United States

Securities and Exchange Commission

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant To Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of March 2015

Commission File Number: 1-16269

 

 

AMÉRICA MÓVIL, S.A.B. DE C.V.

(Exact Name of the Registrant as Specified in the Charter)

 

 

America Mobile

(Translation of Registrant’s Name into English)

Lago Zurich 245

Plaza Carso / Edificio Telcel

Colonia Ampliación Granada

11529, México, D.F., México

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. (Check One)

Form 20-F  x            Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

This Report on Form 6-K shall be deemed incorporated by reference into the Registrant’s Registration Statement on Form F-3ASR (File No. 333-182394).

 

 

 

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Financial Position

(In thousands of Mexican pesos)

 

		At September 30, 2014 Unaudited				At December 31, 2013 Audited
Assets
Current assets:
Cash and cash equivalents		Ps.	89,728,451			Ps.	48,163,550
Accounts receivable:
Subscribers, distributors, recoverable taxes and other, net			128,624,546				127,872,657
Related parties (Note 6)			1,041,655				1,346,392
Derivative financial instruments			16,796,723				10,469,316
Inventories, net			34,122,732				36,718,953
Other assets, net			19,811,406				12,127,200
Total current assets			290,125,513				236,698,068
Non-current assets:
Property, plant and equipment, net (Note 3)			565,354,110				501,106,951
Licenses and rights of use, net			60,384,792				37,053,832
Trademarks, net			14,598,375				1,166,306
Goodwill			129,670,483				92,486,284
Investment in associated companies (Note 4)			48,165,752				88,887,024
Deferred taxes			58,283,410				50,853,686
Other assets, net			33,202,698				17,340,282
Total assets		Ps.	1,199,785,133			Ps.	1,025,592,433
Liabilities and equity
Current liabilities:
Short-term debt and current portion of long-term debt (Note 5)		Ps.	51,096,833			Ps.	25,841,478
Accounts payable			160,861,188				154,137,312
Accrued liabilities			41,729,563				36,958,922
Taxes payable			27,160,200				22,082,241
Derivative financial instruments			9,997,397				5,366,323
Related parties (Note 6)			1,389,375				2,552,337
Deferred revenues			39,722,115				27,016,340
Total current liabilities			331,956,671				273,954,953
Long-term debt (Note 5)			525,525,957				464,478,366
Deferred taxes			19,143,382				1,628,409
Deferred revenues			1,315,762				1,105,294
Asset retirement obligations			11,653,903				7,516,460
Employee benefits			73,184,212				66,607,874
Total liabilities			962,779,887				815,291,356
Equity (Note 8):
Capital stock			96,385,288				96,392,339
Retained earnings:
Prior periods			156,286,971				122,693,933
Profit for the period			42,839,347				74,624,979
Total retained earnings			199,126,318				197,318,912
Other comprehensive loss items			(105,673,197	)			(91,310,640	)
Equity attributable to equity holders of the parent			189,838,409				202,400,611
Non-controlling interests			47,166,837				7,900,466
Total equity			237,005,246				210,301,077
Total liabilities and equity		Ps.	1,199,785,133			Ps.	1,025,592,433

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income

(In thousands of Mexican pesos, except for earnings per share)

 

		For the nine-month periods ended September 30,
		2014 Unaudited				2013 Unaudited
Operating revenues:
Mobile voice services		Ps.	191,513,206			Ps.	199,088,447
Fixed voice services			85,023,563				84,383,517
Mobile data voice services			141,383,887				118,160,686
Fixed data services			71,076,955				63,293,075
Paid television			51,016,821				44,853,893
Sales of equipment, accessories and computers			63,772,418				58,597,644
Other services			15,170,789				13,603,427
			618,957,639				581,980,689
Operating costs and expenses:
Cost of sales and services			278,416,257				262,869,103
Commercial, administrative and general expenses			133,041,882				123,869,904
Other expenses			6,791,500				3,064,058
Depreciation and amortization			85,137,880				75,168,019
			503,387,519				464,971,084
Operating income			115,570,120				117,009,605
Interest income			9,666,717				4,155,344
Interest expense			(29,233,301	)			(21,673,700	)
Foreign currency exchange loss, net			(5,797,076	)			(9,401,442	)
Valuation of derivatives, interest cost from labor obligations and other financial items, net			(6,951,270	)			(3,307,555	)
Equity interest in net (loss) income of associated companies (Note 4)			(1,851,613	)			20,370
Profit before income tax			81,403,577				86,802,622
Income tax (Note 9)			37,293,663				29,000,163
Net profit for the period		Ps.	44,109,914			Ps.	57,802,459
Net profit for the period attributable to:
Equity holders of the parent		Ps.	42,839,347			Ps.	57,448,148
Non-controlling interests			1,270,567				354,311
		Ps.	44,109,914			Ps.	57,802,459
Basic and diluted earnings per share attributable to equity holders of the parent		Ps.	0.62			Ps.	0.78
Other comprehensive income items:
Net other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:
Effect of translation of foreign entities		Ps.	(12,837,814	)		Ps.	(20,800,457	)
Effect of fair value of derivatives, net of deferred taxes			(327,651	)			(537,013	)
Items not to be reclassified to profit or loss in subsequent periods:
Remeasurement of defined benefit plan, net of deferred taxes			(701,309	)			1,232,442
Total other comprehensive loss items for the period, net of deferred taxes			(13,866,774	)			(20,105,028	)
Total comprehensive income for the period		Ps.	30,243,140			Ps.	37,697,431
Comprehensive income for the period attributable to:
Equity holders of the parent		Ps.	28,740,795			Ps.	37,419,102
Non-controlling interests			1,502,345				278,329
		Ps.	30,243,140			Ps.	37,697,431

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income

(In thousands of Mexican pesos, except for earnings per share)

 

		For the three-month periods ended September 30,
		2014 Unaudited				2013 Unaudited
Operating revenues:
Mobile voice services		Ps.	65,703,764			Ps.	65,804,811
Fixed voice services			31,066,736				27,476,439
Mobile data voice services			52,445,744				40,511,146
Fixed data services			25,863,394				21,089,583
Paid television			17,688,735				14,978,895
Sales of equipment, accessories and computers			22,242,629				19,705,327
Other services			5,872,982				4,654,894
			220,883,984				194,221,095
Operating costs and expenses:
Cost of sales and services			97,574,897				87,446,511
Commercial, administrative and general expenses			49,262,583				42,313,292
Other expenses			4,857,277				1,143,639
Depreciation and amortization			31,550,974				25,522,596
			183,245,731				156,426,038
Operating income			37,638,253				37,795,057
Interest income			3,857,737				1,481,968
Interest expense			(10,953,496	)			(8,139,652	)
Foreign currency exchange loss, net			(8,969,850	)			(2,917,007	)
Valuation of derivatives, interest cost from labor obligations and other financial items, net			5,765,711				(1,255,817	)
Equity interest in net income of associated companies			(2,033,330	)			(642,593	)
Profit before income tax			25,305,025				26,321,956
Income tax (Note 9)			14,101,204				9,670,512
Net profit for the period		Ps.	11,203,821			Ps.	16,651,444
Net profit for the period attributable to:
Equity holders of the parent		Ps.	10,119,700			Ps.	16,384,305
Non-controlling interests			1,084,121				267,139
		Ps.	11,203,821			Ps.	16,651,444
Basic and diluted earnings per share attributable to equity holders of the parent		Ps.	0.15			Ps.	0.22
Other comprehensive income items:
Net other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods:
Effect of translation of foreign entities		Ps.	(12,329,281	)		Ps.	(2,635,595	)
Effect of fair value of derivatives, net of deferred taxes			(328,968	)			3,784
Items not to be reclassified to profit or loss in subsequent periods:
Remeasurement of defined benefit plan, net of deferred taxes			(1,478,004	)			815,621
Total other comprehensive (loss) income items for the period, net of deferred taxes			(14,136,253	)			(1,816,190	)
Total comprehensive (loss) income for the period		Ps.	(2,932,432	)		Ps.	14,835,254
Comprehensive income for the period attributable to:
Equity holders of the parent		Ps.	(3,707,771	)		Ps.	14,085,449
Non-controlling interests			775,339				749,805
		Ps.	(2,932,432	)		Ps.	14,835,254

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Equity

For the nine-month period ended September 30, 2014

(In thousands of Mexican pesos)

 

