AMÉRICA MÓVIL S SECOND QUARTER OF 2003 FINANCIAL AND OPERATING REPORT

Transcription

1 Carlos García-Moreno Chief Financial Officer Investor Relations Office Leonel Ch. Schofecker Highlights AMÉRICA MÓVIL S SECOND QUARTER OF 2003 FINANCIAL AND OPERATING REPORT Comp AMX reaches 35.8 million subscribers Revenues of 19.7 bn pesos; up 45% yoy EBITDA of 7.6 bn pesos Operating profits up 23% yoy Net income of 4.5 bn pesos in 2Q03; 7.5 bn pesos in 1H03 AMX net debt down by 6.8 bn pesos in 2003 GSM services launched in, Mexico City, July 21 st, , S.A. de C.V. ("") [BMV: AMX] [NYSE: AMX] [NASDAQ: AMOV] [LATIBEX: XAMXL], announced today its financial and operating results for the second quarter of added 2.6 million subscribers in the second quarter, including one million incorporated with the acquisition of BSE, to finish the first half of the year with a subscriber base of 35.8 million. Second quarter revenues reached 19.7 billion pesos, 45% more than in the same period a year before, bringing the total for the six months through June to 37 billion pesos. EBITDA came in at 7.6 billion pesos in the quarter and 14.1 billion pesos in the first half of the year. Year-on-year, they increased by 47% and 52% respectively. s operating profits rose by 23% year-on-year, to 4.1 billion pesos. For the first semester, operating profits totaled 7.8 billion pesos and were up 34% relative to the same period a year before. The strong operating performance of s subsidiaries and important foreign exchange gains mostly associated with the appreciation of the ian reais and the Mexican peso in the second quarter resulted in a net income of 4.5 billion pesos in the second quarter and 7.5 billion pesos in the first six months of the year. The latter number was 4.3 times larger than the one registered in the first half of The ratio of net debt to EBITDA came down to 1.1 times at the end of June, with net debt having been reduced by 6.8 billion pesos in the first half of the year. This in spite of the two acquisitions carried out this year (Celcaribe and BSE) and the execution of a large capital expenditures program. Through its subsidiaries, launched GSM services in and. By the end of this year it will be providing GSM services in Mexico,,, and Nicaragua. 1

2 Fundamentals Jan-Jun 03 2Q03 1Q03 EPS (Mex$)* Earnings per ADR (US$)** Net Income (millions of Mex$) 7,527 4,544 2,985 EBITDA (millions of Mex$) 14,065 7,603 6,467 EBIT (millions of Mex$) 7,836 4,126 3,712 Shares Outstanding (billion) ADRs Outstanding (billion) Exchange Rate Mex$/US$ Period Average: * Net Income / Total Shares outstanding ** 20 Shares per ADR AMX completes acquisition of BSE New GSM services in and On May 8th acquired an interest of approximately 95% in ian wireless company BSE, which operates in the northeastern region of. The enterprise value of BSE was 180 million dollars. In June the minority equity participations in that company were also acquired: now owns through its subsidiary Telecom Americas 100% of BSE, which is being consolidated in América Móvil's financial results since May. 's ian and n subsidiaries launched their new GSM services in May and June, respectively. The companies are building GSM overlays that will be completed by the end of this year. By then will be providing GSM services in Mexico,,, and Nicaragua. 's Subsidiaries & Affiliates as of June 2003 Subsidiaries Country Company Business Equity Participation Consolidation Method - Mexico wireless 100.0% Global Consolidation Method - wireless, wireline 97.3% Global Consolidation Method - wireless 80.6% Global Consolidation Method - (1) wireless 95.7% Global Consolidation Method - U.S.A. Tracfone wireless 97.8% Global Consolidation Method - broadband, wireline 60.0% Global Consolidation Method - Telecom Americas (2) wireless 97.4% Global Consolidation Method Affiliates - U.S.A Comp other 49.0% Equity Method - U.S.A Telvista other 44.2% Equity Method (1) holds directly 36.6% of Occel and holds indirectly 60.8% of Occel. (2) Telecom Americas holds an equity participation of 100% in both, and and of around 81.5% in both, and. 2.6 Mn new AMX subs 's wireless subscriber base reached 35.8 million at the end of June, after adding 2.6 million subscribers in the second quarter, including one million subscribers incorporated with the acquisition of BSE. Equity subscribers totaled 34.8 million, or 97% of the company's total subscriber base. Comp gains 554 thousand subs 's net additions during the quarter came in at 554 thousand subscribers, bringing the year s total to 1.2 million, as the important Easter vacations (two weeks) took place this year in April rather than March. Total subscribers stood at 21.3 million at the end of June, 13.6% more than in June

