Welcome to the América Móvil second quarter 2016 conference call and webcast. My name is Sam, and I will be the operator for today. At this time, all participants are in listen only mode. We will conduct a question and answer session towards the end of the conference. If at any time during the call you require assistance, please press star zero on your telephone and an operator will be happy to assist you. As a reminder, this call is being recorded for replay purposes. I would like now to hand the call over to Daniela Lecuona, the Investor Relations Officer for the company. Daniela, please begin.
Thank you, Sam. Thank you everyone for joining us this morning. We are here to discuss our second quarter financial and operating results. We have on the line Mr. Daniel Hajj, Chief Executive Officer, Mr. Carlos Garcia Moreno, Chief Financial Officer, Mr. Oscar Von Hauske, Chief Operating Officer, and also Mr. Carlos Robles, Chief Financial Officer from Telmex.
Good morning. Thank you for being in the América Móvil second quarter of 2016 conference call. Carlos is going to make a summary of the results.
Thank you, Daniel. Good morning, everyone. The second quarter saw a recovery of several currencies vis-à-vis the dollar, as the likelihood of new interest rate increases by the Fed appeared to wane. Some indicators pointed towards a stabilization of the main financial and economic variables in China, which had previously been a matter of concern for the international market. In Latin America, both the Brazilian real and the Colombian peso continued their comeback. The Mexican peso weakened further. We ended June with 364 million access lines, 0.9% less than a year before, after net disconnections of one and a half million prepaid subs in the quarter, most of them in Brazil. This figure includes 283 million wireless subscribers, 34 million landlines, and 26 million broadband accesses, as well as 22 million pay TV units.
On the mobile platform, the postpaid base was up 5.9%, and the prepaid were down 4.2%. On the fixed line platform, RGUs were up 3.6% year-on-year, driven by broadband accesses that rose 8.9%. Other than in prepaid, we are seeing good growth in the other business lines. Second quarter revenues rose 6.1% from the year-earlier quarter to MXN 233 billion, with service revenues increasing 3.2%, reflecting the appreciation of several currencies vis-à-vis the Mexican peso. At constant exchange rates, service revenues were down 2.1% year-on-year. Substantially all our operations maintained their growth trends in local currency terms. In Mexico, however, we saw a step down in revenues brought about mostly by more aggressive commercial plans in the prepaid segment, as a greater part of our subscribers moved towards unlimited call plans.
The South American block and the Caribbean both presented a slight improvement in revenue growth trends from the prior quarter, with Central America maintaining a steady one. EBITDA of MXN 61 billion declined 10.7% in Mexican peso terms relative to the prior year, 13.2% at constant exchange rates, bringing about a 29% reduction in operating profits that in turn led to a 55% decrease in provisions for income on deferred taxes in relation to the year-earlier quarter. We obtained a net profit of MXN 7.7 billion in the second quarter, which was down 45% from the year before. Our net debt stood at MXN 608 billion. In dollar terms, our net debt declined by $1.7 billion at nominal exchange rates and by $1.2 billion in flow terms.
In dollar terms, our gross debt actually came down by nearly $2 billion, $1.9 billion in the first six months at nominal exchange rates and by $1.5 billion at constant exchange rates. Our net debt to EBITDA ratio was practically unchanged in the quarter at 2.1 times. Our cash flow from operations, the distributions obtained from our shareholdings, particularly those in KPN, and the unwinding of currency swaps allowed us to finance capital expenditures amounting to MXN 57 billion, share buybacks of MXN 5.2 billion, and acquisitions of equity interest of MXN 3.4 billion. In addition, as mentioned before, they allowed us to further reduce our net debt. Well, with this, I would like to turn the floor back to Daniel, and maybe the operator can begin the Q&A session. Thank you.
Thank you, Carlos. Let's start with the Q&A, please.
Certainly. Ladies and gentlemen, if you do wish to ask a question, please key star, then one on your telephone. Once again, to ask a question, key star, then one on your telephone. Thank you. We do have several questions. The first question comes from Amir Rozwadowski. Please go ahead. You're now live on the call.
