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Axtel Announces First Quarter 2013 Results

  Axtel Announces First Quarter 2013 Results

Business Wire

SAN PEDRO GARZA GARCIA, Mexico -- April 25, 2013

Axtel, S.A.B. de C.V. (“AXTEL” or “the Company”), a leading Mexican fixed-line
integrated telecommunications company, announced today its unaudited first
quarter results ended March 31, 2013^(1).

For additional information, please contact Adrian de los Santos, Investor
Relations Officer and Corporate Finance Director at IR@axtel.com.mx

Highlights:

  *During the first quarter of 2013, EBITDA and EBITDA margin increased 18%
    and 570 bps respectively compared to the previous quarter. This was mainly
    due to lower operating expense levels derived from the productivity
    initiatives recently implemented.
  *During February, AXTEL began making lease payments on the towers it had
    divested in January. Excluding this expense, EBITDA and EBITDA margin for
    the first quarter would have been Ps. 720 million and 31.5%
    respectively—an increase of 25% and 780 bps respectively compared to
    previous quarter.
  *The quality of the revenue mix improved in the first quarter vis-à-vis the
    fourth quarter, as evidenced by the Gross Profit margin increase from
    72.3% to 75.8%, or 350 bps. This trend reflects the increasing proportion
    of higher value services, which is consistent with AXTEL’s strategy.
  *During the quarter the Supreme Court resolved certain cases on
    fixed-to-mobile interconnection rates involving AXTEL, which resulted in
    no payment obligation or contingency for the Company. Concerning the
    Telecommunications and Competition Reform Act under review by Congress,
    AXTEL considers it is a positive initiative as it promotes a more
    competitive industry environment. This reform improves the prospects of
    the Company.

Revenues from operations

Revenues from operations totaled Ps. 2,289 million in the first quarter of
year 2013 from Ps. 2,503 million for the same period in 2012, a decrease of
Ps. 214 million or 9%.

Revenues from operations totaled Ps. 9,976 million in the twelve month period
ended March 31, 2013, compared to Ps. 10,677 million in the same period in
2012, a decrease of Ps. 701 million, or 7%.

Sources of Revenues

IMPORTANT DISCLOSURE. Unless otherwise stated, comments in this section
exclude revenues generated by our major wholesale customer (see note 9 for
further information).

Local services. Local service revenues totaled Ps. 830 million in the
first quarter of 2013, compared to Ps. 913 million for same period in 2012,
representing a decrease of Ps. 82 million, explained by Ps. 38 million, Ps. 14
million and Ps. 30 million decreases in monthly rents, measured service and
cellular revenues, respectively. Despite recording an 11% decline in
customers, monthly rents declined only 6% implying a better customer mix. The
24% decrease in measured services is explained by 16% and 10% decreases in
billed-traffic volume and prices, respectively. The 18% decrease in cellular
revenue is explained by a 5% decline in cellular billed-traffic volume and a
14% decrease in price, resulting from a market trend linked to lower
interconnection tariffs. Revenues coming from monthly rents represented 79% of
local revenues during the three month period ended March 31, 2013. For the
twelve month period ended March 31, 2013, local revenues totaled Ps. 3,521
million, compared to Ps. 3,746 million registered in the same period in 2012,
a decrease of Ps. 225 million or 6% mostly explained by Ps. 55, Ps. 57 and Ps.
113 million declines in monthly rents, measured service and cellular revenues
respectively.

Long distance services. Revenues totaled Ps. 266 million in the first
quarter of 2013, compared to Ps. 267 million for same period in 2012.
Billed-traffic volume increased 21%, however revenues remained flat due to an
18% decline in billed-traffic prices. For the twelve month period ended March
31, 2013, long distance revenues totaled Ps. 1,099 million compared to Ps.
1,132 million registered in 2012, a Ps. 33 million, or 3%, decline.

