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On May 7th, we announced that we would launch a partial tender offer in cash to all holders of Koninklijke KPN N.V. the integrated telecommunications service provider in The Netherlands with mobile operations in Germany and Belgium. The intent was for us to increase to 27.7% our ownership interest in the company.  By the end of June, we had reached the objective, partly through the tender offer itself and partly through direct purchases in the market. The aggregate cost of our investment in KPN is approximately €3.0 billion.

On June 15th, we announced that we had entered into an agreement with Marathon Zwei Beteiligungs GmbH, a wholly owned subsidiary of RPR Privatstiftung, the private trust set up by Mr. Ronny Pecik to acquire approximately 21% of the outstanding shares of Telekom Austria. On that date, AMX acquired approximately 5% of the outstanding shares and will acquire an additional 16% stake upon receipt of certain governmental approvals.  Today we have a total interest of 6.7% and, upon receiving the corresponding approvals our interest will increase to approximately 23%. Telekom Austria is the largest telecommunications company in the country. It also provides telecommunication services in Belarus, Bulgaria, Croatia, Liechtenstein, Macedonia, Serbia and Slovenia. As of March 31st, 2012, it had 20.3 million wireless subscribers and 2.6 million fixed lines.

On June 19th, we acquired Simple Mobile, Inc., previously one of T-Mobile’s largest mobile virtual network operators in the United States with over 1 million customers to whom it provides voice, messaging, data and wireless broadband services.

Total Accesses At the end of June, we had 313.1 million accesses, 7.8% more than in the second quarter of 2011. This figure comprises 251.8 million wireless subscribers, 30.0 million landlines, 16.1 million broadband accesses and 15.1 million PayTV units. Our fixed-line division grew 12.4% driven by PayTV subscriptions, which increased 30.9% over the year and fixed broadband accesses that were up 14.7%. Our wireless subscriber base was up 6.7% year-on-year. The more subdued wireless growth reflects the change in methodology for Mexico, Colombia and Ecuador enacted in the last quarter of 2011 whereby only prepaid subscribers that continue to originate calls are retained as such.

Wireless Subscribers

Our wireless subscriber base reached 251.8 million in June after adding 5.9 million subscribers in the second quarter and over 10 million in the first half of the year.

We gained 1.4 million new subscribers in each of Mexico and Brazil, 1.2 million in the U.S.—including 1.1 million obtained through the acquisition of Simple Mobile—577 thousand in Central America and the Caribbean and 406 thousand in Peru. Colombia and the Argentinean block obtained around 350 thousand new subs each and Ecuador 145 thousand.

In the postpaid segment, net additions in Colombia and Mexico, 140 thousand and 272 thousand respectively, were 34% and 23.9% higher than those registered the year before. In Peru, postpaid net adds of 193 thousand were up 21% year-over-year and in Ecuador they rose 12.1% to 94 thousand. We also made important inroads in the postpaid segment in a number of countries in Central America and the Caribbean; altogether, we gained 104 thousand new postpaid clients, 70.4% more than in the second quarter of 2011.

At the end of June, we had 68.1 million subscribers in Mexico, 63.0 million in Brazil, 29.4 million in Colombia and 21.3 million in the US. We also had 20.2 million clients in Argentina and 19.6 million in Central America and the Caribbean.

We ended June with 61.2 million revenue-generating units, 12.4% more than in 2011. We added 1.7 million new accesses in the second quarter of which 1.3 million came from Brazil. PayTV was our fastest growing segment: 30.9% relative to the prior year. 

With RGUs rising 26.6% to 26.3 million accesses, Brazil remains our largest fixed-line operation, having risen 26.6% over the year. In Mexico, we had 22.7 million RGUs, 5.9 million in Central America and the Caribbean and 3.9 million in Colombia. Although from a smaller base, Peru, Ecuador and the Argentinean block posted the highest growth rates, of around 45%.

América Móvil Consolidated Results

The stabilization of financial markets that had come about at the beginning of the year and which had led to a rapid appreciation of various Latin American currencies and provided certain boost to economic activity in the region came to an end at the beginning of the second quarter on renewed concerns about global economic growth and the economic situation of some European countries. 

Second quarter revenues were up 9.3% year-on-year to 191.7 billion pesos, with wireless revenues rising 14.1% and fixed-line revenues 1.7%. The comparison of these figures—particularly the latter—with those observed in the first quarter becomes difficult because of the sharp relative movements in the value of various currencies vs. the Mexican peso. Noteworthy among them was the 6.1% devaluation throughout the quarter of the Brazilian real vs. the Mexican peso. Measured at constant exchange rates, second quarter revenues increased 6.3% year-on-year led by mobile data and by PayTV revenues, up 32% and 23% respectively. Fixed-voice revenues were down 7.7% with long distance sales a major factor in this reduction.

