Good day, ladies and gentlemen, and welcome to the Second Quarter 2014 America Movil Earnings Conference Call. My name is Jackie and I will be your operator for today. At this time, all participants are in a listen-only mode and later, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the conference over to Ms. Daniela Lecuona, Investor Relations Officer. Please proceed, ma’am.

Good morning, everyone. Thank you for joining us to discuss our second quarter results. We have today on the line, Mr. Daniel Hajj, our CEO; Mr. Carlos García Moreno, our CFO, and Mr. Carlos Robles, CFO of Telmex.

Good morning. Thank you for being in the call. Carlos is going to make a summary of the results. Please Carlos. Carlos García Moreno Elizondo: Thank you, Daniel Hajj, thanks to everyone. good morning. The onset of a tough winter in the U.S. and the significant impact on U.S. economic activity led the way for our second quarter marked by greater financial stability with interest rates coming off in the main financial markets. That paved the way for a recovery of emerging market assets from the losses suffered at the turn of the year and through most of January. Economic trends throughout Latin America remained mostly unchanged from the first three months of the year. with this background, America Movil continues to move ahead with its investment program geared towards convergence throughout the region, seeking to substantially increase the speed, capacity and which of our fixed and mobile networks. For this purpose, we are deploying fiber optic networks across the board, as well as cable to the home. the submarine cable we built to link the South American block through Fortaleza in Brazil to the Caribbean, and Yucatan to Florida will begin operations this quarter. On the mobile front, we are rolling out 4G networks in various countries, growing our 3G footprint, and broadening the reach of fiber connections available to our cell sites. We ended June with 338.7 million accesses at the end of June, 3% more than a year before. The access figure includes 32 million landlines, 20 million broadband accesses, 20 million PayTV units, and 267 million wireless subscribers. The latter number considers in most of our markets all clients that have remained active for at least 30 days originating or receiving calls. Our wireless subscriber base rose 1.8% from the year before while our fixed-RGUs, which…

Thank you, Carlos. If you want, we can start with the questions and answers. Hello?

(Operator Instructions) And your first question comes from the line of Vera Rossi from Goldman Sachs. Please proceed. Vera Rossi – Goldman Sachs: Thank you. My first question is in Mexico, and other one in Brazil. So in Mexico, among the regulatory changes this quarter, which one had a higher negative impact on wireless revenue, the elimination of roaming charges, or the FTR decline, and in Brazil, what type of wireless subscriber, AMX is adding on postpaid. Is postpaid users from competitors, or AMX is upgrading prepaid to postpaid? Thank you.

Good morning, Vera. well in Mexico, I think in the April 6, we start with a separate form that on play here, the Ifetel says that we are a propounder and player. And we have some new rules, one of the rules was no roaming around national roaming, so that was the first one, I think what is happening there is that in a lot of postpaid plans we include already the roaming and in some prepaid plans, we charge the roaming. So it has been a lot of electricity in that. so these in April 6, we decide not to charge anything. But in prepaid, it’s a very good electricity, and costs to merge are starting, we are not charging roaming, while they are starting to use more local calls or data. So they are using their balance to other things. So it has been good, still we are not recuperating what we use to have in roaming, but the electricity is coming. so I think in some more, couple more months, I think we can see exactly how fast would be the electricity, and in the interconnection, well, interconnections hit those immediately in our costs. We will reduce 30%, the interconnection rate and that goes immediately to our P&L. so that’s more or less what is happening. From Brazil, I think there is, we are having both, we have a good campaign where we feel that when our prepaid subscribers have good consumption and they are using a lot of data, then we are having company calling them to move them to a postpaid – as a postpaid subscriber. And in the other side, the number portability is also we’re gaining in more number portability. So we are making both. They right now have exactly the percentages of how much – how many subscribers are coming from their competition, and how many we upgrade it both that we are making both that I think in Brazil, we are having a very good platform, we are doing well as I told you one year ago and two years ago, we are making the investment to be the winner in Brazil, and I feel we are doing that. we have the fourth place; we are doing very good on TV. we are doing – we are starting to offer to our costs and rates on TV, we are starting to offer them also wireless, not only broadband and since, we are starting to offer them also wireless and we have been successful there. Vera Rossi – Goldman Sachs: Thank you, Daniel. And just one more question, just to confirm AMX started to consolidate Telekom Austria in their financials on July 1. is that correct?