Data & Network. Data and network revenues amounted to Ps. 705 million in
the first quarter of 2013, compared to Ps. 683 million in the same period in
2012, a Ps. 22 million increase driven by mass-market, or, “on-demand”
internet services revenues, which increased 25% year-over-year. Private lines
and dedicated internet revenues declined 6% and 4% respectively. Mass-market,
or, “on-demand” internet services, represented 31% of data & network revenues
during the quarter. During the twelve month period ended on March 31, 2013,
data and network services revenues totaled Ps. 2,810 million from Ps. 2,615
million registered in 2012, an increase of Ps. 195 million, or 7%.

International traffic. In the first quarter of 2013, international traffic
revenues totaled Ps. 124 million, a decrease of Ps. 76 million or 38% versus
same quarter of previous year, explained by a blended 14% decline in prices
and a 28% reduction in volume. In peso terms, the decline was also affected by
a 3% appreciation of the Mexican peso vis-à-vis the US dollar. For the twelve
month period ended March 31, 2013, revenues from international traffic totaled
Ps. 579 million from Ps. 1,177 million in the same period in 2012, a decline
of 51% explained by a 8% decline in volume and a 4% decline in prices.

Other services. Quarterly revenues from other services totaled Ps 326
million in the first quarter of 2013, from Ps. 389 million in the same quarter
of previous year, a decrease of Ps. 63 million or 16%, mostly explained by a
Ps. 60 million decrease in integrated services. For the twelve month period
ended March 31, 2013, revenues totaled Ps. 1,785 million from Ps. 1,635
million registered in 2012, an increase of Ps. 150 million, or 9%.

Revenues by segment *(Excludes International Traffic and Major Wholesale
Customer)

Mass Market. Revenues totaled Ps. 884 million in the first quarter of
2013, compared to Ps. 903 million for the same quarter in 2012, a decrease of
2%, mainly due to 10% and 13% decrease in local and long distance revenues,
partially compensated by 25% and 17% increases in data and other revenues. For
the twelve month period ended March 31, 2013, revenues totaled Ps. 3,664
million, an increase of 3% compared to the same period in 2012, mostly
explained by a 39% increase in data revenues.

Enterprise (including Government). Revenues for this segment amounted to
Ps. 1,048 million in the three month period ended March 31, 2013, a decrease
of 5% versus the same period in 2012. This is explained by decreases of 24% in
integrated services and equipment sales and 5% in local revenues, partially
mitigated by increases of 11% in long distance revenues and 2% in data
revenues. For the twelve month period ended March 31, 2013, revenues increased
3%, from Ps. 4,588 million registered in the twelve month period ended March
31, 2012, to Ps 4,712 million in 2013. This is due to increases of 10% and 5%
in other and data revenues respectively, partially offset by a 5% decline in
local revenues.

Interconnection, Public Telephony and Carriers. Revenues for this segment
declined 20%, from Ps. 245 million in the first quarter 2012 to Ps. 196
million in 2013, mainly due to 35% and 17% decreases in long distance and data
revenues. For the twelve month period ended March 31, 2013 revenues reached
Ps. 840 million, a decline of 14% compared to the same period in 2012,
primarily explained by a 30% and 44% decrease in local and long distance
revenues respectively.

Consumption

Local Calls. Local calls excluding our largest wholesale customer totaled
427 million calls in the first quarter of 2013, compared to 441 million calls
for same period in 2012, representing a decrease of 3%. Billed local calls
decreased 14 million or 16%, while local calls included in commercial offers
increased by 1 million. Business and residential customers contributed with 12
million and 2 million calls respectively to the billed local calls decline.
Local calls included in commercial offers represented 82% of total calls in
the first quarter of 2013. For the twelve month period ended March 31, 2013,
local calls totaled 1,804 million excluding our largest wholesale customer,
compared to 1,812 million registered in the same period in 2012, a decline of
8 million calls.

Cellular (“Calling Party Pays”). Minutes of use of calls completed to a
cellular line excluding our largest wholesale customer amounted to 155 million
in the three month period ended March 31, 2013, compared to 159 million in the
same period in 2012, a decrease of 2%. Billed cellular minutes decreased 5
million or 5%, while minutes in modules included in a monthly rent increased 2
million minutes or 4%. Billed cellular minutes represented 70% of cellular
minutes in the first quarter of 2013, compared to 72% in the year-earlier
quarter. For the twelve month period ended March 31, 2013 and excluding our
largest wholesale customer, cellular minutes increased 38 million, or 6%, from
627 million registered in the twelve month period ended March 31, 2012, to 665
million in 2013.