Thank you very much for taking the question. Good morning, folks. I was wondering if we could discuss a bit more about the competitive landscape that you're seeing in the Mexican market right now. It does seem as though that there's been some notable traction with you folks in the postpaid market in terms of the higher-end subscribers. There clearly seems to be a bit more competition in the prepaid arena. Would love to hear sort of your thought process on where you stand right now vis-à-vis your competitors, how you see the competitive process playing out. Should we expect some more pricing concessions coming to the market or anything along those lines? Thank you very much.
Amir, good morning. Let's talk a little bit about Mexico. Since 2014, we have a new competitor in Mexico and two international and big competitors. We have been, the last two years, investing more and having more competition. That's what is the market landscape in Mexico. For the last two years, prices have been going down very fast. We have been having a lot of competition in pricing, in prepaid and in postpaid. We have new plans like unlimited voice, unlimited SMS, and with some data. Those are the new pricing and plans that we have been having for the last six months. These prices are similar than in other countries. Let's say they have unlimited in U.S., we have unlimited also in voice and SMS in Mexico. The prices that we have in Mexico are really low against what you compare in other countries.
The pricing has been going too long, too far, the price. On the competition, we have competition in Mexico, we have a lot on reduction on prices. With these prices, even the competitor that entered in 2014, they have been losing every quarter. They want to gain market share, but they are losing a lot of money in EBITDA. The other competitor has been having big reductions in revenues, also big reductions on EBITDA. Well, that means that the competition is tough and the prices are being too low. Even that the consumption for the people, with these low prices, people is starting to consume a lot more, maybe six times what they used to consume. The demand for the telecom services has been very strong also in Mexico.
That's very good also for us. In terms of that, people is consuming lot more than what they have been consuming. I think that in prepaid, our revenues the last two, three weeks have been very stable, much more stable, because the prepaid people that had the highest ARPU and they want to change, I think they already changed. We have been having a lot of people moving from the old plans to these new plans. I think the people who wants to change, they already changed. That's why we are seeing more stabilization in our revenues in the last weeks. Okay? The other thing is that we're making some changes in the offers. Okay?
We're moving a little bit the due dates and moving some cards and moving other things. We're moving also. I think the competition is stabilizing also a little bit more. Prices are being stabilizing and our revenues in prepaid, I'm seeing that they are stabilizing also more so. That's more or less what you see. The way I see things, it's natural that the prices in telecom reduce because of technology, because of competition, but these prices have been reduced too far. Okay? The thing that I see is, and what I'm thinking is that in the future, the conditions would change. That's more or less the view of what is happening here in Mexico.
That's very helpful. If I may, one quick follow-up. You'd mentioned that utilization of the network has increased pretty dramatically in terms of overall usage. Do you see an opportunity, particularly as we start to see smartphone penetration grow, for you folks to capture some of that incremental usage via pricing? In other words, is there an opportunity to trade some folks up to higher data buckets going forward? I'm just trying to understand where that opportunity set lies for you folks.
The thing is that these data buckets, if you compare these data buckets against the data buckets of last year, you'd see that these new plans have been having a lot more of data than what they used to have last year. Also in postpaid, we're having been too aggressive. Penetration is moving. Penetration on the smartphones is growing a lot, I think we have an opportunity that people start to use more, use more data, use more voice. Of course, I see an opportunity because at the end of the day, I think that things are going to change. The conditions are going to change in the future. As people is starting to use more and more, then we have an opportunity in the future. The smartphone penetration in prepaid is still very low in Mexico.
I think we have also a good opportunity in the prepaid market. In postpaid, penetration is high. I think it's one of the highest in Latin America. In prepaid, I think we still have a lot of room to go.
Great. Thank you very much for the incremental color. Thank you. Next question.
I do apologize. We do have a slight technical issue. If you could carry on with the conference, and we will return to Q&A session as soon as it's finished. Is that a problem? We've lost connection. If you could just continue with the call, and I will come back to the Q&A as soon as we've resumed the technical problem.
Okay. We're sorry. We're being told that they have some technical issues. Connecting. As soon as they sort them out, we can continue the Q&A. We apologize for this.
That is correct. If you'd like to finish the rest of the conference, as soon as I get the bridge back, I will restart the question and answer session for you.
There's nothing more in this call other than the Q&A. If you want to dial again, I don't know how you would want to do it.
I do apologize. I have lost connection with you. I can hear you, but we can't see anything on the bridge.
