AMÉRICA MÓVIL, S.A.B. DE C.V. - PDF

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As filed with the Securities and Exchange Commission on April 30, 2014 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC FORM 20-F Annual Report Pursuant to Section 13 or 15(d) of the

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As filed with the Securities and Exchange Commission on April 30, 2014 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC FORM 20-F Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2013 Commission file number: AMÉRICA MÓVIL, S.A.B. DE C.V. (exact name of registrant as specified in its charter) America Mobile (translation of registrant s name into English) United Mexican States (jurisdiction of incorporation) Lago Zurich 245, Plaza Carso / Edificio Telcel, Colonia Ampliación Granada, Delegación Miguel Hidalgo, 11529, México, D.F., México (address of principal executive offices) Daniela Lecuona Torras, Telephone: (5255) , Facsimile: (5255) , Lago Zurich 245, Plaza Carso / Edificio Telcel, Piso 16, Colonia Ampliación Granada, Delegación Miguel Hidalgo, 11529, México, D.F., México (name, telephone, and/or facsimile number and address of company contact person) Securities registered pursuant to Section 12(b) of the Act: Title of each class: Name of each exchange on which registered: American Depositary Shares, each representing 20 A Shares, without par value NASDAQ National Market A Shares, without par value NASDAQ National Market (for listing purposes only) American Depositary Shares, each representing 20 L Shares, without par value New York Stock Exchange L Shares, without par value New York Stock Exchange (for listing purposes only) 2.375% Senior Notes Due 2016 New York Stock Exchange 3.125% Senior Notes Due 2022 New York Stock Exchange 4.375% Senior Notes Due 2042 New York Stock Exchange Floating Rate Senior Notes Due 2016 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None The number of outstanding shares of each of the registrant s classes of capital or common stock as of December 31, 2013: 23,424 million AA Shares 681 million A Shares 46,370 million L Shares Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. È Yes No If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of Yes È No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. È Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). È Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer È Accelerated filer Non-accelerated filer Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP International Financial Reporting Standards as issued Other by the International Accounting Standards Board È If other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes È No TABLE OF CONTENTS Item 1. Identity of Directors, Senior Management and Advisers... 1 Item 2. Offer Statistics and Expected Timetable... 1 Item 3. Key Information... 1 Selected Financial Data... 1 Exchange Rates... 3 Forward-Looking Statements... 4 Risk Factors... 5 Item 4. Information on the Company Item 4A. Unresolved Staff Comments Item 5. Operating and Financial Review and Prospects Item 6. Directors, Senior Management and Employees Management Employees Item 7. Major Shareholders and Related Party Transactions Related Party Transactions Item 8. Financial Information Dividends Legal Proceedings Item 9. The Offer and Listing Trading Markets Item 10. Additional Information Bylaws Certain Contracts Exchange Controls Taxation Documents on Display Item 11. Quantitative and Qualitative Disclosures about Market Risk Item 12. Description of Securities Other than Equity Securities Item 13. Defaults, Dividend Arrearages and Delinquencies Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds Item 15. Controls and Procedures Item 16A. Audit Committee Financial Expert Item 16B. Code of Ethics Item 16C. Principal Accountant Fees and Services Item 16D. Exemptions from the Listing Standards for Audit Committees Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Item 16F. Changes in Registrant s Certifying Accountant Item 16G. Corporate Governance Item 16H. Mine Safety Disclosure Item 17. Financial Statements Item 18. Financial Statements Item 19. Exhibits i PART I Item 1. Identity of Directors, Senior Management and Advisers Not Applicable. Item 2. Offer Statistics and Expected Timetable Not Applicable. Item 3. Key Information SELECTED FINANCIAL DATA We prepared our consolidated financial statements included in this annual report in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ( IFRS ). We present our financial statements in Mexican pesos. This annual report contains translations of various peso amounts into U.S. dollars at specified rates solely for your convenience. You should not construe these translations as representations that the peso amounts actually represent the U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated. Unless otherwise indicated, we have translated U.S. dollar amounts from pesos at the exchange rate of Ps to U.S.$1.00, which was the rate reported by Banco de México for December 31, 2013, as published in the Official Gazette of the Federation (Diario Oficial de la Federación, or Official Gazette ). In June 2011, we effected a two for one stock split. Unless otherwise noted, all share and per share data in this annual report have been adjusted to reflect the stock split for all periods presented. The selected financial information should be read in conjunction with, and is qualified in its entirety by reference to, our audited consolidated financial statements. We have not included earnings or dividends on a per American Depositary Share ( ADS ) basis. Each L Share ADS represents 20 L Shares and each A Share ADS represents 20 A Shares. For the year ended December 31, (millions of pesos, except share and per share amounts) (millions of U.S. dollars, except share and per share amounts) Income Statement Data: Operating revenues... Ps. 581,560 Ps. 629,889 Ps. 689,966 Ps. 775,070 Ps. 786,101 U.S.$ 60,115 Operating costs and expenses , , , , ,843 48,320 Depreciation and amortization... 