America Movil (NYSE:AMX) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
Benzinga APIs provide real-time access to earnings call transcripts and financial data. Visit https://www.benzinga.com/apis/ to learn more.
View the webcast at https://events.q4inc.com/attendee/501363043
Summary
America Movil reported a 3.1% increase in second-quarter revenue to 241 billion Mexican pesos, with service revenue and EBITDA rising 3.4% and 3.8% respectively.
The company added 531,000 new broadband connections, with Mexico, Brazil, and Colombia being major contributors.
There was a significant appreciation of the Mexican peso against the dollar and euro, impacting financial metrics positively.
Operating profit increased by 9.5% to 51.8 billion Mexican pesos, and net income rose 9.2% year-over-year to 24 billion pesos.
Capital expenditures for the first half of the year amounted to 48 billion pesos, with a focus on network expansion and customer care improvements.
The company continues to see strong growth in mobile and broadband services, particularly in Mexico and Colombia, despite competitive pressures in Brazil.
Management highlighted strategic acquisitions, such as WOW in Peru, as part of their growth strategy to enhance fiber infrastructure and customer base.
There is ongoing focus on deleveraging efforts, reducing net debt by 30.9 billion pesos, supported by strong cash flow and capital management.
The company is seeing a favorable trend in Mexican prepaid revenues, partially attributed to improved economic conditions and increased 5G adoption.
Challenges in Brazil were noted, with increased promotional activity impacting growth, but the company expects recovery in the later quarters.
Full Transcript
Carlos
Argentina with 154,000 and Mexico with 101,000 postpaid subscribers. In the prepay segment we raised 3.0 million net losses as Colombia and Argentina cleaned up the base. In the fixed line segment we connected 531,000 new broadband accesses. Mexico was the main contributor with 170,000 accesses followed by Brazil with 83,000 and Colombia with 74,000. As regards pay TV, we added around 10,000 units with most of them coming from Argentina, Eastern Europe and Central America.
Mobile postpaid and fixed broadband accesses remain the main drivers of growth of our customer base, increasing at an even faster pace, 9.1% and 6.1% respectively, compared with the year-earlier quarter. Second quarter revenue was up 3.1% year on year in Mexican pesos to 241 billion Mexican pesos. Service revenue increased 3.4% and EBITDA 3.8% compared to the year-earlier quarter. The Mexican peso appreciated significantly versus the dollar and the euro, 12% and 9%, while remaining flat versus the Brazilian real and depreciating 3% versus the Colombian peso.
At constant exchange rates, service revenue was up 5.1% while EBITDA increased 5.3%. It would have increased 6.7% absent a one-off charge. In Mexico, mobile service revenue maintained the pace we have observed over several quarters, 6.5%, while fixed line service revenue accelerated to 2.7% from 1.7% the prior quarter. With the downward trend in fixed line growth coming to an end on the mobile platform, postpaid revenue expanded 7.2% as in the preceding quarter, with prepaid revenue growth continuing to accelerate to 5.3% up from 3.1% a year ago.
Mexico, Colombia, Central America and Eastern Europe were the best performers in terms of improved mobile service revenue growth. Regarding fixed line service revenue in the residential segment, both broadband and pay TV revenue grew somewhat more rapidly than in the preceding quarter, 4.2% to 5.4%, up from 3.1% to 4.6% respectively. B2B revenue growth remained stable at 4.0%. Mobile Peru and Central America all contributed to the improvement in broadband revenue growth.
As for the recovery in the B2B segment, Brazil was a top performer moving up from a 4.7% pace to a 7.5% pace. Operating profit totaled 51.8 billion and was up 9.5% in Mexican pesos. Our comprehensive financing cost rose to 10.4 billion pesos, reflecting lower foreign exchange gains that more than offset lower net interest costs. Our net income totaled 24 billion pesos, a 9.2% increase from the year-earlier quarter. It was equivalent to 40 pesos and $47 cents per ADR.
Throughout the first half of the year, our capital expenditures amounted to 48 billion pesos, our share buybacks to 4.6 billion, and the service of our labor obligations to 8.4 billion pesos. These were all covered by our cash flow, which together with net dividend income of 1.31 billion pesos, allowed us to reduce our net debt in cash flow terms by 30.9 billion pesos. You can see in this slide, excluding capitalized lease obligations, net debt totaled 402 billion pesos at the end of June, which represented 1.331 times last 12 months' EBITDA after leases.