		Capital stock				Legal reserve				Retained earnings				Effect of derivative financial instruments acquired for hedging purposes, net of deferred taxes				Remeasurement of defined benefit plan, net of deferred taxes				Effect of translation of foreign entities				Total equity attributable to equity holders of the parent				Non-controlling interests				Total equity
Balance at December 31, 2013 (audited)		Ps.	96,392,339			Ps.	358,440			Ps.	196,960,472			Ps.	(1,237,332	)		Ps.	(56,367,265	)		Ps.	(33,706,043	)		Ps.	202,400,611			Ps.	7,900,466			Ps.	210,301,077
Net profit for the period											42,839,347																42,839,347				1,270,567				44,109,914
Remeasurement of defined benefit plan, net of deferred taxes																			(699,009	)							(699,009	)			(2,300	)			(701,309	)
Effect of fair value of derivative financial instruments acquired for hedging purposes, net of deferred taxes															(328,035	)											(328,035	)			384				(327,651	)
Effect of translation of foreign entities																							(13,071,508	)			(13,071,508	)			233,694				(12,837,814	)
Comprehensive income for the period											42,839,347				(328,035	)			(699,009	)			(13,071,508	)			28,740,795				1,502,345				30,243,140
Dividends declared											(16,677,120	)															(16,677,120	)							(16,677,120	)
Repurchase of shares			(7,051	)							(24,335,587	)															(24,342,638	)							(24,342,638	)
Acquisitions of none-controlling interest arising on business combination of Telekom Austria (Note 4c)															7,935				100				(279,000	)			(270,965	)			37,899,868				37,628,903
Other acquisitions of non-controlling interests											(19,234	)											6,960				(12,274	)			(135,842	)			(148,116	)
Balance at September 30, 2014 (unaudited)		Ps.	96,385,288			Ps.	358,440			Ps.	198,767,878			Ps.	(1,557,432	)		Ps.	(57,066,174	)		Ps.	(47,049,591	)		Ps.	189,838,409			Ps.	47,166,837			Ps.	237,005,246

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Equity

For the nine-month period ended September 30, 2013

(In thousands of Mexican pesos)

 

		Capital stock				Legal reserve				Retained earnings				Effect of derivative financial instruments acquired for hedging purposes, net of deferred taxes				Remeasurement of defined benefit plan, net of deferred taxes				Effect of translation of foreign entities				Total equity attributable to equity holders of the parent				Non-controlling interests				Total equity
Balance at December 31, 2012 (audited)		Ps.	96,414,841			Ps.	358,440			Ps.	210,598,355			Ps.	(496,011	)		Ps.	(54,077,454	)		Ps.	(7,220,700	)		Ps.	245,577,471			Ps.	9,270,775			Ps.	254,848,246
Net profit for the period											57,448,148																57,448,148				354,311				57,802,459
Effect of fair value of derivative financial instruments acquired for hedging purposes, net of deferred taxes															(537,373	)											(537,373	)			360				(537,013	)
Remeasurement of defined benefit plan, net of deferred taxes																			1,232,442								1,232,442								1,232,442
Effect of translation of foreign entities																							(20,724,115	)			(20,724,115	)			(76,342	)			(20,800,457	)
Comprehensive income for the period											57,448,148				(537,373	)			1,232,442				(20,724,115	)			37,419,102				278,329				37,697,431
Dividends declared											(16,256,247	)															(16,256,247	)							(16,256,247	)
Repurchase of shares			(18,773	)							(58,157,021	)															(58,175,794	)							(58,175,794	)
Other acquisitions of non-controlling interests											(236,337	)															(236,337	)			(967	)			(237,304	)
Balance at September 30, 2013 (unaudited)		Ps.	96,396,068			Ps.	358,440			Ps.	193,396,898			Ps.	(1,033,384	)		Ps.	(52,845,012	)		Ps.	(27,944,815	)		Ps.	208,328,195			Ps.	9,548,137			Ps.	217,876,332

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

(In thousands of Mexican pesos)

 

		For the nine-month period ended September 30,
		2014 Unaudited				2013 Unaudited
Operating activities
Profit before income tax		Ps.	81,403,577			Ps.	86,802,622
Items not requiring the use of cash:
Depreciation			76,797,535				69,882,311
Amortization of intangible assets			8,340,345				5,285,708
Loss on derecognition of equity method investment (Note 4a)			3,172,218
Equity interest in net loss (income) of associated companies			1,851,613				(20,370	)
Loss on sale of property, plant and equipment			114,238				8,362
Net period cost of labor obligations			5,221,709				5,464,261
Foreign currency exchange loss, net			2,263,621				4,484,207
Interest income			(9,666,717	)			(4,155,344	)
Interest expense			29,233,301				21,673,700
Employee profit sharing			3,135,686				3,410,916
Gain in valuation of derivative financial instruments, capitalized interest expense and other, net			(6,996,872	)			(7,166,639	)
Loss on partial sale of investment in associated company (Note 4a)			5,327,283				—
Working capital changes:
Accounts receivable from subscribers, distributors and other			6,466,890				(4,450,561	)
Prepaid expenses			2,092,591				3,813,670
Related parties			(858,225	)			(207,398	)
Inventories			3,325,464				(8,883,254	)
Other assets			(6,592,808	)			(831,588	)
Employee benefits			(9,481,777	)			(12,934,361	)
Accounts payable and accrued liabilities			(12,137,181	)			(7,621	)
Employee profit sharing paid			(4,412,466	)			(4,098,759	)
Financial instruments and other			2,688,249				(3,541,010	)
Deferred revenues			(28,500	)			321,685
Interest received			3,853,342				1,633,096
Income taxes paid			(24,247,756	)			(30,679,413	)
Net cash flows provided by operating activities			160,865,360				125,804,220
Investing activities
Purchase of property, plant and equipment (Note 3)			(80,173,779	)			(86,521,020	)
Proceeds from sale of plant, property and equipment			102,103				37,465
Dividends received from associates			99,953				83,165
Purchase of telecommunications licenses			(1,018,190	)			(2,915,542	)
Acquisition of business, net of cash acquired (Note 4c)			(11,075,229	)			(1,711,152	)
Proceeds from partial sale of investment in associated company (Note 4a)			12,066,037				—
Investments in associated companies (Note 4)			(3,784,676	)			(14,541,122	)
Net cash flows used in investing activities			(83,783,781	)			(105,568,206	)
Financing activities
Loans obtained			45,372,479				121,446,582
Repayment of loans			(22,185,648	)			(29,026,448	)
Interest paid			(25,375,440	)			(17,504,041	)
Repurchase of shares			(24,721,105	)			(58,331,134	)
Dividends paid			(8,232,537	)			(7,870,732	)
Derivative financial instruments			489,560				(400,178	)
Acquisitions of other non-controlling interests			(148,116	)			(237,304	)
Net cash flows (used in) provided by financing activities			(34,800,807	)			8,076,745
Net increase in cash and cash equivalents			42,280,772				28,312,759
Adjustment to cash flows due to exchange rate fluctuations			(715,871	)			(1,573,917	)
Cash and cash equivalents at beginning of the period			48,163,550				45,487,200
Cash and cash equivalents at end of the period		Ps.	89,728,451			Ps.	72,226,042
Non-cash transactions related to:
		2014				2013
Investing activities
Purchases of property, plant and equipment in accounts payable at period end		Ps.	5,096,567			Ps.	11,123,623

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

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AMÉRICA MÓVIL, S.A.B. DE C.V. AND SUBSIDIARIES

Notes to Unaudited Interim Condensed Consolidated Financial Statements

(In thousands of Mexican pesos and thousands of U.S. dollars, unless otherwise indicated)

1. Description of the business

América Móvil, S.A.B. de C.V. and subsidiaries (hereinafter, the “Company”, “América Móvil” or “AMX”) was incorporated under laws of Mexico on September 25, 2000. The Company provides telecommunications services include mobile and fixed voice services, mobile and fixed data services, internet access and paid TV, as well as other related services.

 

•

The voice services provided by the Company, both mobile and fixed, mainly include the following: airtime, local, domestic and international long-distance services, and network interconnection services.

 

•

The data services provided by the Company include the following: value added services, corporate networks, data and Internet services.

 

•

Paid TV represents basic services, as well as pay per view and additional programming and advertising services.

 

•

Related services mainly include equipment and computer sales, and revenues from advertising in telephone directories publishing and call center services.

In order to provide these services, América Móvil has the necessary licenses, permits and concessions (collectively referred to herein as “licenses”) to build, install, operate and exploit public and/or private telecommunications networks and provide miscellaneous telecommunications services (mostly mobile and fixed telephony services), as well as to operate frequency bands in the radio-electric spectrum to be able to provide fixed wireless telephony and to operate frequency bands in the radio-electric spectrum for point-to-point and point-to-multipoint microwave links. The Company holds licenses in the countries where it has a presence, and such licenses have different dates of expiration through 2046.

