Good morning. My name is Denise, and I'll be your conference operator today. At this time, I would like to welcome everyone to the América Móvil Second Quarter 2019 Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Now I will turn the call over to Ms. Daniela Lecuona, Head of Investor Relations. Please go ahead.

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

Hi, Daniela. Hi, everyone. Thank you for being in América Móvil's second quarter of 2019 report, and Carlos is going to make the summary of the results. Carlos García Moreno Elizondo: Thank you, Daniel. Good morning, everyone. Well, in the quarter, the uncertainty regarding trade laws in the context of the so-called trade war with China helped bring about a greater deceleration in global economic activity, with 10-year U.S. Treasury interest rates continuing to fall in the latter part of the quarter. They ended June roughly 40 basis points below, where they had been at the beginning of the quarter. Even though U.S. interest rates were not expected to keep on rising, but were seen as falling in the later months of the year, the U.S. dollar remains strong versus most currencies. Only the Mexican peso held it's ground, appreciating in the second quarter against practically all the currencies in the region, 1.3% versus the dollar, 7.6% versus the euro, 10.3% versus the Brazilian real, 15.6% versus the Colombian peso, and 19% versus the Argentinean peso. We added 1.6 million wireless postpaid subscribers in the second quarter, more than half of which came from Brazil, with Austria and Mexico contributing approximately 200,000 subscribers each. We also disconnected 1.2 million prepaid subscribers in the period, including [technical difficulty] in Nicaragua. On the fixed line platform, RGUs increased by 119,000 clients, with 369,000 new broadband accesses, one-third of which came from Central America, with Brazil contributing 81,000 clients, and Colombia 49,000, and a decline of 157,000 voice access. At 7.2% and 6.0% year-on-year, mobile postpaid and fixed broadband remained the main drivers of access growth, with mobile prepaid and PayTV declining 3.4% and 1.9% year-on-year. Fixed-voice accesses were almost flat from a year before. Before going on to the financial results, it is important to highlight that Argentina has deemed to be hyperinflationary economy, and because of it its financial results are to be presented in constant Argentinean peso terms. For purposes of our consolidated results, those results must be converted [ph] into Mexican pesos using the closing exchange rate of the relevant period. To ensure consistency in all our comparisons of consolidated figures that are done at constant exchange rates, we will exclude Argentina from our consolidated fees. For reference, it must be said that in the second quarter, with nominal values, that is with no inflationary adjustments and at average market exchange rates, Argentina would account for 3.4% of the total revenues of the company. Okay, well, on the second quarter revenues, total MXN 250 billion, and our EBITDA MXN 78 billion, it is under IFRS 16. Both our service revenues and our organic EBITDA declined in Mexican peso terms from the earlier quarter, 3.1% and 2.5% respectively, reflected the fact that the results of our international operations had fallen in Mexican peso terms on account of the strength of the peso. At constant exchange rates, again excluding Argentina, and as you can see in the slides those of you that are looking at the presentation, you can see that service revenues were seen to accelerate, expanding from 0.8% in the first quarter to 2.3% in the second one. Organic EBITDA growth also picked up to 3.5% in the second quarter, from minus 0.1% in the preceding one. Well, mobile service revenues were the main driver of revenue expansion, nearly doubling from 2.9% in the first quarter to 4.7% in the second one. And then fixed service revenues also improved, reducing the decline from minus 1.2% in the first quarter to minus 0.4%, so we are seeing a strong growth in mobile, and an improvement in fixed-service revenues that are declining less rapidly than they used to be. The faster growing business lines by revenues were fixed broadband, at 7.7% year-on-year, and mobile postpaid at 6.3%, as you can see in the slides. Prepaid revenue growth also picked up to 3.4%, as did that of corporate networks at 4.6%. On the other hand, the decline of PayTV and fixed-voice revenues continued their decline. Mobile service revenues, as again as you can see in the slide, rose very [technical difficulty] in Mexico 8.3%, Brazil 8.9%, 6.9% in Dominican Republic, and 3.3% in Colombia. And even in the U.S. where we're seeing nice ARPU gains, we've seen an increase of 1.4%, but we did see some declines in Peru and Chile, mostly brought about by the reduction interconnection rates that took place earlier in the year. On the fixed revenue platform we saw revenues increasing 8.5% in Colombia, 4.9% in Ecuador, and 2.4% in the Dominican Republic. But also in -- we have seen an improvement in the case of Mexico, they are now falling 1.3% compared to a decline of 4.5% that we had in the prior quarter. So we are seeing again, in some cases, very significant growth rates, and so we had had some declines, we are seeing less important declines this time around. EBITDA growth was, we mentioned, 3.5% at constant exchange rates, compared to a decline of minus 0.1% in the first quarter, but EBITDA growth accelerated sharply in Mexico to 4.7%, and improved noticeably in Colombia and Ecuador to 8.4% and 6.9% respectively. You see increases in the Dominican Republic [indiscernible] 6.4% in Brazil, 4.7%, and in the U.S. 8.2%, so very good increases of EBITDA in the main markets of the company. [Technical difficulty] in Austria because Austria fell after restructuring costs, but if you consider the results before restructuring costs they had an increase of about 3.5%. So our operating profits were up 7.7% to, say, MXN 7 billion, whereas our comprehensive financing cost of MXN 12 billion was down 63% from the prior year thanks to our having postpaid at MXN 1.2 billion foreign exchange profit this quarter, compared to MXN 30 billion loss last year in same period. The foreign exchange gains were instrumental in our returning a MXN 14 billion net profit in the period, that is the foreign exchange gains and our operating profit helped us come up with a net profit in the period, as you can see in the slide. Our net dent ended June at MXN 686 billion, including the capitalized portion of our lease obligations, the IFRS 16. Excluding these, the debt totaled MXN 570 billion, which is roughly flat relative to a year before. In cash flow terms our net debt did increase MXN 19 billion in the six months to June, partly to fund the acquisition of the Guatemala operation from Telefónica. Our outlays totaled MXN 92 billion, and they include capital expenditures of MXN 66 billion, acquisitions of MXN 6 billion, and contributions to pension funds in the amount of MXN 12 billion. In addition, we had about MXN 7 billion in the shareholder distributions. And finally, you can see here in the slide, that our leverage ratio ended at the quarter practically unchanged from the prior quarter, at 1,98 times net debt to EBITDA. We still feel that we're very much in track to continue to reduce the leverage ratio for this year, and depending on whether we have the acquisition of Nextel closing this year or not, we might end up having a greater reduction of leverage than we were expecting initially. So, that's what I would have to say. I would like to pass the microphone back to Daniel for the Q&A session. Thank you.

