Maxcom Telecomunicaciones, S.A.B de C.V.

Transcription

1 Maxcom Telecomunicaciones, S.A.B de C.V. Third Quarter Results 2018

2 Content Earnings Results Summary and Relevant Events Commercial Business Unit Wholesale Business Unit Residential Business Unit Consolidated Revenue Costs, Expenses and Other Items o Network Operation Costs and SG & A o EBITDA & Operating Income (Loss) o Comprehensive Financing Result o Taxes o Net Income (Loss) o CAPEX o Indebtedness o Stockholders' Equity Exhibits Non-Audited Financial Statements

3 Earnings Results Summary and Relevant Events Maxcom s 3Q18 Performance T O TA L R E V E N UE Ps.270 million N E TW O R K O P E R A T IO N C O S T Ps.136 million -45%. vs 3Q17 G ROSS P RO F I T M A RG I N 50% vs 43% 3Q17 E B I TD A Ps.15 million -79% vs 3Q17 O P E R A T ING I N CO M E ( LOSS ) Ps.-46 million vs Ps.19 million 3Q17 N E T I NCOME Ps.-31 million Maxcom recorded Ps.31 million net loss on the 3Q18, that represents a growth of Ps.27 million compared with the previous quarter and Ps.46 million against the same quarter of last year. Quarterly consolidated EBITDA was Ps.15 million and Ps.33 million without Celmax operation, the variation regarding 3Q17 represented a Ps.59 million and Ps.41 million, respectively. Showing up next the main factors that explain the variation: Progressive decrease/downtrend in Residential and Wholesale revenues The growth on the commercial business was below than the levels obtained on previous quarters product of a lower acquisition compared to the average from other months of 1H of the year. A provision increase for uncollective accounts receivable during the quarter as a consequence of the impairment in 3 of them. Execution of the transformation plan continued during the quarter by generating efficiencies and cost reductions, mainly on direct cost, network maintenance and payroll. As a result of the above, an 8% decrease in expenses was presented compared with the previous quarter and 22% when compared with the nine months ended on September 30, 2018 against the same period of The constant effort in the operative efficiencies generation translates on solid gross margins. During 3Q18 the gross margin was 50%. GROSS MARGIN 70% 60% 50% 40% 30% 20% 10% 0% 64% 51% 50% 43% 44% 27% 30% 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 The improvement on Company s margins is also an effect of the growth in the commercial segment within the revenue mix. This business unit reflects an increase on their participation, coming from 46% on 3Q17 to 80% in this reporting quarter. Conversely, the participation in the wholesale business unit reduced to 7% on the revenue mix when compare 3Q17 that was 34%. Commercial 80% Residential 13% Relevant Events During the quarter, a long term agreement to lease part of our spectrum over the 23 Ghz band was renewed. The transaction has a total contract value of $185 million pesos, which will be recognized as a recurrent revenue in 72 months. This transaction strengthens both monthly recurrent revenue and the cash flow position of Maxcom. On August 9, 2018 took place Celmax s Extraordinary General Shareholders Meeting to authorize the modification of its bylaws in order to include the stablished obligation in the article 112 from Ley Federal de Telecomunicaciones y Radiodifusión ( LFTR ), wich includes among others, to disclose to the IFT the stockholding of the Company. The above based in the granted Unique Concession by the IFT for which it will be able to serve any public telecommunication & broadcast services nationwide, with a 30 years duration and extendable for another 30 years. Derived from renovation and granting of Maxcom s Unique Concession, on October 9, 2018 it was carried out Maxcom s Extraordinary General Shareholders Meeting to authorize the modification of Maxcom s bylaws, including in this the stablished obligation in the article 112 from LFTR. Additionally, in order to comply with LFTR issued on 2013, in this General Shareholders Meeting was modified the part concerning to direct foreign investment, allowing the investment in telecommunications and satellite communications up to 100%. WEIGHT (%) 3Q18 Wholesale 7% 3

