America Movil's Q2 2025 Profit Turnaround: A Strategic Play in Latin America's Telecom Renaissance

America Movil (AMX) has emerged as a standout performer in a struggling Latin American telecom sector, delivering a stunning Q2 2025 profit turnaround of 22.28 billion pesos ($1.19 billion)—a stark contrast to a 1.09 billion peso loss in the same period last year. This $1.19 billion profit not only exceeded analyst forecasts but also signaled a strategic repositioning that positions the company as a prime beneficiary of a broader regional telecom renaissance.

FX Gains: A Tailwind from Currency Volatility

The profit surge was fueled by a 11 billion peso foreign exchange (FX) gain, driven by the U.S. dollar's weakening against Latin American currencies. This shift was catalyzed by U.S. tariff uncertainties and political volatility in key markets like Argentina and Brazil. For a company operating in 15 countries, AMX's exposure to local currencies allowed it to capitalize on the dollar's depreciation. For example, the Mexican peso's decline against the dollar in Q2 2025 added ~$200 million in gains, while Brazil's real appreciated modestly against the dollar, further boosting revenue from its largest market.

This FX-driven tailwind is not a one-time event. With Latin American central banks maintaining accommodative monetary policies to stimulate growth, the dollar's relative weakness is expected to persist. AMX's cross-border revenue streams and cost structures in local currencies make it uniquely positioned to benefit from this dynamic.

Post-Paid Subscriber Growth: A Sustainable Engine

While FX gains provided a short-term boost, AMX's long-term growth story is anchored in its post-paid subscriber base. The company added 2.9 million post-paid customers in Q2 2025, with Brazil contributing 1.4 million of those. This growth was driven by aggressive investments in 5G and fiber broadband, which now serve 15% of households in the region. By 2026, this figure is projected to double, creating a compounding revenue stream.

The post-paid segment's strength is also evident in AMX's financials: service revenue rose 15.8% year-on-year in Q1 2025, while adjusted EBITDA grew 13.3%. This trend reflects a shift in Latin American consumer behavior, where higher-income households and enterprises are prioritizing premium connectivity over cheaper prepaid plans. In Mexico, for instance, AMX's 27% market share in fixed broadband and TV is expanding as 5G adoption accelerates.

A Regional Renaissance: Structural Shifts in Latin American Telecom

The broader context for AMX's success is a telecom sector undergoing a renaissance. While Latin American telecom stocks fell ~14% in 2024, the region's long-term fundamentals are improving. Key drivers include:
- 5G Expansion: Latin America's 5G penetration jumped from 2% in 2023 to 47% in Q2 2025, with AMX investing $12 billion since 2023.
- Regulatory Tailwinds: Governments are pushing digital inclusion policies, including subsidies for broadband adoption and spectrum auctions (e.g., Brazil's upcoming $30 billion auction).
- M&A Opportunities: With $300 billion in private equity dry powder targeting telecom infrastructure, AMX's potential to divest non-core assets or partner with PE firms could unlock additional value.

Investment Thesis: Why AMX Is a Strategic Play

1. Undervalued Valuation: AMX trades at a P/E of 22.86 and EV/EBITDA of 8.65—well below European peer Telefónica (P/E 32.38, EV/EBITDA 13.08). This discount reflects underappreciation of its regional dominance and growth potential.
2. Catalysts in 2025: Argentina's $40 billion IMF agreement (Q3 2025) will stabilize the peso and unlock $800 million in annual debt relief for AMX. Brazil's spectrum auction and U.S. nearshoring trends further solidify its enterprise services revenue.
3. Resilient Business Model: Even as the prepaid segment faces 1.1 million net disconnections, AMX's focus on high-margin post-paid and broadband services insulates it from macroeconomic volatility.

Risks and Mitigation

• Currency Volatility: While FX gains are a boon, a sudden dollar rebound could pressure margins. However, AMX's hedging strategies and local-currency cost structures reduce exposure.
• Competition: MVNOs and new entrants in the prepaid market could erode share. AMX's lead in 5G and enterprise IoT services, however, provides a durable moat.

Conclusion: A Compelling Long-Term Bet

America Movil's Q2 2025 performance is more than a profit rebound—it's a testament to its strategic agility in navigating currency dynamics and capitalizing on a telecom renaissance. With a 22% upside to fair value and a $15 billion 5G revenue runway, AMX is positioned to outperform in a sector poised for structural growth. For investors seeking exposure to Latin America's digital transformation, AMX offers a rare combination of near-term catalysts and long-term durability.