Do you want to call us again? Do you want to call again?
Or
Just bear with me, please. Thank you.
Sure.
Andre Baggio, you are now in the queue. Please go ahead.
Hi, good morning, everyone. Carlos, can you make a comment on the opportunities that you face? I'm seeing that both wireline data and also prepaid have been growing double digits. Can you talk about the opportunity that you face on the specific two areas like data on wireline and also on pay TV?
I mean, I think, Andre, how are you? Good morning. I think that we are seeing the market generally in Latin America, particularly the prepaid market, segment of the market, moving from a voice-only market, where voice has become commoditized, to one that will be voice and data. As the penetration of smartphones increases, the adoption of smartphone devices increases. We are seeing this, I think it's in its nascent phase. I think it will be very much about the ability of the different carriers to offer the combination of voice and data services that the clients will be demanding. I think that's what you're referring to, right, Andre?
Yes.
Basically, we're seeing a period in which different competitive operators will be differentiating themselves by their ability to service a market that is requiring both voice and data services. I think this will lead to very profound changes in the competitive structure of the markets that we are seeing today. I think the market for voice-only clients is a market that is dying. I think that we are going to see a very rapid adoption of new devices as the price is coming down quite significantly.
Carlos, I have a second question. Can you comment a little bit on what's going on in Peru? Each time that I see this country, which is not so big for you, I know, but the margins have been lower and lower. Is it just related to the competition, to the new player that is there? Could we see the same situation in other markets?
In Peru we have a big reduction on MTR, it's hitting us in EBITDA. It's the asymmetric. It was in our favor, today it changed, it hit us on the cost and the revenues over there. That's one thing. The second, the market competition is aggressive. Prices are going down. Big subsidies of our competitor. I think one of the competitors, the new one that is getting in some cases, I don't think they are doing a lot of money because they are putting a lot of subsidy at the beginning. I think they are more rational today. I'm feeling on the other side, we haven't had a good network on 4G because two, three years ago, we haven't win the spectrum over there. Today we have a spectrum. Today we have enough spectrum.
We are putting a new 4G network in Peru. I think, of course not comparing to last year because last year is doing, I think you are going to see increases on revenue, better market share in subscribers, of course, I hope that the EBITDA will get back and start to recuperate in the next quarters. I don't think we're going to go lower than what we have today, I hope that we can recuperate in the next quarters.
Okay, thanks a lot.
Andre, if you'd like to see, I don't know if the question was only referring to Peru, if you'd like to see the other ones, well, there's a number of countries that have higher margins today than they had a year ago. Argentina is higher. Chile is higher. Brazil is flat. Colombia is a little bit lower. Most of the other ones, Central America is higher. There's a number of countries that have higher EBITDA margins today than they had one year ago.
Okay.
Next question. Hello? Next question. Again, a problem. I think we're facing, again, problems with the operator. We believe that this may be a consequence of Brexit. Maybe you can send the questions to Daniela, we can answer the questions. Send it by mail, please, to Daniela.
Carlos, if you're hearing if you're still online about this again. To follow on the, if I may, the question I have on the other markets is specifically the situation that we found in Peru, where there's very aggressive player with a new 4G network. If that situation could not repeat specifically in Mexico, where we also have a new player, very well capitalized with is investing a lot on a new 4G network. Which could trend downward the margins for quite a long time, similar to what we saw in Peru.
It is totally different what is happening in Peru than what is happening in Mexico. In Peru, the problem is that they have a good network because they have the spectrum. They have a 4G network, we haven't had that for the last 2 years. We have very small amount of spectrum to run our 4G. In Mexico, we have a lot of spectrum. We have the best network, the best coverage, the best quality by far, that is totally different. I think in Mexico, Telcel is the brand. The preference for all the subscribers in Mexico is Telcel. I think it is different, it is what we want to do in Peru. We are doing good investment and good network in 4G. We have enough spectrum right now, I think things are going to change in Peru, you are going to see that
subscribers are going to start to grow again and revenues also.
