América Móvil, S.A.B. de C.V. (AMX) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the America Movil Third Quarter Earnings Conference Call and Webcast. My name is Alex, and I'll be your operator for today. At this time, all participants are in listen-only mode. We will conduct a question-and-answer session toward the end of this conference. [Operator Instructions] As a reminder, this is being recorded for replay purposes. I would now like to turn the conference over to Daniela Lecuona, Investor Relations Officer. Please proceed.

Good morning, everyone. Thank you for joining us today to discuss our third quarter results. We have today on the line, Mr. Daniel Hajj, Chief Executive Officer; Mr. Carlos García Moreno, Chief Financial Officer; Mr. Oscar Von Hauske, Chief Operating Officer; and also Mr. Carlos Robles, Chief Financial Officer of Telmex.

Good morning. Thank you, Daniela. Good morning, everybody. Thank you for being in the third quarter financial results and Carlos is going to make a summary of the results. Carlos García Moreno: Thank you, Daniel. Good morning, everyone. The expectation throughout much of the third quarter that the Fed would lift interest rates before the end of September brought about renewed volatility in the capital markets. The fear that such move would lead to more capital flowing back to the U.S. from emerging markets caused a new wave of currency depreciations in the region and partly curtailed the access that emerging markets issuers had to the debt capital markets in the U.S. Signs of renewed economic weakness in China, while dispensing with some of the fears regarding an interest rate increase by the Fed, spooked markets further, particularly when China decided to depreciate slightly its currency. In this contest, we ended September with 368.2 million access lines, which was 1.1% more than a year before. The figure includes 288 million wireless subscribers, 35 million landlines and 23 million broadband accesses. In addition, we had 21.6 million PayTV units. In mobile, it’s important to note that our postpaid base was up 5.1% year-on-year to 61 million subscribers. Postpaid net additions were 836,000 most of them coming from Mexico, Brazil and the European operations. Third quarter revenues were up 1.2% from the prior year to 223 billion pesos, bringing the total through September to 663 billion pesos. At constant exchange rates, the service revenues were down 0.6% from the year-earlier quarter, a figure that was almost identical to the one observed in the second quarter. Voice revenues both mobile and fixed continue to decline in the relation to service revenues. Data revenue growth accelerated in the third quarter in relation to the precedent one: it was 10.7% and 7% in the mobile and fixed platforms, respectively. EBITDA amounted to 66.7 billion pesos in the quarter; it was down 8.2% year-on-year in Mexican peso terms, which partly reflects the depreciation of certain currencies, including the Brazilian real and the Colombian peso, in relation to the Mexican peso. Year to date, EBITDA totaled 203 billion pesos, 5.5% less than a year before in Mexican peso terms. Part of the reduction in EBITDA in the quarter was due to certain extraordinary items in Puerto Rico, Ecuador and in Austria. In some cases both in Austria and part of it Puerto Rico, all having booked an extraordinary revenues in the prior year because of our Austria, we have told most time and because of Puerto Rico, we had built some EBITDA gains on account of changes to pension plan that they manners. Then this year we also had some one-off that partially in Puerto Rico and particularly in Ecuador. In Ecuador we had roughly $50 million that had to go with say compartments of taxes and that to be a new tax that has been in post to market share in the country and we had to book in the third quarter all the amount [indiscernible]. And so we had a large booking of taxes in Ecuador in the third quarter. We were to adjust for these story happens the one that we have booked this year and one that were booked last year, then EBITDA will have a fall in total 9% in peso terms and in total we have fallen 2.5% at constant exchange rate. This means that EBITDA, the reduction in EBITDA in the third quarter that we had just for these one-offs was better than what we got in the prior quarter. The prior quarter the EBITDA reduction has been 3.1% at constant exchange