So with that, I will conclude this presentation and we'll pass the floor back to Gabriel.
Gabriel, Investor Relations
Thank you, Carlos. And we can start with the Q and A.
OPERATOR
At this time I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q and A roster. Your first question comes from the line of Leonardo Olmos, UBS. Your line is open. Go ahead.
Leonardo Olmos, Analyst at UBS
Hi everyone. Good morning. Thank you for taking the question. Congrats on the numbers. We love the deleveraging we saw. My question will be regarding competition in Brazil. You mentioned a more competitive and promotional environment in Brazil. Which segments are most concerned, and how does this entry-level hybrid plans such as Claroflex fit in these scenarios? So I'm asking specifically about the new around 30 reais per month low-end hybrid plans that all the three mobile carriers launched.
Thank you.
Daniel Hajj, CEO
Thank you, Leonardo. We're talking a little bit about Brazil. I think in Brazil we have a lot of things. So the first is, well, if you see one year ago, second quarter the growth was very high. So the comparative between second quarter last year and second quarter this year is a little bit difficult because second quarter of last year the growth was higher than it used to be in the other quarters. So it's a difficult comparison between quarters. Okay, that's one of the things.
The second, no doubt that the market has been more promotional. Where we are seeing more promotions are in prepaid and in postpaid. What you told about the Claroflex, I don't think there's any change on the trends on Claroflex postpaid, prepaid. I think everybody's more or less seeing the same trends. We are not selling more cheaper postpaid or more cheaper prepaid. So we are seeing the same trends. The only thing is that promotions are becoming a little bit stronger.
I still think that we're going to have a recovery in second, but better in third, but more in the fourth quarter we're going to see again a little bit more growth in mobile. But, well, if promotions and our competitors are more aggressive, then we need to be a little bit more aggressive. So I'm not sure what is going to happen in the next months. Maybe the promotions are not so aggressive, but we don't know. So depends a lot. We're following them since May, TIM and Vivo have become more aggressive.
So we have to follow and we're going to follow that. On the fixed side, we have been growing revenues. I can tell you we started one year ago with 1.5% growth, then 1.8, then 2.6 and today 4.1. So in fixed, things are going better and looking stronger. At the end of the day, we have a very strong network, we are doing very good in 5G. We are investing in customer care, we have a very good NPS, we are doing convergence. So if the market is aggressive for this moment, then we're going to be a little bit more aggressive.
And in the future, if things are going the other way and less promotions, then we're going to see better revenue. We are still gaining in mobile portability. We are the gainers in postpaid in mobile portability. Overall we are looking at Brazil as good. And the other important thing that you can see is that we think, and we're feeling a little bit, a slowdown in the economy. That's also one of the things that we're looking at, why revenues are decreasing a little bit, because the economy, we see a little bit of a slowdown, but it's too early to say.
Let's see what's happening in the next months and then we can find if the economy trend is going slow or it's going to stay the way it is. So that's more or less what we have in Brazil.
Leonardo Olmos, Analyst at UBS
Makes a lot of sense. Thank you very much, Daniel.
Daniel Hajj, CEO
Thank you.
OPERATOR
Your next call comes from the line of Marcelo Santos, J.P. Morgan. Your line is open. Go ahead.
Marcelo Santos, Analyst at J.P. Morgan
Hi, good morning. Thank you for the opportunity to ask questions. I wanted to ask about Mexican prepaid performance. The revenue growth we're seeing there has been accelerating every quarter for many quarters already. Usually you discuss this in the light of improving Mexican economy, but what we hear from consumer companies, it's kind of not such a great story in the consumption side. Yet your performance is good. What kind of initiatives have you been putting forward?
What is happening in the competitive environment from inside or outside of America Movil that's helping you to deliver these results? Thank you.
Daniel Hajj, CEO
Well, as you said, we think that the economy at the beginning, when we were almost flat in prepaid and were growing maybe 1% in prepaid, was maybe two years ago when we think that the economy was in a slowdown period. But right now I think the economy is going back and our prepaid customers are consuming, are recharging more and are charging higher cards, higher prepaid cards. Okay. So instead of charging 50 pesos, they are charging 80 or 100. So people are starting to use more and more 5G in Mexico.