4 Revenue (Million Pesos) ARPC (Thousand Pesos) Third Quarter 2018 Results MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. AND SUBSIDIARIES FINANCIAL AND OPERATING HIGHLIGHTS Figures in millions of pesos, except operating data Item 3T18 2T18 % var Total Revenues (44%) EBITDA (92%) EBITDA margin (%) 6% 37% Net income (loss) (31) (58) 47% Net margin (%) (11%) (12%) Cash and financial instruments (11%) CAPEX 50 (3) (1,767%) Debt 2 2,216 2,288 (3%) Net debt / LTM EBITDA (X) % Customers 51,175 60,988 (16%) Commercial 1,155 1,191 (3%) Residential 50,020 59,797 (16%) RGUs 3 234, ,466 (8%) 1 Includes long- term restricted cash. 2 Debt is considered at face value and includes interest payable as of the end of the period 3 Revenue generating units Commercial Business Unit Commercial income reached Ps. 215 million, representing an increase of 8% or Ps. 16 million compared to Ps. 199 million registered during 3Q17. Excluding non-recurrent operations, income grew 13% or Ps. 23 million. Sequentially, income decreased Ps. 200 million or 48% due to the non-recurrent revenue of special projects in the previous quarter that comes from the sale of 72 telecommunication towers for Ps. 197 million. Excluding this effect, Commercial revenue presented a decrease of 4%. The weight of commercial revenues within the revenue mix increased from 46% in 3Q17 to 80% in 3Q18. The average revenue per customer (ARPC) of the Commercial business during 3Q18 was Ps. 59 thousand, being 55% higher than the Ps. 38 thousand registered in 3Q17 and Ps. 3 thousand, less when compared with the figure for 2Q Q17 2Q18 3Q18 Revenue ARPC For the nine months ended September 30, 2018, Maxcom recorded an accumulated income in this business unit for Ps. 818 million, Ps. 276 million more or 51% above compared to the same period of Excluding the towers transaction registered on the 2Q18 by Ps. 197 million, the organic growth of the business unit is 15% or Ps. 79 million which builds our monthly recurring revenue base and position the Company as a 100% Commercial Carrier. 4

5 RGUs / CUSTOMER ARPU Third Quarter 2018 Results Wholesale Business Unit During this quarter, the revenue in this business unit was Ps. 18 million, a significant decrease of 88% compared to the same period of 2017 and 200% above of reported revenue on the second quarter of For the nine months ended on September 30, 2018, the accumulated revenue was Ps.63 million, 94% decrease against the Ps.976 million recognized in the same period of As already disclosed, Maxcom has maintained a reduction in the revenue stream coming from the termination of international traffic throughout its long distance network and does not foreseed continuity in the operation of relevant volumes until it has resolutions from the SAT regarding the pending VAT refund. Residential Business Unit The Company continues the execution of its wind down process, which will be concluded on June In line with the plan, during the 3Q18, 9 clusters were closed in the State of Mexico. Cumulatively, 22 clusters have been closed during the year. The Company will operate the remaining 32 clusters until the closing of the business unit if there are no relevant changes in its profitability. The revenue generated by the segment represented 13% of all the revenues recorded during 3Q18. This participation will continue to decrease in the following quarters as the Company grows its Commercial operations and continues it s windown process.. Comparing 3Q18 with the 3Q17, the revenue of this business unit has a decrease of 60% or Ps. 53 million. This was mainly due to the programmed closing of clusters contemplated in the original plan and the shutdown of TV. Sequentially, the decrease was 36% or Ps. 20 million T17 2T18 3T18 ARPU RGUs / CUSTOMER For the nine months ended September 30, 2018, Maxcom reported an accumulated income of Ps. 158 million, representing 15% of total income. This figure represents a reduction of Ps. 129 million or 45% compared to the same period of 2017, when residential income represented 16% of total revenues. ARPU of residential customers was Ps. 128 in 3Q18, 22% lower than the ARPU of Ps. 165 reported in 3Q17 and 16% below Ps. 153 registered in 2Q18. The sequential fall is a direct consequence of the disconnection of TV services during the month of June of this year. The rate of RGUs per customer during this quarter was 1.8, while in 3Q17 it was