Thank you, Carlos.

Okay, we can begin taking the questions.

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

Thank you. Good morning, Daniel, Carlos, Oscar, Daniela. My first question is related to the economic environment in Mexico. I was wondering if you expect a negative impact on your Mexican operations as a result of the deteriorating economic outlook. And the second question is related to ARPU in Mexico, at MXN 149, and increasing by 6% year-on-year, I was wondering if it's mostly related to higher usage but also the price increases implemented during the quarter in line with what AT&T has been doing? Thank you. Carlos García Moreno Elizondo: Okay. Hello, Rodrigo. On the question of the economic activity, well, as you point out, there has been some recent numbers that have shown really industrial production coming down a bit, and the GDP to U.S. for the first quarter is a little bit weaker than expected. The fact of the matter is that a lot of this has been very much limited to mining and construction, that's been the sectors that have been more affected. And the consensus economic growth expected for the country, and I just checked it yesterday, is still around 1.5% for the year, okay, these are the most recent consensus, which is down from about 2% at the beginning of the year, but still not too bad. So I think it's partly to do with what happens with oil production, which is important in the [fee use 00:02:28], but it's totally not that important directly in the economy. And it is the case that in the market we have seen, as you are seeing now in the report, good increases in revenues and EBITDA. And this is very much driven by consumption. I think that we have a note in the quarterly report where we basically say that the data consumption client in Mexico has increase by 120% year-on-year, and that the MOUs have also continued increasing significantly. I think that they have reached 500-and something minutes - 550 minutes, which makes it the most significant consumption of voice in all of Latin America.

