Good morning. My name is Chris, and I will be your conference operator today. At this time, I would like to welcome everyone to the América Móvil First Quarter 2019 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. I will now turn the call over to Ms. Daniela Lecuona, Head of Investor Relations. You may begin your conference.

Thank you. Good morning, everyone. Thank you for joining us today to discuss our first quarter 2019 financial and operating report. We have today on the line, Mr. Daniel Hajj, our CEO; Mr. Carlos Garcia Moreno, our CFO; and Mr. Oscar Von Hauske, our COO.

Good morning. Carlos is going to make summary of the results. Carlos?

Thank you, Daniel. Good morning, everyone. Well, before going into the summary of the quarter, I'd just like to make sure that we're all on the same page in terms of the accounting changes that have been inactive and have been implemented in this quarter. So, one that is completely new is the IFRS 16 that we will talk a little bit more about it throughout the presentation, which has been implemented beginning of January 1. The other one that is present all throughout the report, although not always mentioned, is the IFRS 15. This is the standard that was implemented. These are being mostly service revenues, the allocation between service and equipment revenues. And this, we were presenting on a consolidated basis all of last year, but beginning this year, we are presenting it on a per country basis as well. So, all of the numbers, all of the figure are comparable. Yet from the point of view of revenues in 2019 to 2018, this is relevant for things like ARPUs. Okay? You cannot consider anymore the ARPU figure that we had in the past, but for changes and new levers, you have to look at the present numbers in this report. Anyway with the -- the first quarter of 2019 ended up with a reduction in U.S. long-term interest rates as it became apparent that the Federal Reserve would not be able to continue increasing interest rates throughout the year as it had signaled late in 2018, and in the first months of 2019. The world economy appeared to be slowing down. During this period the value of the U.S. dollar versus the main Latin American countries were fairly stable; not too different at the end of the quarter than it had been at its beginning. Our wireless…

Thank you, Carlos.

We're ready to take the first question.

Okay. [Operator Instructions] Your first question comes from the line of Rodrigo Villanueva with Merrill Lynch. Your line is open.

Yes. Thank you. Good morning, Daniel, Carlos, Daniela. My first question is related to wireless prices in Mexico. I was wondering now that AT&T decided to raise prices in a significant way from the second quarter of this year, you would be in a position to do the same, and if so, if you could please quantify the potential increase and when would it be effective? Thank you

Good morning, Rodrigo. Well, I think Mexico, in the wireless side, it's becoming a little bit more rational. Prices were very low in the last year, a lot of promotions, and I think competitors last year stabilized a little bit some prices and promotions and our competitors increased prices in April. We increased also prices in the prepaid segment. We'll reduce the duration of the card -- of the MXN 100 card. It's a very important card for us. We've reduced from 17 to 15, and also we increased our low-end plans around 4% -- 3% to 4%. So we start on that, and we're going to see how the market behaves. And of course, we're open to do more things, but what we want to see how those end market is behaving and the demand is having, what I can tell you also in Mexico that use [ph] is actually going up still, we're growing in that usage. We're putting the network. Our network is giving very good speeds, very good quality. We are very good also in number portability so we're gaining in number portability. Our ARPUs are still growing, so I think all - overall our wireless segment in Mexico is doing very good so we are willing to increase prices as we do it and we want to see how the market is behaving.

Understood. Thank you very much, Daniel. And my second question is related to the recent acquisition of Nextel Brazil. Could you please give us an update on the potential date for the transaction to close? And also if you could please help us quantify potential synergies that would be very helpful. Thank you.

Well, I think the process is going, I think that we can close the deal in the fourth quarter of this year, end of third quarter or fourth quarter of this year. What we do I think it's very important is an in-market consolidation. We are not looking for acquisitions, but this acquisition as the Nextel acquisition is giving us good subscribers in the main cities in Brazil, in Rio de Janeiro, in São Paulo; give us a lot of spectrum, so we can have a better network savings on CapEx with more [ph] spectrum. They have good people. And I think all overall is very important for the market to consolidate and does not help us and instead of having five competitors to have four competitors. So I think all overall is good. I don't have the number specifically on what is going to be the synergies, but the synergies are very important in terms of spectrum and subscribers that we have very good subscribers in there.

