América Móvil (AMX) Q3 2026 earnings review
América Móvil's sales grow faster, but profit before tax falls
América Móvil is selling more phone plans and broadband, and its costs are growing more slowly than its sales. Service revenue rose 5% at constant exchange rates, the fastest pace this year, because fixed-line revenue in Mexico picked up. Finance chief Carlos García Moreno said the margin widened and net debt fell to the bottom of its target range. Net income rose 7%, but by our math profit before tax fell.
| Service revenue growth at constant exchange rates | 5.3% 4.6% in the first quarter |
|---|---|
| EBITDA margin | 40.8% 40.3% a year ago |
| Net debt to EBITDA after leases | 1.21x 1.52x at the end of 2025 |
| 2026 capital spending plan | About US$7 billion, unchanged plus or minus 5% |
⚖️ Verdict: 🟢 Bullish
The story got better because growth accelerated without new spending: fixed-line revenue turned up in Mexico, the margin widened and net debt kept falling. The bad news: net income grew only because the tax charge dropped, and Mexico's prepaid revenue is slowing while the line registry removes customers.
The question now is whether Mexico's prepaid slowdown is a side effect of the registry or a sign of weaker consumer spending. If the registry is the cause, prepaid revenue recovers after the final deadline on December 31; if consumers are cutting back, Telcel's growth stays below the rest of the group. Fourth-quarter Mexico prepaid revenue will tell.
🐂 Bull Case
Fixed-Line Revenue Growth Doubled Since the First Quarter
América Móvil sells two kinds of service: mobile plans, and fixed lines that bundle home broadband, pay TV and corporate networks. Mobile has carried growth all year. Fixed-line service revenue barely grew in the first quarter, so the open question was whether the wired side would recover.
It did. Fixed-line service revenue rose 3.7% at constant exchange rates, up from 2.7% last quarter, finance chief Carlos García Moreno said. Mexico drove the change, and the company credits two things: corporate networks and the lapping of last year's broadband promotions.
- Mexico fixed service revenue: up 4.6%, after no growth in the second quarter
- Mexico corporate networks revenue: up 10.0%, against a 7.8% decline last quarter
- Mexico broadband revenue: up 9.7%, helped by "the rollover of promotional offers implemented in the year-earlier period"
- Corporate networks in Colombia and Central America: up 15.4% and 11.5%
This matters because the fixed side carries the fiber investment, so faster fixed revenue lifts the return on money already spent. But part of Mexico's gain comes from an easier comparison with last year, not from new demand, so one quarter does not settle it.
What to watch: Mexico fixed-line service revenue growth next quarter, once the promotional comparison fades. A rate that stays near 4% would mean corporate demand is real and the fiber network is earning more from the same customers.
Margins Widened as Costs Lagged Sales
América Móvil's case rests on operating leverage: sales grow, and the cost of running the networks grows less. Chief executive Daniel Hajj said AI tools now handle customer interactions and parts of network upkeep, which helps "reduce costs in call centers and maintenance in the network". EBITDA, profit before interest, tax, depreciation and amortization, is where that shows up first.
The quarter delivered, and the gains came from the two lines that matter most for a network operator: the cost of providing service and the depreciation of equipment already in the ground. By our math, as a share of revenue:
- Cost of service: 23.9% of revenue, down 0.8 percentage points from a year ago
- Selling and administrative expenses: 21.4% of revenue, down 0.2 points
- Depreciation and amortization: up only 3.1%, so down 0.8 points as a share of revenue
- EBITDA margin 40.8%, up 0.5 points; operating profit margin 22.8%, up 1.3 points
The gains were wide. Colombia's EBITDA margin rose 1.9 points and Central America's 2.8 points. Argentina's climbed 6.6 points under inflation accounting. Austria and Eastern Europe went the other way, with its margin down 1.3 points to 39.2%, because its growth came from handset sales rather than service.
What to watch: the EBITDA margin in the fourth quarter, when Brazil's Christmas promotions arrive. Hajj said he does not know what rivals will do on price. A margin that holds above 40% through the promotional season would mean cost control, not quiet markets, is doing the work.
Debt Fell to 1.21 Times Earnings After Leases
The group measures its debt against EBITDA after lease payments, a yardstick it calls EBITDAaL. Finance chief Carlos García Moreno told investors at the Investor Day that the ratio should stay between 1.2 and 1.5 times, which leaves room for buybacks, dividends and acquisitions. That plan runs through 2028.
At the end of September the ratio stood at 1.21 times, the bottom of the target range. It was 1.52 times at the end of last year. Net debt excluding leases fell to 400 billion pesos from 448 billion over nine months. The company also paid shareholders 27.5 billion pesos in dividends and buybacks.
