América Móvil (AMX) Q1 2026 earnings review
Strong Underlying Operations Masked by the 'Super Peso'
América Móvil delivered a highly profitable quarter, with consolidated EBITDA margin reaching a near-record 39.9% and Net Income surging 25.1% to 23.4 billion MxP. However, top-line optics were heavily distorted by foreign exchange headwinds. While constant currency revenue grew a healthy 6.1%, reported revenue expanded only 2.1% due to the sustained strength of the Mexican Peso against the USD, Brazilian Real, and Colombian Peso. The operational engine—postpaid mobile—is accelerating, adding 3.0 million net subscribers, signaling that network investments and 5G/fiber rollouts are capturing high-value market share.
🐂 Bull Case
The company added 3.0 million postpaid wireless subscribers in a single quarter, led by Brazil (1.3M) and Colombia (258k). This mix-shift is structurally lifting ARPU and margins across the footprint.
Operating leverage is visibly improving. Constant currency EBITDA grew 8.0% (outpacing 4.6% service revenue growth), and Free Cash Flow reversed from negative 410M MxP a year ago to a positive 3.26B MxP, enabling the Net Debt/EBITDA ratio to fall to a comfortable 1.41x.
🐻 Bear Case
The Mexican Peso's continued appreciation (gaining 16.3% vs USD, 4.5% vs BRL) is systematically erasing billions in reported revenue and EBITDA from AMX's largest international markets.
In Mexico, a new Digital Transformation Agency mandate forced the disconnection of 482,000 prepaid subscribers. If this registry process creates persistent friction through the July deadline, total subscriber base growth will stagnate.
⚖️ Verdict: 🟢
Bullish. The disconnect between reported numbers and underlying operational momentum is a classic buying opportunity. AMX is expanding margins, aggressively growing its lucrative postpaid base, and actively returning capital, even if currency translation makes the headline revenue look sluggish.
Key Themes
Postpaid Migration Accelerating in Key Markets
The strategy to migrate prepaid users to high-ARPU postpaid plans is Accelerating. Brazil led with 1.3M postpaid net adds, driving mobile service revenue up 7.8%. Colombia followed with 258k postpaid adds, accelerating mobile service revenue to a 10-year high of 10.2% YoY. This mix-shift is the primary driver of the consolidated 39.9% EBITDA margin.
Fiber Network Upgrades and Speed Bumps
Stable fixed broadband growth is supporting the bottom line. Over 90% of Telmex customers in Mexico are now on fiber, allowing the company to increase speeds across all commercial plans by 33%. This tech upgrade yielded 175k new broadband accesses in Mexico and 594k consolidated, successfully locking in households with high-speed convergence.
Colombia Margin Expansion Defying Competition
Colombia's performance is Accelerating dramatically. Service revenue jumped 7.4% (up from 5.4% last quarter), translating to an 11.6% spike in EBITDA. The EBITDA margin expanded by 2.1 percentage points YoY to 41.6%, proving that best-in-class 5G and fiber deployments can outmaneuver local pricing wars.
Mexico Regulatory Mandate Forcing Prepaid Disconnections
A sudden regulatory shock emerged in Mexico: the Digital Transformation Agency mandated a client registration process that triggered the disconnection of 482,000 prepaid subscribers in Q1. While postpaid added 91k, the heavy prepaid loss suppressed total Mexican wireless base growth to just 0.4% YoY. This introduces execution risk through the July completion deadline.
Macro FX Headwinds Muting Consolidated Results
The 'Super Peso' is a structural headwind for AMX. The Mexican Peso appreciated 16.3% vs the USD, 4.6% vs the Euro, and 4.5% vs the Brazilian Real. As a result, massive operational gains in markets like Brazil (+6.8% BrL revenue) and Central America (+6.3% USD revenue) look mathematically depressed when translated back to headquarters.
Argentina Fixed-Line Weakness Contradicts Bullish Narrative
While management highlighted a 15.4% EBITDA surge and robust 5G postpaid demand in Argentina, a closer look at the data reveals a Reversing trend in the wireline business. Fixed-line service revenue actually shrank 0.5% YoY. Management blamed 'difficulties in accessing clients in the Buenos Aires metropolitan area,' indicating that infrastructure deployment is hitting physical or economic roadblocks in a hyperinflationary environment.
Inorganic Consolidation in Brazil via Desktop S.A.
AMX is leveraging its strong balance sheet to consolidate the fragmented Brazilian broadband market. The agreement to acquire a 73% stake in Desktop S.A. directly targets the affluent State of São Paulo, designed to complement Claro's existing footprint and defend against regional ISPs.
Other KPIs
Reversing. FCF swung from a negative 410 million MxP in 1Q25 to a positive 3.26 billion MxP this quarter. This was driven by a 4.9B MxP increase in Net Cash from Operating Activities and a 3.0B MxP reduction in Capital Expenditures.
Stable and improving. Net Debt (excluding leases) ended the quarter at 437 billion MxP. The leverage ratio has trended down from 1.56x in mid-2025, underscoring excellent capital discipline despite aggressive 5G and fiber deployments.
Decelerating. Financing costs dropped 9.9% YoY, driven by a 6.7% decline in net interest expenses and favorable FX translation on foreign-denominated debt.
Guidance
Management is signaling confidence in cash generation by proposing an additional 10 billion MxP allocation to the share-buyback fund for the April 2026 - April 2027 period, on top of the 1.4 billion MxP already executed in Q1.
Stable shareholder returns. The Board proposed an ordinary dividend payable in two equal installments, maintaining a consistent yield strategy alongside aggressive buybacks.
Key Questions
Mexico Prepaid Mandate Impact
The Digital Transformation Agency registry caused 482k prepaid disconnections this quarter. With the deadline in July, what percentage of the remaining 68.2M prepaid base is currently unregistered and at risk of churn in Q2?
Desktop S.A. Synergies
Regarding the Desktop S.A. acquisition in Brazil, what are the expected OpEx and CapEx synergies, and how quickly do you expect to close and consolidate this asset into Claro's operations?
Argentina Fixed-Line Bottlenecks
You noted difficulties in accessing clients in the Buenos Aires metropolitan area, which caused fixed-line revenues to contract 0.5%. Is this a permitting issue, a macro/affordability issue, or a competitive loss to wireless FWA alternatives?
CapEx Trajectory
CapEx was down roughly 12% YoY in Q1 to 21.6 billion MxP. Is this a timing issue, or does this reflect a structural step-down in capital intensity now that 5G and fiber networks have reached critical scale?