Really, we're the only ones that have a very good 5G network, and that's also helping us a lot. And the other side, we have a little bit more coverage, so we're gaining some good subscribers that we don't have. We're starting to do a little bit more coverage in some places. But overall, we have a very good base on prepaid. Difficult to say, but a lot of our prepaid customers are consuming. So we don't have a base that some of them are consuming or they are maybe one month consuming and two months not.
So all these customers every month are charging and using more data. So those are the things that are helping a lot on the prepaid side. So our base of people who are recharging is growing and that's very good for us. Thank you very much, Marcelo.
Carlos
Just a small detail on the economy. As Daniel points out, I think that economies are on that recovery path. It is coming back. I think at this stage it is very uneven, so it's not affecting all the sectors the same way. But I'll give you the two reference points. As of June, we have registered the highest ever volume of sales of automobiles. Highest ever. And the growth of the automobile sales are almost identical to our prepaid revenues, the growth of the prepaid revenues, just to put it in perspective.
Another reference point is if you look at other services like restaurants, they are booming. All sorts of restaurants, high end, low end, all of them are booming. So it's a little bit uneven. You have some sectors that are doing particularly well, some other sectors that are still not recovering.
Marcelo Santos, Analyst at J.P. Morgan
Okay, pretty interesting. Thank you.
Carlos
Thank you,
OPERATOR
Your next question comes from the line of Fanny Kanemuri, HSBC. Your line is open. Go ahead.
Fanny Kanemuri, Analyst at HSBC
Hi everyone. Thanks for taking my questions. My first question is on Mexico mobile revenue growth. It has registered a very strong growth, but I'm wondering if it had any positive impact from the World Cup that is happening in Mexico. Are you seeing higher roaming revenues? Have you seen higher growth in June compared to other months? The second question is also on Mexico. How is the progress happening on the mobile registration and what percentage of customers have already been registered on this front?
Thank you.
Daniel Hajj, CEO
The first one, I think the World Cup impacts a little bit, so I don't think it's too much. The World Cup was not only in Mexico, so we had only like seven games, something like that, so there's people coming. We see more roaming here in Mexico, more people using. It's not only the roaming. Since people are using more, we have a very good 5G network, so they are watching the games on the iPad, on the phone, so that will have a little bit more consumption, but that will be only two weeks in June, so it's not too much.
What we are seeing is that a lot of our customers who are coming back to our store and want to renovate — they are renovating. Maybe I can tell you that maybe half of our subscribers are upgrading their plan. So that's very, very important. They want to have a better plan, they want to use more — they're using more the concept. That is what is giving us, on postpaid, a very good growth. So a lot of our customers are moving to a higher plan. So that's what you could see.
The market is very competitive. We have a lot of competition in the market, but as I said, we are the only really 5G network, a very good network all around Latin America. We're working a lot on quality, we're working a lot on speed, customer care. So we're trying to give our customers the best service, and that is making us grow — that and the registration. From now on, there's what we said — there's going to be new dates for the registry. The dates are going to be depending on the end of your number — that's when you need to be registered.
It's going to be only the prepaid subscribers. The postpaid are already in, so they don't need to register — the postpaid subscribers. I don't know exactly the number in the industry, but there's still a lot to do on that. So every 15 days, every month, there's going to be a new number and then you have to register your prepaid number. It starts on the 15th of August and ends, I think, end of November or beginning of December. And that's what the authorities are saying and that's what people need to do in prepaid — they need to register.
Since January, all the new customers that all of the companies have, have to be registered. So since then, all of them have to be registered, and this is only for the actual customers that need to register their number. So that's where we are, and we hope that all of them will register.
OPERATOR
Thank you. Your next question comes from the line of Rogerio Arujo, Bank of America. Your line is open. Go ahead.
Leonardo Olmos, Analyst at UBS
Hi everyone, thanks for the opportunity. I have a couple of questions. The first one on the line, other financial expenses. It rose to roughly 6.9 billion Mexican pesos in the quarter. This was a 40% increase year over year. Could you please break down what drove that increase, but specifically how much of this relates to cash outflows tied to your labor obligations and potential funds? We saw this was nearly 6.9 billion Mexican pesos in the quarter as well.