Yes, to add a little bit more on what Carlos is saying. And also remember that the telecom sector is a very defensive sector, so it's important to know that I think telecom has becoming very important for the people, and this is still using, what Carlos is saying, megabytes of use in Mexico increase, around 120%, and ARPU 6.2% as you were saying minutes of usage. And overall what I can tell you about Mexico is that Telcel and Telmex have substantially increased their investments here. So Telmex has increasing their fiber, putting fiber to the curve - fiber to the house, so where want to increase the speeds and did more capacity to all of our broadband clients. And in Telcel what we want is we're putting more 4.5G quality, and we want to connect more cities and more locations in the south of Mexico. So we're putting more money to invest and to have more connectivity in the south -- all Mexico, and specifically more in the south of Mexico. So, we still have the best network, the best quality, the best customer care centers' attention, so all overall the preference of the Mexicans are for Telcel at this time. So it's a little bit in the market. I don't see a lot of increase in prices. We have been increasing a little bit in prepaid side in our case, reducing one day in one card, but in the postpaid we're not doing anything, we're still having the same prices. And that's what we have been seeing. Sometimes we have some increase on prices, but then in the market we see some promotions of our competitors, so it's very difficult to understand exactly what is happening in Brazil. Everybody's saying that they are increasing prices, but when you go to the market then the promotions are reducing in Brazil also there. So, but talking about Mexico, I think the investments that we have been putting here are working very good there [for everyone 00:00:58].

Understood. Thank you very much, Daniel and Carlos.

Thank you, Rodrigo.

Your next question comes from Leonardo Olmos with Santander. Your line is open.

Hi, good morning. All my questions are related to Brazil. The first one is related to fixed broadband. If you could give us an update in the context of Oi strategic plan they released yesterday. We noticed a reduction in the loss of subscribers which was good for Net or Claro, but looking ahead, what are main challenges in terms of competition in Brazil, it could be Oi, it could be the regional players, what do you see are main challenges for Net or Claro in Brazil?

Well, let's talk a little bit about Brazil and divided in two, the first talking about the wireless side, I think we have been doing very good. Prepaid revenues growing 3%, postpaid revenues growing 11%. I think for the last six or seven quarters we have been growing very strongly our wireless revenue. And the network is improving a lot. The coverage has been improving, also -- we have been awarded by one of the best networks in Brazil. So the investments that we have been putting in Brazil in the wireless side have been good. And we have been growing very, very good in the postpaid and prepaid side. In the fixed side, I think broadband has been growing also. We have been growing 13% the revenues in broadband. And it's a good market. I think we are a little bit behind our budget in broadband, but I hope we can do our budget this year, and still it could be very -- the growth in broadband I think is going to be. We have been having mainly -- more than 50% of the market share of the ultra broadband customers. So in that case all the ultra broadband customers that we have been having are being consuming very well and they are very happy. On the -- we have more than, I think, five million customers with high-speed broadband, so the competition with -- Oscar can talk a little bit more on the competition on the broadband with these small players that we're having all around Brazil, but I think we're doing good. And on the voice, in the fixed-voice, I think, yes, starting to reduce the decline that we have been having in the last quarters. Yes, it's almost finished this long-distance and these type of services that we're having. So yes, it's mainly stable. Yes, we're not losing too much more. And in the TV, the TV is the one that is losing a little bit. We're losing not too much subscribers, but the ARPU is reducing a little bit because of the competition, and it's what is happening all around the world. So people want to have less channels, more broadband, Netflix, and other streaming services. So all around is reducing our ARPU, but I think we can sustain that for the next year. So, but Oscar can talk a little bit about what is happening in the market in fixed broadband.