I think, Andre, just to follow on what Daniel is saying. We are mentioning here in the report that in the Q2, we acquired the new spectrum in Peru in the auction that they conducted. We have also acquired a company that was based in Peru, that essentially what it has is it owns spectrum. Spectrum became our bottleneck, it was something that really did not allow us to compete, particularly in data, because we didn't have really the ability to provide it. We didn't have the capacity by way of the spectrum. I think this bottleneck is being broken right now, I think that we should be able to follow through with our own investments to stay in the market, competitive in the market. Again, Peru was a one-off situation. It was exceptional.
It was, as Daniel pointed out, we just had the bad luck that 2 years ago we lost out in an auction and ended up not having the spectrum that we needed for 4G. This obviously made us lack competitiveness over the last couple of years. This has been resolved, I think that we are going to be much more competitive going forward.
I do apologize. This is Tammy, operator. We have the connection resolved now. If you would like to commence the Q&A again, I can start that for you.
Okay.
Yes, please go ahead, Tammy.
Okay. Andre Baggio, you are still live on the call. Please go ahead with your question.
No, I'm done. Thank you.
Andre already said the question. Can we go to the next one, please?
The next question comes from the line of. Please go ahead. You're now live on the call.
Hello?
Take the next one.
Well, the next one.
I have Walter Piecyk's question here. Walter Piecyk from BTIG. The question is, please provide more color on prepaid usage that was up six times in Mexico and the popularity of unlimited, and then comment on whether this means CapEx can still come down 25% this year, and what the outlook would be for the next year on CapEx.
Well, in Mexico, I think in prepaid, as I said, customers that are changing from the old plans to these new unlimited plans are moving, and they have five times to six times more usage in voice. Also, they have more usage in data. We are prepared with this spectrum that we have, this new spectrum that we had in beginning of this year. We're able to do so. We are investing and all overall, I don't know in Mexico, but all overall, we are still trying to do our MXN 8 billion CapEx that we estimate. Not only in Mexico, in other countries are growing a lot the usage in data and in voice.
All the big investments that we do the last three years are going to make us and be able to do all these new plans and all these new data and unlimited voice that we are doing all around Latin America. The next one.
The next question comes from the line of Alejandro Gallostra. Please go ahead. You're now live on the call.
Hi. Good morning, Daniel and Carlos. My first question is regarding your leverage. Do you have plans to further deleveraging your balance sheet, and do you have any net debt target in mind?
Hello, Alejandro. As we've shown here, I think in the first six months of the year, our gross debt came down by nearly $2 billion in nominal terms. We have some important bond maturities that are taking place in September that amount to close to $3 billion. I think, for the most part, we should be able to pay that down from the cash position we built and the cash flow that we're going to have from here to then. I do expect that, in nominal terms for the full year, probably gross debt is going to be coming down at least $4 billion, and maybe between $4 billion and $5 billion with gross debt. In terms of net debt, we're probably looking at roughly $2.5 billion reduction, $2.5 billion-$3 billion reduction in net debt for the year. Yes, I think that we are continuing with this deleveraging.
It's important. We have maintained our ratings that are top ratings in the telecom sector, and we intend to hold on to them. We are acting quickly just to make sure that the leverage position stays within the guidelines that we have seen with the rating agencies.
Okay, great. Thank you so much. My second question is regarding the favorable ruling from IFT when it comes to Telmex broadcasting Uno TV through the internet? Do you have plans to becoming more aggressive in streaming as a result of this? Is your strategy in Mexico going to change as a result of this favorable ruling from IFT?
No, I think what we have been doing is exactly what we are going to do. There's no new plans that we're going to do with this new decision on the IFETEL. We have our plans, our strategy, and on the streaming, we're going to do exactly the same of what we're doing right now.
Okay. Thank you very much.
Thank you.
The next question comes from Michel Morin from Morgan Stanley. Michel, please go ahead. You're now live on the call.
Hi, it's Michel Morin at Morgan Stanley. I was wondering if we could dive in a little bit more into Mexico, and if you could, by any chance, break out the prepaid and postpaid revenue growth trends. It seems from what you're describing that the impact has really been on prepaid, it'd be helpful to get a little bit of granularity there. In Brazil, both of your major competitors, Vivo and TIM, have flagged that they've experienced positive portability metrics over the last several months. I was wondering if that's consistent with what you're seeing, and if so, what would explain that situation for you in that market? Thank you.