This matters because the ratio now sits at the floor of the range, so each further peso of cash flow is free for other uses. García Moreno named the first two: the Desktop purchase in Brazil, which lands mostly in the fourth quarter, and a dividend payment of about 17 billion pesos within weeks.
What to watch: the leverage ratio at the end of December, after Desktop and the dividend are paid. A reading that stays near 1.3 times would mean the balance sheet absorbed both without slowing the buyback.
Postpaid Customers Grew 9% and Pay More
The group's main source of growth is mobile postpaid: customers on a monthly contract, who pay more and leave less often than prepaid users. Chief executive Daniel Hajj said that among customers who renew in Telcel's care centers, "half of them are moving to a better plan".
The postpaid base grew 8.9% from a year ago, with 3.1 million net additions in the quarter. Brazil added 743 thousand, which the company attributes to migration from prepaid and demand for connectivity. Postpaid revenue rose 7.5% at constant exchange rates, and the pace picked up in the three biggest markets.
- Colombia postpaid revenue: up 12%, the fastest of the large markets
- Brazil: up 8.5%, from 7.1% last quarter
- Mexico: up 8.0%, Telcel's best in several quarters
- Chile and Peru: up 11.5% and 7.5%
This matters because postpaid growth comes partly from moving prepaid users up a tier, so the prepaid lines cut this quarter do not cost revenue the way the headline suggests. But the gain is mostly volume: Hajj said he does not yet know whether Brazil will raise prices next year.
What to watch: Brazil's postpaid revenue growth in the fourth quarter, after the Christmas promotions. A rate that holds near 8.5% would mean the prepaid-to-postpaid migration can carry the market through its most competitive season.
🐻 Bear Case
Net Income Rose Only Because Taxes Fell
América Móvil reports net income up 7.0%, and its summary leads with it. Profit before tax went the other way. Comprehensive financing cost, the sum of interest, fees and currency effects, rose 75% to 22.6 billion pesos. The dollar recovered against the peso in September, and the company carries foreign currency debt, so the swing came from "changes in the peso value of América Móvil’s foreign currency denominated debt".
- Foreign exchange: a 3.6 billion peso loss, against a 6.3 billion gain a year ago
- Net interest expense: down 11.2%
- Profit before tax: 34.5 billion pesos, down 7% by our math
- Income tax charge: 8.7 billion, down 32%; the effective rate fell to 25% from 35% by our math
So net income grew only because the tax charge dropped faster than pretax profit. Management did not explain the lower rate on the call. Finance chief Carlos García Moreno addressed only cash taxes, which he tied to credits for amounts overpaid in earlier years. A tax rate at last year's level would have left net income lower, not higher.
What to watch: the effective tax rate in the fourth quarter. A return toward 35% would mean this quarter's profit growth was a timing effect, and the operating gains must carry earnings on their own.
Mexico Prepaid Slowed as the Registry Cut Lines
Mexico's regulator requires every mobile line to be registered to a named person. Deadlines began in mid-August and run every two weeks until the end of December, and "Lines that do not complete the process are suspended". The clean-up removed 2.9 million prepaid lines at Telcel this quarter, and the whole group lost 5.0 million prepaid lines.
Chief executive Daniel Hajj says many of the dropped lines belonged to one-time users, and the aim is revenue, not line counts. The revenue figures weaken that reading.
- Mexico prepaid service revenue: up 3.5%, from about 5.8% last quarter
- Churn in Mexico: 3.7%, up from 3.1% a year ago
- Wireless base in Mexico: 81.8 million, down 3.0% from a year ago
- Mexico ARPU: 196 pesos, up 5.6%, flattered by the smaller base
The company blames a tough comparison, after "a particularly strong performance in the year-earlier period". Hajj conceded "a little bit of reduction on the prepaid revenues" in the short term, and expects a recovery once registration ends. But the registry runs until December, so the fourth quarter carries the full effect.
What to watch: Mexico prepaid service revenue growth in the fourth quarter. A rate that stays above 3% would mean the registry costs lines but not spending, and the slowdown ends with the deadline.
New Rivals Are Forming in Mexico and Argentina
Two deals will change the competitive map in the group's largest market and in Argentina. On the call, analysts asked about Televisa's planned purchase of AT&T's Mexican mobile business and whether Televisa could bundle it with its fixed services. In Argentina, regulators approved Telecom's purchase of Telefónica and ordered a new company to take 6 million subscribers as a remedy, chief executive Daniel Hajj said.
The executives' answer was that Telcel must keep doing what it does: the best network, 5G coverage, almost 700 care centers and more salespeople. They said they do not know what Televisa will change and will wait until the deal closes. Hajj described the Argentine remedy company as an operator without a network of its own, due to take 200,000 broadband subscribers within 18 months.