6 Third Quarter 2018 Results Consolidated Revenue Total consolidated revenues reported in 3Q18 amounted to Ps. 270 million, a decrease of 38% when compared to 3Q17, explained by the contraction of the Wholesale and Residential businesses T17 COMMERCIAL RETAIL WHOLESALE 3T18 Sequentially, the income registered a decrease of 44% or Ps. 210 million. This decrease is mainly due to the extraordinary income from towers sale by Ps. 197 million For the nine months ended September 30, 2018, the Company's total revenues reached Ps. 1,046 million, reflecting 42% decrease with respect to Ps. 1,808 million registered in the same period of However, the recurrent Commercial business is gaining strength and participation as it shows the 78% of the total revenue of the Company compared to 30% in the same period of Commercial Wholesale Residential Others 3Q17 2Q18 3Q18 RECURRENT COMMERCIAL REVENUE 3Q18 2Q18 QoQ D% 3Q17 YoY D% Commercial Ps. 214 Ps. 415 (48%) Ps % Wholesale % 148 (88%) Residential (36%) 89 (60%) Others 2 3 (33%) 2 - Total Ps. 270 Ps. 480 (44%) Ps. 438 (38%) Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Costs, Expenses and Other Items Network Operation Cost Operating costs of the network in 3Q18, decreased 45% to reach Ps. 136 million compared to Ps. 249 million reported in 3Q17, mainly explained by the decrease in traffic termination attributable to the Wholesale business and the reduction in the operational structure of the Residential segment. Maxcom is executing a rightsizing plan that also adds to this decrease, although to a lesser measure. Due to this cost reduction and other efficiencies the gross margin increased from 43% in 3Q17 to 50% in 3Q18. The change in the revenue mix and initiatives to increase profitability per customer in the Commercial business contributes to achieve this improvement. For the nine months ended on September 30, 2018, costs were reduced by 63% compared to the same period of 2017, as well as a gross margin of 57%, 25 p.p. above the registered in the same period of

7 EBITDA (Millions) EBITDA Margin Third Quarter 2018 Results SG&A Expenses During 3Q18, the Company reported a total SG&A expenses of Ps. 119 million, 3% above than the Ps. 115 million in 3Q17. On a sequential basis, this item decreased 8%. The decrease in expenses derived mainly from the efficiencies plan that is being executed mainly in energy expenditure, software and network maintenance. In addition to these reductions, payroll expenses have decreased 5% vs 2Q18 and 7% compared to 3Q17; the headcount at the end of the period is 362 employees. Cumulatively, the nine months of 2018 recorded a total expense of Ps. 364 million, 6% above the Ps. 345 million registered in the same period of The difference is mainly explained by fees corresponding to the transaction of the sale of the towers for Ps. 13 million and other non-recurrent extraordinary expenses. EBITDA During 3Q18 the EBITDA was Ps. 15 million, compares it unfavorably against the Ps.74 million registered during 3Q17. The reduction is a direct consequence of the reduction in revenues of the Wholesale and Residential business units, a growth of the Commercial business below the levels obtained in the previous quarters, as a result of a lower acquisition than the average generated during the first half of the year. as well as an increase in the provision for uncollective accounts receivable in the quarter as a result of the particular spoilage of three accounts associated with the call center segment. Sequentially, the EBITDA has a decrease of 92% or Ps. 164 million derived mainly from non-recurrent revenues from towers sale. The accumulated EBITDA for the nine months ended on September 30, 2018, reached Ps. 227 million, in line with the figure reported in the same period of The EBITDA 2018 is leveraged by the income of the towers transaction previously exposed, while that reported in 2017 by the wholesale business. The accumulated EBITDA margin was 22% and 17% during the nine months of 2018 and 2017, respectively. Maxcom's quarterly EBITDA without Celmax operation was Ps. 33 million. 200 EBITDA & EBITDA Margin 37% 50% % % 17% 20% 11% 6% 30% 20% 10% T17 3T17 4T17 1T18 2T18 3T18 0% EBITDA EBITDA MARGIN Operating Income (Loss) The Company registered an operating loss of Ps. 53 million in 3Q18, which compares with operating income of Ps. 2 million reported in the same period of 2017, mainly derived from all effects that lead the reduction in the quarterly EBITDA. For the nine months ended September 30, 2018, the Company reported an operating income of Ps. 37 million which compares favorably against the operating income of Ps. 28 million registered in the same period of