rate. And then Central America has emerged as the fastest growing region followed by the South American block and has actually increased its rate of growth over the last few quarters in contrast to the experience of South America, that has seen a declining one on account of the economic slowdown in some countries out there, Ecuador [PH] and Brazil. It’s important to note in Central America, we are seeing revenue growth in the 7% to 8% and we are seeing very strong EBITDA growth in the neighborhood of 13%. After depreciation and amortization charges that were equivalent to 16% of service revenues are slightly higher in the prior year, we obtained an operating profit of 35.2 billion pesos. Our comprehensive financing costs grew to 38.9 billion pesos, mostly reflecting the sharp depreciation that took place in the quarter of the Mexican peso and the Brazilian real relative to the U.S. dollar. Net interest expenses actually came down by 2.4% year-on-year and by 10% year-to-date. Notwithstanding the negative income tax provision in the quarter of 1.6 billion pesos we posted a net loss of 2.9 billion pesos. It’s important to note that the foreign exchange losses incurred have had no impact on cash flows. They partly originate in intercompany financing positions, partially have to do with our supplier debt and partially had to do with the financial debt. And in the regional terms I would say that of the net FX losses that we would have booked after considering the effect of hedges of the net losses fully one third came from the combination of suppliers and intercompany transactions. In the case of supply, it is important to understand that a lot of the better we have, have to do with the purchase of handsets, the handsets are denominated in dollars. And the eventual sale of the handsets in local currency is effectively inbound by consumer. The large falling that fully that for the most part the effect of the FX movements is in the end won [PH] by consumers. So I would say that our net debt increased - the evolution to the rate of the company it is to say that we have a long term profile, life of more than ten years which we have limited refinancing requirement and we don’t really have any issue maintaining the structural data we currently have in place. Our net debt increased by 61.3 billion pesos since December allowing for the reclassification of our stake in KPN from a long term investment valued at cost to an available for sale asset valued at market prices. Our net debt represented 1.8 times last 12 months EBITDA. It must be noted that on the spin-off of Telesites our net debt is to be reduced by 21 billion pesos. At the end of September, we had already deducted 14 billion pesos from the other short term investments line item on account of the sale of KPN shares that took place through the mandatory bond placed in September. Our mandatory bond, exchangeable bond that has three year time and it was placed in September, beginning in September. And at the end of date, it involves the outright sale of roughly 200,000 shares of KPN that were valued as EUR750 million at the time that we went that we went to market. So we are deducting now these shares from our holdings of KPN shares in the EBITDA. It’s important to note that through September we funded capital expenditures in the amount of 105.7 billion pesos and shareholder distributions totaling 59.5 billion pesos, including both dividends and share buybacks. I would say that a very significant portion of the shareholder distributions were actually affected in the third quarter. We have payments the first part of dividend was paid in July, the - in September we had the payment of exploring dividend and then we have had our share buybacks for the year. So we will look at the - after the spin-off of Telesites that is happening today [indiscernible] towards the end of the week this spin-off will have been completed from legal perspective. We will have as I mentioned by $41.2 million the debt of the company and that means that grow that of America Movil - financial debt of America Movil valued at in dollar terms, we usually virtually identical today than it was at the beginning of the year. Okay, so that just we don’t expect it, but we have and really had to go to markets basically and financing. So with that I would want to give the floor back to Daniela and we them then begin the session of Q&A. Thank you.