Long distance. Excluding our largest wholesale customer, which represents
12% of total volume, outgoing long distance minutes amounted to 552 million
for the three month period ended March 31, 2013, from 475 million in the same
period in 2012, a 16% increase. This, resulting from a 10% decrease and 23%
increase in traffic from residential and business customers, respectively.
Billed long distance minutes during the first quarter of 2013 increased 21%
compared to the same period in 2012. Domestic long distance minutes
represented 96% of total traffic during the quarter. For the twelve month
period ended March 31, 2013 and excluding our largest wholesale customer,
outgoing long distance minutes amounted 2,100 million, compared to 1,908
million registered in 2012, an increase of 10%, explained by increased traffic
from business customers, particularly in billed long distance minutes.

Operating Data

RGUs^(8) and Customers. As of March 31, 2013, RGUs (Revenue Generating
Units) totaled 1,451 thousand. During the first quarter of 2013, RGU
net-disconnections totaled 38 thousand, compared to 29 thousand net-additions
in the first quarter of 2012, attributable to a greater number of
disconnections from both voice and wireless RGUs, compensated by an increase
in video RGUs. As of March 31, 2013, customers totaled 673 thousand, a decline
of 87 thousand from the same date in 2012. Total customers declined 37
thousand on a sequential basis.

Voice RGUs (lines in service). As of March 31, 2013, lines in service
totaled 957 thousand. During the first quarter of 2013, gross additional lines
totaled 40 thousand compared to 69 thousand in the first quarter of 2012.
Disconnections in the first quarter of 2013 totaled 79 thousand compared to 68
thousand in the year-earlier quarter. Customers in low-ARPU offers represented
the majority of disconnections during the quarter. Lines in service in the
first quarter of 2013 decreased 40 thousand, compared to 1 thousand
net-additions in the same period of 2012. As of March 31, 2013, residential
lines represented 65% of total lines in service.

Broadband RGUs (broadband subscribers). Broadband subscribers increased 3%
year-over-year totaling 479 thousand subs as of March 31, 2013. During the
first quarter of 2013, broadband subscribers decreased 14 thousand compared to
27 thousand net-additions in the same period of 2012. As of March 31, 2013,
WiMAX broadband subs reached 356 thousand, compared to 383 thousand a year
ago, while AXTEL X-tremo, or FTTH customers, totaled 109 thousand. The
decrease in broadband subscribers is explained by a temporary high level of
WiMAX disconnections, which is expected to come to more normal levels in the
short term, as new commercial offers and retentions strategies have been
implemented. Broadband penetration reached 50% at the end of the first quarter
of 2013, compared to 45% a year ago.

Video subscribers. Axtel commercially launched its pay-television service,
AXTEL TV, on January 30th, 2013, and as of March 31, 2013, video subscribers
had reached 15 thousand. Video subscribers totaled one thousand at the
beginning of this quarter.

Line equivalents (E0 equivalents). We offer from 64 kilobytes per second
(“KBps”) up to 200 megabytes per second (“MBps”) dedicated data links in all
of our thirty-nine existing cities. We account for data links by converting
them to E0 equivalents in order to standardize our comparisons versus the
industry. As of March 31, 2013, line equivalents totaled 650 thousand, 17%
increase.

Cost of Revenues and Operating Expenses

Cost of Revenues. For the three month period ended March 31, 2013, the
cost of revenues represented Ps. 554 million, a decrease of Ps. 71 million,
compared with the same period of year 2012, mainly explained by decreases of
Ps. 68 million in integrated services costs. For the twelve month period ended
March 31, 2013, cost of revenues reached Ps. 2,784 million, an increase of Ps.
119 million in comparison with year 2012, mainly due to increases in costs
related to equipment sales, partially offset by decreases in fixed-to-mobile
and international traffic costs.