This matters because Mexico supplies 36% of group revenue, and its broadband is already the soft spot. Telmex connected 37 thousand broadband accesses this quarter, against 94 thousand in Brazil. Hajj attributed the low figure to a clean-up of non-paying customers, and fixed-line operations chief Oscar von Hauske said Telmex raised speeds for its whole base to stay competitive.
What to watch: Telmex broadband net additions next quarter, after the clean-up. A return toward the first quarter's 174 thousand would mean the drop was housekeeping, not customers leaving for a rival.
Less Capex and Tax Lifted Free Cash Flow
Finance chief Carlos García Moreno presented free cash flow of 75 billion pesos for the first nine months, up 41% from a year ago, as the source of the debt reduction and payouts. Free cash flow is funds from operations minus capital spending, and it did rise. But the operating business supplied little of the increase. By our math the 22 billion peso gain came from:
- Lower capital spending: 9.0 billion, as capex fell 10.6%
- Lower cash taxes: 9.7 billion, down 22%
- EBITDA after leases: 3.0 billion, up 1.2%
- Working capital and interest: 0.3 billion
This matters because cash from lower capex and lower taxes does not repeat. García Moreno tied the tax refunds to overpayments in earlier years, and the capex plan calls for a heavier fourth quarter. Meanwhile the balance sheet absorbed cash: inventories rose 18% since December as the group stocked handsets, a buffer chief executive Daniel Hajj flagged in the first quarter against rising memory-chip prices. Receivables grew 7.3% while nine-month revenue grew 4.3%.
What to watch: full-year free cash flow against 2025's 81.9 billion pesos. A figure that still beats last year after the fourth-quarter capex would mean the operating business, not timing, is funding the payouts.
👓 Other Themes
Claro Brazil Took Control of Desktop
On October 1 América Móvil took a 72.83% stake in Desktop, a fiber operator in São Paulo state, in a deal it says "will strengthen Claro’s fiber footprint in the state of São Paulo". Chief executive Daniel Hajj said Desktop passes about 4.8 million homes, more than half outside Claro's own fiber areas, and that integration will take six months. Finance chief Carlos García Moreno said most of the roughly 4 billion reais price lands in the fourth-quarter accounts.
💲 Other KPIs
Growth slowed to 5.6% from a year ago, after reaching about 6.2% in the second quarter. The group connected 390 thousand new accesses, with Brazil, Colombia and Argentina the main contributors. Broadband is the second pillar of customer growth after postpaid, so a slower base feeds into fixed-line revenue next year.
Handset sales rose 11.4% from a year ago, faster than the 6.8% for the nine months. Equipment revenue carries a thin margin, so it adds to sales more than to profit. The pick-up fits the larger handset inventory the group has built this year.
The share count fell 0.8% from a year ago, as buybacks of 10.8 billion pesos in the nine months matched last year's pace. Earnings per share therefore grew 7.9%, a little faster than net income.
🔮 Guidance
Unchanged. The plan still calls for about US$7 billion of capital spending this year, with 5% of room either side, and management said budgets are set in dollars so the stronger peso has cut the peso cost. By our math, at this year's average exchange rate the plan leaves about 46 billion pesos for the fourth quarter, roughly the same as a year ago.
New. Management expects about US$7 billion again next year, with the budget not yet finished and no major change planned. At this year's exchange rate that is about 122 billion pesos, by our math 7% below 2025's actual spend, so capital intensity would keep falling while revenue grows.
Unchanged. The range covers 2026 through 2028, finance chief Carlos García Moreno said, and it has to fit buybacks, dividends and acquisitions together. The ratio now sits at the bottom of the range, so the fourth-quarter Desktop payment and the 17 billion peso dividend will push it back up from the floor.
❓ Key Questions
How much prepaid revenue will Mexico lose through December?
Registry deadlines run every two weeks until December 31, and prepaid revenue growth already fell to 3.5%. Hajj expects a recovery later, but gave no figure for the fourth quarter.
Why did the tax rate fall to 25%, and will it hold?
The income tax charge dropped 32% while pretax profit fell. Net income growth depends on that rate, and the call only covered cash taxes.
What will Desktop add to Brazil's fixed-line revenue?
Claro consolidates Desktop from October. Investors need the revenue, EBITDA and final price, and whether the tender offer changes the stake.
Will Brazil raise prices in 2027?
Hajj said costs are rising with inflation but competition may not allow increases. Brazil's postpaid growth is volume-led, so pricing decides next year's margin there.
How many Mexico broadband customers left in the clean-up?
Telmex added only 37 thousand broadband accesses. Hajj blamed disconnections of non-paying users, but gave no split between clean-up and competitive losses.