Certain licenses require the payment to the respective governments of a share in sales determined as a percentage of revenues from services under concession. The percentage is set as either a fixed rate or in some cases based on certain size of the infrastructure in operation.

The corporate offices of América Móvil are located in Mexico City at Lago Zurich # 245, Colonia Ampliación Granada, Miguel Hidalgo, zip code 11529.

The accompanying unaudited interim condensed consolidated financial statements were approved for their issuance by the Company’s Chief Financial Officer on March 2, 2015. Subsequent events have been considered through the same date.

Relevant events

a) On September 30, 2014, Claro Brazil (a subsidiary of the Company) was granted the use of 20MHz of spectrum nationwide in the 700MHz frequency for a 15-year period through a public auction process. The spectrum will be used in conjunction with our 4G-LTE network. Such licenses were paid and recorded in December 2014 for an amount of Ps.9,662,052.

b) In July 2014, the Company’s Board of Directors approved the implementation of various measures to reduce its national market share in the Mexican telecommunications market to under 50% in order to cease to be a “preponderant economic agent”, which are still under the analysis of the Company’s management and subject to approval of the Mexican telecommunication regulator.

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The Company’s Board of Directors also decided that all cellular sites, including towers and related passive infrastructure, are to be separated from its Mexican subsidiary of mobile services for their corresponding operation and commercialization to all interested parties. As of the date of the preparation of these financial statements, the Company is still analyzing the cellular sites, towers and related passive infrastructure that could be separated from its Mexican subsidiary of mobile services. Also the conditions required in IFRS 5 “Non-current assets held for sale and discontinued operations” have not been met for such assets to be considered as held for sale.

c) On April 23, 2014, Österreichische Industrieholding AG (“ÖIAG”) entered into a shareholders’ agreement, effective since June 27, 2014, with AMX, by which the parties have contractually undertaken to jointly pursue a long-term policy with regard to the management of Telekom Austria AG (TKA), by exercising voting rights on a concerted basis (“Syndicate Agreement”). Furthermore, the Syndicate Agreement contains rules on the uniform exercise of voting rights in the corporate bodies of TKA, nomination rights for members of the Supervisory and Management Boards and share transfer restrictions. The shareholders agreement and Public offer were subject to certain regulatory approvals. Once the conditions were satisfied, AMX obtained operational responsibilities in Telekom Austria and enhanced its role in their supervisory and Management Board resulting in power to direct relevant activities of TKA.

On May 15, 2014, AMX published a voluntary public takeover offer for all shares of TKA (“Offer”). On July 17, 2014, at the end of the Offer period, AMX held in total 50.81% of the share capital of TKA, while ÖIAG continued to hold 28.42%. The Syndicate Agreement currently covers 351.0 million shares of TKA, which equates to a shareholding of 79.23%.

See further disclosures related to the acquisition of Telekom Austria in Note 4c. and subsequent events in Note 13.

 

2.	Basis of Preparation of the Unaudited Interim Condensed Consolidated Financial Statements and Changes in Significant Accounting Policies and Practices

a) Basis of preparation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with the International Accounting Standard No. 34, Interim Financial Reporting (“IAS 34”), and using the same accounting policies applied in preparing the annual financial statements, except as explained below.

The unaudited interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Company’s audited annual consolidated financial statements as of December 31, 2012 and 2013, and for the three year period ended December 31, 2013 as included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2013 (the “2013 Form 20-F”).

The preparation of these unaudited interim condensed consolidated financial statements in accordance with IAS 34 requires the use of critical estimates and assumptions that affect the amounts reported for certain assets and liabilities, as well as certain income and expenses. It also requires that management exercise judgment in the application of the Company’s accounting policies.

The Mexican peso is the functional and reporting currency of the Company in Mexico and the ones used in these unaudited interim condensed consolidated financial statements.

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b) New standards, interpretations and amendments thereof

The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Company’s annual consolidated financial statements for the year ended December 31, 2013, except for the standards/interpretations which became effective on January 1, 2014. The nature and the impact of each new standard/amendment are described below.

 

•

The Company has concluded that the IAS 32, Offsetting Financial Assets and Financial Liabilities – Amendments to IAS 32 did not have an impact in its unaudited interim condensed consolidated financial statements.

 

•

The Company adopted the IFRIC Interpretation 21, Levies (IFRIC 21) did not have an impact in its unaudited interim condensed consolidated financial statements.

 

•

The Company has concluded that the IAS 39 Novation of Derivatives and Continuation of Hedge Accounting – Amendments to IAS 39 did not have an impact in its unaudited interim condensed consolidated financial statements.

 

•

The Company adopted the IAS 36 Recoverable Amount Disclosures for Non-Financial Assets – Amendments to IAS 36 did not have an impact in its unaudited interim condensed consolidated financial statements.

 

•

The Company has concluded that the IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets did not have an impact in its unaudited interim condensed consolidated financial statements.

 

•

The Company adopted the IAS 24 Related Parties Disclosures did not have an impact in its unaudited interim condensed consolidated financial statements.

 

•

The Company has concluded that the Annual Improvements to IFRSs – 2010-2012 Cycle and 2011-2013 Cycle did not have an impact in its unaudited interim condensed consolidated financial statements.

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become effective.

IFRS 9, Financial Instruments

IFRS 9, as issued, reflects the first phase of the IASB’s work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after January 1, 2013, but Amendments to IFRS 9 Mandatory Effective Date of IFRS 9 and Transition Disclosures, issued in December 2011, moved the mandatory effective date to January 1, 2015. In subsequent phases, the IASB is addressing hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the Classification and measurement of the Company’s financial assets, but will not have an impact on classification and measurements of the Company’s financial liabilities. The Company is in the process of analyzing the effect that the other phases of final standard will have on its consolidated financial statements.

IFRS 15, Revenue from Contracts with Customers

In May, 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, a new revenue recognition standard that will supersede virtually all revenue recognition guidance existing in IAS 18 Revenue. The new standard provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to their customers. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. This standard is effective for periods beginning on January 1,

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2017, with retrospective application. Two methods are available for entities to choose from (i) a full retrospective approach or (ii) a modified retrospective approach. Public companies that choose to adopt on a full retrospective basis will need to apply the standard to amounts they report for 2015 and 2016 on the face of their 2017 financial statements. Under the modified retrospective approach, in the year of adoption, entities will be required to disclose the amount that each financial statement line item was affected by as a result of applying the new standard and an explanation of significant changes. Under the modified retrospective approach, entities are not required to restate prior periods.

The Company is in the process of evaluating the impact that this new standard will have in its consolidated financial statements and its disclosures as well as the method that it will use for retrospective application.

IFRS 8 Operating Segments

The amendments are applied retrospectively and clarifies that:

 

i)

An entity must disclose the judgments made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’

The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker (CODM), similar to the required disclosure for segment liabilities. This disclosure has not been included as the CODM does not review this reconciliation as part of financial information.

The Company adopted this new standard and has made the disclosures related to the aggregation of segments in the disclosures included in Note 12.

c) Reclassification

During 2014, the Company separated revenue from the sales of equipment, accessories and computer and revenue from other services as follow:

 

		For the nine-month periods ended September 30, 2013
		As previously reported				Reclassification				As reclassified
Unaudited condensed consolidated statement of Comprehensive Income nine months:
Equipment, accessories, computer sale and other services		Ps.	72,201,071			Ps.	(72,201,071	)		Ps.	—
Sales of equipment, accessories and Computer			—				58,597,644				58,597,644
Other services			—				13,603,427				13,603,427
		Ps.	72,201,071			Ps.	—			Ps.	72,201,071

 

		For the three-month periods ended September 30, 2013
		As previously reported				Reclassification				As reclassified
Unaudited condensed consolidated statement of Comprehensive Income three months:
Equipment, accessories, computer sale and other services		Ps.	24,360,221			Ps.	(24,360,221	)		Ps.	—
Sales of equipment, accessories and Computer			—				19,705,327				19,705,327
Other services			—				4,654,894				4,654,894
		Ps.	24,360,221			Ps.	—			Ps.	24,360,221

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3. Property, plant and equipment

During the nine-month periods ended September 30, 2014 and 2013, the Company made cash payments as an investment in plant and equipment in order to increase and update its transmission network and other mobile and fixed assets for an amount of Ps.80,173,779 and Ps.86,521,020, respectively.