Understood. Thank you, Daniel.

On OpEx of course, we can reduce the big part of the operating OpEx on we have the same towers, we can reduce the number of towers, we can reduce a lot of savings, energy. There is a lot of things that we can reduce in the operating cash side. So it makes a lot of sense for América Móvil to do that. We have been doing very well in the wireless side also in Brazil growing, growing faster than our competitors, growing ARPU, minutes of used data. So our network is the best network in Brazil. So I think makes a lot of sense to do the Nextel deal.

Perfect. Thank you very much.

Thank you.

Thank you, Rodrigo.

Your next question comes from Matthew Niknam with Deutsche Bank. Your line is open.

Hey, guys, thank you for taking the questions. Just two if I could, maybe to go back to the last question and maybe just expand on the margin opportunity both in Mexico and Brazil. I think Mexico, obviously, Carlos, you'd called out some one-time items, but maybe if we sort of look past that how should we think about the pacing of margin expansion on a comparable basis this year both in Mexico and Brazil? And then, secondly just in terms of leverage, you mentioned sort of you're at 1.95 under the sort of prior methodology. How should we think about leverage targets and where you'd like to get to? Any updates there that you can provide? Thanks.

Well, in Mexico, we said that we want to increase our margin like one points to two points this year and we are on target. As Carlos said, we have so - in Mexico specifically, we have some things on the revenue side. We are - as we talk a little bit about the wireless segment in the fixed, we are increasing the speeds; we're giving unlimited voice in the fixed side. So it has been more competitive and more aggressive this market and we're putting a lot more network, more fiber to the home. So we're investing a lot in the fixed side. And I think we're going to get more revenue in the broadband side -- in the fixed broadband side in Mexico. We've some one-offs like some finds that we have one fine that we have with IFD that we paid, some legal disputes that we have and other ones that we have, that's one off that we have and of course some costs that are increasing energy in Mexico is increasing a lot. So, part of the cost that we have been increasing, but on overall I think in the mobile side we're doing very good and looks like this year is going to be better and in the fixed side, I think it's going to be a little bit more aggressive and we're looking for good customers. So for more fixed broadband customers we're investing a lot on fiber to the home and that's more or less how we see the market in Mexico.

I think for the leveraged metrics, I think that we can continue to look at the old numbers, the old net debt-to-EBITDA, we will continue to post the EBITDA under the old methodology and the debt on parallel, so that we can keep it very clear, very simple, where we are kind of changing our target. So, one-and-a-half times net debt-to-EBITDA on the methodology. Okay?

Thank you.

Thank you.

Your next question comes from the line of Walter Piecyk with BTIG. Your line is open.

Thanks. My first question is for Carlos. I think the CapEx expectation is MXN 8.5 billion for the year. I wonder, if that's on target and if you could comment on - as a result incremental free cash flow, thought process on share repurchase and/or dividends over the course of the year. And then for Daniel, in the U.S. market your margins were down in 2018 and it looks like it down again in the first quarter. When you think about the U.S. strategically, if there's an opportunity to add scale and buy an existing large prepaid customer base to add to track phone, I mean, I'm specifically thinking of the Sprint, T-Mobile is required to divest their boost business for prepaid. Is that something that would be of interest to you or alternatively, if you could get a sale of that to T-Mobile or AT&T at a decent EBITDA multiple, which -- which way strategically do you think makes more sense for América Móvil going forward? Thank you.