Also, looking forward, what level of annual pension-related cash outflow should we model given the maturity of the Telmex plan? This is the first one, and the second on Nusel. Could you gently walk us through how it's reflected in your accounting and KPIs? Specifically, are Nusel users counted within your reported subscriber base and net adds? We think so, but if you could confirm. But also, how is the economics recognized — full revenue or only Claro's revenue share?
So we can have an idea on how this impacts ARPU. And finally, how should we think about the associated network, commercial costs, and margin profile of Nusel in your results? Thank you so much.
Gabriel, Investor Relations
Thank you, Leon. On the first question on other financial expenses, basically what we are reflecting is partly a little bit of the elements of the fine that was mentioned a while ago, because as the first ruling was some years ago, part of the fine ended up being financial expenses — financial penalties that were accrued since the initial ruling. The other part that is important generally — and you will see it all the time — is that that's why we have the currency hedging transactions, among other things.
So typically when you are gaining on the FX, to the extent that those gains had already been hedged, you are giving back part of your expenses. It works in opposite directions in both cases. So that's part of it — it's part the fine and partly your expenses. Nothing to do with the pensions. The pensions are accrued in accounting, but what we're showing here is on an accrual basis; it's not on a cash flow basis. And on the accrual basis, there are no changes.
Daniel Hajj, CEO
And on Nusel, there are two types of MVNOs in Brazil. One we call them acreditados and the other ones authorized MVNOs. Nusel is the one that is like acreditados — they work like an agent, a commercial agent — and those customers count as our base. We count them as in our base in Claro. So that's the way we count. All the Nusel subscribers are inside Claro customers.
Leonardo Olmos, Analyst at UBS
Okay, perfect.
Daniel Hajj, CEO
And the revenue is the full revenue charged by Nusel that enters at your revenue. The revenue is the part that is included in us — that's our revenue — and the rest is Nusel revenue. So we divide that. So that's what we have. But Nusel has been working maybe for one year or more, so.
Leonardo Olmos, Analyst at UBS
Okay, fair enough. Very clear. Thank you so much. Thank you.
OPERATOR
Your next question comes from the line of Emilio Fuentes, GBM. Your line is open. Go ahead.
Emilio Fuentes, Analyst at GBM
Hi, thank you for taking my question. My question is regarding capital allocation. I was wondering, given the current weakness seen in the US dollar and how this could benefit your investment needs, do you see any downside risk to your full-year Capex guidance? And if so, and given you're currently standing at the lower end of your leverage ratio, do you see incremental free cash flow as being destined for share buybacks? Thank you.
Daniel Hajj, CEO
The weak dollar, it's difficult for us in Capex because then, for the same things that you do, then it's going to be more dollars. So what we need in dollars is more dollars for the same budget that we have. So in terms of the Capex, it's not helping, while in terms of revenues it's helping. So that's where we are, and we're deciding what to do. But in Capex it's a little bit more. But we are in the target that we have — seven billion — a little bit more, a little bit less, but we are in that target and we're not going to move on that.
The second question, can you repeat it, please? Leverage.
Emilio Fuentes, Analyst at GBM
Do you see any.
Daniel Hajj, CEO
No, I think.
Emilio Fuentes, Analyst at GBM
Do you see any incremental free cash flow — if you see any incremental cash flow — going for buybacks?
Gabriel, Investor Relations
No. No. I think, you know, what we have said consistently is no. We first determine what our leverage ratio is meant to be. So we need to look at our leverage ratio considering the expenses that we are already committed to make, which would include the purchase of Desktop, which likely is going to close this year. That's our expectation in any case. So we basically manage to stay within the range that we have set — not more than 1.5 times net debt to EBITDA, not less than 1.2 times net debt to EBITDA.
So you can see that we have some limits in terms of how much we can reduce our leverage at this point.
Daniel Hajj, CEO
And also adding another thing that we just announced yesterday, the WOW acquisition that we have, I think, makes a lot of sense for us in Peru. It's some more fiber — more than 3 million homes passed with fiber, half a million customers — and makes a lot of synergy with us. And we're open to see more of those acquisitions. They are good for us. They are broadband customers that we can sell prepaid, postpaid, or TV to. Also, this network is outside of Lima and it's a good complement for us.
It helps us also, the fiber, to do corporate customers — we're growing and doing very good there. So small businesses, as Oscar is saying. So we are also looking for other good acquisitions that we can have.
