Incumbent America Movil is still reviewing options to reduce its domestic market share, its CEO said.
During a Q1 earnings call on Friday, Daniel Hajj said the company does not intend to sell frequencies or infrastructure as it had originally planned,…
Incumbent America Movil is still reviewing options to reduce its domestic market share, its CEO said.
During a Q1 earnings call on Friday, Daniel Hajj said the company does not intend to sell frequencies or infrastructure as it had originally planned, since new entrants such as AT&T, which recently bought Iusacell and agreed to acquire Nextel, are challenging its market dominance.
“I don’t we think we’re interested anymore in selling assets as assets. We don’t want to sell frequencies or infrastructure. So we’re reviewing exactly how the market is going to be in Mexico and then we’re going to take the decision, what we’re going to sell to reduce our market share not to be a [dominant] player,” the CEO said.
Hajj added that for the time being, AMX is “well prepared to compete” as a dominant player and does not have a specific timeframe with regard to the potential divestments.
The Carlos Slim-owned telco, which controls approximately 70% of the mobile market and 80% of the fixed-line segment, has been asked by the country’s regulator, the IFT, to comply with a number of regulations aimed at loosening its grip on the market and fuelling competition.
As part of the telecoms reform, the company last month inked network sharing agreements with Axtel, Iusacell and Telecomunicaciones 360.
Earlier this month, AMX shareholders approved the planned spin-off of its tower unit, Telesites, which will comprise 10,800 towers and other passive infrastructure used by its wireless subsidiary Telcel.
The spin-off, due to be completed by July, will hold a net debt of Ps21bn.
The company’s Q1 results were impacted by new regulatory measures including the elimination of termination fees, as well as national roaming and long distance charges in mobile and fixed-line, resulting in a 8.4% decline in domestic service revenues.
Although Brazil was the telco’s largest and fastest growing operation with a 5.8% increase in access lines compared to the same period in 2014, the depreciation of the Brazilian real against the dollar during the quarter contributed to a Ps17.8bn(US$1.1bn) foreign exchange loss.
As a result, Q1 net profits plummeted by 42% from Ps14.2bn (US$922m) in March 2014 to Ps8.23bn(US$534m) a year later.
Open to US opportunities
Hajj also mentioned that, in view of Google’s recent MVNO launch, AMX would be open to any opportunities for its US business Tracfone Wireless, which currently has an MVNO agreement with Sprint.
“[…]There is going to be more competition and there [are] going to be opportunities…we are open to opportunities, and we are going to hold [onto] the opportunities that we have. But the strategy is still to grow the business and further expand our prepaid business in the US,” he pointed out.