Yes, the first question please.

[Operator Instructions] Mr. Rozwadowski, please proceed.

Thank you very much, Amir Rozwadowski from Barclays. I just wanted to confirm, you’d mentioned that the Telesites spin-offs used to be on track in the very near term. I was wondering what specific steps need to be taking care of in order ensure the spin-off occur, it sounded like you said it could happen by this week’s end? Would love some color around on that if possible.

I think - no, we already have all the authorization on the Telesites offer. So this week legally the company will not spin-off and during November, I think we can distribute the shares. So that’s more or less the timing that we have but all the authorizations that we need are okay, so the company will - spin-off there in this week and then we are going to distribute the shares during November. I think that’s more or less dates that we have.

Thank you, that’s very helpful. And then if I may switching to you know sort of the mobile market in Mexico, we continued to see healthy subscriber trends out of your business in Mexico, I would love hear how we should think about this going forward. And then if I may, you know obviously we’ve got some review process going on right now with various regulatory agencies, how do you think the potential risk is for additional asymmetric regulations coming down the pipeline you know after this review process is completed and how do you see sort of your positioning in the marketplace post the review process? Thank you very much.

Let me talk a little bit about that the Mexican market. I think since two years ago, we have the Mexican telecommunication reform. I think with that reform there is - there was a lot of changes in the market. One big company from the U.S. bought two of the small companies here in Mexico. So what you see right now is that we have three big competitors in the market. So we already in Mexico have an effective and very competitive market. And I think what America Movil is thinking that let’s say in the asymmetric regulations like the interconnection, we are - we don’t want to shop Iusacell, S.A. de and Telefonica by paying interconnection to them and they pay an interconnection. So I think that’s a good opportunity for us to - with a regulatory to - in March when it’s going to finish that two year term, so we are going to renegotiate some of those terms because I don’t feel that America Movil should pay or shot revise these two big companies that in Mexico. So I think we have a good opportunity on that. In the other side I think Mexico needs more competition in PayTV, so we are also preparing that TV to - we want to grant our concession of the TV. So those are the two issues that we’re working with the regulator right now. Today we are not presenting anything. Still today, we haven’t present anything to the regulatory but we are preparing everything to talk and present it to them.

And if I may, what do you think your prospects for getting a license for the PayTV look like at this point?

I think it should be highly, I think Mexico, if you see the Mexican market, the Mexican market needs more competition - so - in the TV - in the PayTV. So I think - we think we want to - we are - we need to comply with all the rules and that’s what we are doing. We comply a separate from that on player as the American Movil is complying with all the rules that they have been giving to us. So I think we have a good opportunity to have that PayTV.

Thank you very much for the incremental color. Carlos García Moreno: Thank you.

[Operator Instructions] The next question comes from the line of Vera Rossi with Goldman Sachs.

Talk about Brazil and the impact of the weak economy in your business especially in terms of subscriber usage and the delinquency rates? And what are the services that are most impacted at this point? Thank you.

Hi Very. I think in Brazil, where with economies low down that we’re having in Brazil. Then the most impact the subscribers are the low subscribers, we have been having less consumption in the prepaid subscribers. We have some cancellation as you were seeing in the PayTV that satellite, the low end the segment let’s say see and these - of Brazil, they are consuming less, they are being more careful on their consumptions and that’s what we think a little bit more on the height, a little bit more bad debt. We’re having a little bit more of bad debt also. We’re being very careful and how to whom we are selling and to all the sales to be more profitable, so we’re begin careful on the subsidies on that PayTV satellite, on the subsidies on the prepaid customers. And that’s - what being the other side, all the investments that we have been doing in Brazil, the integration of the companies, I think America Movil in Brazil has been doing well and I hope that for the next year, we can see a little bit more on the integration, on the cost coping and on all the infrastructure that we have been integrated. So we are well positioned in Brazil at this time Vera. Even that the economies are not looking good also for the next year.

Okay and one follow-up question on your CapEx. How the currency valuations are impacting your CapEx decisions in Latin America and you think with all the evaluations, we saw this year the migration to 4G is slow down or you think it will continue at the current pace especially because these are getting cheaper in U.S. dollar? Thank you. Carlos García Moreno: Yeah, well we have been - the CapEx is not all the CapEx is in dollar, so part of the CapEx is in local currencies and part of the CapEx is in dollar. So where we viewing, yes of course where we viewing, we cannot have the same CapEx in dollars but we are renegotiating with suppliers and we are also reviewing what are the relevant things that we need to, but one of the things that America Movil has been doing let’s say in Brazil, we have been investing very good on the last four, five years. So we have been doing all our investments in the last year. So I think we are well prepared to support, even if we reduce the CapEx in Brazil, we are going to be well supported for the next year. So but we are - in the other side also, we have bilateral CapEx that it’s the CapEx that we put when you grow on this. And this one I think it’s - we also are renegotiating with all the suppliers this CapEx try to put in local currency, but that’s more or less what we’re doing Vera.

Thank you.

The next question comes from the line of Rodrigo Villanueva with Merrill Lynch. Please proceed.

Thank you. Good morning, Daniel and Carlos. I was wondering if you just through that Telekom Austria, I mean the government of Austria is looking to sell its stake in Telekom Austria. I was wondering if you could give us some color on why they would be trying to do this if AMX would be interested in acquiring this stake. That would be my first question.

We haven’t had any indication from the government that they want to sell. So I think today it - there are only announcing the press maybe rumors but what I understand is that Minister of Finance said that they don’t want to sell or somebody there they don’t want to sell. So until today we haven’t had any indication on that.