4. Investments in Associates and Business Combinations

a) Changes in the balance in associates

The balance of the Company’s investments in associates primarily represents the Company’s European investment (Koninklijke KPN N.V.“KPN”). During the nine months ended September 30, 2014, the carrying value of the Company’s investments in associates decreased by Ps. 40,721,272 billion. This net decrease was a result of:

 

•

The sale of certain shares of KPN during the period. The Company received proceeds for the sale of Ps. 12,066,037, and then derecognized a total of Ps. 17,393,320 (measured using the average cost basis), resulting in a loss on the sale of the shares of Ps. 5,327,283 which was recorded in Valuation of derivatives, interest cost from labor obligation and other financial items, net in the accompanying unaudited condensed statement of comprehensive income.

 

•

The equity method in earnings on investments in associates, and the changes in the carrying value of the Company’s investments in associates attributable to the translation of foreign currencies for the nine month period was a loss of Ps. 4.8 billion.

 

•

The derecognition of the investment in the associate TKA of Ps 18.5 billion upon consolidation of this associate in July 2014. As part of the derecognition of its previous equity investment on TKA, the Company recognized a loss of Ps. 3.1 billion in its unaudited condensed statements of comprehensive income.

b) Fair Value of Publicly traded investment

As September 30, 2014, the Company owns 912,989,841 shares of KPN, which represents 21.4% of the outstanding shares. The carrying value of the investment in KPN is Ps.45.6 billion. KPN’s shares are traded in the Amsterdam Stock Exchange, and the closing price for such shares was €2.5 per share at September 30, 2014, equating to a Level 1 fair value of the Company’s investment in KPN of Ps.39.4 billion at September 30, 2014 exchange rates; accordingly, the carrying value of the investment is Ps. 6.2 billion higher than its Level 1 fair value. However, at March 2, 2015 the closing price for KPN traded in the Amsterdam Stock Exchange is €3.073 per share, equating to a Level 1 fair value of the Company’s investment in KPN of Ps.46.8 million, an amount in excess of its carrying value.

c) Business Combination

On July 10, 2014, the Company through share acquisition and a Shareholders’ Agreement obtained control of the telecommunications company Telekom Austria AG, acquiring an additional 22.9% of the outstanding shares to reach share ownership of 50.8%. The main goal for the Company was the further development of Telekom Austria. This acquisition was valuated at its fair value at the purchase date. The total purchase price was Ps. 13,256,128. As the transaction related costs are deemed to be immaterial were expensed by the Company as incurred and recorded as a part of “other expenses” in the accompanying unaudited interim consolidated statements of comprehensive income. TKA was included in operating results from July 1, 2014.

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The preliminary allocation of the purchase price was based upon a preliminary valuation and the Company’s estimates and assumptions are subject to change within the purchase price allocation period (generally one year form the acquisition date). The primary areas of the purchase price allocation that are not yet finalized related to other currents assets, licenses and right of use, trademarks Property and equipment an long term debt.

The Company’s preliminary fair values of the net identifiable assets and liabilities as at the date of the transaction is as follows:

 

Cash and cash equivalents		Ps.	2,180,899
Trade receivables			12,023,422
Other current assets			4,745,510
Property and equipment			79,168,329
Licenses and rights of use			27,504,303
Trademarks			12,535,127
Other non current assets			11,939,628
Total assets acquired			150,097,218

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Liabilities and account payable short-term			33,930,605
Liabilities and account payable long-term			18,557,245
Deferred tax liability			13,946,782
Long term debt			55,038,155
Total liabilities assumed			121,472,787

 

Total identified net assets at fair value			28,624,431
Non-controlling interest measured at fair value (49.2% of net assets)			(37,899,868	)
Goodwill arising on acquisition			37,913,072
Fair value of the investment in Telekom Austria at the acquisition date		Ps.	28,637,635

 

Consideration transferred:
Fair value of the prior investment		Ps.	15,381,507
Cash paid			13,256,128
Total consideration transferred		Ps.	28,637,635

 

		Cash-flow on acquisition at September 30, 2014
Cash paid		Ps.	(13,256,128	)
Cash acquired with the subsidiary			2,180,899
Net cash flow on acquisition		Ps.	(11,075,229	)

Goodwill acquired:

 

		Goodwill
Controlling interest		Ps.	19,263,632
Non-controlling interest			18,649,440
Total		Ps.	37,913,072

The fair value of the trade receivables amounts to Ps. 12,023,422 However, none of the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.

The preliminary goodwill of Ps. 37,913,072 comprises the value of expected synergies arising from the acquisition. Goodwill is allocated entirely to the European segment. None of the goodwill recognized is expected to be deductible for income tax purposes.

d) Unaudited pro forma financial data

The following unaudited pro forma consolidated financial data for the periods ended September 30, 2014 and 2013 has not been audited and is based on the unaudited historical financial statements of the Company adjusted to give effect to (i) the acquisition of Telekom Austria; and (ii) certain accounting adjustments of the assets and liabilities of the acquired company.

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The pro forma results of operations assume that the acquisition was completed at the beginning of the acquisition year and are based on the information available and some assumptions that the management believes are reasonable. The pro forma financial data not intended to indicate what the operations of the Company had been if the operations were occur at that date, or predict the results of the operations of the Company.

 

		Unaudited pro forma consolidated financial data for the nine month period ended on September 30, 2014
Operating revenues		Ps.	654,527,629
Income before income taxes			82,924,875
Net income			43,570,284

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5. Debt

The Company’s short-and long-term debt consists of the following:

 

				At September 30, 2014
Currency		Loan		Interest rate		Maturity From 2014 to		Total
U.S. dollars
		Fixed-rate Senior notes (i)		2.375% - 7.5%		2042		Ps.	192,149,425
		Floating rates Senior notes (i)		L + 1.0%		2016			10,090,575
		Financial Leases		3.75%		2015			129,652
		Lines of credit (iii)		4.00% - 7.70% and L + 2.10%		2023			13,487,343
		Subtotal U.S. dollars							215,856,995
Mexican pesos
		Fixed-rate Senior notes (i)		6.00% - 9.00%		2037			78,132,058
		Floating rate Senior notes (i)		TIIE + 0.40% - 1.50%		2016			15,600,000
		Lines of credit (iii)		TIIE + 0.05% - 1.00%		2015			311,048
		Subtotal Mexican pesos							94,043,106
Euros
		Lines of credit (iii)		3.10% - 5.41% and Eurolibor + 0.78% - 0.92%		2020			13,449,913
		Fixed-rate Senior notes (i)		13.0% - 6.375%		2073			163,141,188
		Subtotal Euros							176,591,101
Sterling Pounds
		Fixed-rate Senior notes (i)		4.375% - 6.375%		2073			59,986,114
		Subtotal Sterling pounds							59,986,114
Swiss francs
		Fixed-rate Senior notes (i)		1.125% - 2.25%		2018			14,790,917
		Subtotal Swiss francs							14,790,917
Reals
		Lines of credit (iii)		3.0% - 6.00%		2018			4,030,981
		Subtotal Brazilian reais							4,030,981
Colombian pesos
		Fixed-rate Senior notes (i)		7.59%		2016			2,984,671
		Subtotal Colombian pesos							2,984,671
Other currencies
		Fixed-rate Senior notes (i)		1.23% - 3.96%		2039			7,972,131
		Financial Leases		5.05% - 8.97%		2027			366,774
		Subtotal other currencies							8,338,905
		Total debt						Ps.	576,622,790
		Less: Short-term debt and current portion of long-term debt							51,096,833
		Long-term debt						Ps.	525,525,957

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				At December 31, 2013
Currency		Loan		Interest rate		Maturity From 2014 to		Total
U.S. dollars
		ECA credits (fixed rate)		2.52%		2017		Ps.	973,269
		ECA credits (floating rate)		L + 0.35% y L + 0.75%		2018			3,602,208
		Fixed-rate Senior notes (i)		2.375% - 7.50%		2042			197,427,022
		Floating rate Senior notes (i)		L + 1.0%		2016			9,807,375
		Financial Leases		3.75%		2015			217,525
		Lines of credit (iii)		7.25% - 7.75%		2023			2,183,776
		Subtotal U.S. dollars							214,211,175
Mexican pesos
		Fixed-rate Senior notes (i)		6.45% - 9.00%		2037			61,732,805
		Floating rate Senior notes (i)		TIIE + 0.40% - 1.50%		2016			15,600,000
		Subtotal Mexican pesos							77,332,805
Euros
		Fixed-rate Senior notes (i)		3.0% - 6.375%		2073			106,927,652
		Subtotal Euros							106,927,652
Sterling pounds
		Fixed-rate Senior notes (i)		4.375% - 6.375%		2073			59,539,593
		Subtotal Sterling pounds							59,539,593
Swiss francs
		Fixed-rate Senior notes (i)		1.125% - 2.25%		2018			15,377,226
		Subtotal Swiss francs							15,377,226
Reals
		Lines of credit		3.0% y 4.50%		2018			2,842,941
		Subtotal Brazilian reais							2,842,941
Colombian pesos
		Fixed-rate Senior notes (i)		7.59%		2016			3,053,941
		Subtotal Colombian pesos							3,053,941
Other currencies
		Fixed-rate Senior notes (i)		1.23% - 3.96%		2039			10,493,312
		Financial Leases		5.05% - 8.97%		2027			473,117
		Lines of credit (iii)		19.00%		2014			68,082
		Subtotal other currencies							11,034,511
		Total debt							490,319,844
		Less: Short-term debt and current portion of long-term debt							25,841,478
		Long-term debt						Ps.	464,478,366

