Mexican MNO America Movil, controlled by tycoon Carlos Slim, said on Monday its Mexican unit had reached an agreement to provide a national roaming service to its main competitor in the local market, Telefonica Mexico.
America Movil serves two-thirds of the Latin American country’s mobile phone market, followed by Spain’s Telefonica, which operates in Mexico under the Movistar brand.
Mexican consumers’ growing selection of cheaper telecommunication plans is making America Movil biggest market less profitable.
Billionaire Carlos Slim’s carrier is seeing margins shrink in its home market, where it has cut prices to compete with operators such as Grupo Televisa SAB and Telefonica SA on Web and landline bundles and prepaid mobile-phone plans. Margins in Mexico, where America Movil serves seven of 10 mobile-phone subscribers and eight of 10 landlines, fell to 41.7 percent in the first quarter of 2015 from 44.4 percent a year earlier, the lowest since 2013.
Rivals are taking advantage of new rules including one that lets them connect calls to America Movil’s network without paying a fee. The elimination of domestic roaming charges as of Jan. 1 2015, part of President Enrique Pena Nieto’s industry overhaul, is also crimping margins at the company, which booked gains of $200 million for roaming in the first quarter of last year.
“We’re seeing a very limited growth tendency”
in Mexico because of regulatory measures and
“competition that’s intensified by the entry of very strong players,”
said Montserrat Anton, an analyst at Invex Casa de Bolsa SA in Mexico City.
Source: Reuters, Bloomberg