Understood, Daniel, thank you very much. And I was also wondering if you could give us an update regarding the investigation related to the Telmex this one off that the IFETEL is dong. What is the likelihood that the IFETEL finds Telmex as guilty of same charge and which would be the worse penalty that they IFETEL would post on Telmex?

Well we - it’s on investigation what - on investigation and we have feel the response to that investigation to the IFETEL disputing a ledge of that violation. So - and the only thing that I can tell you that America Movil is strongly believes that Telmex is in full compliance with the terms of its concession. So we are really - we really relieve that we are - what the concession said. So and we already feel that response.

Understood. Thank you very much. Final question if I may Daniel, following the implementation of the Telcel in Mexico, AMX has had its subsidy decline for around 20% of the cost of handsets. However, more recently the subsidy has been approaching to the mid-20s. I was wondering if this has to do with the FX depreciation of the lifetime currencies and if you think that the level of subsidies should come back to the 20% that we’ve seen in the past?

Yeah, I think that you are right. Rodrigo, I think that we have been trying to reduce the subsidies I think, everybody is the world is trying to reduce the subsidies and it’s what in all Latin America not only in Mexico we are doing. So what in Mexico we reduced 20% but well in this quarter the local currency peso goes from 15 steady to maybe 17, so you cannot pass all those prices immediately and that’s why you are seeing that the subsidies increase a little bit more. In the other side, we have been doing a lot more financing on the subsides. It’s been strongly good for the customers, customers like that and we are growing on the financing on the handset, so that’s a strategy that it’s working very good all-around Latin America.

Thank you very much Daniel.

Thank you.

Your next question comes from the line of Walter Piecyk with BTIG. Please proceed.

This is - what’s going in the United States, it look like things were more competitive the margin pulled in a bit and specifically the ARPU really came down, is it that you are just loosing straight to our customers and you are just getting a much bigger mix shift to these assurance or can you just give us a little bit better color of what’s happening in the U.S. and why it makes sense to sustain this business rather than looking for a buyer for that asset?

We lose some customers and losing a little bit of track from the net end customers they all brands but we’re growing on the straight top customers. As you said, U.S. is becoming more and more competitive, the competition is starting in the U.S. We launch a new product also and we spend some money on that launching and that’s more or less what you see of the reduction on the retails because the launch of the products, a lot more advertising and that’s what you see about the competition is growing in the U.S.

Okay and just one other question, your last conference call, I think the last call you’ve talked about the importance of an LTE smartphone getting under a certain price, if I get the exact number. Now that there’s been some kind of I guess you’ll call economic issues in some of these markets, is that price of the LTE smartphone lower enough to stimulate interest in an LTE smartphone and can you give us any sense of what the penetration is of LTE smartphones and maybe Mexico or Brazil? Thank you.

I don’t have exactly that the net rate here but you can take to Daniela. I don’t have any issue to give it to you. So we are growing a lot of 3G and LTE. And there - still the evaluation, I’m still seeing that there is a lot of LTE products and phones that are available for the people and we are for the next year our strategy is to grow more on LTE. LTE customers are consuming maybe two times or three times what they are consuming in 3G, so date is going to grow for the next year. I am sure on that. We’re going to have a lot more customers on LTE. Carlos García Moreno: And to what Daniel said regarding platform, you’re going to note, the ARPU did not decline, the ARPU is exactly the same this quarter than it was in the prior year. And the service revenues are particularly identical. They are then 0.1%, so they are particularly identical to what they had last year. So we haven’t really seen any decline in ARPU in the U.S. Daniel said it’s simply the [indiscernible] of link that have ARPUs and the other platform the net end, those are ones that has lose clients, but the ARPU remains strong at $20 in the U.S.

And also when you said about smartphones, smartphones are growing fast in Latin American, all around the Latin America in America Movil the smartphones are growing as really fast.

Okay, thanks for that actual clarification Carlos. Carlos García Moreno: Thank you, Walter.

The next question comes from the line of Andre Baggio with J.P. Morgan. Please proceed.

Hi. Good morning. I have one, I was interesting in the terms of Mexico where we saw sharp decline in the EBITDA margin. So what’s the measures which are being taken in order to stabilize this margin, so how could you think about this?