That’s correct, Vera. Vera Rossi – Goldman Sachs: Okay. thank you very much.

Thank you.

(Operator Instructions) And your next question comes from the line of Andre Baggio with JP Morgan. Please proceed. Andre Baggio – JPMorgan: Hi, good morning everyone. So I just – if you could add a little bit to the plan of digastric parts for the Mexican operations, if there is any more concrete plan, any signal from the regulators if how could that happen I think it’s a very important part of the AMX operations.

Well, I’m going to try to make a summary of everything on that, well first, what we – the decision on the tower and the size. I think the decision to they use to make an spin-off of the towers, we want to make a spin-off, we don’t want to sell the towers. I think we want to get value to our shareholders making that spin-off, we feel that inside of America Movil the towers doesn’t have the same value outside of America Movil. It’s one of the reasons why we are doing that spin-off, and the second is that this company will open the towers to rent to everybody. So I think we are committed to spin-off and to rent the towers to any competition that they won the tower. So those are the two main reasons why we are spinning-off the towers, its not going to be a sale, it’s going to be on the spin-off. In the other site we don’t have any concrete plan, what we are doing is we are starting to work immediately. What our board decide the decision on the board is to sell some assets to solid career, in a solid company. And what we want is that these would take out the asymmetric regulation and give us the comparisons. So that’s mainly what our boss said to us, so immediately we would start to work on that, we don’t have any concrete plan and we don’t have anything presented to the Ifetel. We started to work on that and the other thing that I – it’s very important to say that it’s going to take some time to do that and it’s – in that period of time I think we are going to accomplish all the preponderant rules and we are perfectly ready to work as a preponderant player in the mean time when we started – that seems we start to sell these assets. So that’s mainly where we are, we haven’t present anything to the Ifetel, but we are ready to work on that as soon as possible, we are working there. In the other side it’s important to say that America Movil Telmex and Telcel are ready to – we have very good people, very trained people I think we do good investments all around Mexico and we are prepared to live as a preponderant player until the Ifetel give us the authorization to sell the assets and to set be out of that regulation. Andre Baggio – JPMorgan: Thank you very much.

And your next question comes from the line of Andrew Campbell with Credit Suisse. Please proceed. Andrew T. Campbell – Credit Suisse: Yes, good morning and thanks for taking my question. I know that in the second quarter you saw some of the preponderant rulings go into effect. And I think that in the third quarter I guess there would be some additional impact perhaps from the MTR going to zero. And I was hoping you could just clarify in terms of what the additional measures are that would go into effect for the short-term perhaps between now and year-end? Thank you.

And I think the additional measures would be the interconnection – zero interconnection on net, off net, deeper in some traffic we cannot sell on net at that different price than the off net that will be and that will be – there is a lot of regulations and lot of information that we need to give, but the most important is on net, off net and zero interconnection rate. And in first of January the long distance would go to zero and no more long distance. In Mexico, well that’s not – for a preponderant player that’s for all the markets. So that’s mainly the other measures that we are going to get. So as I told you we are going to – we prepared to live with those measures until we have the agreement with Ifetel and present the plan and they authorize the plan. So it’s going to take us some time to do that. Andrew T. Campbell – Credit Suisse: Okay, thank you. And just as my follow-up, most of the measures as you are understanding that they would no longer apply as soon as the plan is basically presented or approved by Ifetel or will it be necessary to execute the entire plan before the measures – before the status as preponderant would change? Thank you. Carlos García Moreno Elizondo: My understanding is that we are upon the plan being accepted by the regulator that you assist the preponderant and then we would have up to one-year…

And I think there is two ways, there are two articles where you can go. So we are reviewing everything legally to the sites which is best way to go and to present that to the Ifetel. So the Ifetel needs to evaluate our proposal, and they have some time to respond to also that in the meantime, we need to work and to accomplish the rules as profounder and player. And I think we are prepared to do that, so as we understand that and we are prepared to live with those rules. Andrew T. Campbell – Credit Suisse: Great, thank you.