L = LIBOR o London Interbank Offer Rate

TIIE = Tasa de Interés Interbancaria de Equilibrio

ECA = Export Credit Agreement

Euribor = Euro Interbank Offered Rate

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Except for the fixed-rate notes, interest rates on the Company’s debt are subject to variances in international and local rates. The Company’s weighted average cost of borrowed funds at September 30, 2014 and December 31, 2013 was approximately 4.7% and 4.8%, respectively.

Such rates do not include commissions or the reimbursements for Mexican tax withholdings (typically a tax rate of 4.9%) that the Company must make to international lenders. In general, fees on financing transactions add ten basis points to financing costs.

An analysis of the Company’s short-term debt as of September 30, 2014 and December 31, 2013, is as follows:

 

		2014				2013
Domestic Senior Notes		Ps.	13,600,000			Ps.	9,000,000
International Bonds			33,280,188				13,576,670
Lines of credit used			1,955,184				617,295
Leases			129,652
Subtotal short-term debt		Ps.	48,965,024			Ps.	23,193,965
Weighted average interest rate			4.3	%			5.0	%

An analysis of the Company’s long-term debt maturities is as follows:

 

Year		Amount
2015		Ps.	14,166,209
2016			67,535,061
2017			40,761,315
2018			34,922,138
2019			43,235,107
2020 and thereafter			324,906,127
Total		Ps.	525,525,957

(i) Senior Notes

The outstanding Senior Notes at September 30, 2014 and December 31, 2013 are as follows:

 

Currency*		2014				2013
U.S. dollars		$	202,240,000			$	207,234,397
Mexican pesos			97,732,058				77,332,805
Euro			163,141,188	(*)			106,927,652
Sterling pounds			59,986,114				59,539,593
Swiss francs			14,790,917				15,377,226
Japanese yen			3,067,510				3,104,287
Chinese yuan			2,191,436				2,159,870
Colombian pesos			2,984,671				3,053,941
Chilean pesos			2,713,185				5,229,155

 

*	Thousands of Mexican pesos

(*)	Includes Ps. 51,831,315 of Telekom Austria in 2014.

During the second quarter of 2014, América Móvil issued notes for Euro 600,000 due 2018 with a coupon of 1%. Likewise, the Company has issued two new notes under the program of peso-denominated notes for Ps.10,000,000 due 2019 with a coupon of 6% and for Ps.7,500,000 due 2024 with a coupon of 7.125%. The notes are registered with both the U.S. Securities and Exchange Commission and the Mexican Banking and Securities Commission (“CNBV”).

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(ii) Domestic Notes

At September 30, 2014 and December 31, 2013, debt under domestic bonds aggregates to Ps.36,360,359 and Ps.37,461,105, respectively. Some bear interest at fixed rates and others at variable rates based on TIIE (a Mexican interbank rate).

(iii) Lines of Credit

At September 30, 2014 and December 31, 2013, debt under Lines of Credit aggregates to Ps.31,279,285 (including Ps. 13,449,913 of Telekom Austria) and Ps.5,094,799, respectively.

Likewise, the Company has two revolving syndicated facilities – one for U.S.$2,000,000 and one for the Euro equivalent of U.S.$2,000,000 currently unwilling. The Euro equivalent revolving syndicated facility was amended in July 2013 to increase the amount available to U.S.$2,100,000. Loans under the facility bear interest at variable rates based on LIBOR and EURIBOR.

Restrictions (TELMEX):

A portion of the debt is subject to certain restrictions with respect to maintaining certain financial ratios, as well as restrictions on selling a significant portion of groups of assets, among others. At September 30, 2014, the Company was in compliance with all these requirements.

A portion of the debt is also subject to early maturity or repurchase at the option of the holders in the event of a change in control of the Company, as so defined in each instrument. The definition of change in control varies from instrument to instrument; however, no change in control shall be considered to have occurred as long as Carso Global Telecom or its current shareholders continue to hold the majority of the Company’s voting shares.

Covenants

In conformity with the credit agreements, the Company is obligated to comply with certain financial and operating commitments. Such covenants limit in certain cases, the ability of the Company or the guarantor to: pledge assets, carry out certain types of mergers, sell all or substantially all of its assets, and sell control over Telcel.

Such covenants do not restrict the ability of AMX’s subsidiaries to pay dividends or other payment distributions to AMX. The more restrictive financial covenants require the Company to maintain a consolidated ratio of debt to EBITDA (earnings before interest, tax, depreciation and amortization) that do not exceed 4 to 1, and a consolidated ratio of EBITDA to interest paid that is not below 2.5 to 1 (in accordance with the clauses included in the credit agreements). Telmex Internacional is subject to financial covenants of maintaining a ratio of debt to EBITDA that does not exceed 3.5 a 1, and a consolidated ratio of EBITDA to interest paid that is not below 3 to 1 (in accordance with the clauses included in the credit agreements).

Several of the financing instruments of the Company are subject to early extinguishment or re-purchase, at the option of the debt holder in the case that a change in control occurs.

At September 30, 2014 and December 31, 2013, the Company complied with all the conditions established in the Company’s debt agreements.

At September 30, 2014, approximately 40% of America Movil’s total outstanding consolidated debt is guaranteed by Telcel.

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6. Related Parties

a) The following is an analysis of the balances with related parties at September 30, 2014 and December 31, 2013. All of the companies are considered as associates or affiliates of América Móvil since the Company or the Company’s principal shareholders are also direct or indirect shareholders in the related parties.

 

		2014				2013
Accounts receivable:
Sanborn Hermanos, S.A.		Ps.	62,227			Ps.	235,075
Sears Roebuck de México, S.A. de C.V.			165,379				353,724
AT&T Corp. (AT&T)			—				80,438
Patrimonial Inbursa, S.A.			241,655				245,318
Other			572,394				431,837
Total		Ps.	1,041,655			Ps.	1,346,392
Accounts payable:
Fianzas Guardiana Inbursa, S.A. de C.V.		Ps.	148,057			Ps.	212,765
Operadora Cicsa, S.A. de C.V.			372,868				280,374
PC Industrial, S.A. de C.V.			57,684				176,095
Microm, S.A. de C.V.			18,985				77,690
Grupo Financiero Inbursa, S.A.B. de C.V.			35,135				36,366
Conductores Mexicanos Eléctricos y de Telecomunicaciones, S.A. de C.V.			108,405				52,268
Acer Computec México, S.A. de C.V.			10,205				32,214
Sinergia Soluciones Integrales de Energia, S.A. de C.V.			19,404				35,826
Eidon Software, S.A. de C.V.			7,574				25,461
AT&T			—				1,039,043
Other			611,058				584,235
Total		Ps.	1,389,375			Ps.	2,552,337

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b) For the nine-month periods ended September 30, 2014 and 2013, the Company conducted the following transactions with related parties:

 

		2014				2013
Revenues:
Sale of long-distance services and other telecommunications services		Ps.	227,151			Ps.	361,771
Sale of materials and other services			349,986				258,123
Call termination revenues and other			200,393				316,727
Others			216				3,177
		Ps.	777,746			Ps.	939,798
		2014				2013
Investments and expenses:
Construction services, purchases of materials, inventories and property, plant and equipment		Ps.	3,588,426			Ps.	3,150,130
Insurance premiums, fees paid for administrative and operating services, brokerage services and others			1,421,412				1,574,452
Interconnection cost			6,121,450				11,325,991
Other services			739,305				873,024
		Ps.	11,870,593			Ps.	16,923,597