Gross Profit. Gross profit is defined as revenues minus cost of revenues.
For the first quarter of 2013, the gross profit accounted for Ps. 1,735
million, a decrease of Ps. 143 million compared with the same period in year
2012. The gross profit margin increased from 75.0% to 75.8% year-over-year,
influenced by slightly higher enterprise segment gross margin. For the twelve
month period ended March 31, 2013, our gross profit totaled Ps. 7,192 million,
compared to Ps. 8,012 million recorded in year 2012, a decrease of Ps. 820
million, or 10%.

Operating expenses. In the first quarter of year 2013, operating expenses
totaled Ps. 1,063 million, Ps. 56 million or 5% lower than the Ps. 1,119
million recorded in the same period in year 2012, explained by Ps. 73, Ps. 11
and Ps. 12 million decreases in personnel, outsourcing and maintenance
expenses, respectively, due to the efficiency initiatives initiated during the
fourth-quarter of last year. These reductions were partially offset by the Ps.
48 million increase in rents due to the towers lease expenses of February and
March. For the twelve month period ended March 31, 2013, operating expenses
totaled Ps. 4,541 million, coming from Ps. 4,506 million in the same period in
2012. Personnel represented 41% of total operating expenses in the twelve
month period ended March 31, 2013.

Adjusted EBITDA, D&A and Operating Income

Adjusted EBITDA^(5). The Adjusted EBITDA totaled Ps. 672 million for the
three month period ended March 31, 2013, compared to Ps. 759 million for the
same period in 2012. As a percentage of total revenues, Adjusted EBITDA margin
represented 29.4% in the first quarter of 2013, 95 bps lower than the margin
recorded in the year-earlier quarter. Excluding the tower lease expense,
Adjusted EBITDA in the first quarter would have been Ps. 720 million,
representing a 31.5% margin, or 113 bps higher than a year earlier. For the
twelve month period ended March 31, 2013, Adjusted EBITDA amounted to Ps.
2,652 million, compared to Ps. 3,506 million in year 2012.

Depreciation and Amortization^(11). Depreciation and amortization totaled
Ps. 806 million in the three month period ending on March 31, 2013 compared to
Ps. 752 million for the same period in year 2012. Depreciation and
amortization for the twelve-month period ended March 31, 2013 reached Ps.
3,128 million, from Ps. 3,068 million in the same period in year 2012, an
increase of Ps. 60 million.

Operating Income (loss). In the three month period ended March 31, 2013,
the Company recorded an operating income of Ps. 2,968 million compared to an
operating income of Ps. 9 million registered in the same period in year 2012.
The first quarter 2013 result includes Ps. 3,113 million in gains related to
the tower sale. For the twelve month period ended March 31, 2013 our operating
income reached Ps. 2,425 million when compared to the operating loss of Ps. 8
million in the same period of year 2012, a variation of Ps. 2,433 million
mostly explained by the sale of 883 telecommunication sites.

CFR, Indebtedness, Cash, Investments and Derivative Instruments

Comprehensive financial result. Net interest expense for the first quarter
2013 increased Ps. 64 million vis-à-vis the first quarter 2012 due to the Ps.
48 million cancellation of deferred costs related to the prepayment of the
syndicated bank facility and Ps. 81 million related to the structuring of the
telecommunication towers sale. Without these 2 effects, net interest expense
would have been Ps. 195 million. During the first quarter 2013, a 5.3% peso
appreciation against the U.S. dollar generated a Ps. 436 million FX gain,
compared to an FX gain of Ps. 969 million related to a 9.3% peso appreciation
recorded in the first quarter of 2012. Concerning variations in the fair value
of financial instruments, these are partially explained by 29% increase and 4%
decline in the price of AXTELCPO during the first quarters of 2013 and 2012,
respectively, which affected the valuation of AXTEL´s position held in its own
stock through the zero-strike-calls instruments. The Ps. 572 million
comprehensive financial gain for year ended in March 2013, compared to a Ps.
1,708 million comprehensive financial loss for year ended in March 2012, is
mainly explained by a 3% appreciation of the Mexican peso against the U.S.
dollar in the 2013 period, compared to a 7% depreciation in the 2012 period.