OPERATOR
Next question. Just a reminder to everyone, if you would like to ask a question, press star, then the number one on your telephone keypad. Our next question comes from the line of Ernesto Gonzalez, Morgan Stanley. Oh, excuse me. Our next question comes from the line of Carlos Sequeira, BTG Pactual. Go ahead.
Carlos Sequeira, Analyst at BTG Pactual
Hi, how are you? Hope all is well. So I have one question, please. And it is related to M&A strategy in Europe. If you can, you know, let us know what you are looking at — what makes sense for America Movil at this point regarding Europe. Thank you.
Daniel Hajj, CEO
Well, we're open to see everything. But what we're really looking at is this type of companies like Desktop, like WOW, that add fiber customers — the fiber complement to our fiber network — that we can sell more things to those customers like prepaid, postpaid, and, as I said, also the fiber will be in the small and medium companies and have a lot of synergies. I think we can have a lot of synergies with these companies. So those are the companies that we're looking at.
We are not looking to go outside right now to other countries, but we're looking at things inside our countries that will make us grow a little bit faster and consolidate the market. Consolidation of the market will be important.
Carlos Sequeira, Analyst at BTG Pactual
Perfect. Thank you. Thank you.
OPERATOR
Your next question comes from the line of Ernesto Gonzalez, Morgan Stanley. Your line is open. You may go ahead.
Ernesto Gonzalez, Analyst at Morgan Stanley
Hi. Thank you for taking our question, and congratulations on the results. So it's two questions. The first one is on Colombia. You delivered really strong results consistent with past quarters. Could you talk about how you see this market evolving, especially now that some time has passed since the acquisition of Telefonica closed? And the second question is on Argentina. Given the recent competition authority's resolution on potential consolidation in the market, does it change how you view the long-term outlook for Argentina?
Any comments you can give are greatly appreciated. Thank you.
Daniel Hajj, CEO
Well, good that you're talking about other countries. So, Colombia — I think we're doing very good in Colombia, growing very fast in mobile. We were the first ones — let me tell you — we're growing from 7 to 7, 6, then to 10, the growth in mobile revenue. So we were the first ones that did 5G there. We have a very good network and portability is going well with us. So that's the reason why we're growing. Also, a lot of customers are moving to higher plans.
We work a lot on service quality, speed. So all of that is making that our customers will use more of the service and that new customers are coming to our network. On the other side, on the fixed side, we're moving also to do more fiber. It's more challenging — mobile is more challenging — but I think we can grow. We are doing fiber. We have a good network, good sales and distribution. So I think we're going to do much better in the figures as well in Colombia.
Gabriel, Investor Relations
As Daniel was saying, I think on the corporate segment, we are growing pretty nicely in Colombia as well.
Daniel Hajj, CEO
So, good in broadband, good in mobile, good in corporate, and moving to be better in broadband and pay TV. Mobile, broadband, and pay TV. That's where we are. And in Argentina, well, in Argentina we're going to compete against a big competitor there, but nothing else to do. So we have fiber, we have good broadband, we have 5G, and we're growing. So that's what we want to do. And that's the same strategy that we have: do fiber to get more customers in broadband and TV, and we are competitive in price.
So we have good prices there. So that's where we are. We're growing also very good. We didn't say about Peru, but in Peru we're growing very good in broadband, very good in the corporate segment. The growth in Peru, I think on the fixed side, was around 12%. So it was incredible, the growth in Peru, and that's what we are doing and looking to still grow more there. So there's a lot of opportunities in the corporate segment also in Peru.
OPERATOR
Your next question comes from the line of Rogerio Araujo, Bank of America. Your line is open. Go ahead.
Rogerio Araujo, Analyst at Bank of America
Hi, thanks for the follow-up question. If you could provide more details on the regulatory fine of 1.3 billion pesos on Telmex, what are the reasons behind it and also the potential recurrences of regulatory fines going forward. Thank you.
Daniel Hajj, CEO
Well, this is something that dates back to 2017, and in 2020 this fine was imposed on an alleged violation of asymmetric measures. So we contested the fine and now in June it became final. So we believe it's disproportional. It doesn't make any sense, this fine. It's 6% of the revenue, which is the minimum in accordance with the law, and we think it's completely absurd what they do. Unfortunately at this stage we cannot do anything. So that's what we have.