Well, I'm going to start on the U.S. Just to let you know, and you said that we reduced our margin this year against last year and last year against 2017. Just to on what we do on 2018, we start to grow. So 2017, what we decide if there is check on the growth of that company and the subscribers and that's the reason why we have a very good EBITDA margin. In 2018, we start to grow and in 2019 we start growing very good, we have a soft first quarter because of the tax, it was softer than expected the tax return season. So that's why we don't grow more but I think in April we are growing more. But we have budget on EBITDA in U.S. that it's a little bit higher than $600 million and we are on target on that. We feel that we accomplished that and this EBITDA is with more growth than what we had last year. So I think in TracFone we are doing good. We are developing the market, prepaid is doing also - we are better than some of our big carriers in the U.S. They have released the numbers and in TracFone we're doing good in the first quarter. So we are good. You said about the remedies on T-Mobile and Sprint. We are open to see what would be the alternatives. And we're happy with this company and how TracFone is evolving.

On the CapEx, we are sticking through our $8.5 billion CapEx for the year that's the budget. The dividend that was approved by the Shareholders Assembly in the last several weeks is $0.35 per share. So that's already been defined. And I think that all the NII transaction that we have is called so far with Telefonica and Nextel. I think the intent is actually to keep on this impact. Okay. So we are very fielding going to be tracking. Our goal of 100 will continued to be a priority. We've discussed it with the rating agencies. We've discussed this with our fixed income investors in the context of our placing coupon initiative in the market a few days ago. So I think that we are very much intent on continue to bring our level up.

Thanks, Carlos.

And just to finish with a platform, EBITDA, I think margins, I think that this year we're going to have around the same EBITDA of last year with a better growth than what we have last year. So I think we are improving and this year is going to be an improved on track from against last year.

Understood, Daniel. Can I just have one quick follow-up on that?

Sure.

Does it make sense to be a network owner in Mexico, or you happy just remaining as an MVNO?

In Mexico?

I'm sorry. In the U.S.

Yes. No, no, no, it makes - doesn't make sense for us to be getting less -- we're happy to be an MVNO. We are the company is doing very good and we still want to be an MVNO. Well, of course, if there's a possibility of buying more subscribers not the network subscribers 00:29:09 would be good, and we're open to think about it.

Thank you.

Our capacity, no, but we don't want to own the network in the U.S.

Understood. Thank you.

Thank you.

Your next question comes from the line of Diego Aragao with Goldman Sachs. Your line is open.

Yes. Thanks. Good morning, Carlos, Daniel, Daniela. Thank you for taking my question. First about Mexico, you mentioned on the release that you had some onetime items impacting EBITDA this quarter. So, I was wondering if you can quantify the total amount of these items so we can properly calculate the business performance in Mexico. And separately, if you can comment about the overall business performance in the country as numbers in the first quarter imply at some deceleration on a sequential basis. This is my first question. Thank you.

Okay. The one-offs that we saw, we calculated, it's around MXN 400 million is what we have in Mexico. The one-offs that we have in Mexico are around MXN 400 million is what we have. And as I'd say to talk a little bit about the development of the Mexican market, as I said in the wireless side looks good. I think looks more rational the competition. You never know with the competitors now what looks like everybody wants to be a little bit more rational and some price increases of our competition, some price increases from us. So, things are going in the right direction and we're still having a good -- value such going on, good network in the wireless side. A lot of postpaid, I think we're going to be the leaders by far in adding postpaid cost to Mexico. So, things are going very good in the wireless side in the Mexican market. On the peaks, we think there is a good room to grow where there is still a lot of broadband that we have still to grow in the market. In the TV side, prices are too high. So I think there's still room to do something in the PayTV market and that we're investing in our networks not only on the wireless also on the fixed-broadband -- fiber-to-the-home. So I think these things are not one day to the other one, but we're investing and we're doing good things in the market. So we can see in the future a better result in the fixed-broadband market.

Perfect. Thank you.

I think the other side also in the fixed side we have a big reduction on the voice. On voice, we have -- the voice is still going down and down. So there's no more room to go down in voice. So this is finished. So that's also some good news. Our voice is going down and down so for long distance, we don't have any more long distance or things that are -- things are not going good in the right direction are -- that is appearing. So - and in the other side, we have a very good room in the fixed-broadband side. So that's how I see the Mexican market.

