America Movil TV in Costa Rica - Analyst Blog
January 28 2013 - 10:40AM
Zacks
AmericaMovil (AMX), one of the
leading telecom carriers in South America, has recently gained a
15-year license to market its cable television in Costa Rica. The
multi-year agreement also has a renewal option for another ten
years, depending on the company’s profitability from the new
business. We expect the contract to not only support revenue
generation but also expand Pay TV services of the company.
Winning the license in Costa Rica
provides a breath of fresh air to the company, which has been
fighting an uphill battle with the regulators for a cable TV
license in Mexico. The company remains the biggest telecom
operator in the Mexican market. However, it failed to tap one of
the most lucrative cable businesses in the Mexican market, mostly
captured by Grupo Televisa SAB (TV).
Moving to the Costa Rican market,
America Movil currently operates its wireless business in this
country though its subsidiary Claro. Given the new agreement, the
company would finally make its foray in to the cable TV business in
the country, currently dominated by DIRECTV (DTV)
and Televisa under the brand name Sky, followed by Dish
Network Corp. (DISH).
We believe the new business would
boost the company’s competitive position in the Latin American Pay
TV market. Besides winning new contracts, the company is also
focusing on its acquisition strategy in order to tap more
opportunities. In Jan 2012, the company collaborated with Claxson
Interactive Group to acquire DLA Inc. that adds video-on-demand
service on cable-TV channels in Latin America. It also acquired
Pay-TV firm Net Servicos, the largest multi-service cable company
in Latin America.
The company’s recent actions to
improve its entertainment business include the proposed takeover of
the media-and-advertising unit of Mexican live-entertainment
company Corporacion Interamericana de Entretenimiento SAB for
MXN$1.67 billion ($131 million). The acquisition is expected to be
completed by the second half of 2013, pending necessary
approvals.
Currently, America Movil carries a
Zacks Rank #3 (Hold).
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
DISH NETWORK CP (DISH): Free Stock Analysis Report
DIRECTV (DTV): Free Stock Analysis Report
GRUPO TELEVISA (TV): Free Stock Analysis Report
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