And your next question comes from the line of Rodrigo Villanueva from Merrill Lynch. Please proceed. Rodrigo Villanueva – Bank of America Merrill Lynch: Thank you, good morning, Daniel, Carlos, and I was wondering if you could give us additional thoughts regarding the very solid profitability that you had in most of your markets, I mean excluding Columbia margins did pretty well in every single market, so I was wondering what is behind these and if this is something that we could continue to see going forward? Thank you.

Well, let’s start on Colombia. On Colombia, we are with new regulation sometimes of quality. So it’s costing us a little bit of revenue there, but we are accomplished there, we are working, I think we have a very good quality to rate much better than our competitor. So I feel we are doing well, we are investing in Colombia, and that’s one of the things that is causing a little bit of profitability today. And the other thing is that we have new plans and more competitive plans in the prepaid side, and that is I think it’s going to take sometime the electricity to come again. But we feel that we need to give better plans to all our customers. So that’s where we are. in Colombia, in all the other countries, while we are working, we are trying to reduce costs, expenses; we are working on increasing the ARPU to be more efficient in all data, because the investments on data have been high. So we try to do as efficient as possible. So we are working all around to do that, we are accomplished our CapEx programs and that’s helping us to reduce our costs all around Latin America. Carlos said we are going to start to use our cable, submarine cable this quarter and I think we’re going to fully use it in the end of the fourth quarter. So, all the investments are starting to be the profitable. So that’s mainly where we are. it’s difficult to say if that’s going to go for the next quarters, both the prepaid user know exactly what’s going to be the conditions on the competition and the conditions in the economies in Latin America and the competition in all the countries, but we are doing our job,…

Adding also one more thing that Carlos – to Carlos comments is that we are also working very hard in terms of subsidies of the country. So we are trying to subsidize as less as possible to be competitive in the market, or trying to reduce our subsidies, so that’s also another thing we’re working all around the Latin America and being – having positive results on that.

Okay. And just to give you the numbers, Rodrigo. we’re projecting at this point, this line that has the active growth by different types of practices. And as you see, mobile postpaid grow nearly 8% year-on-year, okay, which is similar to fixed broadband is growing 9%, and we have pay-TV growing 15.7%. That’s what I’m telling you that we are doing very, very well in the very specific segments of the market that are more profitable, where we can do the cross-selling of the various products. Rodrigo Villanueva – Bank of America Merrill Lynch: Understood, thank you very much, Daniel, Carlos. Another question very quickly, any thoughts regarding the breakup of the AMX operations in Mexico, for instance, if it would be nationwide or regional, if it would be a full-service telco or well, as you already mentioned that you wouldn’t be selling your towers, but if it would be basically that nationwide or regional, anything if you can add on that respect would be very helpful? Thank you. Carlos García Moreno Elizondo: Nothing more to add, because we don’t have anything that concrete at this stage, so that’s more or less what we’re thinking and that’s where we are working. Nothing more to add, because we don’t have anything that concrete at this stage, so that’s more or less what we’re thinking and that’s where we are working.

Rodrigo Villanueva – Bank of America Merrill Lynch: Okay, thank you very much. One final question if I may, in Mexico, we saw an EBITDA declining around 80 basis points quarter-on-quarter. I assume this is mainly due to the reduction in interconnection rates. Would it be fair to assume that with full elimination of interconnection rates, the impact in margins could be of around 200 basis points to 250 basis points for an EBITDA margin in Mexico of around 42%? Thank you. Carlos García Moreno Elizondo: I haven’t made that analysis, we haven’t made that analysis, but we don’t have it here. So talk with Daniel and he can tell you more or less the numbers. Rodrigo Villanueva – Bank of America Merrill Lynch: That’s all I have. thank you very much, Daniel.

Thank you very much.

And your next question comes from the line of Maria Azevedo with UBS. Please proceed. Maria Tereza Azevedo – UBS Investment Bank: Hi, everyone. Thank you for taking the question. My question is on the asset divestment plan. What are your expectations in terms of timing for getting approval for a Pay-TV license? In your understanding, do you need to aid the execution of the breakup plan before Ifetel starts to analyze the Pay-TV license request, or can they do it simultaneously?

