Wireless
“What you will see in Brazil this year and next year is that subscriber growth will be faster in Brazil than in the rest of the region,” Garcia Moreno, 52, said yesterday in an interview in Mexico City. “The next big surge of growth will come from Mexico.”
America Movil gets about 20 percent of its subscribers from Brazil, where its annual pace of customer growth equaled 19 percent last quarter, more than twice the rate in Mexico. The carrier, controlled by billionaire Carlos Slim, is relying on Brazil for expansion as Mexicans struggle to recover from the worst economic slump since the 1930s.
“The economys doing a little better, certainly, than in Mexico,” said Christopher King, an analyst at Stifel Nicolaus & Co. in Baltimore. “Youve got robust competition, with three major players, four to five real national players in Brazil as opposed to essentially one in Mexico.”
America Movil, Latin Americas largest wireless carrier, has 25 percent of the market in Brazil, trailing Vivo Participacoes SAs 29 percent. Tim Participacoes SA and Oi, the wireless unit of Tele Norte Leste Participacoes SA, also have more than 20 percent apiece.
America Movil has more than 70 percent of Mexican wireless subscribers, followed by Telefonica SA with about 20 percent. America Movil lost 38,000 prepaid clients in Mexico last quarter, the first decline in its history.
America Movil, based in Mexico City, rose 56 centavos, or 1.9 percent, to 30.44 pesos yesterday in Mexican trading. The shares had increased 43 percent this year before today.
Brazilian Gains
The company gained 1.8 million subscribers in Brazil last quarter, ending September with more than 42 million customers. America Movil ended the quarter with 58.4 million subscribers in Mexico, a 7.3 percent increase from the year-earlier period.
Brazils trade ties to China have helped the country avoid a deeper economic slump, while Mexicos economy remains closely linked to the U.S., Garcia Moreno said. Mexicos economy will contract 7.2 percent this year, according to a Nov. 3 central bank survey, while Brazils probably will expand 0.18 percent, according to an Oct. 30 central bank survey.
Mexicos economic growth generally lags behind the U.S. by about three months, Garcia Moreno said. Mexico has suffered from job losses and reduced consumption of imported goods, including wireless phones, he said.
Abrupt Halt
America Movil was spun off in 2001 from Telefonos de Mexico SAB. The company operates in 16 countries in addition to Brazil and Mexico, which together account for about 60 percent of revenue. Last month the carriers U.S. unit announced plans to sell the Straight Talk prepaid service nationwide through Wal- Mart Stores Inc., the worlds largest retailer.
Garcia Moreno said he has no plans to buy a network in the U.S., where America Movil resells service from carriers such as Verizon Wireless through the Tracfone division. The carrier now has more than 13 million customers there, partly because prepaid service is growing more attractive to consumers, Garcia Moreno said.
Possible Acquisitions?
The global economy hasnt recovered enough for America Movil to seek acquisitions to broaden its Latin American reach, Garcia Moreno said. Potential acquisition targets may go through a “difficult period” in attracting financing, he said.
The companys position in Latin America is “substantially complete,” with little interest in entering Bolivia or Venezuela, he said. The company may participate in planned auctions of wireless airwaves in Costa Rica and could consider entering another mobile-phone market in the Caribbean, moves that wouldnt “really move the needle” of its financial results or investment plans, he said.
“At present we are happy with where we are,” he said. “Theres really no need to rush.”