Yes. As Daniel mentioned, there is this, what is called small players. They are growing pretty rapidly in the areas that we don't have a network. If we look at our networks, where we have HFC network cable with ready with DOCSIS 3.0, and we could move easily to DOCSIS 3.1 to deliver really, really high speeds. And all the new homes that we are doing in Brazil, we are doing with the fiber, we're using GPON technology. As Daniel mentioned, on the ultra broadband, we have more than 50% of market share. So I think we have a good -- we are well-positioned in the market in Brazil. We know that our competitors are building fiber as well. So it's a very competitive environment, but we think we have the right infrastructure to be a good player in the market. We're going to do around 1 million houses -- 1.5 million houses fiber implemented this year.

That's a good one. Yes, thanks, that's useful. It's good that you mentioned the mobile part, then yes, because I'm going to ask you -- was going to be my follow-up question, once again I had a very strong admission on postpaid. You mentioned on the earnings release that it's mostly related to prepaid upgrades, but my question is now that you're going to unify the brands all below collateral, do you think that 4G bundles will be fair and even more important growing in the growth of postpaid mobile?

We are unifying our brand, the name of the brand is going to be -- all that, let's say [indiscernible] and prepaid, postpaid is going to be collateral, still we're thinking on the corporate side that is Brazil. Overall the brand is going to be -- the brand in Brazil is going to be, it's going to be collateral. We have our combo multi that it's leaving convergence on the fixed and mobile services delivering the best value proposition in the market and delivering the most complete and convenient solution for all our customers. Also you can see the churn has been going down as it's been very good, very good the churn. So what Oscar is saying we have a very good platform in Brazil, we have been investing for the last eight years seem like moving and increasing our investments the last three years. So, we have a very competitive network in the wireless side right now and in the fixed side, we are still growing and feel very comfortable on what we have.

Okay, that's very good. Thank you very much.

Thank you.

Thank you.

Your next question comes from Fred Mendes with Bradesco. Your line is open.

Good morning, everyone. Thanks for the call. I have two questions as well; the first one is more of a follow-up on the last one particularly on the prepaid on Brazil. The other players there showing like a double-digit drop year-over-year and you're going on the other direction, you actually showed like 2% growth which is quite interesting. So just trying to get a little bit more of color here, why do you believe it is the main point of such a difference? Of course the report is still the result of the other players, but I think particularly on the prepaid that actually called the attention then as a follow-up, if you believe that the price they are on unsustainable level, this will be my first one and then the second one on Mexico particularly domestic, how has the competition behave thinking in the fixed segment especially your strategy in terms of price and looks like there might be a little bit more aggressive on price. And finally if you can give us an update about the potential PayTV license, this will be great. Thank you.

The first one on the Brazil side, well, what we're seeing is true. We have been growing in postpaid but also in prepaid and beating our competitors there. And I just want to tell you that I think it mainly is because we're having a very strong network. So we're doing a lot of investments in capacity. A lot of investments in quality and that is helping also to give a very good service or against my other guys, I don't want to talk about my competitors but I think we have a much better network quality, capacity, coverage. In some cases coverage than our main competitors in prepaid. So that's why we are growing, even though I think they are in some cases with some packages they are a little bit more aggressive than us in prices, I was in Brazil last week, the last two weeks ago and I looked at the packages they have some packages for 15 days, we don't have packages of 15 days. So they have been very, very aggressive in some packages, we feel very comfortable with the network and with the brand and the distribution also has been good. So that's I think mainly why we are really growing in the prepaid side. In Mexico, you talked a little bit about Telmex and what I can say is again is that, we Telcel and Telmex has been really substantially increasing the investments here. So in Telmex specifically, Oscar can talk a little bit to where we are doing and what investments we are doing but we are mostly putting fiber all around Mexico and yes, we have been a little bit more aggressive in the broadband side and we have been growing this year, we have been having around 100,000 new broadband subscribers, still we are not gaining market share, but I think that we are on track to again starting to gain market share. But Oscar can talk a little bit about the network in Mexico.