3 Susbcribers 6.7 Mn subs in surpasses 3.5 Mn subs In addition to the subscribers obtained through the acquisition of BSE, América Móvil s ian operation registered net gains of 365 thousand subscribers, raising its subscriber base to 6.7 million. Telecom Americas organic growth was 6.9% quarter over-quarter and 18.6% year-on-year, with and being the more dynamic companies within the group. in gained 245 thousand subscribers in the quarter, surpassing the 3.5 million-subscriber mark, for an annual increase of almost 50%. With 1.2 million subscribers, ian was the subsidiary with most rapid growth, increasing its wireless subscriber base by 14.4% quarter over quarter and 77.1% annually. Tracfone reaches 2.4 Mn subs Tracfone continued with the dynamism displayed during the first quarter of 2003 in terms of subscriber growth, posting a 216 thousand net subscriber gain in the second quarter that brought the year s total to 461 thousand net additions. Sercom in reached 754 thousand subscribers, including the wireless subscribers of its operations in Nicaragua. In addition to these, the n operations had 862 thousand fixed wirelines in service, 59 thousand more than at the end of as of June 2003 Thousands Country Company 2Q03 1Q03 Var.% (2) 2Q02 Var.% (2) 2Q03 1Q03 Var.% (2) 2Q02 Var.% (2) - Mexico 21,307 20, % 18, % 21,307 20, % 18, % - Sercom (4)(5) % % % % - 1,157 1, % % % % - 3,518 3, % 2, % 3,367 3, % 2, % - U.S.A. Tracfone 2,429 2, % 1, % 2,375 2, % 1, % 29,164 27, % 24, % 28,714 27, % 23, % Telecom Americas - 2,163 2, % 1, % 2,107 1, % 1, % - 1,204 1, % % % % - 1, % % % % - 1,261 1, % 1, % 1,228 1, % % - BSE 1,022 1, % 1, % n.m. 0 n.m. 6,669 5, % 4, % 6,096 4, % 2, % Total* 35,833 33, % 28, % 34,811 32, % 26, % * Telecom Americas and AMX's subscribers as of the 1Q03 and 2Q02 does not include BSE, as the company started consolidating in May, (1) Includes total subscribers of all companies in which holds an economic interest. (2) Variations from 2Q03 with respect to the relevant quarters. (3) Includes total subscribers weighted by the economic interest held in each company. (4) Fixed line subscribers of stand at 862,394. If included in total subscribers, it adds up to 36,696 thousand customers. (5) Includes subscribers of the Nicaraguan operation in the first and second quarter of Total (1) Equity (3) Comp AMX 2Q03 revenues up 45% yoy Revenues of 37 bn MxP in1h03 Results With strong revenue growth across all of its subsidiaries, 's second quarter revenues rose by 14.6% on the quarter and 44.9% year on year, to 19.7 billion pesos. Service revenues reached 17.3 billion pesos, having risen 12.9% in the quarter and 42.7% in relation to the year before, whereas equipment revenues were up 28.9% in the quarter and 63.0% on an annual basis. The above brought total revenues for the first half of the year to 36.9 billion pesos, which represents a 42.7% increase over the same period of