That's excellent. Thank you. Just to clarify the MXN 400 million is a net impact on EBITDA, right?

Yes.

Okay. Perfect.

Yes.

Yes. Thank you for that. So just and second just a follow up on the recent deals in Latin, I mean you acquired assets from Telefónica in Central America, and also due to buy next time in Brazil and I understand you do not want to disclose some synergies numbers. But I was wondering if you can just share what will be the timing for you to reach let's say a run rate of the expected synergies for those deals above 100 - let's say of 100%. Also would you consider further acquisitions in the Latin region? Thank you.

I think the -- what we do is that we were not -- as I said we were not looking to do some acquisitions, but these three acquisitions that we do specifically Guatemala, El Salvador and Nextel in Brazil are in market consolidations give us a lot of the spectrum in all the three acquisitions and good costumers. And I think to do all the synergies while it takes around 18 months to two years, 24 months. So, that's more or less the time that takes you to do all the synergies in the -- in each of the countries. Guatemala, we already closed in February, so we are in the process of doing that. Everything is going well. And we hope that El Salvador, we closed the deal at the beginning of the third quarter, I think we can do that. And as I said Nextel could be in the fourth quarter. So that's more or less what we have to do and the time that takes is more or less 18 months to 24 months the time to do really to do the synergies that we need to.

Excellent, thank you.

Thank you. Next question?

Yes. Your next question comes from the line of Maria Azevedo with UBS. Your line is open.

Hi, everyone. Thank you for the call. My first question would be on your commercial strategy in Brazil. Following the Nextel acquisition, do you see room to raise prices in that market as well now that you have a higher postpaid market share, or do you think you can do leverage on your network and spectrum advantage and be a little bit more aggressive to increase data usage and even get a higher postpaid market share?

Well, I don't understand when you talk a little bit about our convergence strategy, but our convergence strategy is very clear. We are going to do all the synergies between the peaks and the mobile. We have been doing that for the last three years, the network, commercial, we have packages, the combo package that we have in Brazil. So all of these things we start and as with the new spectrum that we could get with Nextel acquisition, of course, we can have more data and more speed and also we can save some money in CapEx now because if you have more spectrum then you don't have to put so much CapEx. So, there is a lot of things that we could do. And but we have our word convergence strategy going forward and doing very good in Brazil and also what we can have it with modest spectrum of course, you get better quality more speed. And I think in Brazil still data is going to grow a lot. In Latin America data is going to grow a lot. It's important tool.

Perfect. Thank you. And as a follow-up question, I'd like to touch a bit on 5G, can you please comment on what are your expectations in terms of 5G auction that is expected to happen in 2019, and if your CapEx budget is already considering 5G investments for the coming years? Thank you very much.

Well, I think 5G is not -- it's not -- the CapEx that we're putting this year in 2019 has part of 5G. We are doing the…

Fiber.

-- fiber to the node. We're doing a steady ritualization of the networks we're buying some spectrum in some countries, so all of that we are doing through this year. I think we're going to do some testing in some countries this year but I think 5G in América Móvil is going to start to be in 2020. It's not going to be in 2019. So some opportunities are on the spectrum for 5G could be in Argentina, Chile, Guatemala, Honduras, Panama, Paraguay, Peru and Austria that we just closed the option I think it was on February or March we closed the auction on Austria. So Austria is going forward I think the country that it's more advancing 5G is going to be Austria and I think we can get some countries -- some cities in Austria at the end of 2019 in 5G. So that's more or less where we are, so…

Perfect. Thank you very much.

Thank you.

Your next question comes from the line of Carlos Legarreta with GBM. Your line is open.

Hi, thank you. Good morning. Just two very brief questions, just the first one on the first quarter, you mentioned that fine of MXN 2.5 billion, we believe were disclosed. I want to know what the status of that is, please.

No, what we've said is that we have one-offs in Mexico at around MXN 400 million, okay, not really MXN 400 million one-offs in Mexico, okay for the first quarter.