Sure, well, what we are doing in Mexico, we have fiber-to-the-home. We have almost five million home passes with fiber-to-the-home and then the rest we are doing fiber-to-the-node in order to use the best technologies using copper. So we are using BDSL and pair bonding to improve the speeds of the customers, we are covering all the segments of the market to have the best offering in broadband and combined with other products as Claro Video, Claro Security to bundle the offering with more value added broadband, so it's the push that we are doing in Mexico.

And the last thing in Mexico, I think, so in total we have been making important changes in our commercial offer, increasing speeds and including on paid voice in all the package. So I think that is more or less what we have been doing in the commercial side in Mexico. And the last one you asked me about the -- which one…

PayTV…

I think if Telco has not resolved yet our application to provide PayTV services in Mexico, the applications were submitted back in October of 2018, all of the applicable requirements have been met and it is conducting an internal review, we call to receive clearance to compete in such a concentrated market soon, I think there is no competition in the market, in the TV market and as a result of that, prices has been consistently increasing in the PayTV market. So this is affecting all the Mexican consumers. So I think they can give us the license soon. Telmex has only 39% of market share in the fixed broadband and TV segments. In terms of revenues, we only have 39% market share in Telmex into the market.

Perfect, very, very clear Daniel and Oscar. Thank you.

Thank you very much.

Your next question comes from Cesar Medina with Morgan Stanley. Your line is open.

Hi, great quarter guys. Thanks for taking the call. The question was regarding the functional separation. What is the stage of the process and then the second question, we saw significant improvement in margins in the U.S., can you comment on what are the trends that you're seeing in this market as well? Thank you.

Well, on the functional separation, the companies working diligently to assure compliance to ICC position as part of the functional separation. The due date for the separation is around March 2020. At this time, there is nothing specific to comment on this process. So there is nothing more to comment on that. And on the U.S., well I think, and as I told in the first quarter track one is doing good. I think, we are growing or much better -- the growth of the -- of our subscribers has been improving. Revenues also has been improving, and we are on track with our budget, so if we can see 2019 for track one, my view is that we're going to have around the same EBITDA margin that last year and we are going to grow staking out safely around 300,000 subscribers different than last year that we lost subscriber. So overall, track one is going to be much better in terms of net additions and it's going to -- we're going to have around the same EBITDA that we have last year. So that's more or less, if we are having one quarter maybe we have a little bit more subsidies in one quarter than in the other one, but overall, I think we are on track with our budget that we have on track.

Thank you.

Your next question comes from Carlos De Legarreta, GBM. Your line is open.

Hi, thank you. Good morning. Thank you for taking the question. So both in Mexico and Brazil, you saw an EBITDA expansion of mid-single digits. I was wondering, if you could give us some color on how much of that comes from -- just in Greece usage or top line growth. How much of that comes from in turnover efficiency at the OpEx level. Thank you.

Well, did you see the numbers in both countries or both no -- and so we are increasing revenues and we are really being cutting costs all around, so deficiencies has been very good. We have more good networks, more-efficient networks, digitalizing a lot of Our things. We have really a good strategy on trying to digitalize everything that we have, customer care, IT, the billing. Everything we have been trying to digitalize and it's giving us a lot of efficiency. So I can tell you that the Mexico, Brazil, and in Colombia that we have been having a very good quarter in Colombia. It's because we're growing in the revenue side. I mean, and in we are cutting costs in the other. Carlos García Moreno Elizondo: And you summarized, but we probably -- and I'd say these revenues at Mexico are going 8.3% from the mobile platform and the fixed line platform that they have been following, they have reduced a decline and they were down only 1% in the quarter. If you look at mobile ARPUs, mobile ARPUs in Mexico were up 6.2%. So I think there is a lot to be said about topline growth supporting the growth of EBITDA.

Thank you. I understand. And if I may a follow-up in the Mexican decline market, do you think that the acceleration of the decline in this market in terms of top line, is it explained, mostly by the improvement in the corporate segment or you're also seeing an improvement on the mass market side?

I think we're doing very good in the corporate segment; we're doing both. And we're going to improve more on the mass market both as -- but that's the big investment on the substantial investments that we're doing in the big side are also in the mass market.

