I am withholding coverage rather than assigning a rating from stale financial statements. The latest earnings headlines remain unverified, while acquisition funding and the difference between reported free cash flow and cash available to shareholders could materially change the valuation.
Key points
- 12.2 times annualized second-quarter earnings is a screening valuation, not a reliable forecast.
- MXN33.2 billion remained after first-half operating cash covered leases, interest and network spending.
- No rating or target until the September financial statements and acquisition funding are verified.
The call
The price does not establish a bargain by itself. Annualizing second-quarter earnings gives $1.88 per depositary share, but currency gains helped that quarter. Without verified September statements, I cannot responsibly determine whether the market is too optimistic, too pessimistic or about right about sustainable earnings.
Cash left after network spending is below the headline (MXN billions)Source: July 23, 2026 Form 6-K, first-half cash-flow reconciliation; components rounded.
The cash available to owners needs closer scrutiny. Management's first-half free-cash-flow measure adds back employee-benefit payments and includes other adjustments. Buying fiber networks also competes with dividends and buybacks. These are valuation questions, not evidence that the business is deteriorating; the missing disclosures prevent a defensible twelve-month forecast.
Valuation
| Screening measure | Verified basis |
|---|
| Second-quarter 2026 earnings per depositary share | $0.47 |
| Second-quarter earnings annualized, not a forecast | $1.88 |
| Price divided by annualized earnings | 12.2 times |
| First-half 2026 cash after leases, interest and network spending | MXN33.2 billion |
| Twelve-month target | Withheld |
A sustainable earnings multiple requires separating operating progress from currency gains. The cash calculation is before acquisitions and shareholder distributions, not a forecast of distributable cash. Assigning a target now would disguise those missing inputs as precision.
Risks
- Mexican registration deadlines could interrupt prepaid spending; watch service revenue and suspended lines through December 2026.
- Brazilian promotions could dilute subscriber growth; watch revenue per customer and cash generation rather than connection counts alone.
- Acquisition payments could crowd out shareholder returns; watch purchase consideration, tender obligations and debt after closing.
What would change my mind
I would initiate coverage after obtaining the September statements and acquisition funding details, then rebuilding earnings and cash available to shareholders without relying on currency gains.