On June 27, 2014, Inmobiliaria Carso, S.A. de C.V. and Control Empresarial de Capitales, S.A. de C.V. acquired the share that AT&T had of the Company’s stock. Therefore, since such date AT&T is no longer considered a related party and is thus not included in the September 30, 2014 related party disclosures with respect to the analysis of the balances with related parties. AT&T is included as a related party the September 30, 2013 disclosures above and in 2014 up to the period ended June 27, 2014.

c) For the three-month periods ended September 30, 2014 and 2013, the Company conducted the following transactions with related parties:

 

		2014				2013
Revenues:
Sale of long-distance services and other telecommunications services		Ps.	74,853			Ps.	154,138
Sale of materials and other services			117,753				131,513
Call termination revenues and other			3,973				64,429
Others			75				364
		Ps.	196,654			Ps.	350,444

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		2014				2013
Investments and expenses:
Construction services, purchases of materials, inventories and property, plant and equipment		Ps.	1,472,414			Ps.	1,025,731
Insurance premiums, fees paid for administrative and operating services, brokerage services and others			559,243				708,529
Interconnection cost			120,557				3,120,786
Other services			445,055				337,492
		Ps.	2,597,269			Ps.	5,192,538

7. Contingencies

Included in Note 17 on pages F-72 to F-84 of the Company’s 2013 Form 20-F is a disclosure of the material contingencies outstanding as of December 31, 2013.

8. Equity

a) At September 30, 2014 and December 31, 2013, the Company’s capital stock was represented by 68,787,850,000 (23,384,632,660 series “AA” shares, 648,990,662 series “A” shares and 44,754,226,678 registered “L” shares) and 70,475,000,000 (23,424,632,660 series “AA” shares, 680,805,804 series “A” shares and 46,369,561,536 registered “L” shares), respectively.

b) The capital stock of the Company consists of a minimum fixed portion of Ps.397,873 (nominal amount), represented by a total of 95,489,724,196 shares (including treasury shares available for re-subscription in accordance with the provisions of the Mexican Securities Law), of which (i) 23,424,632,660 are common series “AA” shares; (ii) 776,818,130 are common series “A” shares; and (iii) 71,288,273,406 are series “L” shares, all of them fully subscribed and paid.

c) At September 30, 2014 and December 31, 2013, the Company’s treasury shares included shares for re-subscription, in accordance with the provisions of the Mexican Securities Law, in the amount of 26,701,874,196 shares (26,701,219,883 series “L” shares and 654,313 series “A” shares) and 25,014,724,196 (25,007,472,235 series “L” shares and 7,251,961 series “A” shares), respectively.

d) The holders of Series “AA” and Series “A” shares are entitled to full voting rights. The holders of series “L” shares may only vote in certain circumstances, and they are only entitled to appoint two members of the Board of Directors and their respective alternates. The matters in which the shareholders who are entitled to vote are the following: extension of the term of the Company, early dissolution of the Company, change of corporate purpose of the Company, change of nationality of the Company, transformation of the Company, a merger with another company, as well as the cancellation of the registration of the shares issued by the Company in the National Securities Registry (Registro Nacional de Valores) and any other foreign stock exchanges where they may be registered, except for quotation systems or other markets not organized as stock exchanges. Within their respective series, all shares confer the same rights to their holders. The Company’s bylaws contain restrictions and limitations related to the subscription and acquisition of Series “AA” shares by non-Mexican investors.

e) In accordance with the bylaws of the Company, series “AA” shares must at all times represent no less than 20% and no more than 51% of the Company’s capital stock, and they also must represent at all times no less than 51% of the common shares (entitled to full voting rights, represented by Series “AA” and Series “A” shares) representing said capital stock.

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Series “AA” shares may only be subscribed to or acquired by Mexican investors, Mexican corporations and/or trusts expressly empowered for such purposes in accordance with the applicable legislation in force. Common series “A” shares, which may be freely subscribed, may not represent more than 19.6% of capital stock and may not exceed 49% of the common shares representing such capital. Common shares (entitled to full voting rights, represented by Series “AA” and Series “A” shares) may represent no more than 51% of the Company’s capital stock.

Lastly, the combined number of series “L” shares, which have limited voting rights and may be freely subscribed, and series “A” shares may not exceed 80% of the Company’s capital stock. For purposes of determining these restrictions, the percentages mentioned above refer only to the number of the Company’s shares outstanding.

Dividends

f) On April 28, 2014, the Company’s shareholders approved:

i) the payment of a cash dividend from the consolidated net profit tax account (cuenta de utilidad fiscal neta consolidada), of Ps.0.24 (twenty-four peso cents), payable in two installments, for each shares of its capital stock series “AA”, “A” and “L” outstanding as of the date of the dividend payment, subject to adjustments arising from other corporate events (including repurchase or placement of its own shares) that may vary the number of shares outstanding as of the date of said dividend payment; and

g) On April 22, 2013, the Company’s shareholders approved, among others resolution, the (i) payment of a cash dividend of $0.22 pesos per share to each of the shares of its capital stock series “AA”, “A” and “L”. The amount of the cash dividend declared was paid in two exhibitions of $0.11 pesos, on July 19^th, and November 15, 2013, respectively.

Undated Subordinated Fixed Rate Bond

On January 24, 2013, Telekom Austria issued a Undated Subordinated Fixed Rate Bond with a face value of $ 600 million euros, which is subordinated with indefinite maturity which is, based on its conditions, classified as stockholders equity according to IFRS.

The bond pays an annual coupon of 5.625%. The company has the right (call), to redeem the bond on February 1, 2018. Telekom Austria has an early termination right under certain conditions. After that period (2018), the bond establishes conditions and increases the coupon rate every five years. After analyzing the conditions of the issue, Telekom Austria recognized the cash received with a credit to equity in the consolidated statement of financial position and valued the instrument in equity, since it considers that it did not meet the criteria for classification as financial liability, not because it does not represent an obligation to pay.

The Company recognized this bond as an item of equity (non-controlling interest), following the same recognition criteria as Telekom Austria. At the date of issuance of these interim financial statements, the Company is currently in negotiations with the financial institutions involved to achieve the necessary modification of the terms of this bond to allow it to meet the criteria for classification as a financial liability.

9. Income Tax

An analysis of income tax expense charged to results of operations for the nine-month periods ended September 30, 2014 and 2013 is as follows:

 

		2014				2013
Current period income tax		Ps.	39,767,701			Ps.	37,008,056
Deferred income tax			(2,474,038	)			(8,007,893	)
Total		Ps.	37,293,663			Ps.	29,000,163

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Other comprehensive Income

 

		2014				2013
Deferred tax related to items recognized in OCI during the year
Effect of fair value of derivatives		Ps.	6,260			Ps.	6,542
Remeasurement of defined benefit plan			(280,309	)
Deferred tax charged to OCI		Ps.	(274,049	)		Ps.	6,542

An analysis of income tax expense the consolidated statements of comprehensive income for the three-month periods ended September 30, 2014 and 2013 is as follows:

 

		2014				2013
Current period income tax		Ps.	14,730,489			Ps.	12,312,003
Deferred income tax			(629,285	)			(2,641,491	)
Total		Ps.	14,101,204			Ps.	9,670,512

Other comprehensive Income

 

		2014				2013
Deferred tax related to items recognized in OCI during the year
Effect of fair value of derivatives		Ps.	8,154			Ps.	(4,492	)
Remeasurement of defined benefit plan			(280,309	)
Deferred tax charged to OCI		Ps.	(272,155	)		Ps.	(4,492	)

The Company’s effective tax rate was 45.8% and 33.4% for the nine months ended September 30, 2014 and 2013, respectively. Significant differences between the effective tax rate and the statutory tax rate for such interim periods relates to the loss on derecognition of equity method investment in equity investment and the loss on sale of shares of KPN during the period as these items are not tax deductible.

The Company’s effective tax rate was 55.7% and 36.7% for the three months ended September 30, 2014 and 2013, respectively, primarily due to the expiration of tax credits and other non-deductible expenses.