8 Comprehensive Financing Result During 3Q18, the Company recorded a comprehensive financing income of Ps. 23 million, an increase of Ps. 102 million compared to the loss of Ps. 79 million registered in the same period of This result is mainly explained by a higher appreciation of the Mexican peso compared to 3Q17, showing exchange rate gain in the quarter. For the nine months ended September 30, 2018, the comprehensive financing loss was Ps.94 million compared to the P $ 259 million registered in the same period of The variation is mainly due by the appreciation that maintained the Mexican peso during the nine months of 2017, as well as the income registered for the repurchase bond done in May Q18 3Q17 DPs. D% Interest Expense % Interest (Income) 8 (5) 13 (242%) Valuation Effects Net % Exchange Rate (Gain) Loss Net (90) 34 (124) (363%) Total (23) 79 (102) (129%) Taxes During 3Q18 the Company did not recorded income tax. Net Income (Loss) During 3Q18, the Company registered a net loss of Ps. 31 million, compared to a net loss of Ps. 77 million registered in the same period of 2017 and a net loss of Ps. 58 million reported in 2Q18. For the nine months ended September 30, 2018, the Company recorded a net loss of Ps. 71 million compared to the net income of Ps. 173 million registered in the same period of Excluding the results of Celmax, Maxcom generated a net loss of Ps. 10 million in the quarter and Ps.23 million for the nine months ended on September 30, Capital Expenditure Capital expenditures during the quarter totaled Ps. 50 million, a decrease of Ps. 2 million compared to 3Q17. The capital expenditures of the quarter were primarly used to develop last mile connectivity for commercial customers and increase network capacity. Million Pesos Third Quarter Third Quarter of 2018 of 2017 Operating Activities (12) (59) CAPEX (50) (52) Financing Activities (8) 114 Increase (Decrease) in Cash and Financial Instruments Cash and Financial Instruments at Beginning of Period Cash and Financial Instruments at End of Period (70)

9 Indebtedness As of September 30, 2018, the Company reported an indebtedness of 2,216 million (the debt is valued at face value and includes interest payable at ended period). The Company's leverage ratio measured by the Debt to EBITDA ratio was 7.00 times, while the Net Debt to EBITDA ratio stood at 5.23 times (last twelve months EBITDA is used in these calculations). Maxcom Financial Liabilities at September 30, 2018 Face Value Figures in Millions Pesos Dollars Total Pesos 1 Due date Rate Step-Up Senior Notes ,103.8 June, %, 7% y 8% 2 Bancomext September, % 3 Total financial debt , Considers the FIX exchange rate at September 28, 2018: Ps$ per dollar 2 The Step-Up Senior Notes bear interest (i) from the date of issuance (October 2013) until June 14, 2016, at the annual fixed rate of 6% per annum, (ii) from June 15, 2016 until June 14, 2018, at the annual fixed rate of 7% per annum, and (iii) from June 15, 2018 until the maturity date, at the annual fixed rate of 8% per annum; have a maturity date of June 15, This loan was signed on October 2015 at 9.86% fixed interest rate 3T18 2T18 1T17 Net Debt/LTM EBITDA As of September 30, 2018, Maxcom mantains cross currency swap to cover the interests of the Step-Up Senior Notes 2020 for a notional amount of USD$70 million maturing on June 15, Stockholders Equity At the end of 3Q18, the Company reported an equity of Ps. 937 million. Capital Structure 3Q18 3Q17 Subscribed and paid shares 144,471, ,768,725 9

