In order to counter mounting competition in the Mexican telecom market, telecom operator America Movil S.A.B. (AMX - Free Report) recently introduced a pan-North American roaming charge free calling facility. Postpaid subscribers of the company’s Telcel wireless subsidiary will get unlimited calling, text messaging data transfer services to the U.S. without paying roaming charges. Subscribers can enjoy this facility for an additional 50 Mexican Pesos (around $3.15) per month.
Later on, America Movil will extend the same plan to its prepaid wireless customers in Mexico, which constitute nearly 80% of the company’s total subscriber base. Management also aims to offer this type of roaming free wireless connectivity in Canada over the long haul.
In 2014, the government of Mexico reformed its telecommunications sector. As per the reformed norms, regulatory body Federal Telecommunications Institute (IFT) identified America Movil as the dominant player in the market. The company’s wireline division, Telmex, currently controls around 80% of the Mexican market, whereas its wireless division, Telcel, holds about a 70% market share. Notably, the IFT wants to restrict the maximum hold of a company in the market to 50%.
Earlier this year, U.S. telecom behemoth AT&T Inc. (T - Free Report) entered the Mexican telecom industry with the acquisition of Gurpo Iusacell and Nextel de Mexico for approximately $4.4 billion. In Feb 2015, AT&T launched a service which allow its prepaid GoPhone customers, on $60 data plans, unlimited calling from the U.S. to Mexico without imposing any additional charge. The company’s postpaid customers on World Connect Value plans can also get unlimited calls to Mexico as a $5 add-on.
Recently, T-Mobile US Inc. (TMUS - Free Report) also introduced an innovative “Mobile Without Borders” plan through which its subscribers will be able to make calls to Canada and Mexico without paying any roaming charges.
Meanwhile, AT&T has decided to invest $3 billion to expand its high-speed mobile Internet network in Mexico. The service is likely to cover 40 million people within the next six months and will be available to 75 million people by the end of 2016. The company also intends to provide 4G LTE mobile Internet service to 100 million Mexican customers by the end of 2018. Apart from AT&T, Spanish telecom giant Telefonica S.A. (TEF - Free Report) also enjoys a strong presence in Mexico.
To keep abreast in this competitive market, America Movil, currently a Zacks Rank #3 (Hold) stock, has decided to invest $6 billion over the next three years in Mexican telecom network upgrades.