Starting with Brazil, Hi, Michel. First, hello. On Brazil, on number portability, on June we have lost 8,000 number portability on our gainings. Year to date, we have 41,000 on postpaid. Those are numbers on postpaid. On prepaid, we are losing a little bit. I don't know exactly how much, on prepaid, we're winning 41,000 postpaid new adds in number portability. I think the total numbers on postpaid, we're gaining this year more than 600,000 postpaid, I think was the one of the biggest for us. In postpaid, we're doing good. In prepaid, we still need to adjust some things, we're focusing a lot on the postpaid sector, we are doing very well with our strategy on the combo we are offering to our cable subscribers, as we have a very good distribution network for our postpaid.
We're being looking very deeply on all the postpaid business in Brazil, we're doing good. In Mexico, what was your question again, Michel, please?
It was just because when you talked about the relative weakness year to date, you flagged the unlimited plans on prepaid. I'm wondering if your revenue growth on postpaid has been trending maybe more favorably. If you could share with us the trends for both postpaid and prepaid revenue growth as one of your competitors did for the second quarter, that'd be helpful. Thank you.
I don't have right now the number right here with me. Let me find it. I do know that in postpaid we are having positive service revenue growth. It's slightly less than the pace of growth of the postpaid subscriber base, Michel. That means that there's some ARPU dilution in the process. Service revenue growth is positive on the postpaid segment. What you're saying is correct. Basically, all of the service revenue decrease is taking place on the prepaid side. As I was mentioning before with Andre, this is I think a moment in which we are going to see the last parts of a market that is voice only, and that will be morphing fairly rapidly into voice and data. We believe that the ability of operators to provide voice and data will be key to their competitiveness going forward.
Just to add one more thing to Carlos, Michel. In my view, I think we have been too aggressive in the promotions in prepaid and in postpaid. I think if you compare prices against U.S. on plans or prepaid plans or unlimited plans in prepaid and on postpaid, the difference are high. If you compare, please check in the internet prices here to prices in U.S. The prices are really low here in Mexico, my view is that things are going to change. I don't know if they are going to change tomorrow, things have to change in the future. That's how I see.
That's very helpful, Daniel. If I can just follow up on that. When you say we have been too aggressive, are you referring really to we as the industry or we América Móvil? Are you saying that your company?
No. In Mexico, we as the industry has been very aggressive, not us. All the industry. We don't start with the promotions. I think with the promotions, one of the competitors start with those promotions in November of last year, or maybe a little bit earlier. With this big promotion. When they are not promotions and they are plans that they are going to stay, well, everybody has to follow that. It's what we have been doing, I think it hasn't been good for anybody. You could see one of our competitors, since they get in in the market, they are losing money. They don't have any profit since they start. I don't know if that's their plan or not. I don't care. They have been losing every quarter since they start.
The other has been, if you see the last results, well, the revenues and EBITDA has been going down very fast also.
That's the market, it's not us. I think in the future things are going to change. I don't know where and how, things are going to change.
All right. Thank you very much, Daniel.
Thank you, Michel.
The next question comes from Carlos de Legarreta. Carlos, please go ahead. You're now live on the call.
Yes. Thank you. I was wondering if you could give us more information. I was looking at the CapEx figure that Telmex discloses, I believe this is 45% larger year-over-year for the first semester of the year, I'm just curious what it is related to. As well as the third question, please.
Well, I don't have the disclosure of the CapEx of each company, of each country, but I can tell you that all overall, what we are going to do is we have the budget of MXN 8 billion on CapEx. Plus the frequencies that we bought. It's what we are thinking. It could be a little bit higher, it could be a little bit lower, but that's around the strategy that we have. I don't know if in Mexico, how much is Telmex, how much is Telcel. All overall, the networks are the same, they are doing more or less the same CapEx. I don't see any change on the numbers. I don't know exactly what is the number that you see, but Carlos is here, can talk a little bit about that.
Yes. Just to mention-
Carlos Rob
Carlos.
Sure.
Just to mention one thing. It's basically a matter of seasonality in the sense that at the end of the year, we'll be with a target of the MXN 8 billion that we have as América Móvil. There's a reduction also in Telmex for this year. It's basically a matter of seasonality of investment that we are making to strengthen further the network for our customers.
