In an attempt to consolidate business,
) is planning to merge its Brazilian wireless operations that
comprise fixed phone business, wireless and cable services. We
believe that the combined operations of all these businesses will
provide significant cost benefits to the company and strengthen
its market position in a competitive business environment.
AMER MOVIL-ADR (AMX): Free Stock Analysis
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In Brazil, America Movil controls a significant market share
through its three subsidiaries Embratel Participacoes SA, Claro
and Net Servicos de Comunicacao SA. While Embratel is a fixed
phone company, Claro and Net Servicos incorporate the wireless
and cable business, respectively.
In Brazil, America Movil's business operations have been facing
stiff competition alongside regulatory issues. These have
dampened the company's performance in the recent past.
The company's Brazilian wireless operation, Claro remains
challenged by Vivo, a unit of
), which is the leading wireless operator in Brazil.
Additionally, competition has intensified as Telemar Norte Leste,
another major telecom company launched its mobile services in Sao
Paulo, Brazil's largest and most lucrative market. Moreover, Oi's
parent company Telemar Participacoes has acquired a controlling
stake (61.2%) in Brasil Telecom, providing the joint entity with
a nationwide footprint for wireless.
Despite facing these challenges, we believe America Movil
continues to dominate the Latin American telecom market with
other large players like
Grupo Televisa S.A.
NII Holdings Inc.
). It remains focused on expanding its network capabilities as it
aggressively invests in developing cellular networks in the
geographical zone. America Movil also focuses on building new
generation broadband networks, both in the fixed and mobile
platforms. This will require an investment of approximately $8
billion over the next three years, as it will require the
expansion of data networks.
America Movil has a Zacks Rank #3, implying a Hold rating.