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América Móvil under threat as operators team up
15 June 2012
Iusacell, Telefónica and Grupo Televisa are providing stiff competition to Carlos Slim’s América Móvil
Carlos Slim Helu
Carlos Slim Hélu’s América Móvil is facing stiff competition in Mexico as its competitors are joining hands to increase their strength in the market, reported Businessweek.
On June 14, Iusacell received Federal Economic Competition Commission approval to sell a 50% stake to Grupo Televisa, which is one of Slim’s biggest competitors. The country’s third-largest wireless service provider, Grupo Iusacell has also signed an agreement with Telefónica this week to share mobile-phone networks. Iusacell CEO Adrian Steckel said Iusacell and Telefónica may provide 4G services by 2013.
América Móvil intends to provide 4G wireless service in four or five Mexican cities by the end of 2012. The telecoms company will be the first operator in the country to offer the service. Meanwhile, América Móvil, which holds 70% of the market share, can also maintain customer loyalty by offering discounts on calls made within the network, Bloomberg said.
Stifel, Nicolaus & Co. analyst, Christopher King told Bloomberg: “I’d still rather be América Móvil than anybody else in the telecoms industry in Mexico. I don’t see Iusacell having a significant impact on América Móvil for a number of years, since they need to invest over the course of the next year or two to become a viable competitor to anyone.”
Iusacell increased its customer base to 5.4 million customers December 2011, rising 39% from September 2010. América Móvil only managed to increase its subscriber base by 5.2% in the same period, while Telefónica’s customer base remained flat.
Alejandro Gallostra, an analyst at Banco Bilbao Vizcaya Argentaria forecasts Iusacell’s subscriptions to reach 11 million in four years.
The Federal Economic Competition Commission has approved Iusacell’s deal with Grupo Televisa with some conditions. Luis Nino, a spokesman at Iusacell said some of the conditions are “onerous”, added Bloomberg. GTB
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