10 About MAXCOM MAXCOM Telecomunicaciones, S.A.B. de C.V., headquartered in Mexico City, is a facilities-based telecommunications provider using a smart-build approach to deliver last-mile connectivity to enterprises and residential customers in the Mexican territory. MAXCOM launched its commercial operations in May 1999 and is currently offering local and long distance telephony services; wired, wireless and cellular data transmission; IPbased TV services and value-added services in Mexico City metropolitan area, Monterrey, Puebla, Querétaro, León, Guadalajara, San Luis Potosí, Tehuacán and Toluca, and on a selected basis in several cities in Mexico. The information contained in this press release is the exclusive responsibility of Maxcom Telecomunicaciones, S.A.B. de C.V. and has not been reviewed by the Mexican National Banking and Securities Commission (CNBV) or any other authority. The registration of the securities described in this press release before the National Registry of Securities (Registro Nacional de Valores) held by the CNBV, shall it be the case, does not imply any certification as to the investment quality of the securities or of Maxcom s solvency. The trading of these securities by an investor will be made under such investor s own responsibility. For more information contact: Rodrigo Wright México, D.F., México (52 55) rodrigo.wright@maxcom.com This document may include forward-looking statements that are subject to risks, uncertainties and other factors which could cause real results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Words such as estimate, project, plan, believe, expect, anticipate, intend, and similar expressions may identify such forward-looking statements. Maxcom cautions readers that any forward-looking statement in this press release or made by the Company s management involves risks and uncertainties that may change based on various important factors not under Maxcom s control. These forward-looking statements represent Maxcom s judgment as of the date of this press release. Maxcom disclaims any intent or obligation to update these forward-looking statements. Unless otherwise specified, all references to USD$ are to United States dollars and references to Ps. are to Mexican pesos. Amounts presented in this quarterly report may not add up or may be slightly inconsistent due to rounding. 10

11 MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (IFRS) Thousands of Mexican Pesos (''Ps.'') As of September 30, As of December 31, Var $ Var % ASSETS: CURRENT ASSETS: Cash and financial instruments Ps. 531,576 Ps. 585,271 Ps. (53,695) (9%) 531, ,271 (53,695) (9%) Accounts receivable: Customers, net of allowance 260, ,674 7,129 3% Recoverable value added tax 57, ,502 (52,564) (48%) Other sundry debtors 17,064 14,857 2,207 15% 335, ,033 (43,228) (11%) Inventory 1,029 3,404 (2,375) (70%) Prepaid expenses 50,026 37,153 12,873 35% Total current assets 918,436 1,004,861 (86,425) (9%) Telephone network systems and equipment, net 2,271,229 2,338,606 (67,377) (3%) Intangible assets, net 263, ,307 (769) - Long-term restricted cash 30,079 33,145 (3,066) (9%) Deposits in guarantee 9,051 8, % Deferred taxes 10,155 22,710 (12,555) (55%) Other assets 2,151 2, Total assets Ps. 3,504,639 Ps. 3,674,584 Ps. (169,945) (5%) LIABILITIES CURRENT LIABILITIES: Bank loans Ps. 30,000 Ps. 30,000 Ps. - - Interest payable 52,101 6,801 45, % Accounts payable and accrued expenses 265, ,642 (52,266) (16%) Customer deposits 2,111 2,157 (46) (2%) Derivative financial instruments 17,302 4,784 12, % Other taxes payable 5,194 18,463 (13,269) (72%) Total current liabilities 372, ,847 (7,763) (2%) LONG-TERM LIABILITIES: Step-up senior notes 2,032,198 2,089,402 (57,204) (3%) Bank loans 30,000 52,500 (22,500) (43%) Deferred income 51,755 35,010 16,745 48% Labor obligations 2,237 1, % Other long-term liabilities 78,971 95,038 (16,067) (17%) Long-term liabilities 2,195,161 2,273,848 (78,687) (3%) Total liabilities Ps. 2,567,245 Ps. 2,653,695 Ps. (86,450) (3%) SHAREHOLDERS' EQUITY Capital stock Ps. 1,455,066 Ps. 1,455,066 Ps. - - Additional paid-in capital 50,170 50, Accumulated losses (590,647) (592,919) 2,272 - Net income (loss) for the period (47,323) 2,272 (49,595) (2,183%) Other comprehensive income (3,116) 9,496 (12,612) (133%) Controlling interest 864, ,085 (59,935) (6%) Non-controlling interest 73,244 96,804 (23,560) - Total shareholders' equity Ps. 937,394 Ps. 1,020,889 Ps. (83,495) (8%) Total liabitilies and shareholders' equity Ps. 3,504,639 Ps. 3,674,584 Ps. (169,945) (5%) 11

