America Movil blames regulators for Q2 blemish in Mexico

America Movil blames regulators for Q2 blemish in Mexico

22 JUL 2014

America Movil, controlled by billionaire Carlos Slim, saw group sales and profits rise during Q2 – largely thanks to strong growth in mobile data and pay-TV – but took a pot shot at Mexico’s regulators for hampering performance in its home market.

Group turnover was up 4 per cent, to MXP202.6 billion (US$15.6 billion). Revenue from mobile data and pay-TV soared by nearly 19 per cent each. Of America Movil’s MXP180.7 billion service revenue – up 3.6 per cent from Q2 2013 – wireless data now accounts for around a quarter.

Underlying group cash profits, or EBITDA, increased 2.4 per cent, to MXP66.6 billion. Net income was up 32.7 per cent, to MXP18.8 billion.

In Mexico, however – which accounts for around a third of group turnover – America Movil saw a fall in profits. It laid the blame for that squarely at the door of regulation.

At MXP30.4 billion, EBITDA in Mexico was 1.8 per cent lower than Q2 2013 (it was higher margins in Brazil and Chile that helped overall group performance), while domestic mobile voice revenues were down an eye-catching 8.7 per cent.

America Movil pointed to the abolition of national roaming charges and the 34 per cent reduction in termination rates billed to competitors as significant factors.

A 15.3 per cent increase in mobile data sales, however, meant that wireless service revenue in Mexico was stable (up 0.4 per cent, to MXP36.7 billion).

It nonetheless seems a stretch to blame regulators for all of America Movil’s domestic difficulties. Telcel, the group’s mobile operation there, has seen mobile subscribers fall 0.9 per cent, year-on-year, to 71.28 million.

With the prospect of even tougher regulation in its domestic market, America Movil recently announced its decision to reduce national market share below 50 per cent through the sale of assets.

The group has been under growing pressure since the new and emboldened telecoms regulator – IFT – declared the operator a “preponderant economic agent” and eligible for tougher rules to curb its dominance.

America Movil has a 70 per cent share of the mobile market through Telcel, and an 80 per cent chunk of the fixed-line market through its Telmex operation.

Author

Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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