Debt. At the end of the first quarter of 2013, total debt decreased Ps.
4,156 million in comparison with the same date in 2012, explained by (i) a Ps.
2,901 million net reduction related to the exchange of the senior notes due
2017 and 2019, (ii) a Ps. 786 million decrease in bank debt related to the
prepayment of the syndicated bank facility, (iii) a decrease of Ps. 337
million in leases and financial obligations, (iv) a Ps. 149 million decrease
in notes issuance and deferred financing costs, and (v) a Ps. 244 million
non-cash decrease caused by the 3% appreciation of the Mexican peso.

Cash. As of the end of the first quarter of 2013, our cash and equivalents
balance totaled Ps. 824 million, compared to Ps. 526 million a year ago, and
Ps. 608 million at the beginning of the quarter. As of the end of the quarter,
67 percent of the cash balance was maintained in dollars, the rest in pesos.

Capital Investments. In the first quarter of 2013, capital investments
totaled Ps. 329 million, or $26 million, compared to Ps. 502 million, or $39
million, in the year-earlier quarter. Accumulated for the twelve-month period
ended March 31, 2013, capital investments totaled Ps. 1,843 million, or $141
million, compared to Ps. 2,286 million, or $181 million, for the same period
ended in 2012.

Other Investments. As of March 31, 2013, the Company maintained an
economic position equivalent to 30.4 million AXTELCPOs in ZSC.

Derivative Instruments. The following table summarizes the Company’s
derivatives position as of March 31, 2013.

                                                           
                 AXTEL receives            AXTEL pays      Other
Zero-strike Equity Call Option                               
Notional                                                  30.4 million
                                                                  AXTELCPO
                    30.4 million AXTELCPO       Strike price:
Value             times CPO's               ¢1 per CPO      
                    market price
Settlement                                                In cash
Expiration Date                                           July 2013
Valuation                                                 Ps. 114
                                                                  million
                                                                  

Financial Statements

Information as of March 31, 2013 compared with information as of March 31,
2012

Assets

As of March 31, 2013, total assets sum Ps. 19,099 million compared to Ps.
20,798million as of March 31, 2012, a decline of Ps. 1,699 million.

Cash and equivalents. As of March 31, 2013, we had cash and cash
equivalents of Ps. 824million compared to Ps. 526 million in the same date of
year 2012, an increase of Ps. 299 million or 57%.

Accounts Receivable. As of March 31, 2013, the accounts receivable were
Ps. 2,545 million compared with Ps. 2,191 million in the same date of 2012, an
increase of Ps. 354 million.

Property, plant and equipment, net. As of March 31, 2013, the net of
depreciation value of property, plant and equipment was Ps. 13,565 million
compared with Ps. 15,199 million as of March 31, 2012, a decrease of Ps. 1,635
million. The property, plant and equipment without adjusting for the
accumulated depreciation, was Ps. 36,189 million and Ps. 34,951 million as of
March 31, 2013 and March 31, 2012, respectively. The increase in property,
plant and equipment is due to a higher investment during this period.

Liabilities

Total liabilities were Ps. 10,790 million as of March 31, 2013 compared to
Ps. 14,671 million as of March 31, 2012, a decrease of Ps. 3,882 million.

Accounts payable & accrued expenses. On March 31, 2013, the accounts
payable and accrued expenses were Ps. 2,168 million compared with Ps. 2,102
million on March 31, 2012, an increase of Ps. 66 million.

Stockholders Equity

On March 31, 2013, the stockholders equity of the Company was Ps. 8,309
million compared with Ps. 6,127 million as of March 31, 2012, an increase of
Ps. 2,182 million, or 36%. The capital stock remained unchanged at Ps. 6,626
million as of March 31, 2013 and 2012.