As you know with the Telecom reform, in Mexico, we don’t have any more long distance. In the wireless we have zero interconnection rate. So there is some of the things that we are reducing on and no roaming, but we have been doing good plans and I think Mexico is also becoming more competitive. We are having a big strategy on cutting costs on SAB CVs [PH] on integrating more and more all the company selling more to our customers and that’s where we are in Mexico. Carlos García Moreno: Also - Andre, if you look at EBITDA of sales second quarter and third quarter, they are particularly identical. The core EBITDA which is the before cost is identical in the second quarter and the third quarter. So basically we are growing much in, that you are looking, comparison to last year, it’s not something that invited sequentially to something that is factoring in the effect of the loss of the long distance revenues that took place from January 1st of this year. The postpaid subscribers, we are growing very good in Mexico with the postpaid subscriber. So also it’s a very good indication on that. The only line of growth in the cost side, because if you - the cost landscape practically the only –for Mexico, practically the only one that we see on previous that we saw a significant in the cost of equipment. And as I explained before, the cost of equipment is basically something that we’re not counting [indiscernible] last through sales of equipment in the ongoing EBITDA down the road. So that’s what I would say, there is really no changes in the EBITDA cost control in Mexico is fine. The effect is the loss of revenue this year and part of the interconnection revenue that they still happening in the middle of the third quarter of last year. So that’s basically the effect, no long this year. So it’s that and the effect of the depreciation of the pesos to dollar on the cost of equipment.

And other - yes it’s exactly and you have also other cost in dollar. So we need to start on the cost cutting renegotiation of everything because a lot of the - of some let’s say software and a lot of things its valuing this in dollar. So that’s also a little bit on the reduction on the EBITDA. Carlos García Moreno: And one thing that I think is very important Andre because when we look at the year-on-year comparison, last year we didn’t have the long distance relation, we have more, we have fully when we see the interconnection rate, but still in spite of this by the third quarter, this is the first quarter in number of quarters for the rate of service revenue growth is actually better than the prior quarter. We go through declines for three of four quarters on account of some of these measures and method here in Mexico and now we are seeing an upturn, okay. So I think that that’s an inflation point and it’s really, really important and again this is before we look at the fully comparable two years because along the interconnection point is already happening, we start looking at - but I think the similar some with long distance interconnection.

We stopped the long distance in Mexico it’s - was in January. The long distance finished in January. Carlos García Moreno: And the admission of the interconnection was to place in the middle of almost our last year.

Okay, thanks a lot. And just a follow-on actually to on earlier questions, so because CapEx is in local currencies based on your answer, can I understand that this year CapEx and the next year CapEx should be a little bit lower than the $10 billion that was indicated before, let’s say do you have a guidance or some at least some kind of indications for the number for this next two years?

We haven’t finished the CapEx, but yes I think I am sure that the CapEx in dollars is going to be less than what we have last year that this $10 billion of course is going to be less than. Carlos García Moreno: And one think also Andre that you have to consider, in the last year we had CapEx, we have said it repeatedly hit its peak in absolute terms because we had $11 billion of CapEx including the spectrum. More or less the same aspect with next year and we are not going to have the same interest also because this has been into year that marks the end on the five year plan that we had set for our sales of $10 billion per year. We have been invested in our $50 billion in Latin America in last five years and now it’s tend to more into and that’s what we are going to be talking to about on the Investor Day next week.

And what other important thing when you talk about in CapEx is that the CapEx were divided into the fixed CapEx and dividable CapEx, and dividable CapEx it depends a lot on - and I am sure that let’s say in Brazil because this low down, we’re going to grow less, in other countries also we’re going to grow a little bit less. So I am sure that in the dividable CapEx, we’re going to have less by overall CapEx than what we have this year.

Okay, thanks a lot and looking forward to see you in a couple of weeks.

Thank you.

Your next question comes from the line of Ric Prentiss with Raymond James. Please proceed.

Yes, hi. I have two questions if I may. First, you mentioned Telesites this week and maybe it will just spin that out. How will that affect were financials in Mexico, you - where you start paying tower rent starting in late October and November then just thinking through how the financials will look when we see fourth quarter? Carlos García Moreno: I think the first affect is as I mentioned before, we are going to have a reduction in defect of America Movil on the amount on 21 billion pesos that’s $1.2 to $1.3 billion and that’s happening immediately up on the spin-off which is sometime a little bit we expect. And then as we point out, there will some rent of payment that we make overtime. I would say that at current price we are probably looking at the $200 million tenure on the payments for that.