12 MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (IFRS) Thousands of Mexican Pesos (''Ps.'') 3 months ended September 30 vs 3M months ended September 30 vs 9M % 2017 % $ var % var 2018 % 2017 % $ var % var TOTAL REVENUES Ps. 270, % Ps. 437, % Ps. (167,635) (38%) Ps. 1,045, % Ps. 1,807, % Ps. (761,755) (42%) Network operating services 82,160 30% 196,459 45% (114,299) (58%) 288,618 28% 1,075,832 60% (787,214) (73%) Technical expenses 53,602 20% 49,034 11% 4,568 9% 164,221 16% 153,235 8% 10,986 7% Installation expenses 679 0% 3,772 1% (3,093) (82%) 1,151 0% 4,898 0% (3,747) (77%) Network operation cost 136,441 50% 249,265 57% (112,824) (45%) 453,990 43% 1,233,965 68% (779,975) (63%) GROSS PROFIT 133,901 50% 188,712 43% (54,811) (29%) 591,846 57% 573,626 32% 18,220 3% Selling, general and administrative expenses 118,757 44% 114,981 26% 3,776 3% 364,397 35% 344,517 19% 19,880 6% EBITDA 15,144 6% 73,731 17% (58,587) (79%) 227,449 22% 229,109 13% (1,660) (1%) Depreciation and amortization 61,162 54,342 6,820 13% 171, ,777 13,635 9% Other (income) expense 7,459 17,771 (10,312) (58%) 19,422 62,541 (43,119) (69%) Operating income (loss) (53,477) 1,618 (55,095) (3,405%) 36,615 8,791 27, % Comprehensive (income) cost of financing: Interest expense 46,153 39,429 6,724 17% 129, ,134 (6,766) (5%) Interest (income) loss, net 7,575 (5,334) 12,909 (242%) 1,124 (101,344) 102,468 (101%) Valuation effects, net 13,194 10,758 2,436 23% 39,226 59,078 (19,852) (34%) Exchange (income) loss, net (89,872) 34,158 (124,030) (363%) (75,470) (258,300) 182,830 (71%) (22,950) 79,011 (101,961) (129%) 94,248 (164,432) 258,680 (157%) INCOME (LOSS) BEFORE TAXES (30,527) (77,393) 46,866 (61%) (57,633) 173,223 (230,856) (133%) Taxes: Income taxes - 26 (26) (100%) % Total taxes - 26 (26) (100%) 13, ,593 1,917% NET INCOME (LOSS) Ps. (30,527) Ps. (77,419) Ps. 46,892 (61%) Ps. (70,883) Ps. 172,566 Ps. (243,449) (141%) Other comprehensive result (13,685) (4,018) (9,667) 241% (12,612) (46,242) 33,630 (73%) COMPREHENSIVE NET INCOME (LOSS) Ps. (44,212) Ps. (81,437) Ps. 37,225 (46%) Ps. (83,495) Ps. 126,324 Ps. (209,819) (166%) Controlling interest (20,341) (66,583) 46,242 (69%) (47,323) 186,682 (234,005) (125%) Non-controlling interest (10,186) (10,836) 650 (6%) (23,560) (14,116) (9,444) 67% NET INCOME (LOSS) Ps. (30,527) Ps. (77,419) Ps. 46,892 (61%) Ps. (70,883) Ps. 172,566 Ps. (243,449) (141%) Average basic shares 139, , , ,726 Average diluted shares 139, , , ,726 Earnings per basic share (0.15) (0.59) (0.34) 1.72 Earnings per diluted share (0.15) (0.59) (0.34)

