Despite facing severe regulatory challenges
, America Movil S.A.B. de C.V.
), the largest wireless company in Latin America with over 300
million subscribers, continues to dominate the Latin American
wireless market. The company remains benefited by its well-known
brand, extensive distribution network, nationwide coverage and
increasing subscriber base.
Moreover, America Movil still reaps benefits from the ongoing
migration of voice traffic from fixed-lines to wireless and the
continued adoption of smartphones, which are contributing to
Further, America Movil acquired Pay TV firm Net Servicos, the
largest multi-service cable company in Latin America to solidify
its position in Pay TV market. Going forward, the company also
collaborated with Claxson Interactive Group to acquire DLA Inc.
that adds video-on-demand service on cable-TV channels in Latin
America. Apart from Latin America, America Movil is also
targeting emerging markets, such as Asia and the Middle East
through partnerships with telecom Giants like AT&T Inc.
Thus, we expect the Company to focus more on a strategy of
acquisition in a highly competitive telecom market in order to tap
the opportunities in wireless services and pay-TV business. The
company is also looking forward to assimilating a 21% stake in
Telekom Austria AG, intensifying its foray into the European
Despite the company's consistent market share gains, we remain
concerned about the regulatory pressures in Mexico, along with
lower interconnection charges that are expected to limit the
earnings growth this year.
Further, wireless sales in Brazil, the second largest market for
the company, have become a drag on its profits given increased
pricing competition and economic slowdown.
Apart from declining growth rates in the company's two largest
markets, Mexico and Brazil, we believe factors like acquisition
expenses, operating costs on network investment, smartphone
subsidies, and undisclosed pension costs will inevitably weigh on
the near-term profitability. In addition, the company faces
stiff competition from rivals like
Grupo Televisa, S.A.B
) in Latin America.
Weighing the pros and cons, we currently maintain a long-term
Neutral recommendation on America Movil supported by a Zacks #3
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