AMÉRICA MÓVIL Entering A NEW DIMENSION 2009 / 1st Half 2010 Report AMÉRICA MÓVIL is the leading provider of communication services in Latin America and one of the five largest in the world in terms of equity subscribers and market capitalization. It has operations in eighteen countries, covering a combined population of 800 million people. State-of-the-art products and quality services are available to América Móvil´s client base through 259 million wireless, fixed-line, broadband and television accesses. Commitment to the region, proximity to its clients and an ability to take advantage of the opportunities it encounters will allow América Móvil to continue to deliver on revenues and profit growth. fter a truly spectacular expansion of data revenues in 2009 in the face of adverse economic condi- tions throughout the Americas, and with the worldwide trend towards mobile computing ac- celerating fast on the back of an ever increasing array of smartphones and other wireless devices Aand mobile applications, América Móvil decided that it was time to undergo a major transformation, one that would leave it bet- ter suited to address the demands of its clients in the years to come. And so it was that it announced early in 2010 its intention to acquire controlling stakes in Telmex and Telmex Internacional in a move that would lead it to become an integrated telecom company. Our new structure, which has given us access to vast fiber-optic and cable networks, will help us cope with the in- creased demand for wireless data services expected to material- ize over the next several years and allow us to present our clients integrated offers of fixed and wireless telephony, broadband and video services. A “mostly wireless” entity since its inception at the end of 2000, América Móvil has now become—effective June 2010—an integrated one. Thus ended our first era, the “mostly wireless” one, as we entered a new dimension in terms of prod- uct offerings, breadth of operations and relative positioning in the global telecom space. CONTENTS> Relevant Financial Data 2 / Relevant Events 3 / A new dimension that will materially enhance the user-experience of our clients 4 / A new dimension in product offerings that presents us with commercial and operational challenges and opportunities 8 / A new dimension in scale and reach that repositions América Móvil in the telecom space 12 / Our Company at a Glance 16 / Letter to Our Shareholders 18 / Operating Review / América Móvil 20 / Mexico 22 / Brazil 23 / Mercosur 24 / Andean 24 / Central America 25 / Caribbean 26 / United States 26 / Board Members and Directory 27 / CEO’s Report to the Board of Directors 28 / Opinion and Reports of the Board of Directors to the Shareholders’ Meeting 30 / Report of the Audit Committee 32 / Financial Summary 35 / Consolidated Financial Statements 36 1 Relevant FINANCIAL DATA RELEVANT EVENTS Data in millions of Mexican pesos as of June 30, 2010, except for earnings per ADR. Millions of US Dollars Jan-Jun 2010* Var% 2009 2008 Var% 2009 2009 and Telmex Internacional (TII), both of which expired Total Revenues 192,903 11.3% 394,711 345,655 14.2% 30,223 March: We launched operations in Panama under on June 10th. We obtained 99.4% of the stock of CGT the brand Claro, offering GSM/UMTS services in that and 32.9% of TII’s through the tender offers. In the EBITDA 77,607 11.9% 157,291 137,313 14.5% 12,044 country. first case the CGT stock was exchanged for 7.1 billion AMX shares; in the second one, 61% of the TII shares EBITDA Margin 40.2% 39.8% 39.7% 39.8% April: We subscribed with the China Development obtained were tendered for AMX stock (1.3 billion Operating Profit 51,635 9.5% 104,209 95,546 9.1% 7,979 Bank (CDB) a loan agreement in the amount of one AMX shares) and 39% for cash (26.8 billion Mexican billion dollars. This is the largest transaction to date pesos, equivalent to approximately 2.1 billion dol- Operating Margin 26.8% 26.4% 27.6% 26.4% between a Chinese bank and a Mexican entity. lars). By July 16th our participation in CGT had risen to 99.9%. AMX now owns directly or indirectly ap- Net Income 28,961 -11.6% 76,998 59,575 29.2% 5,896 October: Number portability was implemented in proximately 94.6% of TII’s outstanding shares and Ecuador. 