79,904 91,071 93, , ,535 7,765 Operating income , , , , ,258 11,795 Net profit... Ps. 106,901 Ps. 98,905 Ps. 88,199 Ps. 91,649 Ps. 74,974 U.S.$ 5,734 Net profit attributable to: Equity holders of the parent... Ps. 92,698 Ps. 91,123 Ps. 83,045 Ps. 90,988 Ps. 74,625 U.S.$ 5,707 Non-controlling interests... 14,203 7,782 5, Net profit... Ps. 106,901 Ps. 98,905 Ps. 88,199 Ps. 91,649 Ps. 74,974 U.S.$ 5,734 Earnings per share: Basic... Ps Ps Ps Ps Ps U.S.$ 0.08 Diluted... Ps Ps Ps Ps Ps U.S.$ 0.08 Dividends declared per share (1)... Ps Ps Ps Ps Ps U.S.$ Dividends paid per share (2)... Ps Ps Ps Ps Ps U.S.$ Weighted average number of shares outstanding (millions): Basic... 77,930 79,020 78,599 76,111 72,866 Diluted... 77,930 79,020 78,599 76,111 72,866 1 As of December 31, (millions of pesos, except share and per share amounts) Balance Sheet Data: Property, plant and equipment, net...ps.418,733 Ps.411,820 Ps.466,087 Ps.500,434 Ps. 501,107 (millions of U.S. dollars, except share and per share amounts) U.S.$38,321 Total assets , , , ,685 1,025,592 78,430 Short-term debt and current portion of long-term debt... 44,967 9,039 26,643 13,622 25,841 1,976 Long-term debt , , , , ,478 35,520 Total equity , , , , ,301 16,082 Capital stock... 30,116 96,433 96,420 96,415 96,392 7,371 Number of outstanding shares (millions): AA Shares... 23,424 23,424 23,424 23,424 23,424 A Shares L Shares... 52,866 56,136 52,810 51,703 46,370 Ratio of Earnings to Fixed Charges (3) (1) Figures provided represent the annual dividend declared at the general shareholders meeting. Figures for 2009 include a special dividend of Ps.0.25 per share. (2) For more information on dividends paid per share translated into U.S. dollars, see Financial Information Dividends under Item 8. Amount in U.S. dollars translated at the exchange rate on each of the respective payment dates. (3) Earnings, for this purpose, consist of profit before income tax, plus interest expense, interest implicit in operating leases and current period amortization of interest capitalized in prior periods, minus equity interest in net income of associates, during the period. In 2013, we started to account for our employment benefits according to the revised IAS 19 Employee benefits ( IAS 19R ). In accordance with its transition provisions, we applied this standard retrospectively as of and for the years ended December 31, 2012 and We have also adjusted the selected consolidated financial information above for the years ended December 31, 2010 and For further details on the effects of retroactive application of IAS 19R, see Note 3 to our consolidated financial statements. 2 EXCHANGE RATES The following table sets forth, for the periods indicated, the high, low, average and period-end noon buying rate in New York City for cable transfers in pesos published by the Board of Governors of the Federal Reserve System, expressed in pesos per U.S. dollar. Period High Low Average (1) Period End October November December January February March April (through April 25) (1) Average of month-end rates. On April 25, 2014, the noon buying rate published by the Board of Governors of the Federal Reserve System was Ps to U.S.$ FORWARD-LOOKING STATEMENTS Some of the information contained in this annual report may constitute forward-looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of Although we have based these forward-looking statements on our expectations and projections about future events, it is possible that actual events may differ materially from our expectations. In many cases, we include together with the forward-looking statements themselves a discussion of factors that may cause actual events to differ from our forward-looking statements. Examples of forward-looking statements include the following: projections of our commercial, operating or financial performance, our financing, our capital structure or our other financial items or ratios; statements of our plans, objectives or goals, including those relating to acquisitions, competition and rates; statements concerning regulation or regulatory developments; statements about the future economic performance of Mexico or other countries in which we operate; competitive developments in the telecommunications sector; other factors and trends affecting the telecommunications industry generally and our financial condition in particular; and statements of assumptions underlying the foregoing statements. We use words such as believe, anticipate, plan, expect, intend, target, estimate, project, predict, forecast, guideline, should and other similar expressions to identify forward-looking statements, but they are not the only way we identify such statements. Forward-looking statements involve inherent risks and uncertainties. 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 such forward-looking statements. These factors, some of which are discussed under Risk Factors, include economic and political conditions and government policies in Mexico, Brazil, Colombia, Europe and elsewhere, inflation rates, exchange rates, regulatory developments, technological improvements, customer demand and competition. We caution you that the foregoing list of factors is not exclusive and that other risks and uncertainties may cause actual results to differ materially from those in forward-looking statements. Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason. You should evaluate any statements made by us in light of these important factors. 