Liquidity and Capital Resources

Historically we have relied primarily on vendor financing, the proceeds of
the sale of securities, internal cash from operations and the proceeds from
bank debt to fund our operations, capital expenditures and working capital
requirements. Additionally, and subject to (i) market conditions, (ii) our
liquidity position and (iii) contractual obligations, from time to time, we
might acquire senior secured and unsecured notes in the open market or in
privately negotiated transactions. Although we believe that we would be able
to meet our debt service obligations and fund our operating requirements in
the future with cash flow from operations, we may seek additional financing
with commercial banks or in the capital markets from time to time depending on
market conditions and our financial requirements. We will continue to focus on
investments in property, systems and infrastructure and working capital
management, including the collection of accounts receivable and management of
accounts payable.

Cash Flow Statement

For the three-month period ended March 31, 2013 compared with the three-month
period ended March 31, 2012

Net resources provided by operating activities were Ps. 237 million for
the three-month period ended on March 31, 2013 compared to Ps. 93 million
recorded in the same period of year 2012.

Net resources used in investing activities were Ps. 2,835 million for the
three-month period ended on March 31, 2013 compared to Ps. (501) million
recorded in the same period of year 2012. These flows primarily reflect
investments in fixed assets of Ps. (329) million and Ps. (502) million,
respectively.

Net resources (used in) provided by financing activities were Ps. (2,876)
million and Ps. (555) million for the three-month periods ended on March 31,
2013 and 2012, respectively.

As of March 31, 2013, the ratios of net debt to Adjusted EBITDA and
interest coverage of the company were 2.4x and 2.4x, respectively. As March
31, 2012 the ratios of net debt to Adjusted EBITDA and interest coverage, were
3.1x and 3.4x, respectively.

Since the beginning of operations of the Company, AXTEL has invested
approximately Ps. 36 billion in infrastructure. The Company expects to do more
investments in the future, according to the expansion of the network in other
geographical areas of Mexico in order to gain market and to maintain its
current infrastructure and network.

Cash Flow Statement

For the twelve months ended March 31, 2013 compared with twelve months ended
March 31, 2012

Net resources provided by operating activities were Ps. 2,348 million for
the twelve-month period ended on March 31, 2013 compared to Ps. 2,897 million
recorded in the same period of year 2012.

Net resources (used in) provided by investing activities were Ps. 1,305
million for the twelve-month period ended on March 31, 2013 compared to Ps.
(2,297) million recorded in the same period of year 2012. These flows
primarily reflect investments in fixed assets of Ps. (1,843) million and Ps.
(2,286) million, respectively.

Net resources (used in) provided by financing activities were Ps. (3,324)
million and Ps. (892) million for the twelve-month period ended on March 31,
2013 and 2012, respectively.

Other important information

1) We are presenting financial information based on International Financial
Reporting Standards (IFRS) in nominal pesos for the following periods:

  *Consolidated income statement information for the three-month periods
    ending on March 31, 2013, and December 31 and March 31, 2012; and
    twelve-month period ending on March 31, 2013 and March 31, 2012, and
  *Balance sheet information as of March 31, 2013 and 2012; and December 31,
    2012.

2) Revenues are derived from:

               Local services. We generate revenue by enabling our customers
               to originate and receive calls within a defined local service
               area and by providing offers with local calls, calls completed
               on a cellular line (“calling party pays,” or CPP calls) and
   i.     long distance minutes included in the monthly rent. Customers
               are charged a flat monthly fee for a variety of commercial
               offers and in certain offers, a per call fee for local calls
               (“measured service”), a per minute usage fee for CPP calls and
               value added services.
               
               Long distance services. We generate revenues by providing long
      ii.      distance services (domestic and international) for our
               customers’ completed calls from AXTEL lines.
               
               Data & network. We generate revenues by providing data,
      iii.     Internet access and network services, like virtual private
               networks and private lines.
               
      iv.      International traffic. We generate revenues terminating
               international traffic from foreign carriers.
               
               Other services. Include among others, video service revenues,
               activation fees, customer premises equipment (‘‘CPE’’) sales
      v.       and revenues generated from integrated telecommunications
               services provided to corporate customers, financial
               institutions and government entities.
               

     Cost of revenues include expenses related to the termination of our
3)  customers’ cellular and long distance calls in other carriers’ networks,
     as well as expenses related to billing, payment processing, operator
     services and our leasing of private circuit links.