Wireless ARPUs rose practically everywhere—Brazil being the notable exception—led by mobile data.

EBITDA rose 3.1% to 65.5 billion pesos and was equivalent to 34.1% of revenues. Equipment costs increased more than twice as fast as revenues reflecting in part the currency depreciations vs. the U.S. dollar and the increase in postpaid subsidies associated to the sale of smartphones. 

Depreciation and amortization charges increased slightly faster than revenues but remained at 13.7% of total revenues, as they had been in the second quarter of 2011.  Our operating profits totaled 39.1 billion pesos, 1.0% less than a year before.

The renewed turmoil in the markets and depreciation of various Latin American currencies in the second quarter resulted in a foreign exchange loss of 16.1 billion pesos and a comprehensive financing cost of 17.2 billion. The foreign exchange loss was smaller than the gain posted the prior quarter, so the balance for the first six months of the year was a net gain of 3.2 billion pesos.

We obtained a net profit of 13.3 billion pesos in the quarter and 45.9 billion pesos through June. The quarter’s profit was equivalent to 17 peso cents per share or 26 dollar cents per ADR.

Our net debt ended June at 361 billion pesos having increased by 29.7 billion pesos in the semester, as a result of the new investments in KPN and Telekom Austria. Altogether, we paid for acquisitions 67.0 billion pesos in the six months to June while our capital expenditures totaled 53.2 billion pesos. We bought back 12.7 billion pesos of AMX stock in the period. Our net debt to EBITDA (LTM) stood at 1.4 times.

With strong net subscriber additions in the second quarter, particularly in the postpaid segment, Telcel continued to recover from the steep reductions in mobile termination rates enacted last year.  Net additions totaled 1.4 million subscribers and were 10.1% higher than those seen a year before.  Of those, 272 thousand were postpaid—the postpaid base increased 17.5% year-on-year. Telmex observed 19 thousand fixed-line disconnections but 83 thousand new broadband accesses.

At 66.5 billion pesos, second quarter revenues were 3.3% higher than those of the year-earlier quarter, with wireless service revenue growth accelerating to 8.3% from 6.1% the prior quarter while the yearly decline in fixed-line revenues accentuated to 4.5% from 3.1%. 

Wireless voice revenues continued to recover as MOUs rose to 267 minutes per month—the highest level ever—and were only 1.1% lower than a year before in spite of the major reduction in mobile termination rates that took effect in the period. As regards mobile data revenues, they continued to do well growing at a nearly 30% annual pace. They now account for nearly a third of mobile service revenues.

Fixed-line voice revenues declined 9.2% as Telmex continued to pass on to consumers the entire benefit of the reduction in mobile termination rates mentioned above. Falling long distance revenues were also a factor in the greater revenue decline of fixed voice. 

Second quarter EBITDA of 29.7 billion pesos was 3.6% lower than a year before. The latter figure reflects, on the wireline platform, increased pension and other labor provisions as well as certain operating expenses associated with the investment program. On the wireless side, it incorporates the impact of greater subsidies linked to the placement of smartphones with our postpaid clients. The EBITDA margin in Mexico stood at 44.7% of revenues.

Work continues on the rollout by Telcel of its new LTE network.

Argentina, Paraguay and Uruguay

At the end of June, we had 21.4 million wireless subscribers, 8.2% more than a year before. Net adds for the quarter were 340 thousand taking the total for the year to 611 thousand. We also had 369 thousand RGUs, 49.0% above the prior year.

Revenues for the second quarter were up 12.9% year-on-year to 3.5 billion Argentinean pesos. Wireless service revenues were driven by data, which had an annual revenue increase of 27.3% and helped bring about a 5.8% increase in ARPU. On the fixed-line front, revenues were up 32.8% over the year on account of broadband growth.  In the first semester, our revenues totaled almost seven billion Argentinean pesos and were up 16.0% year-over-year.

We generated EBITDA of 1.2 billion Argentinean pesos of in the period. It was up 3.8% year-on-year and was equivalent to 35.5% of revenues. The total for the first semester came in at 2.5 billion Argentinean pesos having risen 6.8% over the year.

Number portability was implemented nationwide in Argentina in March of 2012. We have been a net gainer of ported lines thus far.

Our wireless subscriber base reached 63 million subscribers in June, 13.4% more than a year before, with 1.4 million net additions in the second quarter and 2.6 million in the first half of 2012. Fixed-line RGUs increased 26.6% year-on-year to 26.3 million, with PayTV clients jumping 41.1% and broadband accesses 23.9%, to 11.4 and 5.2 million respectively. The net increase of RGUs in the second quarter totaled 1.3 million accesses.