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10. Components of other comprehensive loss

An analysis of the changes in the components of the other comprehensive loss for the nine-month periods ended September 30, 2014 and 2013 is as follows:

 

		2014				2013
Valuation of the derivative financial instruments acquired for hedging purposes, net of deferred tax		Ps.	(327,651	)		Ps.	(537,013	)
Translation effect of foreign entities			(12,837,814	)			(20,800,457	)
Remeasurement of defined benefit plans, net of income tax effect			(701,309	)			1,232,442
Total other comprehensive loss items for the period, net of deferred taxes		Ps.	(13,866,774	)		Ps.	(20,105,028	)

11. Financial Assets and Liabilities

Set out below is the categorization of the financial instruments, other than cash and cash equivalents, held by AMX as of September 30, 2014 and December 31, 2013:

 

		September 30, 2014
		Loans and receivables				Fair value through profit or loss				Fair value through OCI
Financial Assets:
Accounts receivable from subscribers, distributors, and other, net		Ps.	114,206,109			Ps.	—			Ps.	—
Related parties			1,041,655				—				—
Derivative financial instruments			—				16,796,723				—
Total		Ps.	115,247,764			Ps.	16,796,723			Ps.	—
Financial Liabilities:
Debt		Ps.	576,622,790			Ps.	—			Ps.	—
Accounts payable			160,861,188				—				—
Related parties			1,389,375				—				—
Derivative financial instruments			—				9,831,187				166,210
Total		Ps.	738,873,353			Ps.	9,831,187			Ps.	166,210

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		December 31, 2013
		Loans and receivables				Fair value through profit or loss				Fair value through OCI
Financial Assets:
Accounts receivable from subscribers, distributors, and other, net		Ps.	96,756,472			Ps.	—			Ps.	—
Related parties			1,346,392				—				—
Derivative financial instruments							10,469,316				—
Total		Ps.	98,102,864			Ps.	10,469,316			Ps.	—
Financial Liabilities:
Debt		Ps.	490,319,844			Ps.	—			Ps.	—
Accounts payable			154,137,312				—				—
Related parties			2,552,337				—				—
Derivative financial instruments			—				5,179,024				187,299
Total		Ps.	647,009,493			Ps.	5,179,024			Ps.	187,299

Fair value hierarchy

The Company’s valuation techniques used to determine and disclose the fair value of its financial instruments are based on the following hierarchy:

 

Level 1:		Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2:		Variables other than quoted prices in Level 1 that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices); and
Level 3:		Variables used for the asset or liability that are not based on any observable market data (non-observable variables).

The fair value for the financial assets (excluding cash and cash equivalents) and financial liabilities shown in the consolidated statement of financial position at September 30, 2014 and December 31, 2013 is as follows:

 

		Measurement of fair value at September 30, 2014
		Level 1				Level 2				Level 3				Total
Assets:
Derivative financial instruments			—			Ps.	16,796,723							Ps.	16,796,723
Pension plan assets		Ps.	246,322,399								—				246,322,399
Total		Ps.	246,322,399			Ps.	16,796,723			Ps.	—			Ps.	263,119,122
Liabilities:
Debt		Ps.	390,951,256			Ps.	212,511,258			Ps.	—			Ps.	603,462,514
Derivative financial instruments							9,997,397								9,997,397
Total		Ps.	390,951,256			Ps.	222,508,655			Ps.	—			Ps.	613,459,911

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		Measurement of fair value at December 31, 2013
		Level 1				Level 2				Level 3				Total
Assets:
Derivative financial instruments		Ps.	—			Ps.	10,469,316			Ps.	—			Ps.	10,469,316
Pension plan assets			230,393,171				—				—				230,393,171
Total		Ps.	230,393,171			Ps.	10,469,316			Ps.	—			Ps.	240,862,487
Liabilities:
Debt		Ps.	319,838,222			Ps.	200,011,820			Ps.	—			Ps.	519,850,042
Derivative financial instruments			—				5,366,323				—				5,366,323
Total		Ps.	319,838,222			Ps.	205,378,143				—			Ps.	525,216,365

The carrying amount of accounts receivable, accounts payable and related parties approximate their fair value.

Fair value of derivative financial instruments are valued using valuation techniques with market observable inputs. To determine its Level 2 fair value, the Company applies valuation techniques including forward pricing and swaps models, using present value calculations. The models incorporate various inputs including credit quality of counterparties, foreign exchange spot and forward rates and interest rate curves. Fair value of debt Level 2 has been determined using a model based on present value calculation incorporating credit quality of AMX.

For the nine-month period ended September 30, 2014 and the year ended December 31, 2013, no transfers were made between Level 1 and Level 2 fair value measurement hierarchies.

12. Segments

América Móvil operates in different countries. The Company has operations in Mexico, Guatemala, Nicaragua, Ecuador, El Salvador, Costa Rica, Brazil, Argentina, Colombia, United States, Honduras, Chile, Peru, Paraguay, Uruguay, Dominican Republic, Puerto Rico, Panama, Austria, Bulgaria, Croatia, Belarus, Liechtenstein, Slovenia, Macedonia and Serbia.

The CEO, who is the Chief Operating Decision Maker (“CODM”), analyzes the financial and operating information by geographical segment, except for Mexico, which shows América Móvil (Corporate and Telcel) and Telmex as two segments. All significant operating segments that (i) represent more than 10% of consolidated revenues, (ii) more than the absolute amount of its reported 10% of profits or loss or (iii) more than 10% of consolidated assets, are presented separately.

The Company has aggregated operating segments into the following reporting segments for the purposes of its consolidated financial statements: (i) Mexico (includes Telcel and Corporate operations and Assets), Telmex, Brazil, Southern Cone (includes Argentina Chile, Paraguay and Uruguay), Colombia, Andean (includes Ecuador and Perú), Central- América (includes Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama), U.S.A. (excludes Puerto Rico), Caribbean (includes Dominican Republic and Puerto Rico), and Europe (includes Austria, Bulgaria, Croatia, Belarus, Liechtenstein Slovenia, Macedonia and Serbia).

The Company is of the view that the quantitative and qualitative aspects of the aggregated operating segments are similar in nature for all periods presented. In evaluating the appropriateness of aggregating operating segments, the key indicators considered included but were not limited to: (i) all entities provide telecommunications services, (ii) similarities of customer base, services, (iii) the methods to distribute services are the same, based on telephone plant in both cases, wireless and fixed lines, (iv) similarities of governments and regulatory entities that oversee the activities and services that telecom companies, (v) inflation trends and, (vi) currency trends.

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		México (1)				Telmex				Brazil				Southern Cone (2)				Colombia				Andean (3)				Central- América (4)				U.S.A. (5)				Caribbean (6)				Europe (7)				Eliminations				Total consolidated
For nine-month period ended September 30, 2014:
Operating revenues		Ps.	144,224,964			Ps.	79,981,771			Ps.	153,271,904			Ps.	41,298,532			Ps.	56,524,740			Ps.	35,156,298			Ps.	19,589,491			Ps.	66,829,650			Ps.	19,075,281			Ps.	19,125,635			Ps.	(16,120,627	)		Ps.	618,957,639
Depreciation and amortization			12,445,105				11,708,787				30,961,033				4,952,267				7,174,681				4,033,585				6,264,782				335,742				3,642,942				3,631,778				(12,822	)			85,137,880
Operating income (loss)			52,808,430				16,323,255				9,404,824				4,686,679				13,889,312				9,402,453				(296,388	)			2,592,418				3,405,812				3,288,644				64,681				115,570,120
Interest income			10,754,759				218,936				3,990,486				2,137,724				532,153				831,758				145,983				112,488				346,865				65,287				(9,469,722	)			9,666,717
Interest expense			24,927,045				1,468,597				9,430,554				623,431				349,816				292,997				114,220								39,332				736,588				(8,749,279	)			29,233,301
Income tax			20,705,530				3,759,480				275,898				2,130,590				4,325,337				3,237,306				849,081				1,035,777				532,917				441,747								37,293,663
Equity interest in net income (loss) of associated companies			(1,840,560	)			38,741				(52,875	)			2,349																								732								(1,851,613	)
Net profit (loss) attributable to equity holders of the Parent			22,350,336				7,748,545				(1,475,680	)			(3,556,565	)			7,650,996				5,962,779				(1,105,200	)			1,811,397				2,733,180				2,032,704				(1,313,145	)			42,839,347
Assets by segment			954,512,497				139,064,602				338,206,799				84,912,430				99,246,921				76,493,619				51,927,914				34,173,092				67,267,631				161,378,708				(807,399,080	)			1,199,785,133
Liabilities by segment			618,502,441				106,504,319				195,388,355				67,162,215				33,873,054				23,754,907				23,566,309				29,520,426				25,122,070				126,069,073				(286,683,282	)			962,779,887
		México (1)				Telmex				Brazil				Southern Cone (2)				Colombia				Andean (3)				Central- América (4)				U.S.A. (5)				Caribbean (6)				Europe (7)				Eliminations				Total consolidated
For nine-month period ended September 30, 2013:
Operating revenues			141,820,702				79,089,372				148,624,432				45,624,345				54,622,389				33,224,312				17,775,201				57,062,179				19,018,145								(14,880,388	)			581,980,689
Depreciation and amortization			8,370,460				12,576,954				28,031,977				5,408,357				6,813,552				3,701,737				6,312,769				349,181				3,603,032												75,168,019
Operating income (loss)			59,647,723				15,208,349				8,167,092				4,824,768				16,346,528				9,127,021				(890,648	)			995,463				3,248,551								334,758				117,009,605
Interest income			8,735,745				116,426				1,010,573				2,295,525				680,828				544,073				117,123				95,396				209,446								(9,649,791	)			4,155,344
Interest expense			21,412,680				2,471,292				5,299,454				925,770				357,546				174,565				113,833				121				32,005								(9,113,566	)			21,673,700
Income tax			15,892,965				3,525,186				(999,687	)			2,665,843				4,654,180				3,001,826				168,890				18,391				72,569												29,000,163
Equity interest in net income (loss) of associated Companies			30,954				(17,578	)			(75	)			7,527																				(458	)											20,370
Net profit (loss) attributable to Equity holders of the parent			32,324,049				6,881,388				(2,571,523	)			1,676,498				9,968,616				6,759,588				(1,236,013	)			1,212,422				2,713,158								(280,035	)			57,448,148
Assets by segment			863,053,147				134,624,144				306,466,659				98,411,851				106,359,154				68,144,249				52,028,386				27,109,181				67,310,963								(695,514,556	)			1,027,993,178
Liabilities by segment			605,329,734				103,842,409				176,771,139				63,755,618				30,426,338				18,990,795				25,132,380				24,282,092				29,323,273								(267,736,932	)			810,116,846