     Operating expenses include costs incurred in connection with general and
4)   administrative matters which incorporate compensation and benefits, the
     costs of leasing land related to our operations and costs associated with
     sales and marketing and the maintenance of our network.

     Adjusted EBITDA is defined as net income plus interest, taxes,
5)   depreciation and amortization, and further adjusted for unusual or
     non-recurring items. For additional detail on the Adjusted EBITDA
     Reconciliation, go to AXTEL’s web site at www.axtel.com.mx

     Earnings per CPO are calculated dividing the net income by the average
6)   number of Series A and Series B shares outstanding during the period
     divided by seven. The number of outstanding Series A and Series B shares
     was 96,636,627 and 8,672,716,596, respectively, as of March 31, 2013.

7)   Net Debt to Adjusted EBITDA: The figure comes from dividing the net debt
     at the end of the period by the respective LTM Adjusted EBITDA.

     Revenue Generating Unit, or RGU, represents individual service subscriber
8)   who generates recurring revenue for the Company. Total RGUs include the
     sum of all lines in service, broadband service customers and video
     subscribers.

9)   Breakdown of AXTEL’s revenues including its major wholesale customer:

                                                
                                             LTM     LTM
Million Pesos     Q1 2013  Q1 2012  Q4 2012  mar-13  mar-12
Local                834       917       880       3,536    3,982
Long Distance        283       303       306       1,217    1,234
Data & Network       708       685       718       2,819    2,624
Int'l. Traffic       124       201       146       579      1,177
Other             340      396      368      1,825   1,659
                 2,289    2,503    2,418    9,976   10,677
                                                            

10) RECAPITALIZATION PLAN

  *On January 31, 2013, the Company closed the sale of 883 telecommunications
    sites to MATC Digital, S. de R.L. de C.V. (MATC) for $249 million, and
    also agreed to lease space on these telecommunications sites back from
    MATC for approximately $20 million in annual net lease expense for the
    Company and for a term ranging from 6 years to 15 years depending on the
    technology installation at each site.
  *Concurrent with the tower sale, the Company exchanged $142 million and
    $355 million of its existing Senior Unsecured Notes due 2017 and 2019,
    respectively, for $249 million and $22 million of new Senior Secured Notes
    and Senior Secured Convertible Notes, respectively, both due in 2020, and
    a cash payment of $83 million to tendering bondholders.

      Depreciation and amortization includes depreciation of all
11)  communications network and equipment and amortization of pre-operating
      expenses and cost of spectrum licenses, among others.

      Subject to market conditions, the Company’s liquidity position and its
12)   contractual obligations, from time to time, the Company may acquire its
      senior secured and unsecured notes in the open market or in privately
      negotiated transactions.

Analyst Coverage: The analysts mentioned below currently cover Axtel S.A.B. de
C.V.

  *Actinver Casa de Bolsa S.A. de C.V.
  *Bank of America-Merrill Lynch
  *BBVA Bancomer, S.A.
  *BTG Pactual
  *Casa de Bolsa Banorte Ixe, Grupo Financiero Banorte
  *Credit Suisse Securities (USA) LLC
  *GBM
  *Morgan Stanley & Co. LLC
  *Scotiabank Inverlat

About AXTEL

Axtel is a Mexican telecommunications company with a significant growth in the
broadband segment, and one of the leading companies in information and
communication technologies solutions in the corporate, financial and
government sectors. The Company serves all market segments -corporate,
financial, government, wholesale and residential with the most robust offering
of integrated communications services in Mexico. Its world-class network
consists of different access technologies like fiber optic, fixed wireless
access, point to point and point to multipoint links, in order to offer
solutions tailored to the needs of its customers.

AXTELCPO trades on the Mexican Stock Exchange since 2005. AXTEL’s American
Depositary Shares are eligible for trading in The PORTAL Market, a subsidiary
of the NASDAQ Stock Market, Inc.

Visit AXTEL’s Investor Relations Center on www.axtel.mx

Contact:

Axtel, S.A.B. de C.V.
Adrian de los Santos, +52(81) 8114-1128
Investor Relations Officer and
Corporate Finance Director
IR@axtel.com.mx