13 MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IFRS) Thousands of Mexican Pesos (''Ps.'') Additional Other Total Capital paid-in Accumulated comprehensive Controlling Non-controlling shareholders' stock capital losses income interest interest equity Balances as of December 31, 2016 Ps. 7,628,698 Ps. 41,113 Ps. (6,920,751) Ps. 41,244 Ps. 790,304 Ps. - Ps. 790,304 Increase in capital stock 98, , , ,048 Stock option plan - 9, ,057-9,057 Comprehensive net loss ,682 (46,242) 140,440 (14,116) 126,324 Balances as of September 30, 2017 Ps. 7,726,746 Ps. 50,170 Ps. (6,734,069) Ps. (4,998) Ps. 1,037,849 Ps. 100,884 Ps. 1,138,733 Additional Other Total Capital paid-in Accumulated comprehensive Controlling Non-controlling shareholders' stock capital losses income interest interest equity Balances as of December 31, 2017 Ps. 1,455,066 Ps. 50,170 Ps. (590,647) Ps. 9,496 Ps. 924,085 Ps. 96,804 Ps. 1,020,889 Comprehensive net income - - (47,323) (12,612) (59,935) (23,560) (83,495) Balances as of September 30, 2018 Ps. 1,455,066 Ps. 50,170 Ps. (637,970) Ps. (3,116) Ps. 864,150 Ps. 73,244 Ps. 937,394 13

14 MAXCOM TELECOMUNICACIONES, S.A.B. DE C.V. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOW (IFRS) Thousands of Mexican Pesos (''Ps.'') 3 months ended September 30 vs 3M months ended September 30 vs 9M $ var % var $ var % var Operating Activities: Income (loss) before taxes Ps. (30,527) Ps. (77,393) Ps. 46,866 (61%) Ps. (57,633) Ps. 173,224 Ps. (230,857) (133%) Items not requiring the use of cash 20, ,225 (105,719) (84%) 185,213 (2,121) 187,334 (8,832%) Cash flow form income (loss) before taxes (10,021) 48,832 (58,853) (121%) 127, ,103 (43,523) (25%) Cash flow from: Accounts receivable (21,506) (21,992) 486 (2%) (33,239) (18,304) (14,935) 82% Inventory 802 1,063 (261) (25%) 2, ,225 1,483% Accounts payable 24,000 (65,731) 89,731 (137%) (52,267) (106,161) 53,894 (51%) Other assets and liabilities (4,832) (20,982) 16,150 (77%) 24,245 (111,624) 135,869 (122%) Cash flow from operating activities (1,536) (107,642) 106,106 (99%) (58,886) (235,939) 177,053 (75%) Net cash flow from operating activities (11,557) (58,810) 47,253 (80%) 68,694 (64,836) 133,530 (206%) Investing Activities: Telephone network systems and equipment, net (49,697) (52,038) 2,341 (4%) (102,955) (175,341) 72,386 (41%) Net cash flow used in investing activities (49,697) (52,038) 2,341 (4%) (102,955) (175,341) 72,386 (41%) Financing Activities: Bank loans (7,500) (7,500) - - (22,500) (22,500) - - Senior notes - 23,767 (23,767) (100%) - (246,347) 246,347 (100%) Other financing activities (399) (284) (115) 40% 3,066 (13,786) 16,852 (122%) Net cash flow from financing activities (7,899) 114,030 (121,929) (107%) (19,434) (69,586) 50,152 (72%) Increase (decrease) in cash and financial instruments (69,153) 3,182 (72,335) (2,273%) (53,695) (309,763) 256,068 (83%) Cash and financial instruments at beginning of period 600, ,602 66,127 12% 585, ,547 (262,276) (31%) Cash and financial instruments at end of period Ps. 531,576 Ps. 537,784 Ps. (6,208) (1%) Ps. 531,576 Ps. 537,784 Ps. (6,208) (1%) Important notice: In compliance with provision and other applicable provisions of the internal regulations of the Mexican Stock Exchange ( MSE ), regarding the Independent Analyst, Maxcom Telecomunicaciones S.A.B. de C.V. attests that its share, which is listed on the MSE (Maxcom A) and on the OTCQX (MXMTY), is being covered by more than two financial institutions, thus the Company will not request nor has requested registration to the program Independent Analyst, likewise Maxcom complies with all applicable regulations of the MSE and the National Banking and Securities Commission. 14