Second quarter revenues were up 4.1% year-on-year to 7.5 billion reais led by fixed-broadband and PayTV services—whose revenues climbed 28.6% and 26.6% respectively—and by mobile data revenues that expanded 25.1%.  Revenues were negatively affected by the reduction of both long-distance and mobile termination rates, with long distance revenues continuing their secular decline. The slowdown of the Brazilian economy has intensified competition and has also had an impact in revenues, specially on the mobile segment.

EBITDA of 1.8 billion reais was 6.2% below that of the year-earlier quarter reflecting in part the impact of the reduction in rates mentioned above, the strengthening of customer-care centers and the continued spillover unto op-ex of cost items related to the significant expansion of our networks. Within our overall costs and expenses, the share of TV content continues to grow.

On June 13th, Anatel concluded the auction of nationwide 2.5GHz licenses for mobile services and regional licenses of 450 MHz spectrum for rural services. We acquired 40 MHz nationwide in the 2.5 GHz band for which we paid 844 million reais and 20 MHz in the same frequency for 19 states  in the second round, which had a cost of 144 million reais. Additionally, we were assigned 14 MHz of the 450 MHz band for rural services in some states of the North and Northeast of the country and part of the Sao Paulo metropolitan area.

On July 18th, Anatel, the telecom regulator, enforced sanctions against certain operators based on complaints presented to the entity. Claro was penalized in 3 out of 23 states as they determined a new criteria of “Number of complaints presented to Anatel / Subscriber base” instead of considering the quality measures that Anatel performs on a regular basis, and in which Claro ranks more favorably. Claro continues to work to enhance the capacity and quality of its networks as well as customer care.

Colombia

After adding 355 thousand wireless subscribers in the quarter, we ended June with 29.4 million wireless clients, 4.3% less than a year before. Our postpaid subscriber base exhibited an annual increase of 14.3%. It is important to consider that the annual comparison of the wireless subscriber base is affected by the changes in churn policy on prepaid clients that became effective in December of 2011. On the wire-line front, we ended the period with nearly four million RGUs—20.1% more than a year before—after adding 157 thousand in the second quarter. 

Our revenues totaled 2.4 trillion Colombian pesos in the quarter. They were up 12.0% compared with the same period of last year. Wireless revenues, which account for around 80% of the total, increased 10% relative to the prior year driven by data revenues that expanded 28.5% over the period. Data represents 22% of wireless service revenues. The surge in value added services helped us bring about a 13.2% increase in ARPU. Fixed-line revenues had an annual increase of 26.1% as a result of the growth of revenues coming from fixed-broadband and corporate network services. 

On June 26th, we announced the change in the name brand of both our fixed and wireless services. Comcel and Telmex have been officially replaced by Claro. This is one more step towards the integration of our services, which we believe is key for enhancing our customers’ experience.

Almost a year after number portability was implemented in Colombia, we continue to be net gainers of ported lines—in fact, the number of port-ins has actually accelerated during 2012.

Our wireless subscriber base rose 10.3% over the year to 5.7 million having gained 78 thousand new subscribers in the quarter. Our postpaid subscriber base grew almost twice as fast as the prepaid one. RGUs, one million, increased 6.4% relative to the prior year with broadband accesses jumping 27.9% year-on-year.

Second quarter revenues of 176.3 billion Chilean pesos were 13.0% higher than those of the year-earlier quarter, with wireless revenues accounting for nearly three quarters of them. Wireless service revenues climbed 18.7% year-over-year boosted by wireless data that shot up 32.2%. ARPU had an annual growth rate of 6.8% as data became a more important factor, representing now approximately 19% of service revenues. Wire-line revenues were up 4.0% on account of broadband revenue growth.

EBITDA for the quarter was up 14.6% to 15.8 billion Chilean pesos and was equivalent to 9% of revenues. We have been making important investments that have been pressuring EBITDA figures. On the one hand, we are investing in customer care, opening more customer care centers and call centers to improve customer service. On the other hand, we have been dealing with greater costs associated with having larger networks.

We built a submarine cable that connects Tierra del Fuego, the southernmost point in the world, with the continental platform through the Strait of Magellan. During the quarter, we completed the tranche that crosses Chile. 

Mobile Number Portability was introduced in January; we have been a net gainer of almost 66 thousand ported numbers to date, about 40% of the total ported numbers.

*Total Revenues reflect eliminations derived from both the overlap of fixed and mobile operations as well as international intercompany transactions; Wireless Revenues and Fixed Line and Other Revenues only exclude intercompany transactions with foreign subsidiaries. The sum of the parts will not equal Total Revenues.

