Fixed-line phone provider Telefonos de Mexico was an old, rusty government-run mammoth when businessman Carlos Slim bought it two decades ago. In a matter of a few years, and with the help of billions of dollars to deploy a nation-wide, state-of-the-art network, Telmex became Slim’s cash cow.
But times change fast. The expansion of cell phone services across Latin America, led by sister company America Movil, has dented Telmex’s domestic revenue in recent years. The arrival of new technologies, which allow international calls at very low prices, hit Telmex’s long-distance sales too.
And let’s not forget the new players in the market.
The company bets Internet services will help it keep business charging ahead. Chief Financial Officer Adolfo Cerezo told the Reuters Latin American Investment Summit that in five years Telmex could become a mostly-web focused company.
The one thing holding back even faster growth is that only a quarter of Mexican families own a computer.
With presence in all key Latin American markets, a comfortable debt payment schedule for the next 10 years, and an undisputed lead in the region, what’s left for America Movil to do? The Mexican cellphone provider, part of the empire of billionaire and Forbes list fixture Carlos Slim, will focus on growing its 3G services in the 18 countries where it operates.
Chief Financial Officer Carlos Garcia-Moreno spoke with Reuters during the Latin American Investment Summit in Mexico City, where he forecast that data traffic could make 25 percent of the company’s overall revenue within three years.
He bets that the arrival of new, cheaper cellphones with catchy web-surfing features will help the company’s data traffic rise. The company is also planning to sell netbooks across the continent to help lift its 3G income.
It’s not every day that you have a top executive in big business talk about how nice it will be to see the back of the Bush administration. Republican presidencies typically tout their adherence to free markets, unbridled capitalism and, most importantly, a smaller pile of what corporations often consider burdensome regulations. That isn’t what they usually expect from Democratic administrations, even ones led by Barack Obama.
Mexican cell phone giant America Movil, which does business in 17 countries across Latin America and the United States, plans to add another 20 million subscribers this year to its client base.
Chief Financial Officer Carlos Garcia-Moreno chat with Reuters during the Latin America Investment Summit about keeping the doors open for more acquisitions outside its core region although he said the company is in no rush to do so.
New technologies that enable a wider distribution of basic communications in Mexico are taking longer than expected to take off amid struggles between companies interested in accessing cheaper networks and high launch costs.
A vast fiber optic network owned by Mexico’s Federal Electricity Commission (CFE), good for transporting data all across the country, is currently used by just a handful of telephone firms seeking to bypass what they often criticize as very high fees from the dominant fixed-line phone company.
CFE’s chief Alfredo Elias Ayub told Reuters said during the Third Latin America Investment Summit that in a couple of months there could be news about fiber optic rentals to new companies.
He also shared his views about why power line communications, which carry information over the powerline, are stalled due to the high price of modems and the lack of sufficient research in countries like Mexico.
Mexico’s lax regulation has encouraged the unabashed growth of monopolies in the last few decades, ranging from telecommunications to beer empires. Cable television is no stranger to conflict as Televisa, the world’s biggest producer of Spanish-language content, sets its eyes on triple play amid cries from smaller rivals struggling to keep afloat.
Eduardo Perez Motta, the head of Mexico’s Federal Competition Commission, sat down with Reuters during the Third Latin America Investment Summit to talk about a much-expected decision on a Televisa acquisition that would give the broadcaster a key push in the triple play market, where companies can offer cable TV, Internet and phone services using a single broadband link.
Perez Motta set a series of requirements that Televisa should meet, including sharing its content with rivals, if it wants to buy a 49 percent stake in Cablemas, one of the biggest cable companies in Mexico.