America Movil’s CFO said Eastern Europe’s fixed networks need to be developed to underpin growth in mobile data traffic, as he spoke about the company’s desire for expansion in the region.
“In Eastern Europe you need to build a lot more, develop the fixed platform much more for the new phase of growth in mobile data services,” Carlos Garcia Moreno said in a Reuters interview, adding that Eastern Europe is similar to Latin America several years ago because investment in fixed-line networks stopped when mobile became popular.
He also said that “in this process there are acquisitions that can be made.”
However, he did not shed light on what companies America Movil may be interested in acquiring, pointing out that there are not many assets on offer, and expansion opportunities are more likely to come through organic growth.
Over the last two years, the company acquired cable operators in Bulgaria and Macedonia, although it opted out of bidding for Telecom Srbija, which is being privatised.
America Movil is Latin America’s biggest telecom company and makes just 7 per cent of its revenue from Europe, where it has a presence through Telekom Austria. It also holds a stake in Dutch operator KPN.
Garcia Moreno expressed ambitions to grow operations in the region, saying it is “feasible” that by 2020 Europe could contribute 15 per cent of the company’s revenue.
In its home market, the operator is facing challenges as AT&T ramps up its presence and the trend for cable operators to offer triple-play packages increases. This has been coupled with regulatory reforms designed to erode America Movil’s dominance in the country.
America Movil introduced a No Borders Plan, enabling contract customers in Mexico to make calls to the US at local rates while also using their voice minutes, SMS and data to be used across the border, but the CFO told Reuters the operator did not need to own a network in the US. And he declined to say whether America Movil would be interested in buying US operator T-Mobile US.
In Q2 2015, 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 billion, which was essentially flat year-on-year. Service revenue of MXP193.81 billion was down 1.6 per cent, although in Europe it was trending up.
As for Brazil, America Movil’s second biggest market for wireless subscribers (71.2 million), Garcia Moreno said consolidation is on the rise.