América Móvil gets bigger and stronger

• Carlos Slim’s telco empire is growing steadily
• It has more than 310 million mobile connections across its Latin American and European footprint
• Its second-quarter net profit may have been dented by exchange rate fluctuations, but its service revenues and margins are improving

There seems little doubt that telcos will need significant scale in the coming years if they are to prosper financially and reap the full rewards of the digital services economy, and one of the service providers that already boasts that much-needed scale is América Móvil, which boasts 314 million wireless connections across its multiple operating markets in Latin America and Europe. 

The operator, which is controlled by the family of Mexican billionaire Carlos Slim, has just reported solid second-quarter financials, with group service revenues of 175.1bn Mexican pesos (MXN) ($9.9bn), up by 3.5% year on year, and total revenues (including handset and other equipment sales) of MXN 205.5bn ($11.6bn), up by 1.5%. Operating profit (earnings before interest and tax) grew by 12.9% to MXN 45.5bn ($2.6bn) but foreign exchange rate fluctuations caused by the depreciation of the Mexican peso following the recent presidential election hammered the operator’s bottom line, resulting in a net loss of MXN 1.1bn ($620m) for the quarter compared with a healthy net profit a year earlier.   

Across all of its operations, América Móvil has 314 million mobile subscribers (including machine-to-machine connections – see the table, below), 32.9 million fixed broadband subscribers, and 74.4 million fixed line and pay TV subscribers. Its biggest mobile markets are Brazil (88.3 million customers for its Claro operation) and Mexico (84.2 million for its Telcel operation). Its European business comes from its majority stakeholding (58%) in the A1 Telekom Austria Group. 

And the empire is to expand further, as América Móvil will soon become the majority owner of ClaroVTR in Chile: ClaroVTR is currently a joint venture with Liberty Global but following a decision by Liberty Global not to maintain its 50% stake in the operation, América Móvil will take a 91% stake in the operator, which has been growing its customer base recently and currently boasts 5.1 million mobile customers and 1.4 million fixed broadband customers.  

América Móvil CEO Daniel Hajj noted in this recent announcement: “We are excited about the prospects of ClaroVTR. Our strong partnership with Liberty Latin America helped establish a converged connectivity provider that serves customers with world-class products and services. We look forward to the prospects of this business.”

- Ray Le Maistre, Editorial Director, TelecomTV