America Movil addressed the “major change” impacting Mexico’s telecoms market, as the telecoms group reported Q2 results which reflected the “mixed bag” of economies in which it operates.
With Mexico being a critical market for America Movil, the company noted that this country is seeing “a major change in the telecommunications sector”, with AT&T ramping-up its presence in the sector and the trend for cable operators to offer triple-play packages. This has been coupled with regulatory reforms designed to address the competitive landscape in the country.
It has introduced a new “No Borders Plan”, enabling contract customers in Mexico to make calls to the US at local rates, while minutes, SMS and data plans can also be used when roaming across the border. The intention is to make a similar offer available to prepaid customers, according to reports.
This is similar to AT&T’s plan of creating an integrated “North American Mobile Service area”.
And Reuters reports that the operator is set to spend $6 billion on its network in Mexico over the next three years – shortly after AT&T made a $3 billion pledge.
“Now the principal objective of the Telecoms Reform has been achieved: to increase the level of effective competition in the telecom sector, which is now made up of strong and experienced global players with both the capacity and willingness—we hope—to invest for the long term,” America Movil said in a statement.
Wireless service revenue in Mexico of MXP33.58 billion ($2.12 billion) was down 8.5 per cent year-on-year.
On a group level, the company reported a net income of MXP14.05 billion, down 16 per cent, on revenue of MXP220 million, which was essentially flat year-on-year. Service revenue of MXP193.81 million was down 1.6 per cent.
America Movil said that it had seen a “mixed bag of economic indicators throughout Latin America”, with Mexico’s economy “appearing to be gaining momentum”, Brazil “continuing to go deeper into negative territory”, Colombia “assimilating the blow to the economy from the drop in oil prices”, and the rest of the region seeing “relatively stable, albeit decelerating, economic growth”.
With regard to service revenue, it said that “in Central America and the Caribbean they maintained a stable growth rate, in the South American block they experienced a solid, though declining, expansion, in Europe they are trending up and in Mexico, growth rates kept coming down, but seem to be stabilising”.
The company’s wireless customer base was up 0.8 per cent year-on-year, even after the disconnection of 850,000 subscribers in order to meet corporate churn policies. It closed the period with 288.8 million wireless customers across its markets, alongside 34.6 million landlines, 22.8 million broadband accesses, and 21.5 million PayTV units.
America Movil’s biggest markets for wireless subscribers are Mexico (72.63 million) and Brazil (71.2 million).
The company has reclassified its investment in KPN from a long-term investment to an “available for sale asset”. It has placed a €3 billion bond exchangeable into KPN shares with 5 year maturity, at which point it can settle in cash, deliver the underlying KPN shares, or a combination of both.