 

(1)	Mexico includes Telcel and corporate operations and assets

(2)	Southern Cone includes Argentina, Chile, Paraguay and Uruguay.

(3)	Andean includes Ecuador and Peru.

(4)	Central America includes Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama.

(5)	Excludes Puerto Rico.

(6)	Caribbean includes the Dominican Republic and Puerto Rico.

(7)	Europe includes Austria, Bulgaria, Croatia, Belarus, Liechtenstein Slovenia, Macedonia and Serbia

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		Mexico (1)				Telmex				Brasil				Southern Cone (2)				Colombia				Andean (3)				Centro- America (4)				U.S.A. (5)				Caribbean (6)				Europe (7)				Eliminations				Total consolidated
For three-month period ended September 20, 2014
Operating revenues		Ps.	47,093,211			Ps.	26,896,095			Ps.	52,193,080			Ps.	13,975,587			Ps.	19,043,066			Ps.	11,861,444			Ps.	6,658,047			Ps.	22,624,917			Ps.	6,320,945			Ps.	19,125,635			Ps.	(4,908,043	)		Ps.	220,883,984
Operating income (loss)			15,028,384				5,782,137				2,578,362				1,447,459				4,565,321				3,195,440				(85,287	)			265,513				1,185,099				3,288,644				387,181				37,638,253
Depreciation and amortization			4,420,433				3,865,581				10,743,763				1,608,399				2,452,320				1,346,650				2,159,461				112,645				1,222,766				3,631,778				(12,822	)			31,550,974
Interest income			3,807,185				83,439				1,592,617				745,601				128,761				279,375				51,222				45,435				116,963				65,287				(3,058,148	)			3,857,737
Interest expense			8,471,832				486,240				3,659,803				182,897				118,123				112,399				44,122								13,813				736,588				(2,872,321	)			10,953,496
Income tax			10,224,538				1,254,324				(2,177,514	)			819,395				1,461,421				972,741				296,626				143,177				664,749				441,747								14,101,204
Equity interest in net income (loss) of associated Companies			(2,020,745	)			10,482				(33,207	)			9,408																								732								(2,033,330	)
Net profit (loss) attributable to Equity holders of the parent			9,059,233				2,696,922				(3,734,765	)			(3,399,280	)			2,596,095				2,012,372				(342,268	)			182,904				533,950				2,032,704				(1,518,167	)			10,119,700
Assets by segment			954,512,497				139,064,602				338,206,799				84,912,430				99,246,921				76,493,619				51,927,914				34,173,092				67,267,631				145,726,591				(807,399,080	)			1,199,785,133
Liabilities by segment			618,502,441				106,504,319				195,388,355				67,162,215				33,873,054				23,754,907				23,566,309				29,520,426				25,122,070				126,069,073				(286,683,282	)			962,779,887
For three-month period ended September 20, 2013
Operating revenues			47,636,405				26,456,084				47,979,933				15,509,118				18,425,266				11,428,462				6,155,498				19,299,932				6,428,470								(5,098,073	)			194,221,095
Operating income (loss)			19,226,611				4,899,988				1,347,713				1,575,397				5,364,218				2,919,080				(314,474	)			1,138,057				1,156,487								481,980				37,795,057
Depreciation and amortization			2,915,534				4,109,780				9,622,290				1,824,000				2,279,694				1,241,126				2,186,307				118,281				1,225,584												25,522,596
Interest income			3,057,599				53,278				311,545				809,652				254,220				193,453				39,286				33,395				70,045								(3,340,505	)			1,481,968
Interest expense			8,066,560				653,583				2,005,782				314,666				118,871				63,980				35,469								10,851								(3,130,110	)			8,139,652
Income tax			5,475,865				1,129,867				(512,324	)			909,248				1,681,127				1,203,812				(66,004	)			65,185				(216,264	)											9,670,512
Equity interest in net income (loss) of associated Companies			(637,300	)			(22,025	)			(75	)			16,807																																(642,593	)
Net profit (loss) attributable to Equity holders of the parent			7,864,578				2,239,044				(942,593	)			1,082,056				3,028,960				1,789,336				(424,312	)			1,163,434				1,060,121								(476,319	)			16,384,305
Assets by segment			863,053,147				134,624,144				306,466,659				98,411,851				106,359,154				68,144,249				52,028,386				27,109,181				67,310,963								(695,514,556	)			1,027,993,178
Liabilities by segment			605,329,734				103,842,409				176,771,139				63,755,618				30,426,338				18,990,795				25,132,380				24,282,092				29,323,273								(267,736,932	)			810,116,846

 

(1)	Mexico includes Telcel and corporate operations and assets

(2)	Southern Cone includes Argentina, Chile, Paraguay and Uruguay.

(3)	Andean includes Ecuador and Peru.

(4)	Central America includes Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama.

(5)	Excludes Puerto Rico.

(6)	Caribbean includes the Dominican Republic and Puerto Rico.

(7)	Europe includes Austria, Bulgaria, Croatia, Belarus, Liechtenstein Slovenia, Macedonia and Serbia

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13. Subsequent Events

 

a)

On October 16, 2014 finished the three months’ additional acceptance (“sell-out”) period, on which the shareholders were able to tender their shares to AMX under the Offer conditions. During this extended period, AMX acquired another 38.4 million shares of TKA, which equates to a shareholding of approximately 8.68%.

 

b)

On January 9, 2015, the Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones, or “IFT”) imposed a fine of Ps.14.4 million on Telmex for failing to disclose to the IFT, in November of 2008, what the IFT has called a merger (concentración) between Telmex and Dish México Holdings, S. de R.L. de C.V., and its related companies. AMX will exercise any and all legal remedies to challenge the IFT’s resolution.

 

c)

In January 2015, the Company (through its subsidiary “Tracfone”) and the Federal Trade Commission (FTC) finalized the terms of a stipulated order, related to the Company’s prior practice of marketing data. The order included payment of US$40 million to the FTC to be deposited into a fund administered by the FTC or its designee to be used for consumer redress as a fixed payment amount, and for any expenses for the administration of the fund.

During the period ended September 30, 2014, the Company had recorded a provision of US$35.1 million for settlement of the FTC and class action law suits. The total amount of $45.1 million was included in Account Payable in the Balance Sheet as of December 31, 2014, and as Other expenses in the Statement of Operations for the year ended December 31, 2014.

 

d)

On July 31, 2014, was approved by the Agencia National de Telecomucacoes - Anatel, corporate restructuring aims to consolidate the structures and activities of Claro, S.A., Embratel Participações S.A. (Embrapar), Empresa Brasileira de Telemunicações, S.A. (Embratel) and Net Serviços de Comunicação, S.A. (NET) of its subsidiaries, and of course, all indirectly controlled by America Movil in a single society. The implementation of this incorporation will involve, among other things, the incorporation of Embrapar, Embratel and NET by Claro. On December 17, 2014, the Board approved the merger of Embratel, Claro and NET into Claro. The effect of those mergers is January 1, 2015.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 4, 2015