It's not on Telmex, it's on Telnor, an affiliate of Telmex, and that's what gave us this 6%. We think those fines are absurd. We hope and we don't think there's going to be any more of those. So let's see.
Rogerio Araujo, Analyst at Bank of America
Okay, thank you.
OPERATOR
Your next question comes from the line of Marcelo Santos, J.P. Morgan. Your line is open. Go ahead.
Marcelo Santos, Analyst at J.P. Morgan
Hi, thank you very much for the follow-up. I just want to circle back to the first question regarding Brazilian mobile. So based on what you said, you expect the growth to improve in the third and fourth quarter. Do you see room to increase the control prices, the mobile control price, hybrid prices this year or not? Could you make some comments on that, please? Thank you.
Daniel Hajj, CEO
I think we can do increase of prices, but there's a lot of competition in Brazil, so we are not going to do anything on that until we see at the end of the day we're going to be competitive. We have the network, we have the coverage to be competitive. And if there's one, two, or three months or quarters that the promotions are more aggressive, then we're going to be there. That happened in May with Vivo. So in May with Vivo we needed to put more promotions and we think we needed to put more promotions and to be more aggressive.
So that's what we did in May, and in June we don't know what is going to happen. As I said, we don't control the competition. We control what is internal in the company, not the competition. So I don't know exactly what they are going to do. But in Brazil and in all the countries we are prepared to compete, and if they do more promotions then we're going to do more promotions. And if the promotions are a little more relaxed, then we can relax the promotions.
We are a long-term player. And if it's for some quarters or one year that they are too aggressive—well, that happened in Colombia like three or four years ago with the entrance of new competition there, very aggressive. And today we're growing, and we do what we need to do in the market, in our network, in training our people. Another thing that we're doing is we're using and starting to use a lot more AI agents, a lot more AI, and it's going to help us to reduce costs.
It's going to help us to understand more our customers and to see what opportunities we have. It's not short term. I think that's something that we're going to do long term and it's going to help us. We're seeing that we are growing more our EBITDA than our revenues, and that's because we are controlling our costs and expenses. So that's where we are. That's really the strategy of the company all around Latin America and in Europe. And well, in some countries maybe we have some competition one quarter or six months, another one, another one.
And well, we are prepared to do that. So that's where we are and that's our strategy.
Marcelo Santos, Analyst at J.P. Morgan
All right, thanks a lot.
Daniel Hajj, CEO
Thank you.
OPERATOR
Your next question comes from the line of Walter Pisak from LightShed. Your line is open. You may now go ahead.
Walter Pisak, Analyst at LightShed
Thanks. So in Mexico you've had very good margins for quite some time. I think they stepped up a couple of years ago. But you do show revenue growth there. Just curious if there's a way to further leverage that to take margins higher—specifically in Mexico.
Daniel Hajj, CEO
Well, what I said: we are really working hard to control costs, to control expenses, to find ways that will be good for our customers to increase their plan, because we don't want that we sell a better plan and our customers don't use that plan. We want that what we sell, they use; they will be happy. We want customers for the long term, so we don't want customers for short term. So of course, if we can find a way to increase more revenue and to control costs in all the companies, of course the margin will increase.
I think overall this quarter against the second quarter of last year, the margins of almost all the companies increased a little bit. So, almost all, but in almost all the companies, our margin of EBITDA increased this quarter.
Walter Pisak, Analyst at LightShed
Okay. And then, sorry if this was touched on before, but the fiber acquisition and maybe potential other acquisitions, I assume, is not going to negatively impact what has been a good trajectory in terms of capital return with dividends as well as share repurchase. But related to that, you still have a stake in Verizon. Is there any thought of monetizing that stake in order to provide additional cash for acquisitions or capital return? Obviously the leverage ratio of the company is within your target range.
So just kind of curious how all those things fit together in terms of maybe selling Verizon, how much fiber more to build, and whether we're going to see a big step up more in capital return in ’27.
Daniel Hajj, CEO
Well, the cash flow this first six months was really good. I think we increased a lot our cash flow. But still we need to give the dividends. The dividends for the second half are there, and with the dollar appreciated, it's a lot of dollars what we need to give. So it's good. And no, I think what Carlos is saying—so we have a target and then at the end of the day we can use that. It doesn't have to be immediately in the short term. I can tell you that in the long term there's going to be acquisitions.