I think what I was saying before is that we are analyzing which way we’re going to take there. I think nothing is immediately, I don’t think the Ifetel is going to give us the – okay, immediately I think they have time to review different fraction and they have to be comfortable that there is going to be new competition in Mexico, and we know that and what I said at the beginning is that – as Americas Telcel and Telmex. We are prepared to live with preponderance for some time until we have that. So that’s more or less what we are thinking, we don’t know exactly that they – because we need to first find somebody that meet their requirements that we think we want here in Mexico and that Ifetel would be comfortable there. And then when we find that we need to present Ifetel, then Ifetel is going to take time to have some decisions. We don’t know exactly what they’re going to say, if they’re going to say okay I feel comfortable and then you can start to do TV in this timing or we don’t know exactly nothing is immediately, and we want to accomplish all the rules as always. And what we are prepared is – as we are saying is to live with this rules for sometime until we execute the plan. So that’s mainly what we have, we don’t have anything else, anything concrete. Maria Tereza Azevedo – UBS Investment Bank: Thank you. And my follow-up question would be on the tower spin-off, would you consider expanding business strategy to separate towers and monetize them also to your other Latin countries? Carlos García Moreno Elizondo: I think one of the things that Daniel said that we have – had in mind is that it’s important to give to our shareholders value and that’s some of the assets that we have buried in our balance sheet often don’t have the real – not being assigned the real value that they have in the market. So we’ll be looking at ways of your – basically providing or showing the value of some of the assets that we currently have.

And talking about this, we are going to do it in other countries in Latin America, well, we have – the world takes the decision today in Mexico, and that’s where we are working on in Latin America, we don’t have any decision yet. Maria Tereza Azevedo – UBS Investment Bank: Okay. Thank you very much.

Thank you.

And your next question comes from the line of Michel Morin with Morgan Stanley. Please proceed. Michel Morin – Morgan Stanley & Co. LLC: What exactly is the criteria that was used to the deem new preponderance in the Mexican market, specifically what are the that the targets that you would need to reach as you divest certain assets in order to no longer be deemed preponderance? Thank you.

I think the most important thing, that we need to meet is that the market in Mexico would have competition. So, I think it’s what Ifetel once I think what – they want and that’s their requirements that we want to meet. And that’s what we want to talk with them. And that’s what we want. I think that the constitution said that we need to reduce our percentage to less than 50%. So, that’s what the constitution said. And what Ifetel is saying is that this new, when we reduce that this new company would create competition in the market. So, I think it’s more or less the two things that we’re working for. And that, we are going to be very close to the Ifetel presenting the alternatives to do that. So, that’s mainly all over all what we want to reduce from 50% is what the constitution said. And the other one is to create competition in the market and that’s more or less what we want, if it’s regional or it’s national, well we’re going to see and we’re going to do a plan, so that Ifetel will be happy to see that there is more competition in Mexico. Michel Morin – Morgan Stanley: And Daniel, just a follow-up on that, it’s 50% of what, because what we are hearing from Ifetel and based on what’s the constitutional change that was approved a year-ago suggested that its subscribers, but also network capacity and traffic. We can calculate your market share of subscribers, but we don’t really have public information on your market share of traffic or itself network capacity. So, I’m just wondering if you can. Sorry go ahead.

The lowest figure, I don’t have the numbers here. But happy – that there is exactly the constitution had some articles on that. And then the new secondary loss has all the things. So, that’s mainly there. I don’t have exactly the numbers, what I think what they really wanted to reduce the 50% and to create competition in the market and it’s where we are, that’s the part we’re going. Specifically the things is what we need to do is to sit down with the Ifetel and make them feel comfortable that these two requirements are – okay. Michel Morin – Morgan Stanley: And then Daniel, my second question would be about the U.S. markets now that AT&T is no longer a shareholder and partner. Do you look differently at the possibility of buying some network assets to expand in the U.S.?

No, no, I’d say no, we haven’t changed any strategy on the U.S. we feel comfortable how TracFone is working. We – in TracFone we even that AT&T used to be a very good shareholder of America Movil, a good partner, that we also work with all the companies in U.S. with Verizon with T-Mobile. And we’re going to still work with all of them. So, no I don’t think we have big changes in TracFone today. So we are having the same strategy, Michel. Michel Morin – Morgan Stanley: Thank you very much.

Thank you, Michel.