Okay and then within Brazil, obviously a difficult economy right there you talked a little bit about what you are seeing on the customer side, there is also been some speculation in the press that there could be some industry structure changes next how Brazil might be coming up, Direct TV Brazil might be something on the market in the coming period. How you think about your position in Brazil and are any of the assets as other operators of interest to NY where they be interesting?

I think we have in Brazil America Movil is in a very good position, so we have of the cable company, we have PayTV satellite, we have fixed, we have wireless, we have all the backbone with Embratel the corporate customer. So America Movil in Brazil the last five years have been doing a very good job, so we are well prepared and we have a very good position in Brazil. On all the speculations that are in the market about Nextel as you are saying are these are only all these companies. Well we are going to be - we are open to see anything but right now we are in a very good position in Brazil. So that’s what I can tell you.

Okay, so you got a good bundle, but somebody’s got something interesting, you certainly take a look at it?

Yes, of course, if there is something interesting, we’re also open to look at the opportunities that we could see.

Thanks. See you guys next week.

Thank you.

You next question comes from the line of Andrei Sabah with Credit Suisse. Please proceed.

Yes, good morning. Thank you for the call and talking my question. And I just wanted to clarify on the - I mean the detail on the Ecuador. I understood that there is an impact of $50 million being accounted for 2015 but that accounts for a longer period of time. So if you would just help us understand how much do you think we should expect forward coming quarter on a normalized basis and if you expect to be also continuing to disconnect more of these low volume prepaid subscribers as well? Thank you.

What happened is that you know that we have a new law in Ecuador, this new law you need to pay on depending on your market share upward of your revenues. So this law is that gets I think into January or February or March, I don’t remember exactly the date. But the secondary laws finished in September, so what we are booking is all this revenue that we have since let’s say March, so that’s why we are booking, it’s February, August what we’re booking in this quarter. So there are around $40 million, I think it’s going to be around $60 million what it’s going to cost this extra in this tax that we’re paying and it’s more what you are going to see quarter-by-quarter. So to this time, we are booking since February to August and then you are going to see month by month.

Thanks.

Your next question comes from the line Valder Nogueira with Santander. Please proceed.

Thank you for talking the question. As you said to in your answer to Baggio, your ARPU has already undergone a long series of strong headwinds ranging from the long distance to interconnection and so on. And if we look beyond the FX headlines of the third quarter, what we could see was decent good execution in Mexico. And I believe this is has to do if the quality of the client they are getting so although the price is coming down, the volume that you are getting or the quality of the cline is really stronger. What do you - what can you say about it because at the same time you are losing the market then you need to lose and you keep - you’re keeping the right one, how much room do you have to fighter this battle? What else can you put on the table of the customer in order to continue this trend?

I think that’s a good strategy and we have been doing also this strategy in other countries is not only because the regulation here is because I think when there is economic let’s say slowdown, economic things in the countries, you want to be sure that all the postpaid that you are selling are good clients, good customer. So what we want is that everything that we sell if it’s PayTV, if it’s prepaid and if it’s postpaid it will be profitable. And it’s exactly what we are doing here in Mexico and what we have in Mexico is we are not going to sell any more actives, any more assets because when we - when we know that AT&T is coming and they have the asset so we are not going to sell anymore asset. We are open to sell some customers to do more MVNOs and to reduce our market share but in the other side, we had also that we think that we can live without perform there. And so those things it’s going to depend on what it’s more convenient. We’re open to sell the customers, we are open to do a lot, we already have two MVNOs in Mexico but that has to be - that’s one thing. The other thing is that we are doing the right things in the market, the commercial things to get the best customers in the market. So that’s what we’re looking and that’s what we’re going to can still see in all the strategy for next year. And not only in Mexico, we’re trying to do that in all Latin America.

On this right things to the right customer that you mentioned, has it be more data capacity, had it be more bandwidth or how you treat voice, how you combine that with the interconnections that you have to pay on all lines and netting out in the best way possible. What has been the main driver of this, in my view a better quality?

