América Móvil: Promotions in Brazil, Fiber M&A in Peru — and a Fine It Calls 'Absurd'

América Móvil reported a strong second quarter: service revenue grew 5.1% at constant exchange rates, EBITDA rose 5.3% (6.7% ex a one-off charge in Mexico), and net income jumped 90% to MXN 24 billion. The company added 3.5 million postpaid subscribers and 531,000 fixed broadband accesses, with net debt-to-EBITDA down to 1.31x. Yet the call was less about the numbers than about what lies ahead: a promotional war in Brazil, a new fiber acquisition in Peru, and a regulatory fine that management clearly resents.

Brazil: Following the Promotions, for Now

Brazil remains the key battleground. CEO Daniel Hajj acknowledged that TIM and Vivo have become more aggressive since May, and that the market has gotten more promotional, particularly in prepaid and entry-level hybrid plans like ClaroFlex. He insisted the company is prepared to match competitive moves:

That posture is not new — in prior quarters, management has repeatedly stressed the importance of network quality and customer care over price. But the competitive pressure is intensifying, and the company is also leaning on its MVNO partnership with Nucell, which is counted within Claro's base. As Hajj noted, “the part that is included in ours” — a reference to revenue recognition that complicates ARPU comparisons. The mobile network operator landscape across Latin America is consolidating, which eventually could rationalize pricing, but for now, Brazil is a price fight.

Mexico Prepaid: A Welcome Recovery

In contrast to Brazil, Mexico prepaid revenue is accelerating — up 5.3% year-over-year, with average recharge amounts rising. Hajj attributes this to an improving economy and the company's superior 5G network:

The World Cup market gave a small boost in June, but management downplayed its impact. More structural is the migration of prepaid users to postpaid and the ongoing registration of prepaid lines, which is cleaning the base. Carlos Garcia Moreno pointed out that prepaid net adds in Q2 (146k) actually beat last year's 83k, even as the industry adjusts to the new registration rules. The company continues to win in number portability — a trend that has held for years, as the CEO reiterated from a prior call: “we have been gaining number portability for the last 4 years.”

M&A: Fiber First, But the Checkbook Is Constrained

The big surprise was the announcement of the Wow acquisition in Peru — more than 3 million fiber home passes, 500,000 customers, and significant synergies with existing operations. Hajj explained:

This fits a clear strategy of buying fiber to complement existing networks and cross-sell mobile and TV. But capital allocation is tight: the Desktop acquisition still needs to close, and management reiterated its leverage target of 1.2–1.5x. While leverage is at the low end, the company is not signaling a step-up in buybacks. The CFO confirmed, “we manage to stay within the range that we have set.” The Postpaid phone growth is strong, but the fiber build-out will consume cash.

A Fine That Stings

One sour note: a MXN 1.3 billion regulatory fine on Telnor, tied to a 2017 case on asymmetric measures. Daniel Hajj did not hide his frustration:

we think those fines are absurd, absurd.

Management says it is disproportional and hopes there are no more. It also brushed off a question about the Verizon stake, saying they are “not going to hurry” to sell.

Outlook

Operationally, América Móvil is in good shape — strong cash flow, declining leverage, and revenue momentum in core markets. The main risk is Brazil, where promotional intensity could persist. The company is investing in AI and network quality to stay ahead. As Hajj said, “we are a long term player” — and with fiber acquisitions like Wow, it is building the scale needed to compete.