No, I'm sorry, that's very clear. But on the first -- on the fourth quarter, there was a disclosure of a fine that was imposed of around MXN 2.5 billion, if I recall correctly. I understand, it hasn't been paid, you guys are still getting it.

It's being…

What I would like to know is that…

-- it's being contested in court, yes. Yes, it's what we have in the fourth quarter and its assigned and its being contested in court. So that's nothing to do - nothing related to this.

Okay, that's very clear. Thank you. And just the follow-up, if I may. Just on - in Mexico, I'm still trying to make sense of the slowdown in service -- in wireless service revenue growth. I mean, you guys are like you said still growing ARPU, you know improving the mix postpaid versus prepaid. So I want to how can we understand what's making or explain this acceleration?

Well, remember that we -- is in I think in 2016, we have a big reduction on revenue because of the big promotions that we have and every year we have been growing. So we cannot grow at the same pace as to the last two years because we came from another base of revenues. This base is 2018 we have a good growth. And still 2019 is higher than what we had in 2018. Also if you are comparing against fourth quarter remember that the Christmas promotions are very important so that the growth in revenues people has more money and people spend more. But what I can tell you is that people use this data, it's still consuming more and more. And as promotions get more stable and we don't have to do big promotions in their markets I think ad revenues can grow faster.

Yes, I think there's something to be said, Carlos about changing the accounting standard to IFRS 15 and this is - it becomes too difficult to look at year-on-year comparisons because when you have -- with different basis. So I think that maybe you couldn't even have known we have these numbers so we can look at the actual points on a common basis of absolute numbers that looking at the growth rates become [indiscernible] there. So maybe we can maybe share with you the - it looks like in absolute terms that we can have a better idea of the real point that we are having.

And I think a lot of that prepaid subscribers are going to use more and more data and convert to a postpaid or use more in the prepaid side. So still in Mexico and in the rest of Latin American countries I think we still have a lot to do in that. So people is going to use more data and it were available to charge for that data with the reasonable promotions revenues have to go up, the ARPU has to go up. So still there is a lot size says before still broadband -- peaks broadband is still a long way to go. There's still a lot of subscribers that needs that fixed broadband service. Still I think that a lot of the prepaid subscribers are going to need more and more data. And if we have these reasonable promotions then it's going to, we have a good revenue growth.

Thank you very much. And just very quickly given that there's no more money in the pockets of some citizens in Mexico. Have you seen an increase in the take up or the recharge, the average recharging rebate?

I don't have the numbers here, but yes, I think there's going to be more money in Mexico. It's going to be. Is there really a impact, eventually is going to impact our prepaid subscribers now. They talking a lot about giving money to the old people to the young people and that's a nice thing, that will make a more spending in the prepaid side. So, I'm sure that eventually we could more and more people using more and spending more in the prepaid side. That's great thank you very much.

Thank you.

Your next question comes from the line of Ernesto Gonzalez with Morgan Stanley. Your line is open.

Hi. Thank you for taking my question. I just have two quick questions. The first one is a moment ago you mentioned that this year's EBITDA in the U.S. should be similar to last year but with higher growth. The similar EBITDA, do you mean EBITDA margins, or if it in absolute terms?

No, I'm talking about absolute terms, our budget is to grow more -- to have a little bit more than $600 million in EBITDA and I think we are going to have that EBITDA this year.

Very clear. Thank you.

I'm sure that we're going to grow more than what we've had is in last to have better numbers in terms of costumers this year than last year.

Great. Thank you. And just my second question, if we could talk a bit about mobile service revenue trends in Brazil. We've seen a slowdown in year-over-year growth. Could you please tell us what you're seeing in the market? Thank you.