And, your next question comes from the line of Carlos Legorreta with GBM. Please proceed. Carlos Legorreta – GBM Research: Yes. Thank you for taking the question, just if you can give us some color regarding your strategy in Europe through Telekom Austria, and perhaps the timing of the capital increase and that will be perfect? Thank you.

Carlos, can talk a little bit about the timing on capital. Carlos García Moreno Elizondo: We got a little increase, we would expect it to happen before the end of the year. And, there is even a possibility that can happen before the end of the quarter. So, we would like to get the capital raise done quickly I think it’s important, basically to strengthen the capital raise of the company, and to leave it in a good situation, in good standing. So, to the strategy, Daniel will elaborate.

And, I think – the strategy I think we feel that Telekom Austria is a good company. We want to be out of Latin America. And, we decided on Telekom Austria I think we have all Eastern Europe another six countries, because of the other ones that we have to grow. And we can add a lot of value to the company with all the strategy that we have in Latin America. So, that’s mainly where we are, we are going to start to work this third quarter in the company. We’re going to help them to run the company and I think America Movil could add value to Telekom Austria. Carlos Legorreta – GBM Research: Okay, thank you very much. And, just very quick follow-up, does it make sense…

Sorry, sorry. One more thing that… Carlos Legorreta – GBM Research: Yes, yes, please.

Forget to tell you is that in some countries they of the Eastern European countries of Telekom Austria, they only have wireless. So we feel that we can do convergence that we can add more other services to the company not only wireless, we can add broadband, we can add fixed, TV and other countries. So that’s also other thing that we could do there. And your other question. Carlos Legorreta – GBM Research: Yes, thank you. Just does it make sense to you to participate in the upcoming licensing of the satellites or retail positions in Mexico, because I understand just launched and are changing the satellite fleet in AMX.

We don’t know, we still say having the decision and – we still deciding what to do there. So we haven’t had any decision right now. Carlos Legorreta – GBM Research: Okay, that’s great. Thank you.

Thank you.

And your next question comes from the line of Kevin Smithen with Macquarie. Please proceed.

Hi, guys this is Will for Kevin. Thanks for the question. We are just wondering in your strategic review and did you discussed the TracFone asset and do you view this as a potential gateway to the U.S. or should we think of this as a non-core asset that you considered in – while you considered deals in Brazil and Peru.

I think as I said I think we are very happy the way TracFone is developing, its having been a very good assets for us. And we haven’t changed any strategy at this moment I think what we want is to follow the strategy to grow more we have 25 million subscribers today. We want to go to 30 million subscribers and to have more EBITDA we have $7 billion revenue company. So we aren’t – we don’t want to change this strategy today. And also we are comfortable we have a good EBITDA, good CapEx good branch, we are happy with TracFone and the way TracFone is developing right now. And they the other question on Peru. What do you said on Peru?

No that was all part of the first question, but I do have a follow up about when you spin-out your towers in junior subsidiary, how you capitalize that, will you load it up with debt, or you consider an IPO or another type of strategic investment.

No I think we haven’t considered anything at this stage we are working and making the analysis what we already decided that the way to do spin-off I think that’s the best for our shareholders, that’s the best value for them. So that’s the decision, we don’t know we’re going to put them in that or not so still doing the plan spin-off of the towers.

Do you know how long it will take before you have more clarity on that?

We don’t know maybe, we need to present our plan, but maybe two months we can have a decision, but it’s important because you need to have some authorization to do the spin-off and it’s going to take time. So we have some time to decide exactly that what to do and we are going to do it with that or not how many people, so we are deciding, I think before the end of the year we are going to have much more clarity on the spin-off.

All right. Thank you very much.

Thank you.

And your next question comes from the line of Will Milner with Arete Research. Please proceed. William Milner – Arete Research Services LLP: Thanks, very much. I just want to focus again and clarify my understanding on the asset sale in Mexico. I mean, I think you’ve said in the call I just want to confirm, you can’t present anything to Ifetel without already having a buyer lined up. Is that correct?

