America Movil Plans To Launch 4G Services After Mexico Spectrum Auction
23 Julho 2010 - 2:22PM
Dow Jones News
America Movil SAB (AMX, AMOV, AMX.MX), Latin America's No. 1
wireless carrier by subscribers, said Friday it plans to eventually
launch fourth-generation mobile services in Mexico after it
aggressively bid for additional wireless spectrum in a
government-sponsored auction earlier this month.
"We don't know exactly when, but we are reviewing when it would
be good for [Mexico unit] Telcel to start putting in that
infrastructure. It would be an alternative to increase the data
side of our business, which is growing a lot," Chief Executive
Daniel Hajj said during a conference call to discuss the company's
second-quarter financial results.
Fourth-generation, or 4G, wireless networks are expected to
provide broadband Internet access and streaming multimedia services
at considerably faster speeds than is currently possible with the
3G networks in use today.
Last week, America Movil submitted the highest bids for 21
blocks of 10MHz in the 1710MHz-2170MHz frequency band, offering to
pay 3.79 billion pesos ($297 million). The bidding rounds closed
Monday night and telecommunications regulator Cofetel has 30 days
to announce the final winners.
America Movil's talk about 4G comes at a time when two of its
three competitors in Mexico haven't even launched 3G networks yet
due to spectrum constraints.
However, competition in Mexico's wireless industry, where
America Movil has about a 70% market share with just over 61
million subscribers, is set to increase following two wireless
spectrum auctions.
America Movil's arch rival in Latin America, Spain's Telefonica
SA (TEF, TEF.MC), bid MXN4.13 billion to obtain the spectrum it
needs to launch a nationwide 3G network, while a consortium of
media giant Grupo Televisa SA (TV, TLEVISA.MX) and the Mexican arm
of wireless carrier NII Holdings (NIHD) was the sole bidder for a
nationwide license in the 1710MHz-2170MHz band.
"We have a lot of competition in Mexico. If there is going to be
a new entrant in the market, well, we need to provide a better
service, better quality, more coverage and a lot of data capacity,"
Hajj said when asked how the company is preparing for more
competition in its biggest market.
America Movil, which had 211.3 million wireless subscribers in
17 countries in the Americas at the end of June, spent billions of
dollars in 2007 and 2008 to deploy 3G networks in nearly all of its
markets in Latin America to provide wireless broadband.
The company is betting that demand for data services will boom
in coming years as the falling cost of wireless access devices such
as netbooks and smartphones put them within reach of lower-income
Latin American consumers, many of whom may not have a fixed phone
line or a home computer.
Data services accounted for 22% of the company's MXN88.77
billion in service revenue during the second quarter, up from 17.6%
a year earlier.
America Movil will make a bigger push to offer data plans to its
postpaid subscriber base, Hajj said. "In prepaid, there are going
to be a lot of people who are going to use their phones to use
data," he added.
America Movil said Thursday that its net profit fell 17.9%
year-on-year to MXN18.73 billion in the second quarter due to the
absence of big foreign-exchange gains it reported a year earlier.
Total sales rose 11.9% to MXN100.9 billion as the company added 4.9
million new subscribers in the quarter.
The company's local L shares were trading 1% lower at MXN32.27
around midday Friday. The shares are up about 4.8% so far this
year, compared with a 1.4% gain in Mexico's benchmark IPC equity
index.
Investors' hopes that management would offer more details on
their expectations of synergies following last month's tender
offers for controlling stakes in South American fixed-line phone
company Telmex Internacional SAB (TII, TELINT.MX) and holding
company Carso Global Telecom SAB (CGTVY, TELECOM.MX) were dashed as
Hajj and Chief Financial Officer Carlos Garcia Moreno made only
vague comments about the benefits of combining operations in
Brazil.
America Movil now owns 94.6% of Telmex Internacional and 59.4%
of Mexico's biggest fixed-line company, Telefonos de Mexico SAB
(TMX, TFONY, TELMEX.MX). The three companies are controlled by
Mexican billionaire Carlos Slim.
America Movil will start consolidating the financial results of
Telmex Internacional and Telmex in the third quarter.
"The 2Q10 showed a strong old America Movil ex-Brazil. But our
buy rating is on the new America Movil, where we still expect four
to five years of double-digit growth," UBS telecom analyst Tomas
Lajous said in a note Friday.
BBVA Bancomer telecom analyst Andres Coello described America
Movil's shares as a "bull trap," and reiterated his underperform
rating on the stock.
"Following the spectrum auction, Mexico will experience a sharp
rise in competition, while the consolidation of Telmex and Telmex
Internacional starting in 3Q will erode the growth profile of the
conglomerate," wrote Coello, who recommended that investors take
advantage of any positive reaction in the shares to increase short
positions on America Movil against the IPC index.
-By Ken Parks, Dow Jones Newswires; 52-55-5980-5177;
ken.parks@dowjones.com
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