América Móvil Says Wireless Price War Has Eased
April 26 2017 - 1:45PM
Dow Jones News
By Robbie Whelan
MEXICO CITY -- Telecommunications firm América Móvil SAB, the
flagship company of Mexican billionaire Carlos Slim, said its price
war over wireless service with competitors AT&T Inc. and
Spain's Telefónica SA appears to have bottomed out.
"Prices in Mexico right now are some of the cheapest in the
world," said Chief Executive Daniel Hajj Aboumrad in a conference
call with analysts Wednesday. He said service prices were likely to
remain stable in Mexico over the course of 2017. "Of course, we
would love to raise prices, but it doesn't make sense. In broadband
we are not increasing prices, and in wireless we are not increasing
prices," he added.
Over the past few years, América Móvil's Mexican wireless unit,
Telcel, has been locked in a fierce price war primarily with
AT&T, which entered the Mexican market in 2015 following a
broad deregulation of the telecommunications industry that was
championed by the government of President Enrique Peña Nieto.
Mr. Hajj said that over the last several years, the company has
reduced prices for wireless packages by between 60% and 70%.
Mexico's telecom regulator, the IFT, reported that wireless costs
fell more than 42% between the beginning of 2014 and the third
quarter of 2016.
The price war has been bruising for both companies. América
Móvil's Mexico revenue registered little growth for more than a
year until the fourth quarter of 2016, and AT&T has been
steadily chipping away at the company's more than two-thirds market
share in mobile phones in Mexico, despite being so far unable to
generate a profit on its Mexico operations.
In the first quarter, AT&T added 633,000 new wireless
subscribers, bringing its customer base in Mexico to 12.6 million,
a 37% increase from the year before, while América Móvil's customer
base remained unchanged.
"AT&T and Telefónica are good competitors," Mr. Hajj said
Wednesday. He said that the company wasn't satisfied with the speed
of its recovery in profits after last year's steep price
reductions, but assured investors that new promotions were
unlikely.
"I can't tell you we are right now where we want to be," he
said. "Right now there's a lot of competition. Prices are very,
very competitive. If you're going to see movement on the pricing,
you're going to see more movement going up than going down."
Mr. Hajj's remarks come on the heels of a Tuesday earnings
report in which América Móvil announced a first-quarter net profit
of 35.9 billion Mexican pesos ($1.9 billion), driven largely by
appreciation of the peso against the dollar and the euro and an
economic pickup across Latin America.
Most of América Móvil's debt is denominated in euros and
dollars. The company also buys handsets and other equipment using
dollars, but sells phones and service plans to Mexican consumers
paying in pesos.
The first-quarter results represented a more than sevenfold
increase in profit compared with the year-earlier quarter and
reversed a six-billion-peso loss in the fourth quarter. Revenue
rose 18.5% to 264.2 billion pesos.
América Móvil's shares were up 1.2% to $15.13 in midday trading
Wednesday on the New York Stock Exchange.
Write to Robbie Whelan at robbie.whelan@wsj.com
(END) Dow Jones Newswires
April 26, 2017 13:30 ET (17:30 GMT)
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