We can’t present, what we want to Ifetel, what I think what Ifetel is going to want is to present something clear now, and our plan, already our plan on what we are going to do. So we can present tomorrow something, but then they are going to say to us well that what you have. So what we want is first to find our company that meets all their requirements that I’m saying. And then present the plan to the Ifetel and this cause the plan within. As I told you, I think we know that and we are – and we want to be very clear, we are preferred to work with these rules, asymmetric rules and preponderant rules for sometime from the time we need to do it. So we are well prepared, and CapEx well prepared in our brands, in distribution, in our people, we have 70,000 people in Mexico well trained, well prepared I think it’s something excellent. So we are – we know how to operate with these rules, we know what are these rules and we are not ready to operate that on the rules of asymmetric rules, so we want to do things transparently and to present to Ifetel exactly what our plan to the… William Milner – Arete Research Services LLP: Okay. so I mean in the interest of transparency just to be clear you don’t have a buyer or a shortlist of buyers today, and I guess on that if you don’t what is the pitch to a buyer to buy 20% of Mexican market share with the regulatory landscape so uncertain. I mean how would you try and sell as per buyer?

We don’t have a buyer today as you are saying, but we have some ideas to which companies, we don’t know, we are not talking with them at this stage. And we are preparing our plan as to what we feel, what we sell and then talk to some of these company. So that’s more or less what we want and we don’t know exactly, other thing that we don’t is exactly what Ifetel wants because what we know is that Ifetel wants to have a competition, okay to be less than 50% and to have competition in the market. And I think they are right, I think that’s good for the telecommunications in Mexico and that’s what we are working for to do. William Milner – Arete Research Services LLP: That’s clear, thank you. I mean and the follow-up question is just like as from the impact of the regulation that seems that you will be facing. What proportion of your customers today in Mexico benefit from the cheaper on net calls from Telcel to Telcel. Because I mean there is a lot of those plans on the website?

Well, I think what – we want to do is not to differentiate the on-net, off-net, so if we are going to offer – we use to offer them more calls on-net, what we need to do is to tell them well on August 8, then these calls has to be on-net and off-net. So we’ll not differentiate that and that’s going to be the change what we are going to do. So we are reviewing our plan and what we want this to meet their requirements and put them – and put our customers competitive. So that’s what we are working at today, so meet their requirements of their asymmetric on-net, off-net rule and make them also be competitive. So that’s we are working. William Milner – Arete Research Services LLP: Okay, so no detail on average 10% for the customer base, so 90% of the customer base that will be affected?

No, no nothing there. William Milner – Arete Research Services LLP: Okay, thank you very much.

Thank you.

Ladies and gentlemen we have time for one question and your last question comes from the line of Kevin Berlin with Legal & General. Please proceed. Kenneth J. Berlin – Legal & General Investment Management America, Inc.: Yes, good morning and thank you for taking my questions. Two if I might, first is can you please reconfirm your balance sheet sustained commitment at the 1.5 times level, as well as the sustained commitment to the A credit ratings in the context of the movement in the European investments and the planned Mexican divestitures. And the second question is, if you could just give us a refresh thought – thoughts on capital expenditures and what your plans are for 2014 and if there’s any initial thoughts on 2015 CapEx? Thank you.

Well, on the leverage, I think we’ve been saying for some time probably couple of years that our benchmark, our target is to stay at around 1.5 times net debt-to- EBITDA, that’s basically where we are today. So there is no change on our policy. We believe that we’re staying at these leverage ratios is consistent with at least holding the ratings, might be the existing ratings. So again, that’s why we are committed to maintain these leverage ratios. As for the CapEx, as we saw in the presentation, next year will be the fifth and quite have been a five-year investment plan, $10 billion per year, $50 billion for five years. And so the CapEx amount for next year is going to be almost identical to what we have for this year. Okay, so no changes there. we’re not seeing any changes again, we have signaled to be market for sometime that the $10 billion CapEx number per year was something that we were going to maintain at least for five years, we are in the middle of the fourth year already. We have only one more year to go under this commitment. And then we will have to reduce it from then onwards to see what we would expect. Kenneth J. Berlin – Legal & General Investment Management America, Inc.: Great, thank you very much. Carlos García Moreno Elizondo: Thank you.

Thank you for the call, or there’s another question?

At this time, we have no questions.

Well, thank you everybody. Thank you for being in the call and thank you Carlos and Daniel Hajj and Carlos.

Ladies and gentlemen, that concludes today’s conference. thank you for your participation. You may now disconnect and have a great day.