We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
America Movil (AMX) Network Plans Bode Well, Risks Remain
Read MoreHide Full Article
On Dec 27, we issued an updated research report on Mexican telecom giant America Movil SAB (AMX - Free Report) .
What’s Driving America Movil?
America Movil continues to participate in spectrum auctions in order to deploy 4G LTE services and expand its 3G footprint. Moreover, Telmex, the fixed-line telephone subsidiary of America Movil, has decided to gradually lower its rates by about half for calls from land lines to mobile phones by 2018. The company’s decision to reduce its fixed-line-to-mobile call rates in phased manner reflects its efforts to comply with regulations.
Increased penetration of 3G data services in Mexico continues to drive data revenues. The company’s iPhone has enabled America Movil to counter competition in a more effective manner while boosting customer adoption of 3G services, thereby stimulating ARPU (average revenue per user) growth. The company launched fourth-generation (4G) mobile services in 11 cities across Mexico. Furthermore, the company has introduced LTE services in Brazil where it currently covers 18 cities. We expect the company to perform well in Brazil and Mexico as it continues to focus on winning more contract subscribers, which in turn will minimize churn.
Recently, America Movil signed an agreement with its closest rival Telefonica SA (TEF - Free Report) to offer nationwide mobile roaming services. Notably, America Movil currently commands more than 66% of Mexico’s wireless market while Telefonica comes second with over 20% share.
Meanwhile, on Dec 13, Mexican telecom regulator, Federal Telecommunications Institute (IFT) recently agreed to extend the validity of Telmex’s concession to build, install, maintain, operate and exploit a public telephone network for another 30 years starting Mar 11, 2026.
Troubles
Shares of America Movil have underperformed the Zacks categorized Wireless Non-US market on a year-to-date basis. The stock has lost 11.59%, much wider than the industry’s decline of 7.61% over the same period.
The company’s aggressive promotional strategy which includes discounts and subsidized offers may hurt margins for the company in the near term.
Also, America Movil’s Brazilian operation, Claro, faces competitive threat from Vivo – which is owned by Telefonica Brazil SA (VIV - Free Report) . Meanwhile, U.S. telecom behemoth AT&T Inc.’s (T - Free Report) entry into the Mexican telecom industry with the acquisition of Gurpo Iusacell and Nextel de Mexico was a major setback for America Movil.
America Movil is also focused on shifting its base from Mexico to Brazil through the purchase of Oi S.A. in the wake of declining profits. America Movil’s cash and liquidity position also seems to be a major concern. The accumulating debt and decreasing cash flow in the last reported third quarter of 2016 may also affect its credit ratings going ahead.
To Conclude
We believe the company’s decision to participate in spectrum auctions to deploy 4G LTE services and expand its 3G footprint bode well for long-term growth. However, multiple headwinds have been hurting the stock of late, which may have resulted in America Movil’s Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
America Movil (AMX) Network Plans Bode Well, Risks Remain
On Dec 27, we issued an updated research report on Mexican telecom giant America Movil SAB (AMX - Free Report) .
What’s Driving America Movil?
America Movil continues to participate in spectrum auctions in order to deploy 4G LTE services and expand its 3G footprint. Moreover, Telmex, the fixed-line telephone subsidiary of America Movil, has decided to gradually lower its rates by about half for calls from land lines to mobile phones by 2018. The company’s decision to reduce its fixed-line-to-mobile call rates in phased manner reflects its efforts to comply with regulations.
Increased penetration of 3G data services in Mexico continues to drive data revenues. The company’s iPhone has enabled America Movil to counter competition in a more effective manner while boosting customer adoption of 3G services, thereby stimulating ARPU (average revenue per user) growth. The company launched fourth-generation (4G) mobile services in 11 cities across Mexico. Furthermore, the company has introduced LTE services in Brazil where it currently covers 18 cities. We expect the company to perform well in Brazil and Mexico as it continues to focus on winning more contract subscribers, which in turn will minimize churn.
Recently, America Movil signed an agreement with its closest rival Telefonica SA (TEF - Free Report) to offer nationwide mobile roaming services. Notably, America Movil currently commands more than 66% of Mexico’s wireless market while Telefonica comes second with over 20% share.
Meanwhile, on Dec 13, Mexican telecom regulator, Federal Telecommunications Institute (IFT) recently agreed to extend the validity of Telmex’s concession to build, install, maintain, operate and exploit a public telephone network for another 30 years starting Mar 11, 2026.
Troubles
Shares of America Movil have underperformed the Zacks categorized Wireless Non-US market on a year-to-date basis. The stock has lost 11.59%, much wider than the industry’s decline of 7.61% over the same period.
The company’s aggressive promotional strategy which includes discounts and subsidized offers may hurt margins for the company in the near term.
Also, America Movil’s Brazilian operation, Claro, faces competitive threat from Vivo – which is owned by Telefonica Brazil SA (VIV - Free Report) . Meanwhile, U.S. telecom behemoth AT&T Inc.’s (T - Free Report) entry into the Mexican telecom industry with the acquisition of Gurpo Iusacell and Nextel de Mexico was a major setback for America Movil.
America Movil is also focused on shifting its base from Mexico to Brazil through the purchase of Oi S.A. in the wake of declining profits. America Movil’s cash and liquidity position also seems to be a major concern. The accumulating debt and decreasing cash flow in the last reported third quarter of 2016 may also affect its credit ratings going ahead.
To Conclude
We believe the company’s decision to participate in spectrum auctions to deploy 4G LTE services and expand its 3G footprint bode well for long-term growth. However, multiple headwinds have been hurting the stock of late, which may have resulted in America Movil’s Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>