Well, we talked a little bit about, but still I think the economic situation in Brazil is going at a little bit more slowly than what everybody is expecting. So the recovery in Brazil is taking a little bit more time on what everybody is suspecting, and that's also related to be now. So we're strong, I think we are being the leaders in net adds, the leaders in service revenue in the wireless segment. And I think we have a very good network, we have good promotions. I think, our brand is getting better and good, very good emerge in our brand. So I think, all the work that we have been doing for the last three years is getting better. We have doing good investments in the network, in 4G, in 4.5 G. We have the best speeds in the market. So we are very competitive not only in price, we are competitive in everything there. So speed in the market. So we are very competitive not only in price, we are competitive in everything there. So also we have a very good fixed network, so the convergence is going well, where combos are doing excellent. So in Brazil, I think this year we can have a - we can have a very good year so. I don't know exactly how fast this is going to be the recovery in Brazil. But the recovery is going good, we're going to take advantage of that recovery.

Great. Thank you.

Thank you.

Your next question comes from the line of Ric Prentiss with Raymond James. Your line is open.

Yes. Hi. I want to come back to the U.S., if I could for a moment. When you mentioned better customers in 2019 than 2018, do you expect to have net ads positive for the year or just less of a loss?

We separate the Straight Talk and of these and the SafeLink, I think in SafeLink that as a - the customers that are they Lifeline customers that we have. I think we're going to have much less negative ads, so much less than what we have last year. And in the other ones, all the other ones, I think we're going to have positive this year and much better than last year.

Makes sense. It seems to be that you're having quite a good success with the Straight Talk brand in the United States. How do you think that's being positioned and is that really the strength of the growth?

Yes. Straight Talk is one of our main brand and it has been very competitive and very well position in the U.S. market. So as a prepaid brand is doing very good. Also we have other two or three brands SIMPLE Mobile is doing very good, Walmart Family Mobile is doing also very good. So these brands are going to do very good this year. I mean they are doing good and the SafeLink that is the lifeline program is going to have much less reductions than what we have last year. It's the way we're seeing the market.

That's great.

ARPU has increased nearly 7% year-on-year in the year which goes to show how well the company has positioned itself particularly with Straight Talk.

Straight Talk has, I think the main program that we have is around $40. So it's a very good program and I think we're having a new of $50 on limited. So it's a very good, very, very good program the Straight Talk…

Great. Thank you.

Thank you. Operator: Thank you. Your last question comes from the line of Valder Nogueira with Santander. Your line is open.

Hi. Good day guys. You have been doing a decent job in defending your market share in broadband and fixed-line broadband in Brazil. I believe part of it's of course is the strength of your network, but also the bundling that you have put forward for the features that the group has in Brazil. Now, my question comes from the sense that part of the competition has come from the so-called regional players some of them with radios, some of them with fiber and the local ISPs. Do you guys intend to increase your CapEx in fiber or go through M&A including fiber assets? How do you plan to continue well defending these such important market share in Brazil?

Yes. You are totally right. What we've been seeing the market is that they are called smart players. They are taking share very, important share in the fixed problem. I think they have like a 20%, 21% of market share and they are really the spurred growth all over Brazil. They are using micro ways in some cases cable in other cases. We believe that when you look at the market to get in the cities that we have the network we've been doing pretty well in market share and that's winning the ultra-broadband. I mean we are the leaders in ultra-broadband in Brazil. We believe that maybe get into that market it could be with wireless proposal more than go to fix that is really expensive to go all those regions. So you're totally right, it's a market that they are growing. I think we will have a room to get there and to compete against these players.

Oscar, does it make sense for you to form partnerships with some of these players?

Yes. You know that they are only delivering broadband. We've been talking with them to offer combo packages adding pay-TV as a mobile as well. It makes sense to do that as well.

Okay.

A commercial agreement with them.

Okay. And do you believe we should begin seeing numbers on this or is this just…

-- but you are totally right, we are getting closer to them to get our commercial agreements with some of them.

Thanks, Oscar.

Thank you.

I would now like to bring the call over to Mr. Daniel Hajj for final remarks.

Thank you everybody for being on the call, and thank you, Daniela, and Carlos, Oscar. Thank you very much.

Thank you.

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