59.4% of Telmex’ stock. As a result of these trans- Earnings per Share (EPS, pesos) 1.11 -7.3% 2.35 1.74 35.1% 0.18 actions the number of outstanding AMX shares in- November: The Colombian Ministry of Communi- creased from 32.1 billion to 40.5 billion shares. Earnings per ADR (US dollars) 1.75 1.4% 3.60 2.57 40.0% cations awarded Comcel 10MHz of spectrum in the Total Shareholders´ Equity 267,328 72.7% 177,906 144,925 22.8% 13,622 1900MHz band for a period of 10 years. América Móvil will be consolidating the results of both Telmex and TII beginning July 1st on the basis Total Assets 655,362 57.1% 453,008 435,455 4.0% 34,687 December: América Móvil paid an extraordinary of the global consolidation method. dividend of 50 Mexican peso cents per share. It rep- Weighted Average of Common resented an aggregate amount of 15.8 billion Mexi- By virtue of the integration of the companies, Shares Outstanding (millions) 32 -2.4% 32,738 34,220 -4.3% 2,507 can pesos (equivalent to 1.2 billion dollars). América Móvil ended June with 259.3 million ac- cesses in the Americas, of which 211.3 million were Return on Equity 47.70% 43.80% América Móvil surpassed the 200 million wireless wireless subscribers, 27.4 million fixed lines, 12 mil- subscribers mark, closing the year with 201 million lion fixed broadband accesses and 8.6 million tele- *Not Auditted subscribers. vision subscribers. Beginning on January 2010, América Móvil’s financial statements are presented in accordance to International 2010 August: Our Mexican subsidiary Telcel was granted Financial Reporting Standards (IFRS) both at the consolidated and subsidiary levels. The move towards IFRS is January: América Móvil announced its intention to the right to use two nationwide blocks of 10MHz in st mandatory for all Mexican listed companies, which are obliged to adopt them by January 1 , 2012 at the latest. acquire up to 100% of the stock of Carso Global Tele- the 1.7/2.1GHz bands and an additional 10MHz in The main change regarding the income statement is that revenues are now presented net of commissions to post- com (CGT), a Mexican holding company that owned three of the nine regions in which Mexico is divided paid distributors and the cost of loyalty programs. Financial Information for the other years was prepared under approximately 60% of each of Teléfonos de México for such purposes (Regions 1, 5 and 8). We paid an up Mexican GAAP. (Telmex) and Telmex Internacional (Telint). It noted front contribution of 3.7 billion Mexican pesos. This also that it would tender for the remaining 40% of additional spectrum will enable Telcel to expand its Telint shares that were not owned by CGT. wide array of data and value added services with the latest cutting edge technologies. June: América Móvil announced the results of its tender offers for stock of Carso Global Telecom (CGT) We determine EBITDA as shown in this reconciliation: Jan-Jun 2010 2009 2008 Operating Income 51,635 104,209 95,546 Plus Depreciation 22,113 42,953 32,677 Amortization 3,859 10,129 9,090 EBITDA 77,607 157,291 137,313 2 3 THAT WILL MATERIALLY A NEW ENHANCE DIMENSION THE USER-EXPERIENCE OF OUR CLIENTS 4 5 Total Accesses as of June 2010 259,269,540 Total Accesses Wireless 211,296,669 Wireless 81% Fixed-line Telephony Fixed Line 11% 27,382,727 Broadband 5% TV 3% Fixed Broadband 11,985,589 Television 8,604,555 Wireless services were, not too long ago, sole- Our clients and the countries we serve are Wireless Subscribers (millions) Wireless Subscribers by Region ly about voice. They moved timidly into data truly entering a new dimension as voice gives as short messages (SMS) were introduced way to data in this huge, rapid move towards 1H10 211 with the development of data transmission mobile computing that is starting to take 10 200 USA 8% Central America & Caribbean 8% overlays such as GPRS. Data capabilities were place throughout the world and which is 08 183 Andean 23% 07 153 still very basic given the slow speeds of trans- likely to have a profound impact on their pro- Mercosur 11% mission then possible. However, these speeds ductivity and on how they interact with each 06 125 Brazil 22% were to escalate rapidly with the introduction other. As was the case with voice before it, 05 93 Mexico 29% of new technologies, opening new possibili- wireless data will no doubt be a very powerful 04 61 ties for our clients that can now access their and efficient means of providing millions and 03 44 email, browse the Internet and run various millions of people data services that until now 02 32 applications directly from their wireless phone have eluded them. 01 26 and other wireless devices. 00 14 6 7 IN PRODUCT OFFERINGS THAT PRESENT US WITH A NEW DIMENSION COMMERCIAL AND OPERATIONAL CHALLENGES AND OPPORTUNITIES 8 9 276,000 Kilometers of fiber optic lines Capex (billions of dollars) 1H10 1.2 18 MILLION 5 09 3.4 Homes Satellites passed with From ■ Wireless only ...to an 08 6.1 networks HFC Networks “mostly integrated 07 3.2 ■ Fixed and mobile”..