Okay, perfect. That's helpful. Thank you. If I may just to follow up, I don't know if you are disclosing the figure that you got for the sale of the staking the Telekom Austria, if you could talk about a little bit about that. Thank you.
As you put up, we have sold part of our stake. It's in a combination of transactions that the sum of which allowed us to sell 7.8% of our stake. That is providing us, I think there was an average price of about MXN 5.20, MXN 5.21. Maybe you can compute that. I don't have the exact proceeds here with me, but okay.
Okay. Thank you.
Thank you.
The next question comes from Richard Dineen from UBS. Richard, please go ahead. You're now live on the call.
Thank you very much. Thanks for taking the question. Good morning, Daniel and Carlos. Just interesting commentary on the Brazil competition. Maybe if you could just comment on the sort of Brazil margin progress. It flattened a little bit this quarter on a year-on-year basis versus some gains previously. I'm just wondering if you're starting to see the synergy benefits from the integration of the three companies, whether that's slowing down or whether there are other things in the mix this quarter, whether that's cost pressures or other one-offs that seems to have slowed down that sort of margin progression a little bit. Then secondly, if I may, I understand IFT's ordered fixed to mobile termination rate cuts of 30% in Mexico from the 1st of August.
Just wondering if you've given any thought to how significant that would be on your Mexican revenue, or whether that's something that is probably not going to make much of an impact. Any color on the above would be fantastic. Thank you, gentlemen.
Carlos can answer the interconnection. Please, Carlos.
Yes. Basically, as we have doing in previous years, and we have been doing for the last 16 years, we have lowered or we have reduced our prices by transferring the benefits of our operational effectiveness and the reduction in the technological cost to our customers. This year we announced that we were going to reduce the CPP cost for our customers by 30% and by 50% for the next year, and then 50% in the following year. At this point, it is difficult to know the impact because at the end, it's a matter of elasticity in which traffic might increase and therefore it's difficult to actually have a number about that. What I can tell you, it's two things. First, it's that our customers will receive directly the 30% reduction starting on the 1st of August.
Secondly, our package customers, what we are doing is we are further increasing the speed of our internet services. We are strengthening our packages by value-added services, so that as you can see, just as in the mobile sector, in the fixed sector, we have very competitive prices and we are giving very complete conditions even compared to international standards when you compare it to the U.S. or any other country in the world.
Right. That's very helpful. This is sort of a voluntary rate cut rather than something that's. This is not the interconnection rate. Yeah.
Yes, that's right. That's something that Telmex proposed to IFT of reducing the CPP tariff.
Right. Okay. That's clear. Thank you.
Thank you.
In Brazil, I think the margin reduced 4.5% against last year. I think we're working hard on the cost and expenses. The integration of the companies are doing that. On the other side, we have Brazil with exchange rates a little bit higher, so that means a little bit more cost in local currencies. We have some other contingencies. Uncollectables are growing also a lot. There are new things that we're facing in Brazil because all these economic and political issue. I personally feel that we're doing very good in Brazil, that we still need to fix some things there. In TV, we're doing very well. In broadband, we're doing well. In fixed, we're doing well. In postpaid, we're doing well. We need to fix a little bit data on the prepaid that we're looking to see.
There's promotions that they are being out of the market. We think that the data in prepaid needs to grow faster, and we're working on that. All overall, I see Brazil in good shape. I don't know if we're going to end the year with the same margin as we have last year, but we could be very close on that. We're working to have those numbers. I'm feeling comfortable on Brazil.
That's great. Maybe just to clarify, just in terms of that specific integration of the three businesses, Claro, Embratel, and Net, how far through that process are you? Is that mainly complete, or there are other efficiency gains that you think you can make from that exercise?
No, of course, there are more efficiency gains that we need to get more and more in the network, in the IT, in the engineering side, in the marketing side also. There's still a lot of things. I think there's still one or two years more of efficiencies that we need to get in Brazil, okay? That's something that we need to focus, and we're really focusing on that. I think we are advancing on the right direction in Brazil.
Okay, got it. Many thanks indeed.
Thank you.
The next question comes from Mauricio Fernandes from Merrill Lynch. Please go ahead. You're now live on the call.