4 2Q03 EBITDA rises 47% yoy, Net profits for 1H03 are 4 times larger yoy With most subsidiaries registering a quarterly increase in EBITDA, consolidated EBITDA was up 17.7% in the quarter and 46.8% year on year, to 7.6 billion pesos, bringing the cumulative figure through June to 14.1 billion pesos. The latter number is 52.2% higher than the corresponding figure for the same period a year before. The EBITDA margin was 38.6% for the quarter and 38.1% for the first half of the year. Operating profits, which totaled 4.1billion pesos, were also up on the quarter (11.2%) and relative to the previous year's (23.4%). Operating profits added up to 7.8 billion pesos in the six months to June. The company registered a net comprehensive financing income of 1.2 billion pesos in the second quarter, behind which lie substantial foreign exchange gains (1.8 billion pesos) that came about as a result of the appreciation of the ian Real and the Mexican Peso relative to the U.S. Dollar. These currencies appreciated by 16.5% and 4.5% respectively in the second quarter. The quarter's monetary result was somewhat unusual as a consequence of negative inflation rates observed in Mexico,,, and in at least one month of the quarter. It also reflected among other things, the continued decline of the company's net debt. The strong operating performance of the subsidiaries and the foreign exchange gains mentioned above resulted in a substantial increase in net profits, which rose by 52.4% in the quarter to reach 4.5 billion pesos. Through June, net income came in at 7.5 billion pesos, a figure that is over four times greater than the one seen in the first half of America Movil's Income Statement (in accordance with Mexican GAAP) Millions of Mex$ 2Q03 2Q02 Var.% Jan-Jun 03 Jan-Jun 02 Var.% Service Revenues 17,297 12, % 32,620 23, % Equipment Revenues 2,395 1, % 4,253 2, % Total Revenues 19,693 13, % 36,874 25, % Cost of Service 4,347 2, % 8,271 5, % Cost of Equipment 4,080 2, % 7,576 4, % Selling, General & Administrative Expenses 3,662 3, % 6,962 6, % Total Costs and Expenses 12,089 8, % 22,808 16, % EBITDA 7,603 5, % 14,065 9, % % of Total Revenues 38.6% 38.1% 38.1% 35.8% Depreciation & Amortization 3,477 1, % 6,230 3, % Comp EBIT 4,126 3, % 7,836 5, % % of Total Revenues 21.0% 24.6% 21.3% 22.6% Net Interest Expense % % Other Financial Expenses % % Foreign Exchange Loss -1, % -1, % Monetary Result % -1, % Comprehensive Financing Cost (Income) -1, % -1, n.m. Other Income and Expenses % % Income & Deferred Taxes % 1,506 1, % Net Income before Minority Interest and Equity 4,737 1, % 7,743 3, % Participation in Results of Affiliates minus Equity Participation in Results of Affiliates 67 1, % 85 2, % Minority Interest n.m % Net Income 4, n.m. 7,527 1, % *n.m. = not meaningful 4