After adding 145 thousand new wireless clients during the second quarter, we ended June with 11.3 million subscribers, 2.1% more than a year before in spite of the fact that we implemented more strict policies on accounting for active prepaid subscribers in December of 2011. Our postpaid base was up 22.3% with net adds of 94 thousand in the quarter (12.1% more than a year before). RGUs exceeded by 45% those of the prior year, reaching 204 thousand.

Our revenues of 383 million dollars were 7.7% above those of the second quarter of 2011. Wireless service revenues grew 6.9% on an annual basis with wireless data revenues growing somewhat faster at 8.5%, helping bring about an increase in ARPU of 4.7%. Fixed-line revenues had an annual increase of 36.3%. The quarter’s EBITDA of 180 million dollars was 10.6% above last year’s. The margin was equivalent to 46.9% of revenues having risen 1.2 percentage points.

Wireless number portability trends continue to favor us; we have received around 13 thousand ported lines during the year.

*Total Revenues reflect eliminations derived from both the overlap of fixed and mobile operations as well as international intercompany transactions; Wireless Revenues and Fixed Line and Other Revenues only exclude intercompany transactions with foreign subsidiaries. The sum of the parts will not equal Total Revenues.

Our wireless subscriber base topped 12 million clients in June having registered an annual increase of 15.8%. Net additions of 406 thousand were 7.2% higher than those of the second quarter of last year and brought to 764 thousand the total for the first half of the year. Regarding the postpaid market, our subscriber base rose 38.6% year-on-year with our postpaid net adds accounting for nearly half of the quarter’s additions. We also had 785 thousand RGUs, up 39.9% from the year before, on the back of new fixed-lines and broadband accesses.

Our revenues reached one billion soles in the quarter and were 15.2% higher than those of the precedent year. Wireless service revenues increased 14.6% on the back of data revenues that soared 40.8% and have come to represent 24.2% of service revenues. Fixed-line revenues were 1.8% higher than in the year-earlier quarter as broadband revenue growth—25.7%—offset the decline in voice revenues.

Our EBITDA for the quarter was up 12.5% relative to the precedent year to 439 million soles. It was equivalent to 42.0% of revenues, with the margin slightly down relative to the year before as a result of the acceleration of subscriber growth, especially in the postpaid segment, and the costs it entails.

We have been a net gainer of ported lines since Mobile Number Portability was implemented. We have received roughly 8 thousand new subscribers in the first semester of this year.

*Total Revenues reflect eliminations derived from both the overlap of fixed and mobile operations as well as international intercompany transactions; Wireless Revenues and Fixed Line and Other Revenues only exclude intercompany transactions with foreign subsidiaries. The sum of the parts will not equal Total Revenues.

We finished the period with 19.6 million wireless clients, 10.9% more than a year earlier. Net additions for the quarter—577 thousand—were almost 10 times greater than in the second quarter of the year; total net adds for the first semester more than tripled compared to 2011 totaling 1.1 million. As regards our fixed-line division, we had 5.9 million RGUs, 5.2% more than the year before. However, PayTV and broadband accesses have annual growth rates of 13.2% and 12.5%, respectively. 

We obtained 954 million dollars of revenues, up 3.6% year-on-year. Wireless service revenues were 11.0% higher than in the same quarter of 2011 with data revenues that soared 36.8%. Fixed-line revenues declined 2.3% in the quarter, as a result of the deterioration of voice revenues due to fixed-to-mobile migration.

Second quarter EBITDA of 250 million dollars was down 16.2% compared with the prior year and the margin for the quarter stood at 26.2%. EBITDA figures reflect the costs associated to the start-up of our business in Costa Rica and the effect of the consolidation of the assets recently acquired in Honduras that had EBITDA losses and the costs associated to subscriber growth.

*Total Revenues reflect eliminations derived from both the overlap of fixed and mobile operations as well as international intercompany transactions; Wireless Revenues and Fixed Line and Other Revenues only exclude intercompany transactions with foreign subsidiaries. The sum of the parts will not equal Total Revenues.

We ended June with 21.3 million clients, 13.8% more than a year before. Net adds for the quarter, were 1.2 million, of which 1.1 million resulted from the acquisition of Simple Mobile.

We generated revenues of 1.1 billion dollars in the second quarter, 18.2% higher as compared with the year-earlier quarter. ARPUs rose 7.2% as traffic per subscriber grew 10.5% to 412 minutes per month.

EBITDA for the quarter was 139 million dollars, 65.9% more than the previous year. The EBITDA margin came in at 12.8% of revenues, rising 3.6 percentage points in twelve months time.

On June 19th, we acquired Simple Mobile which used to be one of T-Mobile’s largest mobile virtual network operators in the United States, that services over 1 million customers and offers, among others, data and wireless broadband plans.