Good morning. Carlos or Daniel, in Mexico, could you tell us, and I apologize if you already mentioned this, but what percentage of subscribers, particularly prepaid, but overall have migrated to the new pricing plans at the end of the second quarter? I remember you saying half of them had migrated to the new pricing plans at the end of the first quarter. If you could give us some sense as to what's been the speed of migration towards during the quarter or even in July, that would be great. The second question is in Brazil. There was a steeper decline in wireless service revenues went down by 11% versus 6% in the first quarter. Contrary to what we saw happening at the competitors so far who have reported. At the same time, your fixed line revenues accelerated.
I'm wondering if there was any change in the way you account for wireless or fixed line pay TV revenues, in particular in the bundled product. Thank you.
First in Mexico, what I remember in prepaid, I think in postpaid maybe 20% or 25% of our subscribers are on the unlimited plans. Remember that on postpaid, they are having some contracts. In postpaid, what we're trying to do is that they don't go down. We're giving more and more things to the plans to stay or to upgrade the plan. It's what we're doing on postpaid. In the prepaid side, maybe on June, we have around 56% of the subscribers moving to the unlimited plan. A lot of the subscribers has been moved. What's happening, I think the subscribers and what I said at the beginning of the call, the subscribers that the highest ARPU in prepaid are the ones that move faster because they get a lot of gains there.
They are using more the phone, using more voice, using more data, and paying less. It's what we see at the beginning. First and second quarter is what you are going to see. The other subscribers that hasn't been changed are the subscribers that has less consumption, and those are the customers that has less ARPU subscribers. These ones, maybe it's not convenient for them to move. It's what you are seeing. I think people is moving less and less to the unlimited plan. At the beginning, maybe January, February, March, April, we have a lot of subscribers moving. The last two months, less subscribers moving. As I said, the last weeks, we have been stabilizing. We're checking every week how those prepaid revenues are behaving, and I think they are stabilizing in the last week.
That's more or less what is happening in Mexico. In Brazil, I don't know. I need to check if they have a different accountability, but I don't think so, the way they account for the combos that we're doing in Brazil. What is happening, I think in data, in prepaid, what I said again is postpaid, I think we're doing good and we want to accelerate postpaid and go deeply on that. On the prepaid side, what you see is on voice, we are doing better than the competition. In SMS, we're doing better than the competition. In interconnection, we're doing the same if you compare revenues against revenues. In data, we are not doing as good as the competition is doing. We have two things. First, in value-added services, the content that we have there.
Last year, we are comparing last year that we have a lot of revenues, but also we have a lot of uncollectables, okay. People ask for a lot of services and then they don't pay for that service. Today we have different policies for these customers, so they have to really commit that they're going to pay for that service, for that content. That's why we have been reducing our revenues in the content in value-added services. The other one is in the internet, in data. In data, what you could see, Mauricio, is that we're still giving social networks included in the ARPU. We have social networks included there. Competition is getting out for that, and we're reviewing what to do with the social network.
We still don't know what we're going to do, but we're reviewing what would be our strategy in the future. That's more or less the explanation on what is happening on Brazil, Mauricio.
Thank you very much, Daniel. Just if I could come back to Mexico. Even with only about 56% of subscribers seem to have migrated at the end of the quarter, but still revenues are down year-over-year 17%, which would suggest we could continue to see the revenue decline going forward. What you're saying is that it seems to have stabilized, in which case, the revenue decline that we saw in the second quarter could be slower going forward. Is that a right assessment?
Yeah. Look, Mauricio, really this new plan, the unlimited plan, what's happened with the unlimited plan? The unlimited plan is it hit us with the higher ARPU subscribers, because that higher ARPU subscribers, if they put, let's say MXN 150, MXN 200, MXN 250, if they move to a MXN 100 card, what is happening is that they have more service, they have more data, and they have unlimited. They have a lot unlimited voice and data. The other ones that they are consuming, let's say MXN 50, MXN 30 in the other plans, maybe it's not too convenient for them. If it's convenient, then they are going to pay the same and use more. Maybe they are going to use more, but we are not going to have a reduction on ARPU. It's what we are seeing.
I don't know if I explained well what is happening, the lower ARPU subscribers, if they change, we don't have a big hit on ARPU on revenues. They are going to get more and more minutes and more data, but we're going to not get a hit on revenue. It's what we are seeing in the last weeks, Mauricio.