I think we’re trying to give the best service to our customers, it’s then end-to-end service, end-to-end quality. We’re trying to have the best quality in the network, we’re getting, we’re going to be very transparent when we’re selling to our customer, financing to the equipment, going to 4G, giving a lot of data. Our infrastructure, we’re working very good, so they - part, they are very important issue for the customers, for the high end customers and we’re giving very good speeds on data, so all overall it’s the strategy that we’re following all around Latin America. Carlos García Moreno: And to elaborate on that a little bit, we gained 351,000 subscribers in Mexico and it’s put where all postpaid and we also added 122,000 broadband accesses on the fixed-line platform. And so that means all together we are talking about nearly 500,000 revolutions of use for fixed-lines in the quarter. One other thing that is important to note that the service revenues in peso terms absolute terms, they are virtually identical the second quarter and the third quarter. As I said we have - the decline, the momentum of decline and I think that we are seeing now good platform from which to grow the revenues. So I think that’s a good work, but we should be focusing on declines that are getting essentially both declines with customers, higher declines and I think that the time we are going to see that in addition that we are trying today. And it’s the cost there, good service that we are giving to our customers.

And my last question, if Telesites proves to be a good strategy, if the markets reads it’s in a very much way regarding at which stage of the tower business you are running to and what proves to be a good unlocking of value for your guys, would you consider doing a Telesites lifetime?

At this time we are not considering doing any Telesites lifetime as they were not close on that but at this stage these on next year we don’t think we’re going to do a Telesites lifetime. Maybe in the future, we are open as we saying has the opportunity that we could see in Brazil, we are also to review that. But today we are not considering at doing any Telesites.

Thank you, gentlemen.

Thank you.

Your next question comes from the line of Michel Morin from Morgan Stanley. Please proceed.

Good morning. It’s Michel Morin. So first on Mexico, you just talked the postpaid net ads, it was a record for the third quarter, so congratulations on that. And I was just wondering if you can give us a bit more color, I think in the past you’ve alluded to there being a lot of iPads and kind of non-voice customers driving that, so if you can pass that out for us that would be helpful? And then also in Mexico, on the fixed line, you also did very well, you just mentioned that the net ads and I am wondering if that’s voice, broadband or both, then if you can give us a bit more color? Also with the revenues on the fixed line because when I look at your sequential uptick on fixed line revenue in Mexico, it was also very strong, sometimes there is some IT projects that moved the needle little a bit, so I am wondering if there is anything unusual there that we should be aware of? Thank you.

No, I think on the fixed side, we’re sending voice and broadband, so those are broadband and voice those two things. And we are seeing with the corporate customers giving all good service that’s all around the what they have, so we are going more to the cloud to one of this communication services that we are giving that. In the postpaid is what I am saying, no, I think we have a best network, good quality, customer care centers, so we’re giving the good - a good value to our customers and it’s more or less while they are moving to have a prepaid. That’s - those are the things there Michel. Carlos García Moreno: To your question Michel, the - we had currently -

122. Carlos García Moreno: 122,000 new broadband accesses.

Great. Okay. And if I can throw a quick one out there, receivables seem to have gone up, so I don’t know if that’s because of country mix chancing or if there was really higher delinquencies that are starting to creep up in your receivables?

No, I think it’s more of the economic slowdown a little bit in some countries more than in other ones but that’s what - that’s the economic situation is to brings a little bit more.

Great, thank you.

Thank you.

Your next question comes from the line of Kevin Smithen with Macquirie. Please proceed.

Yes, we think about the diversification of revenue and EBITDA away from Mexico, can you talk a little bit about some of your strategic priorities in the Caribbean digits sell just pulled your IPO, Brazil still a foreplay market in you know looks like why - why they are struggling, and vendor is looking to do something maybe with Tim and then there is Europe, so how do you think about M&A and you know the slow interest rate environment and similarly a lot of deals on the table right now?

We have also Central America. Central America is doing also very good. We are growing in Central America. We are developing very good our - these countries were putting 4G, they are growing in 4G, they are growing in data and then we have the Caribbean and as you’re saying we have, but we are open to see any opportunity depending on the country, depending on our market share, depending on our position. But our strategies to give the foreplay to give fixed, wireless broadband and TV and depending on each country, we can see that. You’ll see that we’re growing, small companies in Eastern Europe but we’re buying some fixed companies so we can be allowed not only giving wireless, to give fixed, to give broadband and to give PayTV and that’s more or less that our strategy has been in all the countries. Not the end of the day what America Movil wants to have the foreplay in each country.