4 RISK FACTORS Risks Relating to Our Operations Competition in the telecommunications industry is intense and could adversely affect the revenues and profitability of our operations Our businesses face substantial competition. We expect that competition will intensify in the future as a result of the entry of new competitors, the development of new technologies, products and services and convergence. We also expect consolidation in the telecommunications industry, as companies respond to the need for cost reduction and additional spectrum. This trend may result in larger competitors with greater financial, technical, promotional and other resources to compete with our businesses. Among other things, our competitors could: provide increased handset subsidies; offer higher commissions to retailers; provide free airtime or other services (such as internet access); offer services at lower costs through double, triple and quadruple play packages or other pricing strategies; expand their networks faster; or develop and deploy improved technologies faster. Competition can lead us to increase advertising and promotional spending and to reduce prices for services and handsets. These developments may lead to smaller operating margins, greater choices for customers, possible consumer confusion and increasing movement of customers among competitors, which may make it difficult for us to retain or add new customers. The cost of adding new customers may also continue to increase, reducing profitability even if customer growth continues. Our ability to compete successfully will depend on our land coverage, the quality of our network and service, our rates, customer service, effective marketing, our success in selling double, triple and quadruple play packages and our ability to anticipate and respond to various competitive factors affecting the telecommunications industry, including new services and technologies, changes in consumer preferences, demographic trends, economic conditions and discount pricing strategies by competitors. If we are unable to respond to competition and compensate for declining prices by adding new customers, increasing usage and offering new services, our revenues and profitability could decline. New Legal Framework for the Regulation of Telecommunications Services in Mexico Mexico is currently developing a new legal framework for the regulation of telecommunications and broadcasting services, based on a package of constitutional amendments enacted in June The new Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones, or the IFT ) issued a resolution in March 2014, determining that our operating subsidiaries in Mexico are part of an economic interest group that is a preponderant economic agent in the Mexican telecommunications sector, and imposing certain asymmetric regulations on our Mexican fixed-line and wireless businesses. A bill that proposes implementing legislation for the June 2013 constitutional amendments is currently under consideration in the Mexican Congress and is likely to be adopted in the near future. The long-term effects of the IFT measures and the proposed legislation could be adverse to our interests in significant respects and could materially adversely affect our business and results of operations. We are contesting the IFT s preponderant economic agent determination and the imposition of asymmetric regulations, but the existing measures are in effect while our challenge is pending, and failure to comply with the new legal framework may result in material fines as well as restrictions on our operations and our ability to enter into new markets, such as broadcasting and Pay TV. 5 Governmental or regulatory actions could adversely affect our operations Our operations are subject to extensive government regulation and can be adversely affected by changes in law, regulation or regulatory policy. The licensing, construction, operation, sale, resale and interconnection arrangements of telecommunications systems in Latin America and elsewhere are regulated to varying degrees by government or regulatory authorities. Any of these authorities having jurisdiction over our businesses could adopt or change regulations or take other actions that could adversely affect our operations. In particular, the regulation of prices that operators may charge for their services could have a material adverse effect by reducing our profit margins. See Regulation under Item 4, Legal Proceedings under Item 8 and Note 17 to our audited consolidated financial statements included in this annual report. In addition, changes in political administrations could lead to the adoption of policies concerning competition and taxation of communications services. For example, Mexico is developing a new legal framework that aims to promote competition and investment in the telecommunications sector by imposing asymmetric regulation upon economic agents deemed preponderant. Furthermore, in the countries in which we operate outside of Mexico, we could face policies such as preferences for local over foreign ownership of communications licenses and assets or for government over private ownership, which could make it more cumbersome or impossible for us to continue to develop our businesses. Restrictions such as those described above could result in our incurring losses of revenues and require capital investments, all of which could materially adversely affect our businesses and results of operations. Our failure to meet or maintain quality of service goals and standards could result in fines The terms of the concessions under which our subsidiaries operate require them to meet certain service quality goals, including, for example, minimum call completion rates, maximum busy circuits rates, operator availability and responsiveness to repair requests. Failure to meet service quality obligations in the past has resulted in the imposition of fines by regulatory entities. Our ability to comply with these obligations in the future may be affected by factors beyond our control and, accordingly, we cannot assure that we will be able to comply with them. Dominant carrier regulations could adversely affect our business by limiting our ability to pursue competitive and profitable strategies Our regulators are authorized to impose specific requirements as to rates (including mobile termination rates), service quality and information on operators that are determined to have substantial market power in a specific market. We cannot predict what steps regulatory authorities might take in response to determinations regarding substantial
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