Understood. Thank you very much, Daniel.
Thank you. Thank you, Mauricio.
The next question comes from Andrew DeLuca from Barclays. Andrew, please go ahead. You're now live on the call.
Hi, good morning, and thank you for taking my question. My question is related to the competitive environment in Colombia. I was wondering if you could just give us an update on what you've been seeing in the market, both on the mobile and the cable side. If you could just remind us of what your strategy is for each of those segments within the country. Thank you.
In Colombia, let's start with fixed. In Colombia, in fixed, we're doing very well. I think we're growing our revenues. We're growing our subscribers. We're growing TV. We're growing fixed. We're gaining market share. I feel very comfortable on what we're doing on the fixed side in Colombia. On the wireless side, I think we're turning around. We have been losing some subscribers. We have been losing also revenues because as they don't have any more contracts in there, they can change. If you have any new promotion, the subscribers will change for this new promotion. That's why we're losing some revenue in Colombia. In the postpaid side, we're starting to grow. This year we are growing 4.7%. I think in the prepaid, we're going to start to grow this second quarter. We do some changes.
We do also the new organization there in Brazil, more focus on sales, marketing, customer acquisition, more focus on all the commercial side, and it's working. You could see a much better turnaround in. I think it's stabilizing and turning around subscribers, and I hope it's coming also the revenues.
Great. That's helpful. Just a follow-up.
It's not immediately, but it's moving on the right direction.
Okay, great. That's very helpful. Just to follow up on the absence of subsidies, can you just explain what you've been seeing in terms of smartphone penetration in Colombia?
I don't have the number here, but what we have been doing in Colombia, we have been financing the handsets. It's more affordable for them in 24 months, 12 months, 18 months, small payments, and smartphone penetration is growing. I don't have the numbers here, what level of penetration we have, but it's also growing the penetration in the smartphones.
Great. That's very helpful. Thank you very much.
Thank you.
The last question comes from Daniel Federle. Daniel from Credit Suisse, please go ahead. You're now live on the call.
Hello. Good morning, everyone. Thank you for taking my question. My first question is about the fixed line business in Mexico. I was wondering if you could comment a little bit more about the competition in the fixed line business, especially regarding the fixed broadband product, and what is the AMX strategy for fiber to the home and fiber to the node, and how you see your competitors evolving this segment. My second question is about the wireless market in Mexico, because you mentioned that the prices are very low in Mexico already. Who you think which will be the company that will increase prices first? AMX could be the first move for increasing prices, or AMX will wait for the competitors to increase price. Thank you.
Well, in Mexico, in the wireless side, it's a difficult question. I think those things, you don't decide on who's gonna be the first or who's gonna be the second. I think it has to be overall the market. It has to have a stabilization of the market. It has to be the conditions. I don't know if we are gonna increase prices. Maybe we can reduce due dates of the cards. We can give more to the customers. We can increase ARPU. I don't know. There's a lot of things that you could do. We have been reducing subsidies. I think we are the company that has been reducing more subsidies in Mexico. We're doing in prepaid, we have been profitable on selling the handsets here in Mexico, and we're doing a lot of things.
As I told you last time, we think that the conditions will change. I don't know when, but the conditions will change in Mexico. On the Telmex side, on the fixed side, Carlos.
Speaking about the broadband business in Mexico, what I can tell you is that it's a very competitive market, in which basically we are competing with cable operators. In the market, what we are doing, our strategy is two things. In the first one is to have the best network and to further invest in technology, fiber to the home, fiber to the node, to be able to provide our customers with better services, more speeds, and more value-added services. For example of this is for the SME customers, we have introduced, the last month, more services, cloud services included in their packages, so that we can even become more competitive. Speaking about offers, what I can tell you is that the competitors are also giving more products, but at the end, it's in the benefit of our customers. Daniel.
Yes. Okay. Thank you very much.
I would now like to turn the call over to Mr. Daniel Hajj for the final remarks. Thank you.
Just thank everybody for being in the call, and thank you again, Sam.
Thank you. Ladies and gentlemen, that concludes your conference call for today. You may now disconnect. Thank you for joining, and have a good day.