.1 and gigabit coverage leading the region. This underpins both retail and B2B growth, with robust take-up in cloud and cybersecurity solutions.
3. Capital Allocation and Leverage Discipline
With capex tracking to the $7.2 billion target and leverage at the bottom of the guided band, AMX is positioned to sustain capital returns. Buybacks and dividends remain balanced, and management signaled no change in capital allocation plans despite currency volatility.
4. Regional Diversification and Market Share Gains
Operational gains are broad-based, with notable outperformance in Eastern Europe, Central America, and Argentina, where AMX is gaining market share and expanding both mobile and fixed footprints. This diversification mitigates country-specific risks and supports group-level resilience.
5. M&A and Strategic Focus
No major M&A is planned, with management focused on organic growth, digitalization, and extracting synergies from recent integrations (notably in Chile). The company remains open to opportunistic deals but sees limited actionable targets in Latin America currently.
Key Considerations
AMX’s Q3 results highlight the company’s strategic transition to higher-value customers and advanced network infrastructure, with a disciplined approach to capital and operational execution underpinning its regional leadership.
Key Considerations:
- Prepaid to Postpaid Migration: Accelerating conversion in Brazil and Mexico is raising ARPU and reducing churn, but competitive intensity and economic sensitivity remain watchpoints.
- Fiber Penetration and Bundling: 84% fiber penetration in Mexico and bundled offerings (streaming, cloud) are driving fixed broadband growth and differentiation.
- Regional Outperformance: Eastern Europe and Central America are delivering above-group growth, validating AMX’s multi-market model.
- Capex and Leverage Stability: Capex is on plan, leverage at the low end, and shareholder returns consistent, supporting valuation stability amid FX volatility.
- Technology Partnerships: Ongoing agreements with satellite providers (Starlink, AST) extend rural coverage, but cost and quality optimization are ongoing priorities.
Risks
Currency volatility remains a significant risk, with recent peso depreciation impacting reported debt and financial obligations. Competitive pressures, particularly in Mexico and Brazil, could drive higher churn or pricing pressure, especially as fiber and mobile markets mature. Macro sensitivity in prepaid segments may expose AMX to demand swings if regional economies weaken. Regulatory shifts or spectrum costs in key markets (e.g., Argentina, Chile) also represent potential headwinds.
Forward Outlook
For Q4 2024, AMX guided to:
- Capex in line with the $7.2 billion full-year target
- Stable leverage within the 1.35–1.5x EBITDA band
For full-year 2024, management maintained guidance:
- Continued focus on fiber and 5G expansion, with no material change to capex or shareholder remuneration plans
Management highlighted several factors that will shape results:
- Ongoing migration to higher-value postpaid and fiber customers
- Disciplined cost control and operational efficiency initiatives
Takeaways
America Movil’s Q3 confirms its pivot to higher-value customers, network leadership, and disciplined capital management as the foundation for resilient growth in a volatile macro environment.
- Postpaid and Fiber Drive Upside: The ongoing shift toward postpaid and fiber is supporting ARPU growth, customer stickiness, and margin expansion, especially in Mexico and Brazil.
- Capital and Leverage Discipline: Capex execution and low leverage provide flexibility for continued network investment and stable capital returns, even as FX volatility impacts reported debt.
- Watch Prepaid and Regional Competition: Investors should monitor prepaid trends and competitive dynamics, particularly in Brazil and Mexico, as well as the pace of digital service adoption and potential regulatory developments.
Conclusion
AMX’s quarter demonstrates the power of scale, technology leadership, and disciplined execution in telecom, with strong postpaid and fiber momentum offsetting macro and FX headwinds. The company’s forward strategy is clear: upsell, upgrade, and defend capital returns, positioning AMX well for 2025.
Industry Read-Through
AMX’s results reinforce the telecom sector’s defensive qualities, with resilient demand for connectivity, even in uncertain economic conditions. The shift to postpaid and fiber is a sector-wide theme, with operators prioritizing customer migration and network upgrades to drive ARPU and retention. Regional competition and FX volatility remain sector risks, but disciplined capex and leverage management are critical for sustaining returns. Satellite partnerships and digital bundling are emerging as differentiators, and peers should watch AMX’s execution in these areas as a bellwether for broader industry shifts.