That's perfect. Thank you.

Your next question comes from Juan Pablo Alba with Credit Suisse. Your line is open.

Hello, good morning. Thank you for taking my question. My first question is I think I know there is lot of questions now in terms of the fixed ID Mexico, but just one last thing, I just wanted to get a little bit more color. If you may in terms of if you are seeing any macro impact on the fixed side in Mexico, regarding the mass market and also in terms of the corporate, if you are seeing some government spending there or if it's only enterprise? That's my first question. And my second question is just around Colombia and mobile market. I would like to see some color there in terms of what's driving the good results. And that's it. Thank you.

Well, let's start in Colombia. I think in Colombia we have very good improvement in service revenue, 5.2% from 3.4% last quarter. So our increase in service revenue is very good. Postpaid is driving 6.1% of that growth. And also the peaks revenues it has been very good. Broadband is increasing around 11%. So, I think in Colombia in the prepaid and postpaid, we have been increasing a lot our capacity, our coverage. ARPU is growing 6.9%. So we are selling a little bit more to our customers. Customers are using more our service; service increasing. And also, it's one of the countries where PayTV services is growing very good. So, in Colombia I can see in the wireless and on the peaks both doing excellent. So, still that user is not so big. It's low. And I think we have still good opportunity to increase that selling a little bit more to our customers. So, I am happy. And our networks has been improving giving more 4.5 fee, and increasing its speed. So, all over all in Colombia is doing good. And in Mexico, well, still we are not seeing as Carlos is saying still we are not seeing any research or any - I am sure that the government is spending less, but we are not seeing that in our business at that time.

Thank you very much.

[Operator Instructions] Your next question comes from Andre Baggio with JP Morgan. Your line is open.

Hi, good morning. I would like to know outlook for América Móvil to get a PayTV license in Mexico. We have had heard about this topic in the last quarters, but we have not seen any action. So do you think that this could happen here in the end of the year?

We don't know. As I just said, this has not resolved yet our application. So, the application, we submitted in October 2018. And we give them all the requirements that they need. So, we still don't know. We hope and as I said, the only segment of the telecom market that is increasing prices in the PayTV, and I think vote for the Mexican people will be very good if they have more competition. So that's what I see. I hope we can have the license at the end of the year.

Perfect. And can you talk a little bit more on this pension payment, so we have seen this throughout the year -- statements to pensions in América Móvil and Telmex. And can you give me some outlook if expect recurring basis next years?

Yes, I don't understand your question, but I don't think we have any change on the pension payments and pension fund on Telmex. We have been having that full time. There is nothing new. Nothing changed, and I don't have the specifics here, but there is nothing new on that pension fund.

Okay. That's well done. Thanks a lot.

Thank you.

Your next question comes from Carlos Sequeira with BTG Pactual. Your line is open.

Hi, thank you. Good morning. I have just one, and one follow-up question on Baggio's question on PayTV license, and my question is how relevant would you think getting a PayTV license in Mexico. I mean given what happened to the PayTV business in several different markets and you have other ways to provide PayTV services, is it really that important to have a license at this point in Mexico? Thank you.

Well, what you are saying, it's right. I think the TV -- the PayTV is reducing in some markets. Still as you are seeing Colombia is growing, but I think it's important, and that all the players has convergence, they can give convergence. They can do peaks, broadband and PayTV. That's the triple play I think in the house people is expecting to have the three services. And that's really the reason why we are asking that. And on the other side, that's why we want to do that. The penetration in the PayTV Mexico is still low. I don't think the penetration -- it's average, but still we can have a little bit more penetration there. But, the importance is also to have more competition. Prices - it's the only place where prices has been increasing. And we want to bundle our services with PayTV, so that's the reason to have that.

That makes sense. Thank you.

Thank you.

There are no further questions at this time. I will turn the call back over to Mr. Daniel Hajj.

No more question. We are doing a very good job.

I want to thank everybody for being in the call. Thank you. Carlos García Moreno Elizondo: Thank you all.

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