5 Revenues by Company Jan-Jun 03 EBITDA by Company Jan-Jun 03 3% 11% 6% 9% 7% 3% Tracfone 8% 10% 7% 64% Telecom Americas 71% AMX net debt to EBITDA ratio down to 1.1x contributed 64% of 's revenues in the first half of the year and 71% of its EBITDA. The ian operations under Telecom Americas were the second largest contributors of revenues, but the n operations remained the second most important generator of EBITDA. The gross debt of (including accrued financial expenses) ended June at 42.8 billion pesos whereas its net debt stood at 30.2 billion pesos. During the first half of the year net debt was reduced by 6.8 billion pesos, mostly as a consequence of the company's strong cash flow generation, and in spite of the acquisitions effected so far this year (Celcaribe and BSE) and a strong CAPEX. The ratio of net debt to EBITDA (last twelve months) has fallen to 1.1 times. BALANCE SHEET Millions of Mex$ Jun-03 Dec-02 Var.% Jun-03 Dec-02 Var.% Current Assets Current Liabilities Cash & Securities 12,690 10, % Short Term Debt* 6,604 11, % Accounts Receivable 5,118 5, % Accounts Payable 12,175 10, % Other Current Assets 2,634 1, % Other Current Liabilities 5,505 4, % Inventories 3,034 3, % 24,283 26, % 23,476 21, % Long-Term Assets Plant & Equipment 63,952 60, % Investments in Affiliates 3,143 3, % Long-Term Liabilities Long Term Debt 36,238 36, % Deferred Assets Other Long-Term Liabilities 2,002 2, % Goodwill (Net) 5,646 6, % 38,240 38, % Brands & Licenses (Net) 27,336 22, % Deferred Assets 737 1, % Shareholder's Equity 61,767 49, % Total Assets 124, , % Total Liabilities and Equity 124, , % * Includes current portion of Long Term Debt Mexico Comp 1H03 revenues up 22% yoy For the fifth consecutive quarter, 's blended ARPUs rose on the back of a steady increase in overall traffic and a more moderate subscriber growth in the period. This increase helped bring about an increase of service revenues of 8.4% sequentially and 23.0% year-on-year, on the back of which total revenues reached 12.4 billion pesos in the second quarter. Accumulated revenues for the first half of the year rose to 23.8 billion pesos, posting a 22.1% increase year-on-year. 5

6 EBITDA margin hits 43.3% EBITDA for the quarter totaled 5.4 billion pesos, one third higher than that of the previous year, as total revenues outpaced costs by 1.4 times in the period. EBITDA margin in the second quarter reached a high of 43.3%, around 3 percentage points higher compared to both the previous quarter s and the second quarter of During the first semester of the year, EBITDA reached 10 billion pesos and represented 41.9% of revenues, an improvement of 4 percentage points over a year ago. s operating profits up 36.5% yoy INCOME STATEMENT (in accordance with Local GAAP) Millions of Mex$ 2Q03 2Q02 Var.% Jan-Jun 03 Jan-Jun 02 Var.% Service Revenues 10,946 8, % 21,045 17, % Equipment Revenues 1,489 1, % 2,753 2, % Total Revenues 12,435 10, % 23,798 19, % Cost of Service 2,519 2, % 5,125 4, % Cost of Equipment 2,346 1, % 4,456 3, % Selling, General & Administrative Expenses 2,189 1, % 4,247 4, % Total Costs & Expenses 7,053 6, % 13,829 12, % EBITDA 5,381 4, % 9,969 7, % % 43.3% 40.1% 41.9% 37.9% Depreciation & Amortization 1, % 2,266 1, % EBIT 4,278 3, % 7,704 5, % % 34.4% 31.1% 32.4% 28.8% It is worth mentioning that this improvement in s operating performance was obtained in spite of the establishment of a reserve at the beginning of this year associated with the payment of the special telecommunications' tax in Mexico, which the company continued to provision during the second quarter, although at a smaller proportion relative to the prior one based on new changes to the tax law. 's operating profits in the quarter totaled 4.3 billion pesos, a 25% sequential increase and 36.5% relative to the same period of Year- to-date operating earnings reached 7.7 billion pesos, a margin of 32.4% relative to revenues. Traffic and ,800 Million ,600 1,400 1,200 1, Millions of Minutes Comp 4.0 Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-00 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Traffic Oct-02 Jan-03 Apr