Great, thank you.

Your next question comes from the line of Soomit Datta with Newstreet Research. Please proceed.

Yeah. Good morning. Couple of questions please, first is on the balance sheet. A mix of that just sort of shy of 600 billion pesos and you report a 1.8 times leverage number, can you help me understand how the two reconcile, I am guessing those are couple of adjustments in that, I am sure if you’re already adjusting for the Telesites that’s been off but a bit of clarify there would be helpful please. And then secondly maybe if we could touch on Colombia much better I thing trends on the fixed side, some better trends on data but the voice market on wireless looks very difficult still. Are there any signs of improvement, there is anything you can do to alleviate some of that weakness there? Thank you. Carlos García Moreno: Okay on the first one, I think that we have - disclosed the - one, it’s basically we applied, we do the same and the same that the government are directing agency to utilize. We have some high debt which is meant to the like including possibility net of debt and that has a 50% credit by the very - so have roughly $3 billion a little bit more of securities at the level of America Movil. So in that case we dive at 50%. Then we have discount and that’s also what the raging agency do. The net value that we have under the hedge positions that we have, there they have a market value, there is high. So that amount is also deducted from the net debt. That’s we deployed - we deployed those position, you can immediately realize that mark-to-market value they currently have. And then on the Telesites, it doesn’t have an effect because in Telesites we had already issued debt at the Telesites level at top, but all of that debt refunding from the proceeds from the issuance of that debt were still in cash, so Telesites as of the end of the quarter we have really knows what the net debt because here they had you should know that but they had all the cash there, the cash already is required to pay us off upon this, okay. So the - we’re not including debt, the reduction of net debt of the American Movil level that will pick Telesites, that is not included. If you want to contact Daniela Lecuona, we can provide you on these numbers, okay.

Okay, yeah, thanks. Just on Colombia if you could help with the wireless voice market things?

Can you repeat the question on Colombia?

Sure, yeah, so it was just on - in Colombia some better trends in parts of the business, but the wireless voice revenues continue to be under pressure. I just wondered if there was any sign that may improve if you were doing anything actively to improve those trends? Thank you.

What’s happened in Colombia is that well since for all the country you cannot do contract in the postpaid side, so what you’re seeing is that a people is adjusting to new plans. So what is happening is that all the postpaid customers can come as they don’t have a contract, they can move to a better plan, but in the other side, we are not anymore subsidizing any handset there. So that’s the regulation in the country is not for America Movil, the regulation is for everybody in Colombia and that’s what is happening. So what I think that’s something that almost taking place here where we don’t think that in the future there is going to be big movements on those customers. And prices and the competition in Columbia is top, we have been having 17% reduction in price per minute in data also the competitive. This is high, the prices in data are low and that’s more or less what is happening in Columbia. But I think I could see, we can maintain the EBITDA that we have in Columbia for the next - I hope for the next year. Carlos García Moreno: And again for the new case, when you look sequentially from the second quarter to third quarter, service revenues increased by 1.4% in Columbia again sequentially. EBITDA was practically flat and this is quite that we thought that the currency has depreciated considerably there because of the impact of all prices. But again views were to talk that issue of the equipment cost, the cost of equipment practically cost were the low inflation in Columbia. So I think again EBITDA had help up in spite of the inclusion cost.

And let me add something, I think in the fixed side we’re doing very good, we’re growing a little bit more market share on TV, we have a low market share which I think a low market in TV, in broadband, in fixed and we’re trying to do comparisons there. And I think for we’ll feel that being in the fixed sides, we’re doing also very good in Columbia. And help market for the future.

Okay, thank you.

Thank you very much.

And ladies and gentlemen due to time constraints that was the last question. I would now like to hand the call over to Daniela for closing remarks.

And thank you everyone. I just want to remind you that we’re few days away from our Investor Day and tomorrow is the last day to register. So if you want to attend the event, please access our website and register. If you need any assistance with that, you can contact myself, Ana or Alejandro follow the contact in our website.

Thank you. Thank you very much.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.