If we have acquisitions and return of capital to the shareholders and reduce the debt, those are the three things that we have. We want to be as financially healthy as possible because, well, maybe we can have other opportunities in the future. So that's what we are. Still, what Carlos is saying: we need to pay the acquisition of Desktop at the end of the year. So overall we are going to be looking for those three things: acquisitions, returning capital to shareholders, and reducing debt.
So that's where we are. But is there any reason why we are not seeing the things in the short term? Okay, so today is today, and then tomorrow we need to see a little bit more on medium and long term to do all these things. Okay. So that's where we are. I still personally think that there will be more opportunities like Desktop, like Whoa, in the future. And let's see. That's why we want to be healthy and to be prepared to do those things.
Walter Pisak, Analyst at LightShed
Those are. And why continue to own Verizon?
Daniel Hajj, CEO
Well, Verizon, when the share was at some price, we sold some of that. We took the decision to sell half of that. We haven't taken the decision of the other half of that. So we're looking. We're not in a hurry. There has to be a good price.
Walter Pisak, Analyst at LightShed
It's a pretty good price right now.
Daniel Hajj, CEO
We sold it.
Walter Pisak, Analyst at LightShed
Okay, thanks. I know. Thank you. Thanks. Thank you.
OPERATOR
Your next question comes from the line of Jesus Romo, GlobalData. Your line is open. You may go ahead.
Jesus Romo, Analyst at GlobalData
Hello, good morning and thank you for taking my call. Just a quick follow-up on the Mexico numbers, specifically the prepaid subscriber numbers. I noticed that you had positive net adds in Q2 2026 versus Q1 2026. And since we're in the middle of the—we're still in the ongoing registration process, I wonder if you could share a little bit of color on the factors that guided us to have positive net add numbers in this quarter. Was it promotions, the World Cup mobile, or a combination of factors?
Thank you.
Daniel Hajj, CEO
Look, it's very difficult to explain what is happening since the registration in January is with the new customers. It's very difficult because some customers decide not to renew because if they renew they have to register. So people are not registered. But we have fewer disconnections—so a little bit less sales but less disconnection. It's very difficult. We are still seeing and trying to understand what people are thinking, but it changed a little bit because people used to buy very cheap and then use and then buy another handset and then use.
The behavior of the prepaid subscribers is changing a little bit and we need to see. But at the end of the day the most important thing in prepaid is the amount of revenue that you are getting per month. And I think that's doing good and we are doing fine on that.
Gabriel, Investor Relations
And just to give you a reference point: net adds—prepaid net adds—second quarter were 146,000 in Mexico. A year ago, second quarter of last year, they were 83,000, and two years ago they were 106,000. So if you look at the last three years, the second quarter has given us the better net adds in prepaid.
Daniel Hajj, CEO
Another thing that is happening in all the countries is that there's a lot of people moving from prepaid to postpaid. So in some countries they are moving more from prepaid to postpaid, in other ones a little bit less. But people are understanding that the handset is part of the life of the person. So when they can, they move to postpaid, and in postpaid they hire more data and more applications and do more things. And that's going to be the truth for the next five years.
There's going to be more people moving from prepaid to postpaid.
Jesus Romo, Analyst at GlobalData
Just a quick follow-up, if I may. Do you perceive there is an effect of customers coming in from Movistar now that there's an announcement of a deal—not an approval yet—but there's an announcement of Movistar changing hands? Do you think that is customized?
Daniel Hajj, CEO
I think it's difficult that the customers—all the customers—will know that the company is going to be for sale or not for sale. Some of them know, other ones don't. But I think what we have is in number portability. We have been gainers in number portability and we still are gainers—we're gaining number portability. So I don't know exactly if it's because the company was for sale and then it's still not for sale, or they are not selling because they don't have the authority.
I don't know exactly what is happening on those regulatory issues, but we're gaining customers from all the companies.
Jesus Romo, Analyst at GlobalData
Thank you. Thank you.
OPERATOR
We have reached the end of the Q&A session. I will now turn the call over to Mr. Daniel Hajj for final remarks.
Daniel Hajj, CEO
Let's thank everyone for being in the call. Thank you very much.
OPERATOR
This concludes today's conference call. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
Login to comment