7 's Operating Data 2Q03 1Q03 Var. %* 2Q02 Var. %* Licensed Pops (millions) % % (thousands) 21,307 20, % 18, % Postpaid 1,398 1, % 1, % Prepaid 19,909 19, % 17, % MOU % % Postpaid % % Prepaid % % ARPU (Mex$) % % Postpaid % % Prepaid % % Churn (%) 3.1% 3.0% 3.0% * Percentage change from 2Q03 relative to 1Q03 and 2Q02 1H03 revenues rise 4.3% yoy With net additions of 254 thousand over a one-year period, s n wireless subscriber base reached 754 thousand at the end of the first semester of 2003, including those clients obtained in Nicaragua through the n subsidiary. 's number of wireline subscribers stood at 862 thousand as of the end of June. Revenues amounted to 121 million dollars in the second quarter (4.4% qoq growth) and 238 million dollars for the first semester (4.3% yoy growth). At 67 million dollars, EBITDA in the quarter decreased slightly compared to the previous one but was up 6.9% annually. INCOME STATEMENT (in accordance with Local GAAP) ACT Millions of US$ 2Q03 2Q02 Var.% Jan-Jun 03 Jan-Jun 02 Service Revenues % % Equipment Revenues % % Total Revenues % % Cost of Service % % Cost of Equipment % % Selling, General & Administrative Expenses % % Total Costs & Expenses % % EBITDA % % % 55.3% 54.7% 56.9% 57.7% Var.% Depreciation & Amortization % % EBIT % % % 31.3% 29.4% 32.4% 33.0% Sercom's Traffic and Thousand Millions of Minutes Comp Jan-01 Mar-01 May-01 Jul-01 Sep-01 Nov-01 Jan-02 Mar-02 May-02 Jul-02 Sep-02 Nov-02 Jan-03 Traffic Mar-03 May-03 7

8 The EBITDA margin came in at 55.3%, somewhat higher than the one seen in the same period of Operating profit for the semester totaled 77 million dollars, representing 32.4% of revenues; they were up 2.3% year-on-year. Sercom's Operating Data Telecom Americas 2Q03 revenues up 44% 2Q03 EBITDA rises by 37% yoy 2Q03 1Q03 Var. %* 2Q02 Var. %* Licensed Pops (millions) % % (thousands) % % Postpaid % % Prepaid % % MOU % % Postpaid % % Prepaid % % ARPU (US$) % % Postpaid % % Prepaid % % Churn (%) 0.9% 1.4% 0.6% * Percentage change from 2Q03 relative to 1Q03 and 2Q02 Telecom Americas' subscriber base reached 6.7 million at the end of June, as one million BSE subscribers were incorporated and the other operations posted net gains of 365 thousand subscribers. Telecom Americas revenues reached 713 million reais (246 million dollars) in the quarter, led by a strong increase in sales associated with Mother's Day promotions and the consolidation of BSE since the beginning of May. Service revenues were up 42% year-on-year and total revenues 44%. First semester revenues increased by 29.3% year on year to 1.3 billion reais (396 million dollars). The five ian operations generated an EBITDA of 189 million reais (65 million dollars) in the quarter, slightly up sequentially but nearly 37% higher than that of the same period a year before. As a percentage of revenues, second quarter EBITDA represented 26.5%, reflecting the strong subscriber growth in the period. Year-todate EBITDA came in at 373 million reais (117 million dollars), which represents an increase of 26.5% relative to the first half of 2002; the EBITDA margin was practically unchanged. INCOME STATEMENT (in accordance with Local GAAP) Telecom Americas Millions of R$ 2Q03 2Q02 Var.% Jan-Jun 03 Jan-Jun 02 Var.% Comp Service Revenues % 1, % Equipment Revenues % % Total Revenues % 1, % Cost of Service % % Cost of Equipment % % Selling, General & Administrative Expenses % % Total Costs & Expenses % % EBITDA % % % 26.5% 27.8% 29.6% 30.2% Depreciation & Amortization % % EBIT % % % 1.2% -4.4% 2.6% -2.1% Exchange Rates R$/US$ End of Period and Avg. 2Q03: $ 2.9 and $ 2.9, respectively. 8

9 Telecom Americas' Traffic and Million Millions of Minutes Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Traffic Regarding the second quarter operating income, it stood at 8 million reais which compares with the loss of 22 million reais registered the year before. During the first half of the year, operating income came in at 33 million reais (10 million dollars), an improvement of over 50 million reais compared to the same period of Telecom Americas' Operating Data 2Q03 1Q03 Var. %* 2Q02 Var. %* Licensed Pops (millions) % % (thousands) 6,669 5, % 4, % Postpaid 1, % % Prepaid 5,517 4, % 4, % MOU % % Postpaid % % Prepaid % % ARPU (R$) % % Postpaid % % Prepaid % % Churn (%) 2.1% 2.0% 1.5% * Percentage change from 2Q03 relative to 1Q03 and 2Q02 Comp 2Q03 revenues increased by 46% yoy EBITDA soars; is up 70% yoy 's n unit attained 3.5 million subscribers by the of the first half of the year, adding 245 thousand clients during the second quarter (7.5% sequential growth) and more than a million over a year before, including those subscribers obtained through the acquisition of Celcaribe. It is worth mentioning that postpaid subscribers have increased their relative importance in total subscribers. generated 343 billion n pesos (120 million dollars) of revenues in the quarter, a sequential increase of 8.8% and 46.2% higher than those of the same period of Accumulated revenues through June came in at 659 billion n pesos (227 million dollars) and were up by 45.0% on the back of similar service revenue and subscriber growth. EBITDA increased 19.7% quarter over quarter and over 70% compared to a year before, thus reaching 124 billion n pesos (44 million dollars). The second quarter margin stood at 36.1% and was the highest ever registered by the company; it was up 3.3 and 5.1 percentage points compared to the previous quarter and that of the same period a year before, respectively. 9

10 INCOME STATEMENT (in accordance with US GAAP) Billion of COP$ 2Q03 2Q02 Var. % Jan-Jun 03 Jan-Jun 02 Var. % Service Revenues % % Equipment Revenues % % Total Revenues % % Cost of Service % % Cost of Equipment % % Selling, General & Administrative Expenses % % Total Costs & Expenses % % EBITDA % % % 36.1% 31.0% 34.5% 30.1% Depreciation & Amortization % % EBIT % % % 12.5% 7.2% 10.8% 5.7% Exchange Rates COP$/US$ End of Period and Avg. 2Q03: $ 2,818 and $2,851, respectively. s operating profit 2.7x higher For the first half of the year, EBITDA totaled 228 billion n pesos (79 million dollars), two thirds higher than the same period of the prior year, as revenues outpaced costs by 1.3 times. Operating profit for the quarter amounted to 43 billion n pesos (15 million dollars), whereas that of the semester stood at 71 billion n pesos (25 million dollars), more than 2.7 times that of 's Traffic and 350 Million Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Millions of Minutes 50 0 Traffic Comp 's Operating Data 2Q03 1Q03 Var. %* 2Q02 Var. %* Licensed Pops (millions) % % (thousands) 3,518 3, % 2, % Postpaid 1,124 1, % % Prepaid 2,393 2, % 1, % MOU % % Postpaid % % Prepaid % % ARPU (COP$) 32,208 32, % 33, % Postpaid 76,474 77, % 89, % Prepaid 11,433 11, % 13, % Churn (%) 2.1% 2.4% 2.0% * Percentage change from 2Q03 relative to 1Q03 and 2Q02 10

11 145 thousand new subs in registered the highest subscriber growth rate amongst América Móvil's subsidiaries, both sequentially and annually. The company's subscriber base reached 1.2 million after net additions of 145 thousand in the quarter and 504 thousand over a twelve-month period. It is worth mentioning that already offers GSM services in since the beginning of June. EBITDA is 2.6 times greater than in 2Q02 Total revenues in the quarter almost doubled sequentially to 73 million dollars on the back of a 2.7 times increase in equipment revenues and an extraordinary interconnection revenue of 21 million dollars received in April. Without this exceptional income, total revenues would have increased 37% quarter over quarter and 80% year over year. Quarterly EBITDA reached 25 million dollars and was 43.6% higher compared to the previous quarter and 161.8% relative to that of last year, including a positive net effect of 7 million dollars associated with the exceptional interconnection revenue. EBITDA margin came in at 34.2% and was somewhat lower than that of the previous quarter but still 1.5 percentage points higher than in Year-to-date EBITDA totaled 42 million dollars, 38.3% relative to revenues. INCOME STATEMENT (in accordance with Local GAAP) Millions of US$ 2Q03 2Q02 Var.% Jan-Jun 03 Jan-Jun 02 Var.% Service Revenues % % Equipment Revenues % % Total Revenues % % Cost of Service 23 4 n.m % Cost of Equipment % % Selling, General & Administrative Expenses % % Total Costs & Expenses % % EBITDA % % % 34.2% 32.7% 38.3% 34.5% Depreciation & Amortization % % EBIT 18 3 n.m n.m. % 24.4% 9.0% 25.5% 9.6% *n.m. = not meaningful 's Traffic and Thousand 1,300 1, Millions of Minutes Comp Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Traffic Oct-02 Jan-03 Apr-03 11

12 's Operating Data 2Q03 1Q03 Var. %* 2Q02 Var. %* Licensed Pops (millions) % 12 2% (thousands) 1,157 1, % % Postpaid % % Prepaid 1, % % MOU % % Postpaid % % Prepaid % % ARPU (US$) % % Postpaid % % Prepaid % 9 2.7% Churn (%) 3.3% 3.6% 2.8% * Percentage change from 2Q03 relative to 1Q03 and 2Q02 United States Comp Tracfone gains 216 thousand subs in 2Q03 Revenues of 146 MDls in 2Q03, up 34% yoy EBITDA of 5 MDls in the quarter At nearly 2.5 million subscribers at the end of June and after net additions of 216 thousand in the second quarter, Tracfone has increased its total subscriber base by almost 10% on the quarter and by 32% on a yearly basis. Second quarter revenues totaled 146 million dollars, bringing the total for the first half of 2003 to 271 million dollars, over 24% higher than those of the prior year. Airtime revenues during the quarter rose by 19.5% to reach 121 million dollars, mostly on the back of an MOU sequential increase of 7.4%; Tracfone's ARPU growth matched that of the minutes of use. Revenue growth more than offset the increase in airtime cost and SG&A expenses, leading the quarter's EBITDA to add up to 5 million dollars or 3.5% of revenues, the highest figure obtained by Tracfone to date. In spite of strong subscriber growth during 2003, the company has managed to maintain a nearly break-even EBITDA balance. For the first time, the company's quarterly operating profit came in close to a breakeven point. The EBIT loss (10 million dollars) registered during the first half of the year was 47% lower than that of the first semester of INCOME STATEMENT (in accordance with US GAAP) US$ millions 2Q03 2Q02 Var.% Jan-Jun 03 Jan-Jun 02 Var.% Airtime Revenues % % Phone Revenues % % Total Revenues % % Airtime Cost % % Phone Cost % % Gross Profit % % Gross Profit - Airtime % % Selling, General & Administrative Expenses % % Acquisition Costs % % EBITDA 5 0 n.m % % 3.5% 0.2% -0.4% -4.8% Depreciation & Amortization % % EBIT % % % -0.1% -3.9% -3.7% -8.7% 12

13 2.5 Tracfone's Traffic and 160 Million Millions of Minutes Jan-00 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Traffic Tracfone's Operating Data 2Q03 1Q03 Var. %* 2Q02 Var. %* Licensed Pops (millions) % % (thousands) 2,429 2, % 1, % MOU % % ARPU (US$) % % Churn (%) 4.1% 3.0% 5.9% * Percentage change from 2Q03 relative to 1Q03 and 2Q02 For further information please visit our website at: Comp Legal Disclaimer, S.A. de C.V. (the "Company") quarterly reports and all other written materials may from time to time contain forward-looking statements that reflect the current views and/or expectations of the Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance, or achievements, and may contain words like "believe", "anticipate", "expect", "envisages", "will likely result", or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in this report. In no event, neither the Company nor any of its subsidiaries, affiliates, directors, officers, agents or employees shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this document or for any consequential, special or similar damages. 13